HdL Companies - Legislative Update March 2022

Details: March 23rd, 2022

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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February 18th was the first deadline to introduce bills in this legislative cycle for 2022. The final bills were in print bringing the total for new introductions to 2109. Two-year bills either passed out of their House of Origin (House they were introduced in) by the January 31st deadline or are now considered dead. A sizeable portion of proposed law cover topics like land use/housing, climate change along with interest in Prop. 47 reform.

At this point in the process, many bills introduced in this session will make non-substantive changes to laws or state the intent of the legislation without offering any specific information. These are called “spot” and “intent” bills respectively.

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, allowing a signature drive to begin. Signatures are 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.

Status: Referred to Revenue and Taxation Committee on 2/18/22.

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: Amended and re-referred to Commission on Local Government on 3/21/22.

SB 771 (Becker) Sales and Use Tax Zero Emissions Vehicle Exemption

State sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state. This bill would provide an exemption from those taxes with respect to the sale of and the storage, use, or other consumption of a qualified motor vehicle sold to a qualified buyer. The bill would provide that this exemption does not apply to specified state sales and use taxes from which the proceeds are deposited into the Local Revenue Fund, the Local Revenue Fund 2011, or the Local Public Safety Fund.

Status: Failed Deadline in 2021 but may be acted upon in 2022.

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: Referred to Governance and Finance Committee on 3/2/22: Hearing set for 3/31/22.

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 Appropriations Committee on 3/22/22.

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: Referred to Committee on Governance and Finance and Environmental Quality on 3/17/22; hearing set for 3/31/22.

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: Referred to Business and Professions Committee on 1/27/22.

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: Re-Referred to Public Safety Committee on 3/10/22, In Committee 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 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, and a separate cultivation tax on harvested cannabis that enters the commercial market. This bill would discontinue the imposition of the cultivation tax on July 1, 2022. The bill would increase, from July 1, 2025, until July 1, 2026, the excise tax by an additional percentage that the Department of Finance estimates will generate half the amount of revenue that would have been collected pursuant to the cultivation tax, and would, beginning July 1, 2026, instead increase the excise tax by an additional percentage estimated by the department to generate the full amount of revenue that would have been collected pursuant to the cultivation tax.

Status: Referred to Governance and Finance Committee on 3/17/22.

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: Re-referred to Revenue and Taxation Committee on 3/22/22.

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 the welfare exemption, that is organized and operated for the specific and primary purpose of building and rehabilitating single 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 the specific and primary purpose of building and rehabilitating single or multifamily residential units and the units meet specified requirements.

Status: Referred to Revenue and Taxation Committee and Housing and Community Development Committee on 2/18/22. In Committee 3/17/22: Hearing postponed.

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.