AB 2792

Bill Subjects

Abstract

(1) The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA) , an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances. AUMA imposes an excise tax on upon 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. 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 markup, as determined by the California Department of Tax and Fee Administration on a biannual basis in 6-month intervals. Existing law prohibited the department from increasing the markup amount during the period beginning on and after September 18, 2020, and before July 1, 2021. AUMA imposes a separate cultivation tax on harvested cannabis that enters the commercial market, as specified. Existing law, beginning January 1, 2020, requires the California Department of Tax and Fee Administration to adjust the cultivation tax rate for inflation each calendar year, except for the 2021 calendar year, in which existing law prohibited the department from adjusting for inflation unless the adjustment was for an inflation rate less than zero. MAUCRSA, for purposes of the California Cannabis Equity Act, requires the Department of Cannabis Control to develop and implement a program to provide waivers and deferrals for application fees, licensing fees, and renewal fees required by MAUCRSA, as specified. This bill, from July 1, 2022, to July 1, 2025, inclusive, would prohibit the department from including any markup amount in the average market price in an arm's length transaction for purposes of the cannabis excise tax, and would reduce the rate of the cannabis excise tax imposed on purchasers in a nonarm's length transaction to 8%. The bill, from July 1, 2022, to July 1, 2025, inclusive, would suspend the imposition of the excise tax upon purchasers of cannabis or cannabis products sold in this state by licensees eligible for a fee waiver or deferral pursuant to the program established by the Department of Cannabis Control under the California Cannabis Equity Act. The bill would also suspend the imposition of the cultivation tax from July 1, 2022, to July 1, 2025, inclusive, and would discontinue the requirement that the department adjust the cultivation tax rate for inflation during the suspension. (2) AUMA requires the cannabis retailer to collect the cannabis excise tax from the purchaser and to remit that tax to a distributor. Existing law requires the distributor to collect the cannabis excise tax from the cannabis retailer on or before 90 days after the sale or transfer of cannabis or cannabis product to the cannabis retailer, as specified, and requires the distributor to collect the cultivation tax from a cultivator on all harvested cannabis that enters the commercial market, except as specified. Existing law requires the distributor to remit the cannabis excise tax and the cultivation tax to the department quarterly on or before the last day of the month following each quarterly period of 3 months. Existing law requires revenues from the excise and cultivation taxes to be deposited into the California Cannabis Tax Fund, which is continuously appropriated for specified purposes. This bill would instead require the distributor to collect the cannabis excise tax from the cannabis retailer on or before 90 days after the cannabis or cannabis product was sold or transferred by the cannabis retailer to the purchaser. The bill would require the distributor to remit the cannabis excise taxes and cultivation taxes to the department quarterly on or before the last day of the month following the quarterly period in which the distributor collected the tax. This bill would additionally state that any tax owed by a cultivator or cannabis retailer that has not been collected by a distributor is deemed a debt owed to the State of California by the cultivator or cannabis retailer. (3) AUMA authorizes legislative amendment of its provisions with a 23 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. (4) This bill would declare that it is to take effect immediately as an urgency statute.