The following includes updates for 2022 legislative statuses on legislation to watch and bills related to sales and use tax, medical and adult use cannabis taxation and regulation, property taxation and business license that HdL is currently tracking.
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May 6th was the deadline for bills to be heard in policy committee in their “house of origin.” Bills not making this deadline are dead for the 2-year session. Fiscal bills were then considered in Appropriations and on to their respective floors. Bills must have passed off their first house floor by May 27th to continue in the process. Legislators have until July 1st to move bills through their respective policy committees before the month-long summer recess.
On May 12th, Governor Newsom announced his proposed $18.1 Billion Inflation Relief Package. The package includes direct payments to help address costs of rising inflation and past-due water and utility bills, free public transit, money for health care workers, middle-class health care subsidies and waiving child care fees for families. Click HERE to read the full press release.
Click HERE to download this Legislative Update in PDF format.
LEGISLATION TO WATCH
CALIFORNIA TAX LIMITS AND VOTE REQUIREMENTS INITIATIVE (2022)
The California Tax Limits and Vote Requirements Initiative (No.21-0026) may appear on the ballot in California as an initiated constitutional amendment on November 8, 2022. The ballot initiative would define levies, charges, and extractions as taxes or exempt charges, with those classified as taxes requiring a two-thirds legislative vote and voter approval at an election.
Status: The Attorney General of California issued ballot language for the initiative on December 7, 2021, which allowed for a signature drive. Signatures were due on June 6, 2022.
SALES AND USE TAX LEGISLATION
AB 1951 (GRAYSON) MANUFACTURING SALES AND USE TAX EXEMPTIONS
Current sales tax law does not provide an exemption to an apportioning trade or business, as specified for electric power. Existing law provides that qualified tangible personal property does not include consumables with a useful life of less than one year. This bill would recast and restate these provisions to clarify the application of the exemption provided and update certain definitions to correspond to current federal guidelines. The latest version includes local jurisdiction’s loss of the Bradley-Burns portion of sales taxes collected on the types of personal property noted above.
Status: Referred to Committee on Governance and Finance, 6/8/22.
AB 2453 (BENNETT) TRANSACTIONS AND USE TAX FOR VENTURA COUNTY TRANSPORTATION COMMISSION
This bill would make a change to the existing Revenue and Taxation code. It would authorize the County of Ventura to impose a transactions and use tax for the support of countywide transportation programs at a rate of no more than 0.5% that would, in combination with other transactions and use taxes, exceed the above-described combined rate limit of 2%, if the ordinance proposing the tax is approved by the voters, subject to applicable voter approval requirements.
Status: Re-Referred to Committee on Governance and Finance, 6/15/22.
AB 2887 (GARCIA) SALES AND USE TAX EXCLUSION
The California Alternative Energy and Advanced Transportation Financing Authority Act establishes the California Alternative Energy and Advanced Transportation Financing Authority. The act prohibits the sales and use tax exclusions from exceeding $100,000,000 for each calendar year. This bill would increase the limit on sales and use tax exclusions to $150,000,000 for each calendar year.
Status: Referred to Committee on Governance and Finance, 6/8/22.
SB 1312 (OCHOA BOGH) TAX AND FEE LIABILITY RELIEF FOR PASSENGER VEHICLES RENTAL COMPLIANCE
The Fee Collection Procedures Law provides for the administration and collection of various fee programs. This bill would also relieve a marketplace facilitator of liability for the taxes or fees on a retail sale if the marketplace facilitator demonstrates to the satisfaction of the department that the marketplace seller is an unrelated passenger vehicle rental company and is registered to remit sales and use tax to the department.
Status: Re-Referred to Committee on Appropriations, 6/16/22.
BUSINESS LICENSE LEGISLATION
AB 2164 (LEE) ACCESS FOR DISABILITY FUNDING
The bill would expand the existing Americans with Disabilities Act of 1990 and the California Building Standards Code. Existing law, until December 31, 2023, requires any applicant for an original or renewal of a local business license or equivalent instrument or permit to pay an additional fee of $4 for that license, instrument, or permit for specified purposes related to disability access, including the CASp program. Commencing January 1, 2024, that fee is reduced to $1. Existing law requires a portion of those fees to be deposited in the Disability Access and Education Revolving Fund. This bill would repeal the provision reducing the fee to $1 commencing January 1, 2024, thereby extending the operation of this fee at the amount of $4 indefinitely. By expanding the increased fee deposited into the Disability Access and Education Revolving Fund, this bill would make an appropriation.
Status: Re-referred to Committee on Judiciary, 6/15/22.
SB 891 (HERTZBERG) BUSINESS LICENSE STORMWATER DISCHARGE COMPLIANCE
Current law requires a person who conducts a business operation that is a regulated industry to demonstrate enrollment with the NPDES permit program by providing specified information on the application, including, among other things, the Standard Industrial Classification Code for the business. Current law requires the State Water Resources Control Board, on or before April 1, 2020, to post on its internet website a list of applicable Standard Industrial Classification Codes for the purpose of the determinations made by cities or counties, and requires the state board to update that list, as specified. This bill would make non-substantive changes to these provisions.
Status: Re-referred to Committee on Local Government, 6/15/22.
CANNABIS-RELATED LEGISLATION
AB 1656 (AGUILAR-CURRY) INDUSTRIAL HEMP PRODUCTS
The Control, Regulate and Tax Adult Use of Marijuana Act of 2016 (AUMA 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. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities and requires the Department of Cannabis Control to administer its provisions. This bill would state that MAUCRSA does not prohibit a licensee from manufacturing, distributing, or selling products that contain industrial hemp or cannabinoids, extracts, or derivatives from industrial hemp, if the product complies with all applicable state laws and regulations.
Status: Scheduled for third reading in Senate, 6/8/22.
AB 1725 (SMITH) ILLEGAL CULTIVATION OF CANNABIS
The California Uniform Controlled Substances Act makes it a crime to plant, cultivate, harvest, dry, or process more than 6 living cannabis plants without a commercial cannabis license. The act makes those actions a misdemeanor for a person over 18 years of age but less than 21 years of age and a misdemeanor for a person over 18 years of age, unless specified conditions exist, in which case the actions may be punished as a felony. This bill would amend AUMA to make it a felony, punishable by 16 months or 2 or 3 years in county jail, for a person over 18 years of age to plant, cultivate, harvest, dry, or process more than 6 living cannabis plants.
Status: In Committee: Hearing canceled at the request of the author, 3/15/22.
SB 1074 (MCGUIRE) CANNABIS EXCISE AND CULTIVATION TAX
The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA imposes an excise tax on cannabis or cannabis products at the rate of 15% on any retail sale, and a separate cultivation tax on harvested cannabis that enters the commercial market. This bill would discontinue the cultivation tax on July 1, 2022 and increase, from July 1, 2025, until July 1, 2026, the excise tax by an additional percentage that will generate half the amount of revenue that would have been collected pursuant to the cultivation tax, and would, beginning July 1, 2026, increase the excise tax by an additional percentage estimated to generate the full amount of revenue that would have been collected pursuant to the cultivation tax.
Status: Ordered to inactive file, 5/25/22.
SB 1186 (WEINER) MEDICINAL CANNABIS PATIENTS’ RIGHT OF ACCESS ACT
This bill would enact the Medicinal Cannabis Patients’ Right of Access Act, which, on and after January 1, 2024, would prohibit a local jurisdiction from adopting or enforcing any regulation that prohibits the retail sale by delivery within the local jurisdiction of medicinal cannabis to medicinal cannabis patients or their primary caregivers by medicinal cannabis businesses, as defined, or that has the effect of prohibiting the retail sale by delivery within the local jurisdiction of medicinal cannabis to medicinal cannabis patients or their primary caregivers in a timely and readily accessible manner and in types and quantities that are sufficient to meet demand from medicinal cannabis patients within the local jurisdiction, as specified. The bill, on and after January 1, 2024, would provide that the act may be enforced by an action for writ of mandate brought by a medicinal cannabis patient or their primary caregiver, a medicinal cannabis business, the Attorney General, or any other party otherwise authorized by law.
Status: Referred to Committees on Business & Professions and Judiciary, 6/9/22.
PROPERTY TAX LEGISLATION
AB 1839 (CHOI) TAX-DEFAULTED PROPERTY SALES COMPENSATION
Current law authorizes a nonprofit organization to purchase a residential or vacant property that has been tax-defaulted for 5 years or more, or 3 years or more if the property is subject to a nuisance abatement lien. The law requires the sales price of a property sold to include certain amounts, including all defaulted taxes and assessments and all associated penalties and costs. This bill would require the sales price of a property sold pursuant to those provisions to additionally include, only if the property is exempt from property taxation, an amount sufficient to fairly compensate, for the equity lost, any person with title of record to all or any portion of the property before the recordation of the tax deed to the purchaser.
Status: In Committee: Set, first hearing. Failed passage.
AB 1933 (FRIEDMAN) PROPERTY TAX WELFARE EXEMPTION FOR NONPROFIT CORPORATIONS BUILDING RESIDENTIAL HOUSING UNITS
Current property tax law states that property is within that welfare exemption if the property is owned and operated by a nonprofit corporation, otherwise qualifying for th e welfare exemption, that is organized and operated for the specific and primary purpose of b uilding a nd rehabilitating si ngle or multifamily residences for sale at cost to low-income families. This bill would also provide that property is fully exempt from property taxation and is also within that welfare exemption if that property is owned and operated by a nonprofit corporation that is organized and operated for th e specific and primary purpose of building and rehabilitating single or multifamily residential units and the units meet specified requirements.
Status: Referred to Committee on Governance and Finance, 6/8/22.
SB 1456 (STERN) LOW INCOME HOUSING PROPERTY TAX WELFARE EXEMPTION LIMITS
The California Constitution partially exempts property used exclusively for rental housing and related facilities from property taxation, if specified criteria are met, including that 90% or more of the occupants of the property are lower income households whose rents do not exceed the rent limits prescribed by a specified law. Current law limits the total exemption amount allowed to a taxpayer, with respect to a single property or multiple properties for any fiscal year on the sole basis of the application of this criterion, to $20,000,000 of assessed value. This bill would remove the above-described limit on the total exemption amount with respect to property tax lien dates occurring on and after the effective date of the bill.
Status: Referred to Committee on Revenue and Taxation, 6/2/22.
Click HERE to download this Legislative Update in PDF format.
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