This bill is part of the 2022 Cannabis Bills section of our ongoing update on California Cannabis Legislation – see the full California Cannabis Law Legislative Update which includes information on cannabis bills from other years.
SB 1281 (Bradford D) Cannabis taxes.
(1) Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure, as additionally amended by statute, imposes a weight-based cultivation tax on harvested cannabis that enters the commercial market and a separate excise tax on purchasers of cannabis or cannabis products sold in this state at the rate of 15% of the average market price of any retail sale by a cannabis retailer, as specified. Existing law defines average market price in an arm’s length transaction to mean the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up, as determined by the California Department of Tax and Fee Administration on a biannual basis in 6-month intervals. Existing law requires revenues from the cultivation and excise taxes to be deposited into the California Cannabis Tax Fund, and continuously appropriates that tax fund for specified purposes.
This bill, beginning on January 1, 2023, would discontinue the imposition of the cultivation tax, as specified, and would impose the excise tax on purchasers of cannabis or cannabis products sold in this state at the rate of 5% of the gross receipts of any retail sale by a cannabis retailer, as specified. The bill, beginning on January 1, 2023, and annually thereafter, would require the Department of Finance to estimate the amount of revenue that would have been collected pursuant to the excise tax and cultivation tax imposed prior to January 1, 2023, and would require the Controller, upon appropriation by the Legislature, to transfer moneys equivalent to that amount from the General Fund to the California Cannabis Tax Fund.
(2) Existing law requires the distributor to collect the excise tax from the cannabis retailer and to remit the tax to the department. Under existing law, the cultivation tax and the cannabis excise tax collected by a distributor or a manufacturer and any amount unreturned to the cultivator or retailer that is not tax, but was collected under the representation by the distributor or manufacturer that it was tax, constitute debts owed by the distributor or manufacturer to this state. Existing law deems any tax collected from a cultivator or retailer that has not been remitted to the department a debt owed to this state by the person required to collect and remit the tax. Existing law requires a distributor to obtain a permit from the department and provides that any person required to obtain a permit and who engages in business as a distributor without a valid permit is guilty of a misdemeanor.
This bill, beginning on January 1, 2023, would revise and recast the provisions relating to the administration of the cannabis cultivation and excise taxes. The bill would remove the requirement that the distributor collect the excise tax from the cannabis retailer, and would instead require the cannabis retailer to collect the cannabis excise tax from the purchaser and to remit the excise tax to the department. The bill would deem any tax collected by the cannabis retailer, and any amount unreturned to the purchaser that is not tax, to constitute a debt owed to this state by the cannabis retailer, as provided. The bill would require a cannabis retailer to obtain a permit from the department, and would provide that any person required to obtain a permit and who engages in business as a cannabis retailer without a valid permit is guilty of a misdemeanor. By expanding creating a new crime, the bill would impose a state-mandated local program.
(3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(4) AUMA authorizes legislative amendment of its provisions with a 2/3 vote of both houses, without submission to the voters, to further its purposes and intent.
This bill would declare that its provisions further the purposes and intent of AUMA.
(5) This bill would take effect immediately as a tax levy.
Read more about California Cannabis Legislation – see the full California Cannabis Law Legislative Update.
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