Bill Text: CA AB1609 | 2015-2016 | Regular Session | Amended
Bill Title: State government.
Spectrum: Partisan Bill (Democrat 16-0)
Status: (Engrossed - Dead) 2016-11-30 - Died on Senate inactive file. [AB1609 Detail]
Download: California-2015-AB1609-Amended.html
BILL NUMBER: AB 1609 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 13, 2016
AMENDED IN SENATE JUNE 13, 2016
AMENDED IN ASSEMBLY APRIL 14, 2016
INTRODUCED BY Committee on Budget (Assembly Members Ting (Chair),
Travis Allen, Bigelow, Bloom, Bonta, Campos, Chávez, Chiu, Cooper,
Gordon, Grove, Harper, Holden, Irwin, Kim, Lackey, McCarty, Melendez,
Mullin, Nazarian, Obernolte, O'Donnell, Patterson, Rodriguez,
Thurmond, Wilk, and Williams)
JANUARY 7, 2016
An act to amend Sections 27, 101, 144, 205.1, 19300, 19300.7,
19302, 19302.1, 19303, 19304, 19305, 19306, 19307, 19310, 19311,
19312, 19315, 19321, 19322, 19323, 19326, 19327, 19328, 19332,
19332.5, 19334, 19335, 19341, 19342, 19343, 19344, 19345, 19347,
19350, 19351, and 19360 of, to amend the heading of Chapter 3.5
(commencing with Section 19300) of Division 8 of, to amend and repeal
Section 19320 of, to add Sections 19332.2, 19347.1, 19347.2,
19347.3, 19347.4, 19347.5, 19347.6, 19347.7, and 19347.8 to, to
repeal Sections 19313 and 19318 of, to repeal Article 6 (commencing
with Section 19331) of Chapter 3.5 of Division 8 of, and to repeal
and add Section 19300.5 of, the Business and Professions Code, to
amend Sections 2154, 2265, 5100, and 5151 of the Elections Code, to
amend Sections 1602, 12025.2, and 12029 of, and to add Section 1617
to, the Fish and Game Code, to amend Section 52452 of, and to add
Section 37104 to, the Food and Agricultural Code, to add Section
15283 to, and to add Chapter 6.45 (commencing with Section 30035) to
Division 3 of Title 3 of, the Government Code, to amend Sections
11362.769, 11362.777, 44559.11, 50800.5, 51341, 51349, 51455, and
51622 of, to amend and renumber Sections 51344 and 51345 of, to amend
and repeal Section 11362.775 of, to add Section 44559.14 to, to add
Sections 50912.5 and 51511 to, to repeal Sections 51342, 51347,
51348, 51618, and 51619 of, and to add Chapter 19 (commencing with
Section 50899.1) to Part 2 of Division 31 of, the Health and Safety
Code, to amend Sections 12206, 17058, 18900.24, and 23610.5 of, to
add and repeal Sections 17053.88.5 and 23688.5 of, and to repeal
Section 31020 of, the Revenue and Taxation Code, and to amend
Sections 1058.5, 1525, 1535, 1552, 1831, 1840, 1845, 1846, and 5103
of, and to add Sections 1847, 1848, and 13149 to, the Water Code,
relating to state government, and making an appropriation therefor,
to take effect immediately, bill related to the budget.
LEGISLATIVE COUNSEL'S DIGEST
AB 1609, as amended, Committee on Budget. State government.
(1) Existing law, the Medical Marijuana Regulation and Safety Act,
regulates and licenses the cultivation, dispensing, distribution,
manufacturing, testing, and transportation of medical cannabis
through various state agencies, including, among others, the Bureau
of Medical Marijuana Regulation, the Department of Food and
Agriculture, and the State Department of Public Health, and
authorizes the bureau to adopt rules to carry out the provisions of
that act, as specified. That act requires a person to obtain both a
local and state license to engage in commercial cannabis activities,
except that the act authorizes, until January 1, 2018, a facility or
entity that is operating in compliance with local laws to continue in
operation until its application for licensure is approved or denied.
That act requires the State Department of Public Health to regulate
cannabis testing laboratories, as specified. That act authorizes the
bureau to establish appellations of origin for marijuana grown in the
state. That act establishes the Medical Marijuana Regulation Safety
Act Fund and provides that moneys in the fund shall be available upon
appropriation by the Legislature.
This bill would, among other things, change the name of the
Medical Marijuana Regulation and Safety Act, the Bureau of Medical
Marijuana Regulation, and the Medical Marijuana Regulation and Safety
Act Fund to the Medical Cannabis Regulation and Safety Act, the
Bureau of Medical Cannabis Regulation, and the Medical Cannabis
Regulation and Safety Act Fund, and would change references to
medical marijuana or marijuana to medical cannabis or cannabis,
respectively. The bill would authorize licensing authorities, as
defined, to adopt rules and regulations to carry out the purposes of
that act and emergency regulations, as specified. The bill would add
additional grounds for disciplinary action, including failure to
maintain safe conditions for inspection by a licensing authority. The
bill would exempt the premises or person from the above-mentioned
requirement to obtain both a local and state license only if certain
conditions are met, including that the applicant continues to operate
in compliance with all local and state laws, except for possession
of a state license. The bill would require the State Water Resources
Control Board, in consultation with the Department of Fish and
Wildlife, to adopt principles and guidelines for diversion and use of
water for cannabis cultivation, as specified. The bill would require
an applicant for a state license issued by a licensing authority to
meet certain requirements, including providing proof of a bond to
cover the costs of destruction of medical cannabis or medical
cannabis products if necessitated by a violation of the licensing
requirements. The bill would require an applicant for a license for
indoor or outdoor cultivation to identify the source of water supply,
as specified. The bill would authorize the Department of Food and
Agriculture to establish appellations of origin for cannabis grown in
the state instead of the bureau. The bill would require the bureau
to regulate the laboratory testing of cannabis instead of the State
Department of Public Health, as specified. The bill would authorize
the State Department of Public Health to, among other things, develop
standards for the manufacturing and labeling of all manufactured
medical cannabis products and would require the State Department of
Public Health, when it has evidence that a medical cannabis product
is adulterated or misbranded, to notify the manufacturer, and
authorizes the department to take certain actions.
(2) Existing law prohibits an entity from substantially diverting
or obstructing the natural flow of, or substantially changing or
using any material from the bed, channel, or bank of, any river,
stream, or lake, or from depositing certain material where it may
pass into any river, stream, or lake, without first notifying the
Department of Fish and Wildlife of that activity, and entering into a
lake or streambed alteration agreement if required by the department
to protect fish and wildlife resources. Existing law exempts certain
routine maintenance and operation activities from those requirements
after the initial notification and agreement and exempts certain
emergency activities from those notification and agreement
requirements. Existing law authorizes the director of the department
to establish a graduated schedule of fees to be charged to any entity
subject to the notification and agreement provisions and requires
any fees received to be deposited into the Fish and Game Preservation
Fund. Under existing law, it is unlawful for any person to violate
those notification and agreement provisions, and a person who
violates them is also subject to a civil penalty of not more than
$25,000 for each violation.
Existing law, in order to facilitate the remediation and
permitting of marijuana cultivation sites, requires the department to
adopt regulations to enhance the fees on any entity subject to lake
or streambed alternation agreement provisions for marijuana
cultivation sites that require remediation. Existing law prohibits
this fee schedule from exceeding the fee limits established for lake
or streambed alteration agreements.
This bill would exempt an entity from the requirement to enter
into a lake or streambed alteration agreement with the department for
activities authorized by a license or renewed license for cannabis
cultivation issued by the Department of Food and Agriculture for the
term of the license or renewed license if the entity submits the
written notification to the department, a copy of the license or
renewed license, and the fee required for a lake or streambed
alteration agreement, and the department determines certain
requirements are met. If an entity receives an exemption, any failure
by the entity to comply with certain requirements contained in the
license would constitute a violation of the lake or streambed
alteration agreement provisions. Because this violation would be a
crime, this bill would impose a state-mandated local program.
This bill would also authorize the department to adopt regulations
establishing the requirements and procedure for the issuance of a
general agreement in a geographic area for a category or categories
of activities related to cannabis cultivation that would be in lieu
of an individual lake or streambed alteration agreement.
(3) Existing law, with certain exceptions, requires each person
who diverts water after December 31, 1965, to file with the State
Water Resources Control Board a statement of diversion and use, and
to include specified information, including the purpose of the use.
Existing law requires each person or entity who holds a permit or
license to appropriate water, and certain lessors of water, to pay an
annual fee according to a schedule established by the board.
Existing law requires a person or entity who files a certain
application, registration, petition, or request to pay a fee
according to a schedule established by the board. Revenues generated
from these fees are deposited into the Water Rights Fund, which are
available, upon appropriation, for specified purposes.
This bill would require a statement of diversion and use to also
include information regarding the amount of water used, if any, for
cannabis cultivation. The bill would require a person who files a
statement of diversion and use with the board reporting that water
was used for cannabis cultivation to pay a fee according to a fee
schedule established by the board. The bill would authorize moneys in
the Water Rights Fund, upon appropriation, to be expended by the
board for the purposes of carrying out water diversion-related
provisions of the Medical Marijuana Regulation and Safety Act.
(4) Existing law authorizes the State Water Resources Control
Board to issue a cease and desist order against a person who is
violating, or threatening to violate, certain requirements relating
to water use.
This bill would authorize the board to issue a cease and desist
order against a person who is both diverting or using water for
cannabis cultivation and violating, or threatening to violate,
certain licensing and water diversion-related provisions of the
Medical Marijuana Regulation and Safety Act.
(5) Under existing law, a person who violates a cease and desist
order may be liable in an amount not to exceed $1,000 for each day in
which the violation occurs and, for a violation occurring in a
critically dry year immediately preceded by 2 or more consecutive
below normal, dry, or critically dry years or during a period for
which the Governor has issued a proclamation of a state of emergency
based on drought conditions, may be liable in an amount not to exceed
$10,000 for each day in which the violation occurs. Existing law
authorizes a person or entity in violation of a term or condition of
a permit, license, certificate, or registration issued by, an order
adopted by, or regulations adopted by, the state board to be civilly
liable for an amount not to exceed $500 for each day in which the
violation occurs. Revenue generated from these penalties is deposited
in the Water Rights Fund.
This bill would authorize a person or entity who violates certain
licensing and water diversion-related provisions of the Medical
Marijuana Regulation and Safety Act to be held liable in an amount
not to exceed the sum of (1) $500 dollars for a violation plus $250
for each additional day on which the violation continues if the
person fails to correct the violation within 30 days after the board
has called the violation to the attention of the person and (2)
$2,500 for each acre-foot of water diverted or used in violation of
the applicable requirement. Revenue generated from these penalties
would be deposited in the Water Rights Fund.
(6) Existing law requires a person who diverts 10 acre-feet of
water per year or more under a permit or license to install and
maintain a device or employ a method capable of measuring the rate of
direct diversion, rate of collection to storage, and rate of
withdrawal or release from storage, as specified, and with certain
exceptions. Existing law requires the permittee or licensee to
maintain a record of all diversion monitoring and the total amount of
water diverted and submit these records to the state board, as
prescribed. Existing law requires a person who diverts water under a
registration, permit, or license to report to the state board, at
least annually, certain information, including the monitoring
information, if applicable.
This bill would require a person who diverts water under a
registration, permit, or license to also report to the state board,
at least annually, information regarding the amount of water used, if
any, for cannabis cultivation.
(7) Existing law, the California Seed Law, regulates seed sold in
California, and requires each container of agricultural seed that is
for sale or sold within this state for sowing purposes to be labeled,
as specified, unless the sale is an occasional sale of seed grain by
the producer of the seed grain to his or her neighbor for use by the
purchaser within the county of production.
This bill would also exclude from the California Seed Law any
cannabis seed, as defined, sold or offered for sale in the state.
(8) Existing law, the Milk and Milk Products Act of 1947,
regulates the production of milk and milk products in this state. The
act specifies standards for butter. The act requires a license from
the Secretary of Food and Agriculture for each separate milk products
plant or place of business dealing in, receiving, manufacturing,
freezing, or processing milk, or any milk product, or manufacturing,
freezing, or processing imitation ice cream or imitation ice milk.
This bill would exempt from the Milk and Milk Products Act of 1947
butter purchased from a licensed milk products plant or retail
location that is subsequently infused or mixed with medical cannabis
at the premises or location that is not required to be licensed as a
milk products plant.
(9) The Personal Income Tax Law and the Corporation Tax Law allow
various credits against the taxes imposed by those laws, including,
for taxable years beginning on or after January 1, 2012, and before
January 1, 2017, a credit for a qualified taxpayer, defined as a
person responsible for planting a crop, managing the crop, and
harvesting the crop from the land, in an amount equal to 10% of the
cost that would otherwise be included in, or required to be included
in, inventory costs, as specified under federal law, with respect to
the donation of fresh fruits or fresh vegetables to a food bank
located in California.
This bill would establish similar credits under the Personal
Income Tax Law and the Corporation Tax Law for taxable years
beginning on or after January 1, 2017, and before January 1, 2022.
The bill would, as compared to the existing credits, modify the
credit amount to instead equal 15% of the qualified value, as
defined, of the fresh fruits or vegetables. The bill would require
the credit to be claimed on a timely filed original return.
(10) Existing law requires the Department of Housing and Community
Development to administer the Emergency Housing and Assistance
Program. Under the program, moneys from the continuously appropriated
Emergency Housing and Assistance Fund are available for the purposes
of providing shelter, as specified, to homeless persons.
This bill would create the California Emergency Solutions Grants
Program, also to be administered by the department. The bill, among
other things, would require the department to make grants under the
program to qualifying subrecipients to implement activities that
address the needs of homeless individuals and families and assist
them to regain stability in permanent housing as quickly as possible,
as specified. The bill, to the extent funds are made available by
the Legislature, would authorize moneys in the Emergency Housing and
Assistance Fund to be used for the purposes of the program.
(11) Existing law establishes a low-income housing tax credit
program pursuant to which the California Tax Credit Allocation
Committee provides procedures and requirements for the allocation of
state insurance, income, and corporation tax credit amounts among
low-income housing projects based on federal law.
This bill, beginning on or after January 1, 2016, and before
January 1, 2020, would allow a taxpayer that is allowed a low-income
housing tax credit to elect to sell all or a portion of that credit
to one or more unrelated parties, as described, for each taxable year
in which the credit is allowed for not less than 80% of the amount
of the credit to be sold, and would provide for the one-time resale
of that credit, as provided. The bill would require the California
Tax Credit Allocation Committee to enter into an agreement with the
Franchise Tax Board to pay any costs incurred by the Franchise Tax
Board in administering these provisions.
Existing law, in the case of a partnership, requires the
allocation of the credits, on or after January 1, 2009, and before
January 1, 2016, to partners based upon the partnership agreement,
regardless of how the federal low-income housing tax credit, as
provided, is allocated to the partners, or whether the allocation of
the credit under the terms of the agreement has substantial economic
effect, as specified.
This bill would extend the January 1, 2016, date to January 1,
2020.
(12) The Public Safety Communications Act of 2013 (act)
establishes the Public Safety Communications Division within the
Office of Emergency Services and, among other things, requires the
division to acquire, install, equip, maintain, and operate new or
existing public safety communications systems and facilities for
public safety agencies, as specified. Existing law also authorizes
the division to aid local public agencies in the formulation of
concepts, methods, and procedures that will improve the operation of
nonemergency telephone systems, and requires the division to perform
certain duties related to local emergency telephone systems.
This bill, beginning on July 1, 2016, would create the Public
Safety Communications Revolving Fund in the State Treasury and
require that the fund consist of, among others, revenues from the
provision or sale of public safety communications services provided
for in the act or of other services rendered by the division, and
moneys appropriated and made available by the Legislature for the
purposes of the act. The bill would require the Director of Emergency
Services to administer the fund and would require the fund to be
used, upon appropriation by the Legislature, to pay all costs to the
office resulting from the act or from rendering services to the state
or public agencies, and to establish reserves, as specified. The
bill would require the reduction of the billing rates for services
rendered by the office in a fiscal year if the balance in the fund at
the end of the prior fiscal year meets certain conditions, and would
require the Controller to transfer payments authorized to be
collected by the division for the division's services to the fund, as
specified.
(13) Existing law establishes the Capital Access Loan Program to
assist small businesses in financing the costs of complying with
environmental mandates and the remediation of contamination on their
properties, and also establishes within the program the California
Americans with Disabilities Act Small Business Capital Access Loan
Program to assist small businesses in financing the costs of projects
that alter or retrofit existing small business facilities to comply
with the federal Americans with Disabilities Act. Under existing law,
both programs are administered by the California Pollution Control
Financing Authority (authority).
This bill would establish within the Capital Access Loan Program
the California Seismic Safety Capital Access Loan Program to assist
residential property owners and small business owners in seismically
retrofitting residences and small businesses by covering losses on
qualified loans for those purposes, as specified. The bill would
require the authority to administer the program, including
regulations and funds received for the program, as specified. The
bill would also authorize the authority to, by regulation, implement
loan loss reserve programs to benefit any individual person engaged
in qualifying activities that require financing, as specified.
This bill would establish the California Seismic Safety Capital
Access Loan Program Fund and would continuously appropriate that fund
to the authority to carry out the purposes of the California Seismic
Safety Capital Access Loan Program.
(14) Existing law authorizes an individual to contribute amounts
in excess of his or her income tax liability for the support of
specified funds and allows an individual to designate on his or her
tax return that a specified amount in excess of his or her tax
liability be transferred to the Habitat for Humanity Fund. Existing
law requires moneys in the fund, upon appropriation by the
Legislature, to be allocated to the Franchise Tax Board, the
Controller, and the Department of Housing and Community Development
for reimbursement of costs, as provided, and the balance to the
Department of Housing and Community Development to distribute grants
to Habitat for Humanity affiliates in California that meet certain
requirements, including having a specified tax-exempt status.
Existing law requires the Department of Housing and Community
Development to award grants through a competitive, project-specific
grant process and be responsible for overseeing that grant program
and prohibits a Habitat for Humanity affiliate from using a grant
award for administrative expenses or for any purposes outside of
California. Existing law also has administrative provisions
applicable to voluntary contributions.
This bill would instead require the Department of Housing and
Community Development to disburse these moneys to Habitat for
Humanity of California, Inc., and would require that organization to
submit a plan to the department for the use and competitive
project-specific distribution of moneys to Habitat for Humanity
affiliates in California that meet certain requirements, including
having a specified tax-exempt status. The bill would allow Habitat
for Humanity of California, Inc., to use a specified amount of moneys
for administrative costs and would require the organization to
submit an annual audit of the program to the department, as provided.
(15) Existing law establishes the California Housing Finance
Agency with a primary purpose of meeting the housing needs of persons
and families of low or moderate income. Under existing law, the
California Housing Loan Insurance Fund, a continuously appropriated
fund, is established for the purpose of insuring loans and bonds, and
defraying administrative expenses incurred by the agency in
operating these programs of loan and bond insurance, as specified.
Existing law establishes within the agency a Director of Insurance of
the fund who is required to manage and conduct the business and
affairs of the insurance fund, as specified.
This bill would repeal provisions relating to the Director of
Insurance of the fund. The bill would instead establish the director
of enterprise risk management and compliance within the agency, who
would be required to assist in the implementation of processes,
tools, and systems to identify, assess, measure, manage, monitor, and
mitigate risks related to the development of new programs or changes
to existing law or regulations that may result in new or increased
risk to the agency, as specified.
Existing law requires the agency to obtain an annual audit of the
insurance fund's books and accounts regarding its activities by an
independent certified public accountant, to provide that audit to the
Governor, the chairperson and vice-chairperson of the Senate and
Assembly housing policy committees, the Senate and Assembly budget
committees, and the Joint Legislative Budget Committee, and to make
the audit available for review by interested parties no later than
November 1 of each year.
This bill would instead require the agency to obtain an annual
agreed-upon procedures engagement of the insurance fund's books and
accounts, to provide that agreed-upon procedures engagement to the to
the Governor, the chairperson and vice-chairperson of the Senate and
Assembly housing policy committees, the Senate and Assembly budget
committees, and the Joint Legislative Budget Committee, and to make
the agreed-upon procedures engagement available for review by
interested parties no later than November 1 of each year.
By expanding the purposes of a continuously appropriated fund,
this bill would make an appropriation.
(16) Existing law, known as the Second Chance Program, requires
the Board of State and Community Corrections to administer a
competitive grant program that focuses on community-based solutions
for reducing recidivism using certain funds allocated pursuant to the
Safe Neighborhoods and Schools Act, enacted by Proposition 47 at the
November 4, 2014, general election.
This bill would establish the Community-Based Transitional Housing
Program, to be administered by the Department of Finance, for the
purpose of providing grants to cities, counties, and cities and
counties to increase the supply of transitional housing available to
persons previously incarcerated for felony and misdemeanor
convictions and funded with moneys appropriated for that purpose in
the annual Budget Act or other measure. The bill would require an
applicant city, county, or city and county to submit an application
between October 1, 2016, and October 1, 2018, that includes specified
information and to approve the issuance of a conditional use permit
or other local entitlement for a transitional housing facility that
meets specified criteria, including that the facility provide
transitional housing for a period of not less than 10 years and that
it provide additional services to residents. If, after approval of
its application, the city, county, or city and county fails to issue
the conditional use permit or provide other local entitlement within
a specified time period, the bill would provide that the approval of
the application is void and the city, county, or city and county is
permanently ineligible to submit any future application for funding
under the program.
This bill would require the department to approve or deny an
application based on specified criteria within 90 days of receipt and
determine the amount of funds to award to the applicant city,
county, or city and county. The bill would require that the
department award up to $2,000,000 to each successful applicant and
that 60% of the award be retained by the city, county, or city and
county for certain law enforcement and community outreach purposes
and 40% of the award be provided to the facility operator to provide
services, enhance security, perform community outreach, or cover
start-up costs.
The bill would require the department to submit a report to the
Joint Legislative Budget Committee on November 1, 2017, and each
November 1 thereafter until November 1, 2020, as provided. In
addition, the bill would require the department's Office of State
Audits and Evaluations to conduct a review of the program to
determine its effectiveness in providing services to offenders
released from state prison or county jail. The bill would authorize
the department to use up to $500,000 of the amount appropriated in
any budget act or other measure for the program for this review.
The Administrative Procedure Act governs the procedure for the
adoption, amendment, or repeal of regulations by state agencies and
for the review of those regulatory actions by the Office of
Administrative Law. That act exempts from its provisions actions by
the department to adopt and update, as necessary, instructions to any
state or local agency for the preparation, development, or
administration of the state budget.
This bill would provide that any action by the department to adopt
and update instructions to any state or local agency for the purpose
of carrying out the Community-Based Transitional Housing Program
constitutes a department action to adopt and update instructions for
the preparation, development, or administration of the state budget
and is exempt from the Administrative Procedure Act.
(17) Existing law establishes within the Department of Housing and
Community Development the California Housing Finance Agency and
provides that the primary
purpose of the agency is to meet the housing needs of persons and
families of low or moderate income. Existing law requires the
California Housing Finance Agency to administer various housing
finance assistance programs, including, among others, the California
Homebuyer's Downpayment Assistance Program and the Homebuyer Down
Payment Assistance Program of 2002.
This bill would discontinue those and other specified programs on
and after July 1, 2016.
Existing law also requires the agency to administer the
Roberti-Greene Home Purchase Assistance Program, which provides
first-time homebuyers with home purchase assistance in the form of
interest rate subsidies and downpayment assistance, among others.
Existing law establishes the Home Purchase Assistance Fund in the
State Treasury and continuously appropriates the fund to the agency
for expenditure pursuant to the program and defraying actual
administrative costs of the agency.
This bill, among other things, would modify the program to instead
provide home purchase assistance to low- and moderate-income
homebuyers to qualify for the purchase of owner-occupied homes and
would revise the terms under which that assistance is provided. The
bill would authorize the agency, pursuant to specified objectives, to
create its own home purchase assistance programs, home purchase
assistance products, or both, on such terms and conditions as the
agency deems prudent. On and after July 1, 2016, the bill would
transfer any obligated amounts from the funds for the programs
discontinued by the bill, and any loan receivables, interest, or
other amounts accruing to the agency pursuant to those programs, to
the Home Purchase Assistance Fund. By expanding the authorized uses
of continuously appropriated funds, this bill would make an
appropriation.
(18) Existing law permits a person, at the time of registering to
vote, to choose whether or not to disclose the name of a political
party that he or she prefers on his or her affidavit of registration.
When a county elections official receives an affidavit of
registration that does not include a political party preference in
the space provided, existing law requires the elections official to
presume that the person has declined to disclose a party preference.
Existing law requires the Secretary of State to register a person
to vote based on the person's motor vehicle records, which constitute
a completed affidavit of registration, as specified. If the person
does not provide a political party preference in his or her motor
vehicle records, existing law requires the person's political party
preference to be designated as "Unknown" and requires the person to
be treated as a "No Party Preference" voter.
This bill would require a county elections official who receives
an affidavit of registration that does not include a political party
preference to designate the person's political party preference as
"Unknown" on a voter registration index and would require the person
to otherwise be treated as a "No Party Preference" voter. This bill
would specify that a voter whose political party preference is
designated as "Unknown" because he or she did not provide a political
party preference in his or her motor voter records is required to be
designated as such on a voter registration index.
Existing law provides that a political party is qualified to
participate in a primary election or presidential general election if
voters equal in number to at least 0.33% of the total number of
voters registered on a specified day before the election have
declared their preference for that political party. For purposes
determining whether a political party qualified to participate in the
presidential general election, existing law prohibits a person who
is registered to vote by the Secretary of State through his or her
motor vehicle records, and whose party preference is designated as
"Unknown" because he or she did not provide a party preference, from
being counted in the total number of voters registered before the
election.
This bill would prohibit counting a person in the total number of
voters registered before the election for purposes of determining
whether a political party qualified to participate in a primary
election if that person is registered by a county elections official
through an affidavit of registration, or by the Secretary of State
through motor vehicle records, and his or her party preference is
designated as "Unknown" because he or she did not include a party
preference on his or her affidavit.
By imposing additional duties on the county elections officials,
this bill would impose a state-mandated local program.
(19) 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 with regard to certain mandates no
reimbursement is required by this act for a specified reason.
With regard to any other mandates, this bill would provide that,
if the Commission on State Mandates determines that the bill contains
costs so mandated by the state, reimbursement for those costs shall
be made pursuant to the statutory provisions noted above.
(12) This bill would declare that it is to take effect immediately
as a bill providing for appropriations related to the Budget Bill.
Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 27 of the Business and Professions Code is
amended to read:
27. (a) Each entity specified in subdivisions (c), (d), and (e)
shall provide on the Internet information regarding the status of
every license issued by that entity in accordance with the California
Public Records Act (Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code) and the Information
Practices Act of 1977 (Chapter 1 (commencing with Section 1798) of
Title 1.8 of Part 4 of Division 3 of the Civil Code). The public
information to be provided on the Internet shall include information
on suspensions and revocations of licenses issued by the entity and
other related enforcement action, including accusations filed
pursuant to the Administrative Procedure Act (Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code) taken by the entity relative to persons, businesses,
or facilities subject to licensure or regulation by the entity. The
information may not include personal information, including home
telephone number, date of birth, or social security number. Each
entity shall disclose a licensee's address of record. However, each
entity shall allow a licensee to provide a post office box number or
other alternate address, instead of his or her home address, as the
address of record. This section shall not preclude an entity from
also requiring a licensee, who has provided a post office box number
or other alternative mailing address as his or her address of record,
to provide a physical business address or residence address only for
the entity's internal administrative use and not for disclosure as
the licensee's address of record or disclosure on the Internet.
(b) In providing information on the Internet, each entity
specified in subdivisions (c) and (d) shall comply with the
Department of Consumer Affairs' guidelines for access to public
records.
(c) Each of the following entities within the Department of
Consumer Affairs shall comply with the requirements of this section:
(1) The Board for Professional Engineers, Land Surveyors, and
Geologists shall disclose information on its registrants and
licensees.
(2) The Bureau of Automotive Repair shall disclose information on
its licensees, including auto repair dealers, smog stations, lamp and
brake stations, smog check technicians, and smog inspection
certification stations.
(3) The Bureau of Electronic and Appliance Repair, Home
Furnishings, and Thermal Insulation shall disclose information on its
licensees and registrants, including major appliance repair dealers,
combination dealers (electronic and appliance), electronic repair
dealers, service contract sellers, and service contract
administrators.
(4) The Cemetery and Funeral Bureau shall disclose information on
its licensees, including cemetery brokers, cemetery salespersons,
cemetery managers, crematory managers, cemetery authorities,
crematories, cremated remains disposers, embalmers, funeral
establishments, and funeral directors.
(5) The Professional Fiduciaries Bureau shall disclose information
on its licensees.
(6) The Contractors' State License Board shall disclose
information on its licensees and registrants in accordance with
Chapter 9 (commencing with Section 7000) of Division 3. In addition
to information related to licenses as specified in subdivision (a),
the board shall also disclose information provided to the board by
the Labor Commissioner pursuant to Section 98.9 of the Labor Code.
(7) The Bureau for Private Postsecondary Education shall disclose
information on private postsecondary institutions under its
jurisdiction, including disclosure of notices to comply issued
pursuant to Section 94935 of the Education Code.
(8) The California Board of Accountancy shall disclose information
on its licensees and registrants.
(9) The California Architects Board shall disclose information on
its licensees, including architects and landscape architects.
(10) The State Athletic Commission shall disclose information on
its licensees and registrants.
(11) The State Board of Barbering and Cosmetology shall disclose
information on its licensees.
(12) The State Board of Guide Dogs for the Blind shall disclose
information on its licensees and registrants.
(13) The Acupuncture Board shall disclose information on its
licensees.
(14) The Board of Behavioral Sciences shall disclose information
on its licensees, including licensed marriage and family therapists,
licensed clinical social workers, licensed educational psychologists,
and licensed professional clinical counselors.
(15) The Dental Board of California shall disclose information on
its licensees.
(16) The State Board of Optometry shall disclose information
regarding certificates of registration to practice optometry,
statements of licensure, optometric corporation registrations, branch
office licenses, and fictitious name permits of its licensees.
(17) The Board of Psychology shall disclose information on its
licensees, including psychologists, psychological assistants, and
registered psychologists.
(d) The State Board of Chiropractic Examiners shall disclose
information on its licensees.
(e) The Structural Pest Control Board shall disclose information
on its licensees, including applicators, field representatives, and
operators in the areas of fumigation, general pest and wood
destroying pests and organisms, and wood roof cleaning and treatment.
(f) The Bureau of Medical Cannabis Regulation shall disclose
information on its licensees.
(g) "Internet" for the purposes of this section has the meaning
set forth in paragraph (6) of subdivision (f) of Section 17538.
SEC. 2. Section 101 of the Business and Professions Code is
amended to read:
101. The department is comprised of the following:
(a) The Dental Board of California.
(b) The Medical Board of California.
(c) The State Board of Optometry.
(d) The California State Board of Pharmacy.
(e) The Veterinary Medical Board.
(f) The California Board of Accountancy.
(g) The California Architects Board.
(h) The Bureau of Barbering and Cosmetology.
(i) The Board for Professional Engineers and Land Surveyors.
(j) The Contractors' State License Board.
(k) The Bureau for Private Postsecondary Education.
(l) The Bureau of Electronic and Appliance Repair, Home
Furnishings, and Thermal Insulation.
(m) The Board of Registered Nursing.
(n) The Board of Behavioral Sciences.
(o) The State Athletic Commission.
(p) The Cemetery and Funeral Bureau.
(q) The State Board of Guide Dogs for the Blind.
(r) The Bureau of Security and Investigative Services.
(s) The Court Reporters Board of California.
(t) The Board of Vocational Nursing and Psychiatric Technicians.
(u) The Landscape Architects Technical Committee.
(v) The Division of Investigation.
(w) The Bureau of Automotive Repair.
(x) The Respiratory Care Board of California.
(y) The Acupuncture Board.
(z) The Board of Psychology.
(aa) The California Board of Podiatric Medicine.
(ab) The Physical Therapy Board of California.
(ac) The Arbitration Review Program.
(ad) The Physician Assistant Committee.
(ae) The Speech-Language Pathology and Audiology Board.
(af) The California Board of Occupational Therapy.
(ag) The Osteopathic Medical Board of California.
(ah) The Naturopathic Medicine Committee.
(ai) The Dental Hygiene Committee of California.
(aj) The Professional Fiduciaries Bureau.
(ak) The State Board of Chiropractic Examiners.
(a l ) The Bureau of Real Estate.
(am) The Bureau of Real Estate Appraisers.
(an) The Structural Pest Control Board.
(ao) The Bureau of Medical Cannabis Regulation.
(ap) Any other boards, offices, or officers subject to its
jurisdiction by law.
SEC. 3. Section 144 of the Business and Professions Code is
amended to read:
144. (a) Notwithstanding any other law, an agency designated in
subdivision (b) shall require an applicant to furnish to the agency a
full set of fingerprints for purposes of conducting criminal history
record checks. Any agency designated in subdivision (b) may obtain
and receive, at its discretion, criminal history information from the
Department of Justice and the United States Federal Bureau of
Investigation.
(b) Subdivision (a) applies to the following:
(1) California Board of Accountancy.
(2) State Athletic Commission.
(3) Board of Behavioral Sciences.
(4) Court Reporters Board of California.
(5) State Board of Guide Dogs for the Blind.
(6) California State Board of Pharmacy.
(7) Board of Registered Nursing.
(8) Veterinary Medical Board.
(9) Board of Vocational Nursing and Psychiatric Technicians.
(10) Respiratory Care Board of California.
(11) Physical Therapy Board of California.
(12) Physician Assistant Committee of the Medical Board of
California.
(13) Speech-Language Pathology and Audiology and Hearing Aid
Dispenser Board.
(14) Medical Board of California.
(15) State Board of Optometry.
(16) Acupuncture Board.
(17) Cemetery and Funeral Bureau.
(18) Bureau of Security and Investigative Services.
(19) Division of Investigation.
(20) Board of Psychology.
(21) California Board of Occupational Therapy.
(22) Structural Pest Control Board.
(23) Contractors' State License Board.
(24) Naturopathic Medicine Committee.
(25) Professional Fiduciaries Bureau.
(26) Board for Professional Engineers, Land Surveyors, and
Geologists.
(27) Bureau of Medical Cannabis Regulation.
(c) For purposes of paragraph (26) of subdivision (b), the term
"applicant" shall be limited to an initial applicant who has never
been registered or licensed by the board or to an applicant for a new
licensure or registration category.
SEC. 4. Section 205.1 of the Business and Professions Code is
amended to read:
205.1. Notwithstanding subdivision (a) of Section 205, the
Medical Cannabis Regulation and Safety Act Fund is a special fund
within the Professions and Vocations Fund, and is subject to
subdivision (b) of Section 205.
SEC. 5. The heading of Chapter 3.5 (commencing with Section 19300)
of Division 8 of the Business and Professions Code is amended to
read:
CHAPTER 3.5. MEDICAL CANNABIS REGULATION AND SAFETY ACT
SEC. 6. Section 19300 of the Business and Professions Code is
amended to read:
19300. This act shall be known and may be cited as the Medical
Cannabis Regulation and Safety Act.
SEC. 7. Section 19300.5 of the Business and Professions Code is
repealed.
SEC. 8. Section 19300.5 is added to the Business and Professions
Code, to read:
19300.5. For purposes of this chapter, the following definitions
shall apply:
(a) "Accrediting body" means a nonprofit organization that
requires conformance to ISO/IEC 17025 requirements and is a signatory
to the International Laboratory Accreditation Cooperation Mutual
Recognition Arrangement for Testing.
(b) "Applicant," for purposes of Article 4 (commencing with
Section 19320), includes the following:
(1) Owner or owners of the proposed premises, including all
persons or entities having ownership interest other than a security
interest, lien, or encumbrance on property that will be used by the
premises.
(2) If the owner is an entity, "owner" includes within the entity
each person participating in the direction, control, or management
of, or having a financial interest in, the proposed premises.
(3) If the applicant is a publicly traded company, "owner" means
the chief executive officer or any person or entity with an aggregate
ownership interest of 5 percent or more.
(c) "Batch" means a specific quantity of homogeneous medical
cannabis or medical cannabis product and is one of the following
types:
(1) "Harvest batch" means a specifically identified quantity of
dried flower or trim, leaves, and other cannabis plant matter that is
uniform in strain, harvested at the same time, and, if applicable,
cultivated using the same pesticides and other agricultural
chemicals, and harvested at the same time.
(2) "Manufactured cannabis batch" means either:
(A) An amount of cannabis concentrate or extract produced in one
production cycle using the same extraction methods and standard
operating procedures, and is from the same harvest batch.
(B) An amount of a type of manufactured cannabis produced in one
production cycle using the same formulation and standard operating
procedures.
(d) "Bureau" means the Bureau of Medical Cannabis Regulation
within the Department of Consumer Affairs.
(e) "Cannabinoid" or "phytocannabinoid" means a chemical compound
that is unique to and derived from cannabis.
(f) "Cannabis" means all parts of the plant Cannabis sativa
Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or
not; the seeds thereof; the resin, whether crude or purified,
extracted from any part of the plant; and every compound,
manufacture, salt, derivative, mixture, or preparation of the plant,
its seeds, or resin. "Cannabis" also means the separated resin,
whether crude or purified, obtained from cannabis. "Cannabis" also
means marijuana as defined by Section 11018 of the Health and Safety
Code as enacted by Chapter 1407 of the Statutes of 1972. "Cannabis"
does not include the mature stalks of the plant, fiber produced from
the stalks, oil or cake made from the seeds of the plant, any other
compound, manufacture, salt, derivative, mixture, or preparation of
the mature stalks (except the resin extracted therefrom), fiber, oil,
or cake, or the sterilized seed of the plant which is incapable of
germination. For the purpose of this chapter, "cannabis" does not
mean "industrial hemp" as defined by Section 81000 of the Food and
Agricultural Code or Section 11018.5 of the Health and Safety Code.
(g) "Cannabis concentrate" means manufactured cannabis that has
undergone a process to concentrate one or more active cannabinoids,
thereby increasing the product's potency. Resin from granular
trichomes from a cannabis plant is a concentrate for purposes of this
chapter. A cannabis concentrate is not considered food, as defined
by Section 109935 of the Health and Safety Code, or a drug, as
defined by Section 109925 of the Health and Safety Code.
(h) "Certificate of accreditation" means a certificate issued by
an accrediting body to a testing laboratory .
(i) "Chief" means Chief of the Bureau of Medical Cannabis
Regulation within the Department of Consumer Affairs.
(j) "Commercial cannabis activity" includes cultivation,
possession, manufacture, processing, storing, laboratory testing,
labeling, transporting, distribution, delivery, or sale of medical
cannabis or a medical cannabis product, except as set forth in
Section 19319, related to qualifying patients and primary caregivers.
(k) "Cultivation" means any activity involving the planting,
growing, harvesting, drying, curing, grading, or trimming of medical
cannabis.
(l) "Cultivation site" means a location where medical cannabis is
planted, grown, harvested, dried, cured, graded, or trimmed, or that
does all or any combination of those activities.
(m) "Delivery" means the commercial transfer of medical cannabis
or medical cannabis products from a dispensary, up to an amount
determined by the bureau to a primary caregiver or qualified patient
as defined in Section 11362.7 of the Health and Safety Code, or a
testing laboratory. "Delivery" also includes the use by a dispensary
of any technology platform owned and controlled by the dispensary, or
independently licensed under this chapter, that enables qualified
patients or primary caregivers to arrange for or facilitate the
commercial transfer by a licensed dispensary of medical cannabis or
medical cannabis products.
(n) "Dispensary" means a premises where medical cannabis, medical
cannabis products, or devices for the use of medical cannabis or
medical cannabis products are offered, either individually or in any
combination, for retail sale, including an establishment that
delivers, pursuant to Section 19340, medical cannabis and medical
cannabis products as part of a retail sale.
(o) "Dispensing" means any activity involving the retail sale of
medical cannabis or medical cannabis products from a dispensary.
(p) "Distribution" means the procurement, sale, and transport of
medical cannabis and medical cannabis products between entities
licensed pursuant to this chapter.
(q) "Distributor" means a person licensed under this chapter to
engage in the business of purchasing medical cannabis from a licensed
cultivator, or medical cannabis products from a licensed
manufacturer, for sale to a licensed dispensary.
(r) "Dried flower" means all dead medical cannabis that has been
harvested, dried, cured, or otherwise processed, excluding leaves and
stems.
(s) "Edible cannabis product" means manufactured cannabis that is
intended to be used, in whole or in part, for human consumption,
including, but not limited to, chewing gum, but excluding products
set forth in Division 15 (commencing with Section 32501) of the Food
and Agricultural Code. An edible medical cannabis product is not
considered food as defined by Section 109935 of the Health and Safety
Code or a drug as defined by Section 109925 of the Health and Safety
Code.
(t) "Fund" means the Medical Cannabis Regulation and Safety Act
Fund established pursuant to Section 19351.
(u) "Identification program" means the universal identification
certificate program for commercial medical cannabis activity
authorized by this chapter.
(v) "Labeling" means any label or other written, printed, or
graphic matter upon a medical cannabis product, or upon its container
or wrapper, or that accompanies any medical cannabis product.
(w) "Labor peace agreement" means an agreement between a licensee
and a bona fide labor organization that, at a minimum, protects the
state's proprietary interests by prohibiting labor organizations and
members from engaging in picketing, work stoppages, boycotts, and any
other economic interference with the applicant's business. This
agreement means that the applicant has agreed not to disrupt efforts
by the bona fide labor organization to communicate with, and attempt
to organize and represent, the applicant's employees. The agreement
shall provide a bona fide labor organization access at reasonable
times to areas in which the applicant's employees work, for the
purpose of meeting with employees to discuss their right to
representation, employment rights under state law, and terms and
conditions of employment. This type of agreement shall not mandate a
particular method of election or certification of the bona fide labor
organization.
(x) "Local license, permit, or other authorization" means an
official document granted by a local jurisdiction that specifically
authorizes a person to conduct commercial cannabis activity in the
local jurisdiction.
(y)
(x) "Licensee" means a person issued a state license
under this chapter to engage in commercial cannabis activity.
(z)
(y) "Licensing authority" means the state agency
responsible for the issuance, renewal, or reinstatement of the
license.
(aa)
(z) "Live plants" means living medical cannabis flowers
and plants, including seeds, immature plants, and vegetative stage
plants.
(aa) "Local license, permit, or other authorization" means an
official document granted by a local jurisdiction that specifically
authorizes a person to conduct commercial cannabis activity in the
local jurisdiction.
(ab) "Lot" means a batch or a specifically identified portion of a
batch.
(ac) "Manufactured cannabis" means raw cannabis that has undergone
a process whereby the raw agricultural product has been transformed
into a concentrate, an edible product, or a topical product.
(ad) "Manufacturer" means a person that conducts the production,
preparation, propagation, or compounding of manufactured medical
cannabis, as described in subdivision (ae), or medical cannabis
products either directly or indirectly or by extraction methods, or
independently by means of chemical synthesis or by a combination of
extraction and chemical synthesis at a fixed location that packages
or repackages medical cannabis or medical cannabis products or labels
or relabels its container.
(ae) "Manufacturing site" means the premises that produces,
prepares, propagates, or compounds manufactured medical cannabis or
medical cannabis products, directly or indirectly, by extraction
methods, independently by means of chemical synthesis, or by a
combination of extraction and chemical synthesis, and is owned and
operated by a licensee for these activities.
(af) "Medical cannabis," "medical cannabis product," or "cannabis
product" means a product containing cannabis, including, but not
limited to, concentrates and extractions, intended to be sold for use
by medical cannabis patients in California pursuant to the
Compassionate Use Act of 1996 (Proposition 215), found at Section
11362.5 of the Health and Safety Code. For the purposes of this
chapter, "medical cannabis" does not include "industrial hemp" as
defined by Section 81000 of the Food and Agricultural Code or Section
11018.5 of the Health and Safety Code.
(ag) "Nursery" means a licensee that produces only clones,
immature plants, seeds, and other agricultural products used
specifically for the planting, propagation, and cultivation of
medical cannabis.
(ah) "Person" means an individual, firm, partnership, joint
venture, association, corporation, limited liability company, estate,
trust, business trust, receiver, syndicate, or any other group or
combination acting as a unit and includes the plural as well as the
singular number.
(ai) "Primary caregiver" has the same meaning as that term is
defined in Section 11362.7 of the Health and Safety Code.
(aj) "State license" or "license " means a state license issued
pursuant to this chapter.
(ak) "Testing laboratory" means the premises where tests are
performed on medical cannabis or medical cannabis products and that
holds a valid certificate of accreditation.
(al) "Topical cannabis" means a product intended for external use.
A topical cannabis product is not considered a drug as defined by
Section 109925 of the Health and Safety Code.
(am) "Transport" means the transfer of medical cannabis or medical
cannabis products from the permitted business location of one
licensee to the permitted business location of another licensee, for
the purposes of conducting commercial cannabis activity authorized
pursuant to this chapter.
(an) "Transporter" means a person who holds a license by the
bureau to transport medical cannabis or medical cannabis products in
an amount above a threshold determined by the bureau between
licensees that have been issued a license pursuant to this chapter.
SEC. 9. Section 19300.7 of the Business and Professions Code is
amended to read:
19300.7. License classifications pursuant to this chapter are as
follows:
(a) Type 1 = Cultivation; Specialty outdoor; Small.
(b) Type 1A = Cultivation; Specialty indoor; Small.
(c) Type 1B = Cultivation; Specialty mixed-light; Small.
(d) Type 2 = Cultivation; Outdoor; Small.
(e) Type 2A = Cultivation; Indoor; Small.
(f) Type 2B = Cultivation; Mixed-light; Small.
(g) Type 3 = Cultivation; Outdoor; Medium.
(h) Type 3A = Cultivation; Indoor; Medium.
(i) Type 3B = Cultivation; Mixed-light; Medium.
(j) Type 4 = Cultivation; Nursery.
(k) Type 6 = Manufacturer 1.
(l) Type 7 = Manufacturer 2.
(m) Type 8 = Testing laboratory.
(n) Type 10 = Dispensary; General.
(o) Type 10A = Producing Dispensary; No more than three retail
sites.
(p) Type 11 = Distributor.
(q) Type 12 = Transporter.
SEC. 10. Section 19302 of the Business and Professions Code is
amended to read:
19302. There is in the Department of Consumer Affairs the Bureau
of Medical Cannabis Regulation, under the supervision and control of
the director. The director shall administer and enforce the
provisions of this chapter related to the bureau.
SEC. 11. Section 19302.1 of the Business and Professions Code is
amended to read:
19302.1. (a) The Governor shall appoint a chief of the bureau,
subject to confirmation by the Senate, at a salary to be fixed and
determined by the Director of Consumer Affairs with the approval of
the Director of Finance. The chief shall serve under the direction
and supervision of the director and at the pleasure of the Governor.
(b) Every power granted to or duty imposed upon the Director of
Consumer Affairs under this chapter may be exercised or performed in
the name of the director by a deputy or assistant director or by the
chief, subject to conditions and limitations that the director may
prescribe. In addition to every power granted or duty imposed with
this chapter, the director shall have all other powers and duties
generally applicable in relation to bureaus that are part of the
Department of Consumer Affairs.
(c) The Director of Consumer Affairs may employ and appoint all
employees necessary to properly administer the work of the bureau, in
accordance with civil service laws and regulations. The Governor may
also appoint a deputy chief and an assistant chief counsel to the
bureau. These positions shall hold office at the pleasure of the
Governor.
(d) The Department of Consumer Affairs shall have the sole
authority to create, issue, renew, discipline, suspend, or revoke
licenses for the transportation, storage unrelated to manufacturing
activities, testing, distribution, and sale of medical cannabis
within the state and to collect fees in connection with activities
the bureau regulates. The bureau shall have the authority to create
licenses in addition to those identified in this chapter that the
bureau deems necessary to effectuate its duties under this chapter.
(e) The Department of Food and Agriculture shall administer the
provisions of this chapter related to and associated with the
cultivation of medical cannabis and will serve as lead agency for the
purpose of fulfilling the requirements of the California
Environmental Quality Act (Division 13 (commencing with Section
21000) of the Public Resources Code). The Department of Food and
Agriculture shall have the authority to create, issue, renew,
discipline, suspend, or revoke licenses for the cultivation of
medical cannabis and to collect fees in connection with activities it
regulates. The Department of
Food and Agriculture shall have the authority to create licenses
in addition to those identified in this chapter that it deems
necessary to effectuate its duties under this chapter.
(f) The State Department of Public Health shall administer the
provisions of this chapter related to and associated with the
manufacturing of medical cannabis. The State Department of Public
Health shall have the authority to create, issue, renew, discipline,
suspend, or revoke licenses for the manufacturing of medical cannabis
and medical cannabis products and to collect fees in connection with
activities it regulates. The State Department of Public Health shall
have the authority to create licenses in addition to those
identified in this chapter that it deems necessary to effectuate its
duties under this chapter.
SEC. 12. Section 19303 of the Business and Professions Code is
amended to read:
19303. Protection of the public shall be the highest priority for
all licensing authorities in exercising its licensing, regulatory,
and disciplinary functions under this chapter. Whenever the
protection of the public is inconsistent with other interests sought
to be promoted, the protection of the public shall be paramount.
SEC. 13. Section 19304 of the Business and Professions Code is
amended to read:
19304. (a) The licensing authorities shall make and prescribe
rules and regulations as may be necessary or proper to carry out the
purposes and intent of this chapter and to enable each licensing
authority to exercise the powers and duties conferred upon it by this
chapter, not inconsistent with any statute of this state, including
particularly this chapter and Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code. For
the performance of its duties, each licensing authority has the
power conferred by Sections 11180 to 11191, inclusive, of the
Government Code.
(b) Each licensing authority may adopt emergency regulations to
implement this chapter.
(1) Each licensing authority may readopt any emergency regulation
authorized by this section that is the same as, or substantially
equivalent to, an emergency regulation previously adopted by this
section. Any such readoption shall be limited to one time for each
regulation.
(2) Notwithstanding any other law, the initial adoption of
emergency regulations and the readoption of emergency regulations
authorized by this section shall be deemed an emergency and necessary
for the immediate preservation of the public peace, health, safety,
or general welfare. The initial emergency regulations and the
readopted emergency regulations authorized by this section shall be
each submitted to the Office of Administrative Law for filing with
the Secretary of State and shall remain in effect for no more than
180 days, by which time final regulations may be adopted.
SEC. 14. Section 19305 of the Business and Professions Code is
amended to read:
19305. Notice of any action of a licensing authority required by
this chapter to be given may be signed and given by the director of
the licensing authority or an authorized employee of the licensing
authority and may be made personally or in the manner prescribed by
Section 1013 of the Code of Civil Procedure, or in the manner
prescribed by Section 124 of this code.
SEC. 15. Section 19306 of the Business and Professions Code is
amended to read:
19306. (a) The bureau may convene an advisory committee to advise
the bureau and licensing authorities on the development of standards
and regulations pursuant to this chapter, including best practices
and guidelines to ensure qualified patients have adequate access to
medical cannabis and medical cannabis products. The advisory
committee members shall be determined by the chief.
(b) The advisory committee members may include, but not be limited
to, representatives of the medical cannabis industry,
representatives of medical cannabis cultivators, appropriate local
and state agencies, appropriate local and state law enforcement,
physicians, environmental and public health experts, and medical
cannabis patient advocates.
SEC. 16. Section 19307 of the Business and Professions Code is
amended to read:
19307. A licensing authority may make or cause to be made such
investigation as it deems necessary to carry out its duties under
this chapter. A licensing authority may work with state and local law
enforcement agencies on investigations and enforcement actions
pertaining to licenses.
SEC. 17. Section 19310 of the Business and Professions Code is
amended to read:
19310. A licensing authority may on its own motion at any time
before a penalty assessment is placed into effect and without any
further proceedings, review the penalty, but such review shall be
limited to its reduction.
SEC. 18. Section 19311 of the Business and Professions Code is
amended to read:
19311. Grounds for disciplinary action include, but are not
limited to, the following:
(a) Failure to comply with the provisions of this chapter or any
rule or regulation adopted pursuant to this chapter.
(b) Conduct that constitutes grounds for denial of licensure
pursuant to Chapter 3 (commencing with Section 490) of Division 1.5.
(c) Any other grounds contained in regulations adopted by a
licensing authority pursuant to this chapter.
(d) Failure to comply with any state law, except as provided for
in this chapter or other California law.
(e) Failure to maintain safe conditions for inspection by a
licensing authority.
(f) Failure to comply with any operating procedure submitted to
the licensing authority pursuant to subdivision (b) of Section 19322.
SEC. 19. Section 19312 of the Business and Professions Code is
amended to read:
19312. (a) (1) Each licensing authority may suspend, revoke,
place on probation with terms and conditions, or otherwise discipline
licenses issued by that licensing authority and fine a licensee,
after proper notice and hearing to the licensee, if the licensee is
found to have committed any of the acts or omissions constituting
grounds for disciplinary action.
(2) A licensing authority may revoke a license when a local agency
has notified the licensing authority that a licensee or applicant
within its jurisdiction is in violation of state rules and regulation
relating to commercial cannabis activities, and the licensing
authority, through an investigation, has determined that the
violation is grounds for termination or revocation of the license.
(b) The disciplinary proceedings under this chapter shall be
conducted in accordance with Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code, and
the director and agency head, as that term is defined in Section
11405.40 of the Government Code, of each licensing authority shall
have all the powers granted therein.
(c) Each licensing authority may take disciplinary action and
assess fines against its respective licensees for any violation of
this chapter when the violation was committed by the licensee's agent
or employee while acting on behalf of the licensee or engaged in
commercial cannabis activity.
(d) A licensing authority may recover the costs of investigation
and enforcement of a disciplinary proceeding pursuant to Section
125.3 of this code.
SEC. 20. Section 19313 of the Business and Professions Code is
repealed.
SEC. 21. Section 19315 of the Business and Professions Code is
amended to read:
19315. (a) Nothing in this chapter shall be interpreted to
supersede or limit existing local authority for law enforcement
activity, enforcement of local zoning requirements or local
ordinances, or enforcement of local license, permit, or other
authorization requirements.
(b) Nothing in this chapter shall be interpreted to require a
licensing authority to undertake local law enforcement
responsibilities, enforce local zoning requirements, or enforce local
licensing, permitting, or other authorization requirements.
(c) Nothing in this chapter shall be interpreted to supersede or
limit state agencies from exercising their existing enforcement
authority under the Fish and Game Code, the Water Code, the Food and
Agricultural Code, or the Health and Safety Code.
SEC. 22. Section 19318 of the Business and Professions Code is
repealed.
SEC. 23. Section 19320 of the Business and Professions Code, as
added by Section 4 of Chapter 689 of the Statutes of 2015, is amended
to read:
19320. (a) All commercial cannabis activity shall be conducted
between licensees, except as otherwise provided in this chapter.
(b) Licensing authorities administering this chapter may issue
state licenses only to qualified applicants engaging in commercial
cannabis activity pursuant to this chapter. Upon the date of
implementation of regulations by the licensing authority, no person
shall engage in commercial cannabis activity without possessing both
a state license and a local permit, license, or other authorization.
A licensee shall not commence activity under the authority of a state
license until the applicant has obtained, in addition to the state
license, a local license, permit, or other authorization from the
local jurisdiction in which he or she proposes to operate, following
the requirements of the applicable local ordinance.
(c) Each licensee shall obtain a separate license for each
location where it engages in commercial medical cannabis activity.
However, transporters only need to obtain licenses for each physical
location where the licensee conducts business while not in transport
or where any equipment that is not currently transporting medical
cannabis or medical cannabis products permanently resides.
(d) Revocation of a local license, permit, or other authorization
shall terminate the ability of a medical cannabis business to operate
within that local jurisdiction until the local jurisdiction
reinstates or reissues the local license, permit, or other
authorization. Local authorities shall notify the bureau upon
revocation of a local license, permit, or other authorization. The
bureau shall inform relevant licensing authorities.
(e) Revocation of a state license shall terminate the ability of a
medical cannabis licensee to operate within California until the
licensing authority reinstates or reissues the state license.
(f) In addition to the provisions of this chapter, local
jurisdictions retain the power to assess fees and taxes, as
applicable, on facilities that are licensed pursuant to this chapter
and the business activities of those licensees.
(g) Nothing in this chapter shall be construed to supersede or
limit state agencies, including the Department of Food and
Agriculture, the State Water Resources Control Board, and the
Department of Fish and Wildlife, from establishing fees to support
their medical cannabis regulatory programs.
SEC. 24. Section 19320 of the Business and Professions Code, as
added by Section 8 of Chapter 719 of the Statutes of 2015, is
repealed.
SEC. 25. Section 19321 of the Business and Professions Code is
amended to read:
19321. (a) A license issued pursuant to this chapter shall be
valid for 12 months from the date of issuance. The license shall be
renewed annually. Each licensing authority shall establish procedures
for the renewal of a license.
(b) Notwithstanding subdivision (b) of Section 19320, the premises
or person that is operating in compliance with local zoning
ordinances and other state and local requirements on or before
January 1, 2018, may continue its operations until its application
for licensure is approved or denied pursuant to this chapter only if
(1) a completed application and all required documentation and
approvals for licensure are submitted to the licensing authority no
later than the deadline established by the licensing authority and
(2) the applicant continues to operate in compliance with all local
and state requirements, except possession of a state license pursuant
to this chapter. In issuing licenses, the licensing authority shall
prioritize any premises or person that can demonstrate to the
authority's satisfaction that the premises or person was in operation
and in good standing with the local jurisdiction by January 1, 2016.
(c) Issuance of a state license or a determination of compliance
with local law by the licensing authority shall in no way limit the
ability of the City of Los Angeles to prosecute any person or entity
for a violation of, or otherwise enforce, Proposition D, approved by
the voters of the City of Los Angeles on the May 21, 2013, ballot for
the city, or the city's zoning laws. Nor may issuance of a license
or determination of compliance with local law by the licensing
authority be deemed to establish, or be relied upon, in determining
satisfaction with the immunity requirements of Proposition D or local
zoning law, in court or in any other context or forum.
SEC. 26. Section 19322 of the Business and Professions Code is
amended to read:
19322. (a) A person shall not submit an application for a state
license issued by a licensing authority pursuant to this chapter
unless that person has received a license, permit, or authorization
from the local jurisdiction. An applicant for any type of state
license issued pursuant to this chapter shall do all of the
following:
(1) Electronically submit to the Department of Justice fingerprint
images and related information required by the Department of Justice
for the purpose of obtaining information as to the existence and
content of a record of state or federal convictions and arrests, and
information as to the existence and content of a record of state or
federal convictions and arrests for which the Department of Justice
establishes that the person is free on bail or on his or her own
recognizance, pending trial or appeal.
(A) The Department of Justice shall provide a response to the
licensing authority pursuant to paragraph (1) of subdivision (p) of
Section 11105 of the Penal Code.
(B) The licensing authority shall request from the Department of
Justice subsequent notification service, as provided pursuant to
Section 11105.2 of the Penal Code, for applicants.
(C) The Department of Justice shall charge the applicant a fee
sufficient to cover the reasonable cost of processing the requests
described in this paragraph.
(2) Provide documentation issued by the local jurisdiction in
which the proposed business is operating certifying that the
applicant is or will be in compliance with all local ordinances and
regulations.
(3) Provide evidence of the legal right to occupy and use the
proposed location. For an applicant seeking a cultivator,
distributor, manufacturing, testing, transporter, or dispensary
license, provide a statement from the owner of real property or their
agent where the cultivation, distribution, manufacturing, testing,
transport, or dispensing of commercial medical cannabis activities
will occur, as proof to demonstrate the landowner has acknowledged
and consented to permit cultivation, distribution, manufacturing,
testing, transport, or dispensary activities to be conducted on the
property by the tenant applicant.
(4) If the application is for a cultivator or a dispensary,
provide evidence that the proposed location is located beyond at
least a 600-foot radius from a school, as required by Section
11362.768 of the Health and Safety Code.
(5) Provide a statement, signed by the applicant under penalty of
perjury, that the information provided is complete, true, and
accurate.
(6) (A) For an applicant with 20 or more employees, provide a
statement that the applicant will enter into, or demonstrate that it
has already entered into, and abide by the terms of a labor peace
agreement.
(B) For the purposes of this paragraph, "employee" does not
include a supervisor.
(C) For purposes of this paragraph, "supervisor" means an
individual having authority, in the interest of the licensee, to
hire, transfer, suspend, lay off, recall, promote, discharge, assign,
reward, or discipline other employees, or responsibility to direct
them or to adjust their grievances, or effectively to recommend such
action, if, in connection with the foregoing, the exercise of that
authority is not of a merely routine or clerical nature, but requires
the use of independent judgment.
(7) Provide the applicant's valid seller's permit number issued
pursuant to Part 1 (commencing with Section 6001) of Division 2 of
the Revenue and Taxation Code or indicate that the applicant is
currently applying for a seller's permit.
(8) Provide any other information required by the licensing
authority.
(9) For an applicant seeking a cultivation license, provide a
statement declaring the applicant is an "agricultural employer," as
defined in the Alatorre-Zenovich-Dunlap-Berman Agricultural Labor
Relations Act of 1975 (Part 3.5 (commencing with Section 1140) of
Division 2 of the Labor Code), to the extent not prohibited by law.
(10) Pay all applicable fees required for licensure by the
licensing authority.
(11) Provide proof of a bond to cover the costs of destruction of
medical cannabis or medical cannabis products if necessitated by a
violation of licensing requirements.
(b) For applicants seeking licensure to cultivate, distribute,
manufacture, test, or dispense medical cannabis or medical cannabis
products, the application shall also include a detailed description
of the applicant's operating procedures for all of the following, as
required by the licensing authority:
(1) Cultivation.
(2) Extraction and infusion methods.
(3) The transportation process.
(4) Inventory procedures.
(5) Quality control procedures.
(6) Security protocols.
SEC. 27. Section 19323 of the Business and Professions Code is
amended to read:
19323. (a) A licensing authority shall deny an application if the
applicant or the premises for which a state license is applied does
not qualify for licensure under this chapter or the rules and
regulations for the state license.
(b) A licensing authority may deny an application for licensure or
renewal of a state license, or issue a conditional license, if any
of the following conditions apply:
(1) Failure to comply with the provisions of this chapter or any
rule or regulation adopted pursuant to this chapter, including but
not limited to, any requirement imposed to protect natural resources,
instream flow, and water quality pursuant to subdivision (a) of
Section 19332.
(2) Conduct that constitutes grounds for denial of licensure
pursuant to Chapter 2 (commencing with Section 480) of Division 1.5.
(3) The applicant has failed to provide information required by
the licensing authority.
(4) The applicant or licensee has been convicted of an offense
that is substantially related to the qualifications, functions, or
duties of the business or profession for which the application is
made, except that if the licensing authority determines that the
applicant or licensee is otherwise suitable to be issued a license
and granting the license would not compromise public safety, the
licensing authority shall conduct a thorough review of the nature of
the crime, conviction, circumstances, and evidence of rehabilitation
of the applicant, and shall evaluate the suitability of the applicant
or licensee to be issued a license based on the evidence found
through the review. In determining which offenses are substantially
related to the qualifications, functions, or duties of the business
or profession for which the application is made, the licensing
authority shall include, but not be limited to, the following:
(A) A felony conviction for the illegal possession for sale, sale,
manufacture, transportation, or cultivation of a controlled
substance.
(B) A violent felony conviction, as specified in subdivision (c)
of Section 667.5 of the Penal Code.
(C) A serious felony conviction, as specified in subdivision (c)
of Section 1192.7 of the Penal Code.
(D) A felony conviction involving fraud, deceit, or embezzlement.
(5) The applicant, or any of its officers, directors, or owners,
is a licensed physician making patient recommendations for medical
cannabis pursuant to Section 11362.7 of the Health and Safety Code.
(6) The applicant or any of its officers, directors, or owners has
been subject to fines or penalties for cultivation or production of
a controlled substance on public or private lands pursuant to Section
12025 or 12025.1 of the Fish and Game Code.
(7) The applicant, or any of its officers, directors, or owners,
has been sanctioned by a licensing authority or a city, county, or
city and county for unlicensed commercial cannabis activities or has
had a license revoked under this chapter in the three years
immediately preceding the date the application is filed with the
licensing authority.
(8) Failure to obtain and maintain a valid seller's permit
required pursuant to Part 1 (commencing with Section 6001) of
Division 2 of the Revenue and Taxation Code.
(9) The applicant or any of its officers, directors, owners,
employees, or authorized agents have failed to comply with any
operating procedure required pursuant to subdivision (b) of Section
19322.
(10) Conduct that constitutes grounds for disciplinary action
pursuant to this chapter.
SEC. 28. Section 19326 of the Business and Professions Code is
amended to read:
19326. (a) A person other than a transporter shall not transport
medical cannabis or medical cannabis products from one licensee to
another licensee, unless otherwise specified in this chapter.
(b) (1) All cultivators, manufacturers, and licensees holding a
producing dispensary license in addition to a cultivation or
manufacturing license shall send all medical cannabis and medical
cannabis products cultivated or manufactured to a distributor, as
defined in Section 19300.5, for presale quality assurance and
inspection by a distributor and for a batch testing by a testing
laboratory prior to distribution to a dispensary.
(2) Notwithstanding paragraph (1), a cultivator shall not be
required to send medical cannabis to a distributor if the medical
cannabis is to be used, sold, or otherwise distributed by methods
approved pursuant to this chapter by a manufacturer for further
manufacturing.
(c) (1) Upon receipt of medical cannabis or medical cannabis
products from a cultivator, manufacturer, or a licensee holding a
producing dispensary license in addition to a cultivation or a
manufacturing license, the distributor shall first inspect the
product to ensure the identity and quantity of the product and ensure
a random sample of the medical cannabis or medical cannabis product
is tested by a testing laboratory.
(2) Upon issuance of a certificate of analysis by the testing
laboratory that the product is fit for dispensing medical cannabis
and medical cannabis products shall undergo a quality assurance
review by the distributor prior to distribution to ensure the
quantity and content of the medical cannabis or medical cannabis
product, and for tracking and taxation purposes by the state.
(3) This section does not limit the ability of licensed
cultivators, manufacturers, and dispensaries to directly enter into
contracts with one another indicating the price and quantity of
medical cannabis or medical cannabis products to be distributed.
However, a distributor responsible for executing the contract is
authorized to collect a fee for the services rendered, including, but
not limited to, costs incurred by a testing laboratory, as well as
applicable state or local taxes and fees.
(d) Medical cannabis and medical cannabis products shall be tested
by a licensed testing laboratory, prior to dispensing, pursuant to
Section 19344.
(e) This chapter shall not prohibit a licensee from performing
testing on the licensee's premises for the purposes of quality
assurance of the product in conjunction with reasonable business
operations. On-site testing by the licensee shall not be certified by
the Bureau of Medical Cannabis Regulation.
SEC. 29. Section 19327 of the Business and Professions Code is
amended to read:
19327. (a) A licensee shall keep accurate records of commercial
cannabis activity.
(b) All records related to commercial cannabis activity shall be
maintained for a minimum of seven years.
(c) Licensing authorities may examine the records of licensees and
inspect the premises of a licensee as the licensing authority or a
state or local agency deems necessary to perform its duties under
this chapter. All inspections and examination of records shall be
conducted during standard business hours of the licensed facility or
at any other reasonable time. Licensees shall provide and deliver
records to the licensing authority upon request.
(d) Licensees shall keep records identified by the licensing
authorities on the premises of the location licensed.
(e) A licensee or its agent, or employee, that refuses, impedes,
obstructs, or interferes with an inspection of the premises or
records of the licensee pursuant to this section has engaged in a
violation of this chapter.
(f) If a licensee, its agent, or an employee of a licensee fails
to maintain or provide the records required pursuant to this section,
the licensee may be subject to a citation and fine of thirty
thousand dollars ($30,000) per individual violation.
SEC. 30. Section 19328 of the Business and Professions Code is
amended to read:
19328. (a) Except as provided in paragraphs (9) and (10), a
licensee may only hold a state license in up to two separate license
categories, as follows:
(1) Type 1, 1A, 1B, 2, 2A, or 2B licensees may also hold either a
Type 6 or 7 state license.
(2) Type 6 or 7 licensees, or a combination thereof, may also hold
either a Type 1, 1A, 1B, 2, 2A, or 2B state license.
(3) Type 6 or 7 licensees, or a combination thereof, may also hold
a Type 10A state license.
(4) Type 10A licensees may also hold either a Type 6 or 7 state
license, or a combination thereof.
(5) Type 1, 1A, 1B, 2, 2A, or 2B licensees, or a combination
thereof, may also hold a Type 10A state license.
(6) Type 10A licensees may hold a Type 1, 1A, 1B, 2, 2A, or 2B
state license, or a combination thereof.
(7) Type 11 licensees shall also hold a Type 12 state license, but
shall not hold any other type of state license.
(8) Type 12 licensees may hold a Type 11 state license.
(9) A Type 10A licensee may hold a Type 6 or 7 state license and
may also hold a 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B, 4 or combination
thereof if, under the 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B, 4 or
combination of licenses thereof, no more than four acres of total
canopy size of
cultivation by the licensee is occurring throughout the state during
the period that the respective licenses are valid. All cultivation
pursuant to this section shall comply with local ordinances. This
paragraph shall become inoperative on January 1, 2026.
(10) All cultivators and manufacturers may hold a Type 12
transporter license. All cultivators and manufacturers who are issued
Type 12 transporter licenses shall comply with the following:
(A) Cultivators shall only transport medical cannabis from a
cultivation site to a manufacturer or a distributor.
(B) Manufacturers shall only transport medical cannabis and
medical cannabis products as follows:
(i) Between a cultivation site and a manufacturing site.
(ii) Between a manufacturing site and a manufacturing site.
(iii) Between a manufacturing site and a distributor.
(b) Except as provided in subdivision (a), a person or entity that
holds a state license is prohibited from licensure for any other
activity authorized under this chapter, and is prohibited from
holding an ownership interest in real property, personal property, or
other assets associated with or used in any other license category.
(c) (1) In a jurisdiction that adopted a local ordinance, prior to
July 1, 2015, requiring qualified businesses to cultivate,
manufacture, and dispense medical cannabis or medical cannabis
products, with all commercial cannabis activity being conducted by a
single qualified business, upon licensure that business shall not be
subject to subdivision (a) if it meets all of the following
conditions:
(A) The business was cultivating, manufacturing, and dispensing
medical cannabis or medical cannabis products on January 1, 2016, and
has continuously done so since that date.
(B) The business has been in full compliance with all applicable
local ordinances at all times prior to licensure.
(C) The business is registered with the State Board of
Equalization for tax purposes.
(2) A business licensed pursuant to paragraph (1) is not required
to conduct all cultivation or manufacturing within the bounds of a
local jurisdiction, but all cultivation and manufacturing shall have
commenced prior to January 1, 2016, and have been in full compliance
with applicable local ordinances.
(d) This section shall remain in effect only until January 1,
2026, and as of that date is repealed.
SEC. 31. Article 6 (commencing with Section 19331) of Chapter 3.5
of Division 8 of the Business and Professions Code, as added by
Section 1 of Chapter 688 of the Statutes of 2015, is repealed.
SEC. 32. Section 19332 of the Business and Professions Code, as
added by Section 13 of Chapter 719 of the Statutes of 2015, is
amended to read:
19332. (a) The Department of Food and Agriculture shall
promulgate regulations governing the licensing of indoor and outdoor
commercial cultivation sites.
(b) The Department of Pesticide Regulation shall develop
guidelines for the use of pesticides in the cultivation of cannabis
and residue in harvested cannabis.
(c) The Department of Food and Agriculture shall serve as the lead
agency for purposes of the California Environmental Quality Act
(Division 13 (commencing with Section 21000) of the Public Resources
Code) related to the licensing of cannabis cultivation.
(d) Pursuant to Section 13149 of the Water Code, the State Water
Resources Control Board, in consultation with the Department of Fish
and Wildlife and the Department of Food and Agriculture, shall ensure
that individual and cumulative effects of water diversion and
discharge associated with cultivation of cannabis do not affect the
instream flows needed for fish spawning, migration, and rearing, and
the flows needed to maintain natural flow variability.
(e) The Department of Food and Agriculture shall have the
authority necessary for the implementation of the regulations it
adopts pursuant to this chapter. The regulations shall do all of the
following:
(1) Provide that weighing or measuring devices used in connection
with the sale or distribution of medical cannabis are required to
meet standards equivalent to Division 5 (commencing with Section
12001).
(2) Require that cannabis cultivation by licensees is conducted in
accordance with state and local laws. Nothing in this chapter, and
no regulation adopted by the department, shall be construed to
supersede or limit the authority of the State Water Resources Control
Board, regional water quality control boards, or the Department of
Fish and Wildlife to implement and enforce their statutory
obligations or to adopt regulations to protect water quality, water
supply, and natural resources.
(3) Establish procedures for the issuance and revocation of unique
identifiers for activities associated with a cannabis cultivation
license, pursuant to Article 8 (commencing with Section 19337). All
cannabis shall be labeled with the unique identifier issued by the
Department of Food and Agriculture.
(4) Prescribe standards, in consultation with the bureau, for the
reporting of information as necessary related to unique identifiers,
pursuant to Article 8 (commencing with Section 19337).
(f) The Department of Pesticide Regulation shall require that the
application of pesticides or other pest control in connection with
the indoor or outdoor cultivation of medical cannabis complies with
Division 6 (commencing with Section 11401) of the Food and
Agricultural Code and its implementing regulations.
(g) State cultivator license types issued by the Department of
Food and Agriculture may include:
(1) Type 1, or "specialty outdoor," for outdoor cultivation using
no artificial lighting of less than or equal to 5,000 square feet of
total canopy size on one premises, or up to 50 mature plants on
noncontiguous plots.
(2) Type 1A, or "specialty indoor," for indoor cultivation using
exclusively artificial lighting of less than or equal to 5,000 square
feet of total canopy size on one premises.
(3) Type 1B, or "specialty mixed-light," for cultivation using a
combination of natural and supplemental artificial lighting at a
maximum threshold to be determined by the licensing authority, of
less than or equal to 5,000 square feet of total canopy size on one
premises.
(4) Type 2, or "small outdoor," for outdoor cultivation using no
artificial lighting between 5,001 and 10,000 square feet, inclusive,
of total canopy size on one premises.
(5) Type 2A, or "small indoor," for indoor cultivation using
exclusively artificial lighting between 5,001 and 10,000 square feet,
inclusive, of total canopy size on one premises.
(6) Type 2B, or "small mixed-light," for cultivation using a
combination of natural and supplemental artificial lighting at a
maximum threshold to be determined by the licensing authority,
between 5,001 and 10,000 square feet, inclusive, of total canopy size
on one premises.
(7) Type 3, or "outdoor," for outdoor cultivation using no
artificial lighting from 10,001 square feet to one acre, inclusive,
of total canopy size on one premises. The Department of Food and
Agriculture shall limit the number of licenses allowed of this type.
(8) Type 3A, or "indoor," for indoor cultivation using exclusively
artificial lighting between 10,001 and 22,000 square feet,
inclusive, of total canopy size on one premises. The Department of
Food and Agriculture shall limit the number of licenses allowed of
this type.
(9) Type 3B, or "mixed-light," for cultivation using a combination
of natural and supplemental artificial lighting at a maximum
threshold to be determined by the licensing authority, between 10,001
and 22,000 square feet, inclusive, of total canopy size on one
premises. The Department of Food and Agriculture shall limit the
number of licenses allowed of this type.
(10) Type 4, or "nursery," for cultivation of medical cannabis
solely as a nursery. Type 4 licensees may transport live plants, if
the licensee also holds a Type 12 transporter license issued pursuant
to this chapter.
SEC. 33. Section 19332.2 is added to the Business and Professions
Code, to read:
19332.2. (a) An application for a license for indoor or outdoor
cultivation shall identify the source of water supply.
(1) (A) If water will be supplied by a retail water supplier, as
defined in Section 13575 of the Water Code, the application shall
identify the retail water supplier.
(B) Paragraphs (2) and (3) shall not apply to any water subject to
subparagraph (A) unless the retail water supplier has 10 or fewer
customers, the applicant receives 10 percent or more of the water
supplied by the retail water supplier, 25 percent or more of the
water delivered by the retail water supplier is used for cannabis
cultivation, or the applicant and the retail water supplier are
affiliates, as defined in Section 2814.20 of Title 23 of the
California Code of Regulations.
(2) If the water supply includes a diversion within the meaning of
Section 5100 of the Water Code, the application shall identify the
point of diversion and maximum amount to be diverted.
(3) If water will be supplied from a groundwater extraction not
subject to paragraph (2), the application shall identify the location
of the extraction and the maximum amount to be diverted for cannabis
cultivation in any year.
(b) An application for a license issued by the Department of Food
and Agriculture before January 1, 2020, shall include one of the
following:
(1) A copy of a registration, permit, or license issued under Part
2 (commencing with Section 1200) of Division 2 of the Water Code
that covers the diversion.
(2) A copy of a statement of water diversion and use, filed with
the State Water Resources Control Board before July 1, 2017, that
covers the diversion and specifies the amount of water used for
cannabis cultivation.
(3) A copy of a pending application for a permit to appropriate
water, filed with the State Water Resources Control before July 1,
2017.
(4) Documentation, submitted to the State Water Resources Control
Board before July 1, 2017, establishing that the diversion is subject
to subdivision (a), (c), (d) or (e) of Section 5101 of the Water
Code.
(5) Documentation, submitted to the State Water Resources Control
Board before July 1, 2017, establishing that the diversion is
authorized under a riparian right and that no diversion occurred
after January 1, 2010, and before January 1, 2017.
(c) An application for a cultivation license issued after December
31, 2019, shall include one of the following:
(1) A copy of a registration, permit, or license issued under Part
2 (commencing with Section 1200) of Division 2 of the Water Code
that covers the diversion.
(2) A copy of a statement of water diversion and use, filed with
the State Water Resources Control Board, that covers the diversion.
(3) Documentation, submitted to the State Water Resources Control
Board, establishing that the diversion is subject to subdivision (a),
(c), (d) or (e) of Section 5101 of the Water Code.
(4) Documentation, submitted to the State Water Resources Control
Board, establishing that the diversion is authorized under a riparian
right and that no diversion occurred in any calendar year between
January 1, 2010, and the calendar year in which the application is
submitted.
(d) The Department of Food and Agriculture shall include in any
license for cultivation requirements for compliance with applicable
principles, guidelines, and requirements established under Section
13149 of the Water Code.
(e) The Department of Food and Agriculture shall include in any
license for cultivation any relevant mitigation requirements the
Department of Food and Agriculture identifies as part of its approval
of the final environmental documentation for the cannabis
cultivation licensing program as requirements that should be included
in a license for cultivation. Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code does
not apply to the identification of these mitigation measures.
(f) Every license for cultivation shall include a condition that
the license shall not be effective until the licensee has complied
with Section 1602 of the Fish and Game Code or receives written
verification from the Department of Fish and Wildlife that a
streambed alteration agreement is not required.
(g) The Department of Food and Agriculture shall consult with the
State Water Resources Control Board and the Department of Fish and
Wildlife in the implementation of this section.
SEC. 34. Section 19332.5 of the Business and Professions Code is
amended to read:
19332.5. (a) Not later than January 1, 2020, the Department of
Food and Agriculture shall make available a certified organic
designation and organic certification program for medical cannabis
cultivation, if permitted under federal law and the National Organic
Program (Section 6517 of the federal Organic Foods Production Act of
1990 (7 U.S.C. Sec. 6501 et seq.)), and Article 7 (commencing with
Section 110810) of Chapter 5 of Part 5 of Division 104 of the Health
and Safety Code.
(b) The Department of Food and Agriculture may establish
appellations of origin for cannabis grown in California.
(c) It is unlawful for medical cannabis to be marketed, labeled,
or sold as grown in a California county when the medical cannabis was
not grown in that county.
(d) It is unlawful to use the name of a California county in the
labeling, marketing, or packaging of medical cannabis products unless
the product was grown in that county.
SEC. 35. Section 19334 of the Business and Professions Code is
amended to read:
19334. (a) State licenses to be issued by the Department of
Consumer Affairs are as follows:
(1) "Dispensary," Type 10 license as defined in this chapter. This
license shall allow for delivery pursuant to Section 19340.
(2) "Distributor," Type 11 license for the distribution of medical
cannabis and medical cannabis products from manufacturer to
dispensary. A distributor licensee shall hold a Type 12 or
transporter license. Each location where product is stored for the
purposes of distribution must be individually licensed. A distributor
licensee shall not hold a license in a cultivation, manufacturing,
dispensing, or testing license category and shall not own, or have an
ownership interest in, premises licensed in those categories other
than a security interest, lien, or encumbrance on property that is
used by a licensee. A distributor shall be bonded and insured at a
minimum level established by the licensing authority.
(3) "Producing dispensary," Type 10A for dispensers who have no
more than three licensed dispensary facilities and wish to hold
either a cultivation or manufacturing license or both. This license
shall allow for delivery where expressly authorized by local
ordinance. Each dispensary must be individually licensed.
(4) "Transport," Type 12 license for transporters of medical
cannabis or medical cannabis products between licensees. A Type 12
licensee shall be bonded and insured at a minimum level established
by the licensing authority.
(b) The bureau shall establish minimum security requirements for
the commercial transportation, storage, and delivery of medical
cannabis and medical cannabis products.
(c) The State Department of Public Health shall establish minimum
security requirements for the storage of medical cannabis products at
the manufacturing site.
(d) A licensed dispensary shall implement sufficient security
measures to both deter and prevent unauthorized entrance into areas
containing medical cannabis or medical cannabis products and theft of
medical cannabis or medical cannabis products at the dispensary.
These security measures shall include, but not be limited to, all of
the following:
(1) Preventing individuals from remaining on the premises of the
dispensary if they are not engaging in activity expressly related to
the operations of the dispensary.
(2) Establishing limited access areas accessible only to
authorized dispensary personnel.
(3) Storing all finished medical cannabis and medical cannabis
products in a secured and locked room, safe, or vault, and in a
manner as to prevent diversion, theft, and loss, except for limited
amounts of cannabis used for display purposes, samples, or immediate
sale.
(e) A dispensary shall notify the licensing authority and the
appropriate law enforcement authorities within 24 hours after
discovering any of the following:
(1) Significant discrepancies identified during inventory. The
level of significance shall be determined by the bureau.
(2) Diversion, theft, loss, or any criminal activity pertaining to
the operation of the dispensary.
(3) Diversion, theft, loss, or any criminal activity by any agent
or employee of the dispensary pertaining to the operation of the
dispensary.
(4) The loss or unauthorized alteration of records related to
medical cannabis or medical cannabis products, registered qualifying
patients, primary caregivers, or dispensary employees or agents.
(5) Any other breach of security.
SEC. 36. Section 19335 of the Business and Professions Code is
amended to read:
19335. (a) The Department of Food and Agriculture, in
consultation with the bureau, shall establish a track and trace
program for reporting the movement of medical cannabis items
throughout the distribution chain that utilizes a unique identifier
pursuant to Section 11362.777 of the Health and Safety Code and
secure packaging and is capable of providing information that
captures, at a minimum, all of the following:
(1) The licensee receiving the product.
(2) The transaction date.
(3) The cultivator from which the product originates, including
the associated unique identifier, pursuant to Section 11362.777 of
the Health and Safety Code.
(b) (1) The Department of Food and Agriculture, in consultation
with the State Board of Equalization, shall create an electronic
database containing the electronic shipping manifests to facilitate
the administration of the track and trace program, which shall
include, but not be limited to, the following information:
(A) The quantity, or weight, and variety of products shipped.
(B) The estimated times of departure and arrival.
(C) The quantity, or weight, and variety of products received.
(D) The actual time of departure and arrival.
(E) A categorization of the product.
(F) The license number and the unique identifier pursuant to
Section 11362.777 of the Health and Safety Code issued by the
licensing authority for all licensees involved in the shipping
process, including, but not limited to, cultivators, manufacturers,
transporters, distributors, and dispensaries.
(2) (A) The database shall be designed to flag irregularities for
all licensing authorities in this chapter to investigate. All
licensing authorities pursuant to this chapter may access the
database and share information related to licensees under this
chapter, including social security and individual taxpayer
identifications notwithstanding Section 30.
(B) The Department of Food and Agriculture shall immediately
inform the bureau upon the finding of an irregularity or suspicious
finding related to a licensee, applicant, or commercial cannabis
activity for investigatory purposes.
(3) Licensing authorities and state and local agencies may, at any
time, inspect shipments and request documentation for current
inventory.
(4) The bureau shall have 24-hour access to the electronic
database administered by the Department of Food and Agriculture. The
State Board of Equalization shall have read access to the electronic
database for the purpose of taxation and regulation of medical
cannabis and medical cannabis products.
(5) The Department of Food and Agriculture shall be authorized to
enter into memoranda of understandings with licensing authorities for
data sharing purposes, as deemed necessary by the Department of Food
and Agriculture.
(6) Information received and contained in records kept by the
Department of Food and Agriculture or licensing authorities for the
purposes of administering this chapter are confidential and shall not
be disclosed pursuant to the California Public Records Act (Chapter
3.5 (commencing with Section 6250) of Division 7 of Title 1 of the
Government Code), except as necessary for authorized employees of the
State of California or any city, county, or city and county to
perform official duties pursuant to this chapter or a local
ordinance.
(7) Upon the request of a state or local law enforcement agency,
licensing authorities shall allow access to or provide information
contained within the database to assist law enforcement in their
duties and responsibilities pursuant to this chapter.
SEC. 37. Section 19341 of the Business and Professions Code is
amended to read:
19341. The State Department of Public Health shall promulgate
regulations governing the licensing of manufacturers. The State
Department of Public Health shall develop standards for the
manufacturing and labeling of all manufactured medical cannabis
products. Licenses to be issued are as follows:
(a) "Manufacturing level 1," for manufacturing sites that produce
medical cannabis products using nonvolatile solvents.
(b) "Manufacturing level 2," for manufacturing sites that produce
medical cannabis products using volatile solvents. The State
Department of Public Health shall limit the number of licenses of
this type.
SEC. 38. Section 19342 of the Business and Professions Code is
amended to read:
19342. (a) For the purposes of testing medical cannabis or
medical cannabis products, licensees shall use a testing laboratory
that has adopted a standard operating procedure using methods
consistent with general requirements established by the International
Organization for Standardization, specifically ISO/IEC 17025, to
test medical cannabis and medical cannabis products. The testing
laboratory shall be accredited by a body that is a signatory to the
International Laboratory Accreditation Cooperation Mutual Recognition
Arrangement.
(b) An agent of a testing laboratory shall obtain samples
according to a statistically valid sampling method for each lot.
(c) A testing laboratory shall analyze samples according to both
of the following:
(1) In the final form that the medical cannabis or medical
cannabis products will be consumed or used, including moisture
content and other attributes.
(2) A scientifically valid methodology, as determined by the
bureau.
(d) If a test result falls outside the specifications authorized
by law or regulation, the testing laboratory shall follow a standard
operating procedure to confirm or refute the original result.
(e) A testing laboratory shall destroy the remains of the sample
of medical cannabis or medical cannabis product upon completion of
the analysis.
(f) The State Department of Public Health and the Department of
Pesticide Regulation shall provide assistance to the bureau in
developing regulations, as requested by the bureau.
SEC. 39. Section 19343 of the Business and Professions Code is
amended to read:
19343. A testing laboratory shall not be licensed by the bureau
unless the laboratory meets all of the following:
(a) A testing laboratory shall not hold a license in another
license category under this chapter and shall not own or have an
ownership interest in any other entity or premises licensed under a
different category pursuant to this chapter.
(b) Follows the methodologies, ranges, and parameters that are
contained in the scope of the accreditation for testing medical
cannabis or medical cannabis products. The testing laboratory shall
also comply with any other requirements specified by the bureau.
(c) Notifies the bureau within one business day after the receipt
of notice of any kind that its accreditation has been denied,
suspended, or revoked.
(d) Has established standard operating procedures that provide for
adequate chain of custody controls for samples transferred to the
testing laboratory for testing.
SEC. 40. Section 19344 of the Business and Professions Code is
amended to read:
19344. (a) A testing laboratory shall issue a certificate of
analysis for each lot, with supporting data, to report both of the
following:
(1) Whether the chemical profile of the lot conforms to the
specifications of the lot for compounds, including, but not limited
to, all of the following, unless limited through regulation by the
bureau:
(A) Tetrahydrocannabinol (THC).
(B) Tetrahydrocannabinolic Acid (THCA).
(C) Cannabidiol (CBD).
(D) Cannabidiolic Acid (CBDA).
(E) Terpenes required by the bureau in a regulation.
(F) Cannabigerol (CBG).
(G) Cannabinol (CBN).
(H) Any other compounds or contaminants required by the bureau.
(2) That the presence of contaminants does not exceed the levels
set by the bureau. In setting the levels, the bureau shall consider
the American Herbal Pharmacopoeia monograph, guidelines set by the
Department of Pesticide Regulation pursuant to subdivision (b) of
Section 19332, and any other relevant sources.
(A) Residual solvent or processing chemicals.
(B) Foreign material, including, but not limited to, hair,
insects, or similar or related adulterant.
(C) Microbiological impurities as identified by the bureau in
regulation.
(b) Residual levels of volatile organic compounds shall be below
the lesser of either the specifications set by the United States
Pharmacopeia (U.S.P. Chapter 467) or those set by the bureau.
SEC. 41. Section 19345 of the Business and Professions Code is
amended to read:
19345. (a) Except as provided in this chapter, a testing
laboratory shall not acquire or receive medical cannabis or medical
cannabis products except from a licensee in accordance with this
chapter, and shall not distribute, sell, deliver, transfer,
transport, or dispense medical cannabis or medical cannabis products,
from the licensed premises the medical cannabis or medical cannabis
products were acquired or received. All transfer or transportation
shall be performed pursuant to a specified chain of custody protocol.
(b) A testing laboratory may receive and test samples of medical
cannabis or medical cannabis products from a qualified patient or
primary caregiver only if he or she presents his or her valid
recommendation for cannabis for medical purposes from a physician. A
testing laboratory shall not certify samples from a qualified patient
or caregiver for resale or transfer to another party or licensee.
All tests performed by a testing laboratory for a qualified patient
or caregiver shall be recorded with the name of the qualified
patient or caregiver and the
amount of medical cannabis or medical cannabis product received.
(c) The bureau shall develop procedures related to all of the
following:
(1) Ensuring that testing of medical cannabis and medical cannabis
products occurs prior to delivery to dispensaries or any other
business.
(2) Specifying how often licensees shall test medical cannabis and
medical cannabis products.
(3) Requiring the destruction of harvested batches whose testing
samples indicate noncompliance with health and safety standards
required by state law, unless remedial measures can bring the medical
cannabis or medical cannabis products into compliance with quality
assurance standards as specified by state law.
(d) Cultivators and manufacturers shall pay all costs related to
and associated with the testing of medical cannabis and medical
cannabis products required by this chapter.
SEC. 42. Section 19347 of the Business and Professions Code is
amended to read:
19347. (a) Prior to delivery by or sale at a dispensary, medical
cannabis and medical cannabis products shall be labeled and in tamper
proof packaging and shall include a unique identifier, as prescribed
by the Department of Food and Agriculture, for the purpose of
identifying and tracking medical cannabis or medical cannabis
products. Packages of medical cannabis and medical cannabis products
shall meet the following requirements:
(1) Medical cannabis packages and labels shall not be made to be
attractive to children.
(2) All medical cannabis and medical cannabis product labels shall
include the following information, prominently displayed and in a
clear and legible font:
(A) Cultivation and manufacture date and source.
(B) The statement "SCHEDULE I CONTROLLED SUBSTANCE."
(C) The statement "KEEP OUT OF REACH OF CHILDREN AND ANIMALS" in
bold print.
(D) The statement "FOR MEDICAL USE ONLY."
(E) The statement "THE INTOXICATING EFFECTS OF THIS PRODUCT MAY BE
DELAYED BY UP TO TWO HOURS."
(F) The statement "THIS PRODUCT MAY IMPAIR THE ABILITY TO DRIVE OR
OPERATE MACHINERY. PLEASE USE EXTREME CAUTION."
(G) For packages containing only dried flower, the net weight of
medical cannabis in the package.
(H) A warning if nuts or other known allergens are used in the
manufacturing of the medical cannabis products.
(I) List of ingredients and pharmacologically active ingredients,
including, but not limited to, tetrahydrocannabinol (THC),
cannabidiol (CBD), and other cannabinoid content, the THC, CBD, and
other cannabinoid amount in milligrams per serving, servings per
package, and the THC, CBD, and other cannabinoid amount in milligrams
for the package total.
(J) Clear indication, in bold type, that the product contains
medical cannabis.
(K) Any other requirement set by the bureau or the State
Department of Public Health.
(L) Information associated with the unique identifier issued by
the Department of Food and Agriculture pursuant to Section 11362.777
of the Health and Safety Code.
(M) All manufactured and edible medical cannabis products shall be
sold only in special packaging constructed to be child-resistant
unless otherwise exempted by regulation.
(b) Only generic food names may be used to describe edible medical
cannabis products.
SEC. 43. Section 19347.1 is added to the Business and Professions
Code, to read:
19347.1. (a) The State Department of Public Health may issue a
citation, which may contain an order of abatement and an order to pay
an administrative fine assessed by the department where the licensee
is in violation of this chapter or any regulation adopted pursuant
to it.
(1) Citations shall be in writing and shall describe with
particularity the nature of the violation, including specific
reference to the provision of law determined to have been violated.
(2) Whenever appropriate, the citation shall contain an order of
abatement fixing a reasonable time for abatement of the violation.
(3) In no event shall the administrative fine assessed by the
State Department of Public Health exceed five thousand dollars
($5,000) for each violation, unless a different fine amount is
expressly provided by this chapter. In assessing a fine, the
licensing authority shall give due consideration to the
appropriateness of the amount of the fine with respect to factors
such as the gravity of the violation, the good faith of the licensee,
and the history of previous violations.
(4) A citation issued or a fine assessed pursuant to this section
shall notify the licensee that if the licensee desires a hearing to
contest the finding of a violation, that hearing shall be requested
by written notice to the State Department of Public Health within 30
days of the date of issuance of the citation or fine. If a hearing is
not requested pursuant to this section, payment of any fine shall
not constitute an admission of the violation charged. Hearings shall
be held pursuant to Chapter 5 (commencing with Section 11500) of Part
1 of Division 3 of Title 2 of the Government Code.
(5) Failure of a licensee to pay a fine within 30 days of the date
of assessment of the fine, unless assessment of the fine or the
citation is being appealed, may result in further legal action being
taken by the State Department of Public Health. If a licensee does
not contest a citation or pay the fine, the full amount of the fine
shall be added to the fee for renewal of the license. A license shall
not be renewed without payment of the renewal fee, including the
amount of the fine.
(6) A citation may be issued without the assessment of an
administrative fine.
(7) The State Department of Public Health may limit the assessment
of administrative fines to only particular violations of the chapter
and establish any other requirement for implementation of the
citation system by regulation.
(b) Notwithstanding any other law, if a fine is paid to satisfy an
assessment based on the finding of a violation, payment of the fine
shall be represented as satisfactory resolution of the matter for
purposes of public disclosure.
SEC. 44. Section 19347.2 is added to the Business and Professions
Code, to read:
19347.2. The State Department of Public Health may, in addition
to the administrative citation system authorized by Section 19347.1,
also establish by regulation a similar system for the issuance of an
administrative citation to an unlicensed person who is acting in the
capacity of a licensee under the jurisdiction of the State Department
of Public Health as pertains to this chapter. The administrative
citation system authorized by this section shall meet the
requirements of Section 19347.1 and shall not be applied to an
unlicensed person who is otherwise exempt from the licensing
provisions of this chapter. The establishment of an administrative
citation system for unlicensed activity does not preclude the use of
other enforcement statutes for unlicensed activities at the
discretion of the State Department of Public Health.
SEC. 45. Section 19347.3 is added to the Business and Professions
Code, to read:
19347.3. In determining whether to exercise its discretion when
enforcing this chapter, the State Department of Public Health may
consider whether the public interest will be adequately served in the
circumstances by a suitable written notice or warning. The State
Department of Public Health may also require licensees to provide it
with a written plan of correction and correct a violation within a
timeframe the State Department of Public Health deems necessary under
the circumstances.
SEC. 46. Section 19347.4 is added to the Business and Professions
Code, to read:
19347.4. The State Department of Public Health may notify the
public regarding any medical cannabis product when the State
Department of Public Health deems it necessary for the protection of
the health and safety of the consumer or for his or her protection
from fraud.
SEC. 47. Section 19347.5 is added to the Business and Professions
Code, to read:
19347.5. (a) A medical cannabis product is misbranded if it is
any of the following:
(1) Manufactured, packed, or held in this state in a manufacturing
site not duly licensed as provided in this chapter.
(2) Its labeling is false or misleading in any particular.
(3) Its labeling or packaging does not conform to the requirements
of Section 19347 or any other labeling or packaging requirement
established pursuant to this chapter.
(b) It is unlawful for any person to manufacture, sell, deliver,
hold, or offer for sale a medical cannabis product that is
misbranded.
(c) It is unlawful for any person to misbrand a medical cannabis
product.
(d) It is unlawful for any person to receive in commerce a medical
cannabis product that is misbranded or to deliver or offer for
delivery any such medical cannabis product.
SEC. 48. Section 19347.6 is added to the Business and Professions
Code, to read:
19347.6. (a) A medical cannabis product is adulterated if it is
any of the following:
(1) It has been produced, prepared, packed, or held under
insanitary conditions in which it may have become contaminated with
filth or in which it may have been rendered injurious.
(2) It consists in whole or in part of any filthy, putrid, or
decomposed substance.
(3) It bears or contains any poisonous or deleterious substance
that may render it injurious to users under the conditions of use
suggested in the labeling or under conditions as are customary or
usual.
(4) It bears or contains a substance that is restricted or limited
under this chapter or regulations promulgated pursuant to this
chapter and the level of substance in the product exceeds the limits
specified pursuant to this chapter or in regulation.
(5) Its concentrations differ from, or its purity or quality is
below, that which it is represented to possess.
(6) The methods, facilities, or controls used for its manufacture,
packing, or holding do not conform to or are not operated or
administered in conformity with practices established by regulations
adopted under this chapter to ensure that the medical cannabis
product meets the requirements of this chapter as to safety and has
the concentrations it purports to have and meets the quality and
purity characteristics that it purports or is represented to possess.
(7) Its container is composed, in whole or in part, of any
poisonous or deleterious substance that may render the contents
injurious to health.
(8) It is an edible cannabis product and any substance has been
mixed or packed with it after testing by a testing laboratory so as
to reduce its quality or concentration or if any substance has been
substituted, wholly or in part, for the edible cannabis product.
(b) It is unlawful for a person to manufacture, sell, deliver,
hold, or offer for sale a medical cannabis product that is
adulterated.
(c) It is unlawful for any person to adulterate a medical cannabis
product.
(d) It is unlawful for any person to receive in commerce a medical
cannabis product that is adulterated or to deliver or proffer for
delivery any such medical cannabis product.
SEC. 49. Section 19347.7 is added to the Business and Professions
Code, to read:
19347.7. (a) When the State Department of Public Health has
evidence that a medical cannabis product is adulterated or
misbranded, the department shall notify the manufacturer.
(b) The State Department of Public Health may order a manufacturer
to immediately cease distribution of a medical cannabis product and
recall the product if the department determines both of the
following:
(1) The manufacture, distribution, or sale of the medical cannabis
product creates or poses an immediate and serious threat to human
life or health.
(2) Other procedures available to the State Department of Public
Health to remedy or prevent the occurrence of the situation would
result in an unreasonable delay.
(c) The State Department of Public Health shall provide the
manufacturer an opportunity for an informal proceeding on the matter,
as determined by the department, within five days, on the actions
required by the order and on why the product should not be recalled.
Following the proceeding, the order shall be affirmed, modified, or
set aside as determined appropriate by the State Department of Public
Health.
(d) The State Department of Public Health's powers set forth in
this section expressly include the power to order movement,
segregation, isolation, or destruction of medical cannabis products,
as well as the power to hold those products in place.
(e) If the State Department of Public Health determines it is
necessary, it may issue the mandatory recall order and may use all
appropriate measures to obtain reimbursement from the manufacturer
for any and all costs associated with these orders. All funds
obtained by the State Department of Public Health from these efforts
shall be deposited into a fee account specific to the State
Department of Public Health, to be established in the Medical
Cannabis Regulation and Safety Act Fund, and will be available for
use by the department upon appropriation by the legislature.
(f) It is unlawful for any person to move or allow to be moved a
medical cannabis product subject to an order issued pursuant to this
section unless that person has first obtained written authorization
from the State Department of Public Health.
SEC. 50. Section 19347.8 is added to the Business and Professions
Code, to read:
19347.8. (a) Whenever the State Department of Public Health finds
or has probable cause to believe that any medical cannabis product
is adulterated or misbranded within the meaning of this chapter or
the sale of the medical cannabis product would be in violation of
this chapter, the department shall affix to the medical cannabis
product, or component thereof, a tag or other appropriate marking.
The State Department of Public Health shall give notice that the
medical cannabis product is, or is suspected of being, adulterated or
misbranded, or the sale of which would be in violation of this
chapter and has been embargoed and that no person shall remove or
dispose of the medical cannabis product by sale or otherwise until
permission for removal or disposal is given by the State Department
of Public Health or a court.
(b) It is unlawful for any person to remove, sell, or dispose of a
detained or embargoed medical cannabis product without written
permission of the State Department of Public Health or a court. A
violation of this subdivision is subject to a fine of not more than
ten thousand dollars ($10,000).
(c) If the adulteration or misbranding can be corrected by proper
labeling or additional processing of the medical cannabis product and
all of the provisions of this chapter can be complied with, the
claimant or owner may request the State Department of Public Health
to remove the tag or other marking. If, under the supervision of the
State Department of Public Health, the adulteration or misbranding
has been corrected, the department may remove the tag or other
marking.
(d) When the State Department of Public Health finds that a
medical cannabis product that is embargoed is not adulterated,
misbranded, or whose sale is not otherwise in violation of this
chapter, the State Department of Public Health may remove the tag or
other marking.
(e) The medical cannabis product may be destroyed by the owner
pursuant to a corrective action plan approved by the State Department
of Public Health and under the supervision of the department. The
medical cannabis product shall be destroyed at the expense of the
claimant or owner.
(f) A proceeding for condemnation of any medical cannabis product
under this section shall be subject to appropriate notice to, and the
opportunity for a hearing with regard to, the person affected in
accordance with Section 19308.
(g) Upon a finding by the administrative law judge that the
medical cannabis product is adulterated, misbranded, or whose sale is
otherwise in violation of this chapter, the administrative law judge
may direct the medical cannabis product to be destroyed at the
expense of the claimant or owner. The administrative law judge may
also direct a claimant or owner of the affected medical cannabis
product to pay fees and reasonable costs, including the costs of
storage and testing, incurred by the bureau or the Department of
Public Health in investigating and prosecuting the action taken
pursuant to this section.
(h) When, under the supervision of the State Department of Public
Health, the adulteration or misbranding has been corrected by proper
labeling or additional processing of the medical cannabis and medical
cannabis product and when all provisions of this chapter have been
complied with, and after costs, fees, and expenses have been paid,
the State Department of Public Health may release the embargo and
remove the tag or other marking and the medical cannabis shall no
longer be held for sale in violation of this chapter.
(i) The State Department of Public Health may condemn any medical
cannabis product under provisions of this chapter. The medical
cannabis product shall be destroyed at the expense of the claimant or
owner.
SEC. 51. Section 19350 of the Business and Professions Code is
amended to read:
19350. Each licensing authority shall establish a scale of
application, licensing, and renewal fees, based upon the cost of
enforcing this chapter, as follows:
(a) Each licensing authority shall charge each licensee a
licensure and renewal fee, as applicable. The licensure and renewal
fee shall be calculated to cover the costs of administering this
chapter. The licensure fee may vary depending upon the varying costs
associated with administering the various regulatory requirements of
this chapter as they relate to the nature and scope of the different
licensure activities, including, but not limited to, the track and
trace program required pursuant to Section 19335, but shall not
exceed the reasonable regulatory costs to the licensing authority.
(b) The total fees assessed pursuant to this chapter shall be set
at an amount that will fairly and proportionately generate sufficient
total revenue to fully cover the total costs of administering this
chapter.
(c) All license fees shall be set on a scaled basis by the
licensing authority, dependent on the size of the business. License
fees shall cover the costs of administering the track and trace
program managed by the Department of Food and Agriculture, as
identified in Article 7.5 (commencing with Section 19335).
(d) The licensing authority shall deposit all fees collected in a
fee account specific to that licensing authority, to be established
in the Medical Cannabis Regulation and Safety Act Fund. Moneys in the
licensing authority fee accounts shall be used, upon appropriation
of the Legislature, by the designated licensing authority for the
administration of this chapter.
SEC. 52. Section 19351 of the Business and Professions Code is
amended to read:
19351. (a) The Medical Cannabis Regulation and Safety Act Fund is
hereby established within the State Treasury. Moneys in the fund
shall be available upon appropriation by the Legislature.
Notwithstanding Section 16305.7 of the Government Code, the fund
shall include any interest and dividends earned on the moneys in the
fund.
(b) (1) Funds for the establishment and support of the regulatory
activities pursuant to this chapter shall be advanced as a General
Fund or special fund loan, and shall be repaid by the initial
proceeds from fees collected pursuant to this chapter or any rule or
regulation adopted pursuant to this chapter, by January 1, 2022.
Should the initial proceeds from fees not be sufficient to repay the
loan, moneys from the Medical Cannabis Fines and Penalties Account
shall be made available to the bureau, by appropriation of the
Legislature, to repay the loan.
(2) Funds advanced pursuant to this subdivision shall be
appropriated to the bureau, which shall distribute the moneys to the
appropriate licensing authorities, as necessary to implement the
provisions of this chapter.
(3) The Director of Finance may provide an initial operating loan
from the General Fund to the Medical Cannabis Regulation and Safety
Act Fund that does not exceed ten million dollars ($10,000,000).
(c) Except as otherwise provided, all moneys collected pursuant to
this chapter as a result of fines or penalties imposed under this
chapter shall be deposited directly into the Medical Cannabis Fines
and Penalties Account, which is hereby established within the fund,
and shall be available, upon appropriation by the Legislature to the
bureau, for the purposes of funding the enforcement grant program
pursuant to subdivision (d).
(d) (1) The bureau shall establish a grant program to allocate
moneys from the Medical Cannabis Fines and Penalties Account to state
and local entities for the following purposes:
(A) To assist with medical cannabis regulation and the enforcement
of this chapter and other state and local laws applicable to
cannabis activities.
(B) For allocation to state and local agencies and law enforcement
to remedy the environmental impacts of cannabis cultivation.
(2) The costs of the grant program under this subdivision shall,
upon appropriation by the Legislature, be paid for with moneys in the
Medical Cannabis Fines and Penalties Account.
(3) The grant program established by this subdivision shall only
be implemented after the loan specified in this section is repaid.
SEC. 53. Section 19360 of the Business and Professions Code is
amended to read:
19360. (a) A person engaging in commercial cannabis activity
without a license and associated unique identifiers required by this
chapter shall be subject to civil penalties of up to twice the amount
of the license fee for each violation, and the department, state or
local authority, or court may order the destruction of medical
cannabis associated with that violation. A violator shall be
responsible for the cost of the destruction of medical cannabis
associated with his or her violation, in addition to any amount
covered by a bond required as a condition of licensure. Each day of
operation shall constitute a separate violation of this section. All
civil penalties imposed and collected pursuant to this section by a
licensing authority shall be deposited into the Medical Cannabis
Fines and Penalties Account established pursuant to Section 19351.
(b) If an action for civil penalties is brought against a licensee
pursuant to this chapter by the Attorney General on behalf of the
people, the penalty collected shall be deposited into the Medical
Cannabis Fines and Penalties Account. If the action is brought by a
district attorney or county counsel, the penalty collected shall be
paid to the treasurer of the county in which the judgment was
entered. If the action is brought by a city attorney or city
prosecutor, the penalty collected shall be paid to the treasurer of
the city or city and county in which the judgment was entered. If the
action is brought by a city attorney and is adjudicated in a
superior court located in the unincorporated area or another city in
the same county, the penalty shall be paid one-half to the treasurer
of the city in which the complaining attorney has jurisdiction and
one-half to the treasurer of the county in which the judgment is
entered.
(c) Notwithstanding subdivision (a), criminal penalties shall
continue to apply to an unlicensed person or entity engaging in
cannabis activity in violation of this chapter, including, but not
limited to, those individuals covered under Section 11362.7 of the
Health and Safety Code.
SEC. 54. Section 2154 of the Elections Code is amended to read:
2154. In the event that the county elections official receives an
affidavit of registration, executed under penalty of perjury, that
does not include portions of the information for which space is
provided, the county elections official shall apply the following
rebuttable presumptions:
(a) If no middle name or initial is shown, it shall be presumed
that none exists.
(b) If no party preference is shown, it shall be presumed that the
affiant has declined to disclose a party preference. The county
elections official shall designate the affiant's party preference as
"Unknown" on a voter registration index under Article 5 (commencing
with Section 2180) and the affiant shall otherwise be treated as a
"No Party Preference" voter.
(c) If no execution date is shown, it shall be presumed that the
affidavit was executed on or before the 15th day prior to the
election, provided that (1) the affidavit is received by the county
elections official on or before the 15th day before the election, or
(2) the affidavit is postmarked on or before the 15th day before the
election and received by mail by the county elections official.
(d) If the affiant fails to identify his or her state of birth
within the United States, it shall be presumed that the affiant was
born in a state or territory of the United States if the birthplace
of the affiant is shown as "United States," "U.S.A.," or other
recognizable term designating the United States. The affiant's
failure to furnish his or her place of birth shall not preclude his
or her affidavit of registration from being deemed complete.
SEC. 55. Section 2265 of the Elections Code is amended to read:
2265. (a) The records of a person designated in paragraph (1) of
subdivision (b) of Section 2263 shall constitute a completed
affidavit of registration and the Secretary of State shall register
the person to vote, unless any of the following conditions is
satisfied:
(1) The person's records, as described in Section 2263, reflect
that he or she affirmatively declined to become registered to vote
during a transaction with the Department of Motor Vehicles.
(2) The person's records, as described in Section 2263, do not
reflect that he or she has attested to meeting all voter eligibility
requirements specified in Section 2101.
(3) The Secretary of State determines that the person is
ineligible to vote.
(b) If a person who is registered to vote pursuant to this chapter
does not provide a party preference, his or her party preference
shall be designated as "Unknown" on a voter registration index under
Article 5 (commencing with Section 2180) of Chapter 2, and he or she
shall otherwise be treated as a "No Party Preference" voter.
SEC. 56. Section 5100 of the Elections Code is amended to read:
5100. A party is qualified to participate in a primary election
under any of the following conditions:
(a) (1) At the last preceding gubernatorial primary
election, the sum of the votes cast for all of the candidates for an
office voted on throughout the state who disclosed a preference for
that party on the ballot was at least 2 percent of the entire vote of
the state for that office.
(2) Notwithstanding paragraph (1), a party may inform the
Secretary of State that it declines to have the votes cast for a
candidate who has disclosed that party as his or her party preference
on the ballot counted toward the 2-percent qualification threshold.
If the party wishes to have votes for a candidate not counted in
support of its qualification under paragraph (1), the party shall
notify the secretary in writing of that candidate's name by the
seventh day before the gubernatorial primary election.
(b) (1) On or before the 135th day before a primary election, it
appears to the Secretary of State, as a result of examining and
totaling the statement of voters and their declared political
preference transmitted to him or her by the county elections
officials, that voters equal in number to at least 0.33 percent of
the total number of voters registered on the 154th day before the
primary election have declared their preference for that party.
(2) A person whose party preference is designated as "Unknown"
pursuant to Section 2154 or 2265 shall not be counted for purposes of
determining the total number of voters registered on the specified
day preceding the election under paragraph (1).
(c) On or before the 135th day before a primary election, there is
filed with the Secretary of State a petition signed by voters, equal
in number to at least 10 percent of the entire vote of the state at
the last preceding gubernatorial election, declaring that they
represent a proposed party, the name of which shall be stated in the
petition, which proposed party those voters desire to have
participate in that primary election. This petition shall be
circulated, signed, and verified, and the signatures of the voters on
it shall be certified to and transmitted to the Secretary of State
by the county elections officials substantially as provided for
initiative petitions. Each page of the petition shall bear a caption
in 18-point boldface type, which caption shall be the name of the
proposed party followed by the words "Petition to participate in the
primary election."
SEC. 57. Section 5151 of the Elections Code is amended to read:
5151. A party is qualified to participate in a presidential
general election under any of the following conditions:
(a) The party qualified to participate and participated in the
presidential primary election preceding the presidential general
election pursuant to Section 5100.
(b) (1) At the last preceding gubernatorial primary election, the
sum of the votes cast for all of the candidates for an office voted
on throughout the state who disclosed a preference for that party on
the ballot was at least 2 percent of the entire vote of the state for
that office.
(2) Notwithstanding paragraph (1), a party may inform the
Secretary of State that it declines to have the votes cast for a
candidate who has disclosed that party as his or her party preference
on the ballot counted toward the 2-percent qualification threshold.
If the party wishes to have votes for a candidate not counted in
support of its qualification under paragraph (1), the party shall
notify the secretary in writing of that candidate's name by the
seventh day before the gubernatorial primary election.
(c) (1) If on or before the 102nd day before a presidential
general election, it appears to the Secretary of State, as a result
of examining and totaling the statement of voters and their declared
political preference transmitted to him or her by the county
elections officials, that voters equal in number to at least 0.33
percent of the total number of voters registered on the 123rd day
before the presidential general election have declared their
preference for that party.
(2) A person whose party preference is designated as "Unknown"
pursuant to Section 2154 or 2265 shall not be counted for purposes of
determining the total number of voters registered on the specified
day preceding the election under paragraph (1).
(d) On or before the 135th day before a presidential general
election, there is filed with the Secretary of State a petition
signed by voters, equal in number to at least 10 percent of the
entire vote of the state at the last preceding gubernatorial
election, declaring that they represent a proposed party, the name of
which shall be stated in the petition, which proposed party those
voters desire to have participate in that presidential general
election. This petition shall be circulated, signed, and verified,
and the signatures of the voters on it shall be certified to and
transmitted to the Secretary of State by the county elections
officials substantially as provided for initiative petitions. Each
page of the petition shall bear a caption in 18-point boldface type,
which caption shall be the name of the proposed party followed by the
words "Petition to participate in the presidential general election."
SEC. 58. Section 1602 of the Fish and Game Code is amended to
read:
1602. (a) An entity may not substantially divert or obstruct the
natural flow of, or substantially change or use any material from the
bed, channel, or bank of, any river, stream, or lake, or deposit or
dispose of debris, waste, or other material containing crumbled,
flaked, or ground pavement where it may pass into any river, stream,
or lake, unless all of the following occur:
(1) The department receives written notification regarding the
activity in the manner prescribed by the department. The notification
shall include, but is not limited to, all of the following:
(A) A detailed description of the project's location and a map.
(B) The name, if any, of the river, stream, or lake affected.
(C) A detailed project description, including, but not limited to,
construction plans and drawings, if applicable.
(D) A copy of any document prepared pursuant to Division 13
(commencing with Section 21000) of the Public Resources Code.
(E) A copy of any other applicable local, state, or federal permit
or agreement already issued.
(F) Any other information required by the department.
(2) The department determines the notification is complete in
accordance with Chapter 4.5 (commencing with Section 65920) of
Division 1 of Title 7 of the Government Code, irrespective of whether
the activity constitutes a development project for the purposes of
that chapter.
(3) The entity pays the applicable fees, pursuant to Section 1609.
(4) One of the following occurs:
(A) (i) The department informs the entity, in writing, that the
activity will not substantially adversely affect an existing fish or
wildlife resource, and that the entity may commence the activity
without an agreement, if the entity conducts the activity as
described in the notification, including any measures in the
notification that are intended to protect fish and wildlife
resources.
(ii) Each region of the department shall log the notifications of
activities where no agreement is required. The log shall list the
date the notification was received by the department, a brief
description of the proposed activity, and the location of the
activity. Each item shall remain on the log for one year. Upon
written request by any person, a regional office shall send the log
to that person monthly for one year. A request made pursuant to this
clause may be renewed annually.
(B) The department determines that the activity may substantially
adversely affect an existing fish or wildlife resource and issues a
final agreement to the entity that includes reasonable measures
necessary to protect the resource, and the entity conducts the
activity in accordance with the agreement.
(C) A panel of arbitrators issues a final agreement to the entity
in accordance with subdivision (b) of Section 1603, and the entity
conducts the activity in accordance with the agreement.
(D) The department does not issue a draft agreement to the entity
within 60 days from the date notification is complete, and the entity
conducts the activity as described in the notification, including
any measures in the notification that are intended to protect fish
and wildlife resources.
(b) (1) If an activity involves the routine maintenance and
operation of water supply, drainage, flood control, or waste
treatment and disposal facilities, notice to and agreement with the
department shall not be required after the initial notification and
agreement, unless the department determines either of the following:
(A) The work described in the agreement has substantially changed.
(B) Conditions affecting fish and wildlife resources have
substantially changed, and those resources are adversely affected by
the activity conducted under the agreement.
(2) This subdivision applies only if notice to, and agreement
with, the department was attained prior to January 1, 1977, and the
department has been provided a copy of the agreement or other proof
of the existence of the agreement that satisfies the department, if
requested.
(c) (1) Notwithstanding subdivision (a), an entity shall not be
required to obtain an agreement with the department pursuant to this
chapter for activities authorized by a license or renewed license for
cannabis cultivation issued by the Department of Food and
Agriculture for the term of the license or renewed license if all of
the following occur:
(A) The entity submits all of the following to the department:
(i) The written notification described in paragraph (1) of
subdivision (a).
(ii) A copy of the license or renewed license for cannabis
cultivation issued by the Department of Food and Agriculture that
includes the requirements specified in subdivisions (d), (e), and (f)
of Section 19332.2 of the Business and Professions Code.
(iii) The fee specified in paragraph (3) of subdivision (a).
(B) The department determines in its sole discretion that
compliance with the requirements specified in subdivisions (d), (e),
and (f) of Section 19332.2 of the Business and Professions Code that
are included in the license will adequately protect existing fish and
wildlife resources that may be substantially adversely affected by
the cultivation without the need for additional measures that the
department would include in a draft streambed alteration agreement in
accordance with Section 1603.
(C) The department notifies the entity in writing that the
exemption applies to the cultivation authorized by the license or
renewed license.
(2) The department shall notify the entity in writing whether the
exemption in paragraph (1) applies to the cultivation authorized by
the license or renewed license within 60 days from the date that the
notification is complete and the fee has been paid.
(3) If an entity receives an exemption pursuant to this
subdivision and fails to comply with any of the requirements
described in subdivision (d), (e), or (f) of Section 19332.2 of the
Business and Professions Code that are included in the license, the
failure shall constitute a violation under this section, and the
department shall notify the Department of Food and Agriculture of any
enforcement action taken.
(d) It is unlawful for any person to violate this chapter.
SEC. 59. Section 1617 is added to the Fish and Game Code, to read:
1617. (a) The department may adopt regulations establishing the
requirements and procedure for the issuance of a general agreement in
a geographic area for a category or categories of activities related
to cannabis cultivation.
(b) A general agreement adopted by the department subsequent to
adoption of regulations under this section shall be in lieu of an
individual agreement described in subparagraph (B) of paragraph (4)
of subdivision (a) of Section 1602.
(c) Subparagraph (D) of paragraph (4) of subdivision (a) of
Section 1602 and all other time periods to process agreements
specified in this chapter do not apply to the issuance of a general
agreement adopted by the department pursuant to this section.
(d) The department general agreement issued by the department
pursuant to this section is a final agreement and is not subject to
Section 1603 or 1604.
(e) The department shall charge a fee for a general agreement
adopted by the department under this section in accordance with
Section 1609.
(f) Regulations adopted pursuant to this section, and any
amendment thereto, shall not be subject to Division 13 (commencing
with Section 21000) of the Public Resources Code.
SEC. 60. Section 12025.2 of the Fish and Game Code is amended to
read:
12025.2. The director or his or her designee may issue a
complaint to any person or entity in accordance with Section 1055 of
the Water Code alleging a violation for which liability may be
imposed under Section 1052 or 1847 of the Water Code that harms fish
and wildlife resources. The complaint is subject to the substantive
and procedural requirements set forth in Section 1055 of the Water
Code, and the department shall be designated a party to any
proceeding before the State Water Resources Control Board regarding a
complaint filed pursuant to this section.
SEC. 61. Section 12029 of the Fish and Game Code is amended to
read:
12029. (a) The Legislature finds and declares all of the
following:
(1) The environmental impacts associated with cannabis cultivation
have increased, and unlawful water diversions for cannabis
irrigation have a detrimental effect on fish and wildlife and their
habitat, which are held in trust by the state for the benefit of the
people of the state.
(2) The remediation of existing cannabis cultivation sites is
often complex and the permitting of these sites requires greater
department staff time and personnel expenditures. The potential for
cannabis cultivation sites to significantly impact the state's fish
and wildlife resources requires immediate action on the part of the
department's lake and streambed alteration permitting staff.
(b) In order to address unlawful water diversions and other
violations of the Fish and Game Code associated with cannabis
cultivation, the department shall establish the watershed enforcement
program to facilitate the investigation, enforcement, and
prosecution of these offenses.
(c) The department, in coordination with the State Water Resources
Control Board and the Department of Food and Agriculture, shall
establish a permanent multiagency task force to address the
environmental impacts of cannabis cultivation. The multiagency task
force, to the extent feasible and subject to available resources,
shall expand its enforcement efforts on a statewide level to ensure
the reduction of adverse impacts of cannabis cultivation on fish and
wildlife and their habitats throughout the state.
(d) In order to facilitate the remediation and permitting of
cannabis cultivation sites, the department may adopt regulations to
enhance the fees on any entity subject to Section 1602 for cannabis
cultivation sites that require remediation. The fee schedule
established pursuant to this subdivision shall not exceed the fee
limits in Section 1609.
SEC. 62. Section 37104 is added to the Food and Agricultural Code,
to read:
37104. Notwithstanding Section 19300.5 of the Business and
Professions Code, butter purchased from a licensed milk products
plant or retail location that is subsequently infused or mixed with
medical cannabis at the premises or location that is not subject to
licensing as a milk product plant is exempt from the provisions of
this division.
SEC. 63. Section 52452 of the Food and Agricultural Code is
amended to read:
52452. (a) Except as otherwise provided in Section 52454, each
container of agricultural seed that is for sale or sold within this
state for sowing purposes shall bear upon it or have attached to it
in a conspicuous place a plainly written or printed label or tag in
the English language that includes all of the following information:
(1) The commonly accepted name of the kind, kind and variety, or
kind and type of each agricultural seed component in excess of 5
percent of the whole, and the percentage by weight of each. If the
aggregate of agricultural seed components, each present in an amount
not exceeding 5 percent of the whole, exceeds 10 percent of the
whole, each component in excess of 1 percent of the whole shall be
named together with the percentage by weight of each. If more than
one component is required to be named, the names of all components
shall be shown in letters of the same type and size.
(2) The lot number or other lot identification.
(3) The percentage by weight of all weed seeds.
(4) The name and approximate number of each kind of restricted
noxious weed seed per pound.
(5) The percentage by weight of any agricultural seed except that
which is required to be named on the label.
(6) The percentage by weight of inert matter. If a percentage by
weight is required to be shown by any provision of this section, that
percentage shall be exclusive of any substance that is added to the
seed as a coating and shown on the label as such.
(7) For each agricultural seed in excess of 5 percent of the
whole, stated in accordance with paragraph (1), the percentage of
germination exclusive of hard seed, the percentage of hard seed, if
present, and the calendar month and year the test was completed to
determine the percentages. Following the statement of those
percentages, the additional statement "total germination and hard
seed" may be stated.
(8) The name and address of the person who labeled the seed or of
the person who sells the seed within this state.
(b) Subdivision (a) does not apply in the following instances:
(1) The sale is an occasional sale of seed grain by the producer
of the seed grain to his or her neighbor for use by the purchaser
within the county of production.
(2) Any cannabis seed, as defined in subdivision (f) of Section
19300.5 of the Business and Professions Code, sold or offered for
sale in the state.
(c) All determinations of noxious weed seeds are subject to
tolerances and methods of determination prescribed in the regulations
that are adopted pursuant to this chapter.
(d) For purposes of this section, "neighbor" means a person who
lives in close proximity, not to exceed three miles, to another.
SEC. 64. Section 15283 is added to the Government Code,
immediately following Section 15282, to read:
15283. (a) For purposes of this section, "fund" means the Public
Safety Communications Revolving Fund.
(b) The Public Safety Communications Revolving Fund is hereby
created within the State Treasury. The fund shall be administered by
the director and shall be used, upon appropriation by the
Legislature, to pay all costs to the office resulting from this
chapter or from rendering services to the state or other public
agencies, which costs include, but are not limited to, costs of
employing and compensating necessary personnel, expenses such as
operating or other expenses of the division, and costs associated
with approved public safety communications projects, and to establish
reserves. The director, at his or her discretion, may establish
segregated, dedicated accounts within the fund.
(c) The fund shall consist of all of the following:
(1) Revenues from the provision or sale of public safety
communications services provided for in this chapter or of other
services rendered by the division.
(2) Moneys appropriated and made available by the Legislature for
the purposes of this chapter.
(3) Any other moneys properly credited or made available to the
division from any other source, including, but not limited to, the
return from investments of moneys by the Treasurer.
(d) Pursuant to Section 11255, the Controller shall, at the
request of the division and consistent with the annual budget of each
state department, transfer to the fund any payment authorized to be
collected by the division from public agencies for the division's
services. The division shall notify each affected state agency upon
requesting the Controller to make any transfer pursuant to this
subdivision.
(e) If the balance remaining in the fund at the end of any fiscal
year exceeds 25 percent of the portion of the division's budget for
that fiscal year that is used for supporting public safety
communications and other client services, the excess amount shall be
used to reduce the billing rates for services rendered by the office
during the following fiscal year.
(f) This section shall become operative on July 1, 2016.
SEC. 65. Chapter 6.45 (commencing with Section 30035) is added to
Division 3 of Title 3 of the Government Code, immediately preceding
Chapter 7, to read:
CHAPTER 6.45. COMMUNITY-BASED TRANSITIONAL HOUSING PROGRAM
30035. The Legislature finds and declares all of the following:
(a) Upon release from custody, offenders who are incarcerated for
felony or misdemeanor convictions generally return to their
communities of last residence.
(b) Providing released offenders with transitional housing
services in tandem with support services that include, but are not
limited to, employment counseling, job training, continuing
education, psychological counseling, and substance abuse treatment
may help these individuals transition into productive roles in their
communities and reduce the fiscal and operational strain of
recidivism on state and local law enforcement agencies and the
courts.
(c) Research has found that transitional housing, and related
support services, can be effective when provided to ex-offenders in
community-based settings that reflect the environments in which they
will permanently reside.
(d) For a variety of reasons, local agencies charged with land use
decisions may be reluctant to approve facilities that provide
released offenders with community-based services similar to those
described in subdivision (b).
(e) It is in the state's interest to increase the supply of
transitional housing for ex-offenders. The provision of state grants
to cities, counties, and cities and counties that agree to approve
facilities that provide released offenders with community-based
services can provide incentives to increase the number of those
facilities, while also providing additional resources to those
communities.
30035.1. (a) There is hereby established the Community-Based
Transitional Housing Program, to be administered by the Department of
Finance. As used in this chapter, "program" means the
Community-Based Transitional Housing Program and "department" means
the Department of Finance.
(b) Eligibility to apply to participate in the program shall be
limited to cities, counties, and cities and counties.
(c) The program shall be funded with moneys appropriated for that
purpose in the annual Budget Act or other measure. Notwithstanding
any other law, the encumbrance period for moneys appropriated in a
budget act or other measure for the program shall be three fiscal
years.
30035.2. In order for a city, county, or city and county to
receive funds pursuant to the program, the facility for which it has
approved a conditional use permit or other local entitlement pursuant
to paragraph (2) of subdivision (a) of Section 30035.3 shall meet
all of the following criteria:
(a) The facility shall provide transitional housing for a period
of not less than 10 years to persons who have been released from a
state prison or county jail after serving a sentence for one or more
felony or misdemeanor convictions.
(b) The facility shall provide, or contract with another provider
for, two or more additional services to residents. These services may
include, but need not necessarily be limited to, life skills
training, employment counseling, vocational training, continuing
education, psychological counseling, anger management training,
substance abuse treatment and counseling, or cognitive behavioral
therapy.
(c) The facility operator, and any entity with which it contracts
for the provisions of services described in subdivision (b), shall be
in valid possession of all licenses required by state law and local
rules, regulations, or ordinances.
30035.3. (a) (1) Applications for program funding shall be
submitted to the department, in the form and manner specified by the
department, no earlier than October 1, 2016, and no later than
October 1, 2018.
(2) (A) Each application shall be accompanied by a copy of a
resolution adopted by the county board of supervisors or the city
council, as applicable, stating that the board or council has
approved the issuance of a conditional use permit or other local
entitlement for a facility that meets the criteria specified in
Section 30035.2 and that final issuance of the conditional use permit
or provision of other local entitlement will be provided within the
three scheduled public meetings of the county board of supervisors or
city council, as applicable, following the department's approval of
the city's, county's, or city and county's application for program
funds.
(B) The conditional use permit or other local entitlement issued
pursuant to this paragraph shall be valid for a minimum period of 10
years from the date of issuance.
(C) Failure of the city, county, or city and county to provide
final issuance of the conditional use permit or other local
entitlement within the three scheduled public meetings following the
department's approval of the city's, county's, or city and county's
application shall render the department's approval of that
application void. The city, county, or city and county shall
thereafter be permanently ineligible to submit any future application
for funding under the program.
(b) Each application for program funding shall detail all of the
following:
(1) The amount of program funding requested.
(2) The number of offenders for whom the facility will provide
services.
(3) The types of offenders for whom the facility will provide
services.
(4) The types of services that the facility will provide to
offenders.
(5) The purposes for which the city, county, or city and county
will use the program funds for which it has applied.
(6) The purposes for which the facility will use program funds
provided to it by the applicant city, county, or city and county.
(7) (A) The facility operator's past in-state experience with
operating facilities similar to those for which the application has
been submitted.
(B)
The information required by this paragraph shall include detailed
information describing each instance in which the facility operator
was found to be in violation of any state law or local rule,
regulation, or ordinance, including any applicable state or local
licensing requirements.
(8) The facility operator's program performance measurement in
reducing recidivism and assisting ex-offenders in transitioning back
into society.
(9) (A) A list of all permitted facilities within the applicant
city's, county's, or city and county's jurisdiction that, in a
residential setting, provide transitional housing services,
psychological counseling, or cognitive behavioral therapy.
(B) The number of persons residing in each facility described in
subparagraph (A) and the types of services provided to those
residents.
(C) The number of persons residing in each facility described in
subparagraph (A) who are on probation or parole.
(10) An agreement, as a condition of receiving program funds, that
the applicant city, county, or city and county will allow the
conditional use permit or other local entitlement to remain valid
throughout the 10-year period for which the conditional use permit or
other local entitlement required pursuant to paragraph (2) of
subdivision (a) is valid.
(11) Two contact persons at the applicant city, county, or city
and county and two contact persons at the facility provider who will
be tasked with responding to questions regarding the facility if the
application for program funding is approved. The applicant city,
county, or city and county shall promptly notify the department of
any changes made to the contact information required by this
paragraph.
30035.4. (a) The department shall approve or deny each
application received pursuant to Section 30035.3 within 90 days of
receipt and, if the application is approved, shall determine the
amount of funding to be provided to each applicant city, county, or
city and county, subject to subdivision (a) of Section 30035.5. The
department's decision to approve or deny an application and the
determination of the amount of funding to be provided shall be final.
(b) The criteria specified in paragraphs (1) through (9),
inclusive, of subdivision (b) of Section 30035.3 shall be the primary
basis upon which the department determines whether to approve or
deny an application and the amount of funds to award to an applicant
city, county, or city and county. The department may consider any
other criteria it deems appropriate, provided that any additional
criteria are germane to making an award decision and further the
purposes of the program.
(c) The department shall encourage applicant cities, counties, and
cities and counties to match the requested program funds, to the
greatest extent possible, using local funds. In the event that the
department determines that, based on the criteria specified in
subdivision (b), two or more applications are equal in merit, the
department shall give priority to those applicant cities, counties,
or cities and counties that agree to provide the largest amount of
local matching funds proportionate to the amount of program funds for
which they have applied.
(d) If the department approves an application and receives
subsequent notification that the applicant city, county, or city and
county has provided final issuance of a conditional use permit or
other local entitlement as required by paragraph (2) of subdivision
(a) of Section 30035.3, the Director of Finance, or his or her
designee, shall direct the State Controller to remit to the applicant
city, county, or city and county the amount of program funding
approved by the department from those funds designated for that
purpose in any budget act or other measure.
30035.5. (a) The department shall award to a city, county, or
city and county, the application of which the department has approved
pursuant to Section 30035.4, up to two million dollars ($2,000,000).
An applicant city, county, or city and county shall specify in its
application the amount for which they are applying, as required by
paragraph (1) of subdivision (b) of Section 30035.3.
(b) Of the funds provided to an applicant pursuant to this
section, 60 percent shall be retained by the city, county, or city
and county that provided the conditional use permit or other local
entitlement for the facility and 40 percent shall be provided by the
city, county, or city and county to the facility operator.
(1) A city, county, or city and county may use program funds, and
any matching funds provided pursuant to subdivision (c) of Section
30035.4, for the following purposes:
(A) Discretionary law enforcement services, including efforts to
enhance public safety in the vicinity of the facility for which
program funding is provided.
(B) Community outreach efforts that seek to address the concerns
of residents and property owners within the one-quarter mile radius
of the facility for which program funding is provided.
(C) Any other community-based activities that the board of
supervisors or city council, as applicable, believes will contribute
to improved community relations regarding the facility for which
program funding is provided.
(2) Facility operators may use program funds provided by the
applicant city, county, or city and county for the following
purposes:
(A) Providing facility residents with the services specified in
the approved application for program funding.
(B) Enhancing the security of the facility and its premises.
(C) Community outreach and communications.
(D) Start-up costs for the operation of the facility.
(3) While the program is intended to primarily target offenders
released from state prison or county jail, nothing in this chapter
shall be construed as prohibiting the program from serving other
individuals in the community who may benefit from the program's
services.
(c) No later than August 1, 2017, and each subsequent August 1 for
which the program is in effect, each participating city, county, or
city and county shall report the following to the department in the
form and manner specified by the department:
(1) Program funds and matching funds received by the participating
city, county, or city and county.
(2) A description of the use of the program funds and matching
funds.
(3) A list of permitted facilities within the city's, county's, or
city and county's jurisdiction.
(d) No later than August 1, 2017, and each subsequent August 1 for
which the program is in effect, each facility operator receiving
program funds from a participating city, county, or city and county
shall report the following to the department in the form and manner
specified by the department:
(1) Program funds and matching funds received by the facility
operator.
(2) The number of ex-offenders currently receiving program
services.
(3) A description of the services provided.
(4) The number of ex-offenders who, over the course of the year
preceding the report, received treatment and transitioned back into
society.
(5) The facility operator's program performance measurement of
recidivism reduction.
30035.6. (a) No later than November 1, 2017, and each subsequent
November 1 until November 1, 2020, the department shall submit a
report to the Joint Legislative Budget Committee detailing all of the
following for the preceding fiscal year:
(1) The number of applications for program funding received by the
department.
(2) The number of applications for program funding approved and
denied by the department.
(3) The name of each city, county, or city and county receiving
program funds and the number of ex-offenders for which each recipient
city, county, or city and county has received program funds.
(4) The name of each city, county, or city and county whose
application for program funding was denied and the number of
ex-offenders for which each denied application requested program
funding.
(b) A report submitted pursuant to subdivision (a) shall be
submitted in compliance with Section 9795.
30035.7. (a) Of the amount appropriated in the annual Budget Act
or other measure for the program, the department's Office of State
Audits and Evaluations may use up to five hundred thousand dollars
($500,000) to conduct a review of the program to determine its
effectiveness in providing services to offenders released from state
prison or county jail.
(b) The department's Office of State Audits and Evaluations shall
initiate its review of the program on July 1, 2018. The department
shall provide a copy of the review to the Joint Legislative Budget
Committee no later than May 1, 2019. The copy of the review shall be
submitted in compliance with Section 9795.
(c) Cities, counties, cities and counties, and facility operators
that receive program funds shall agree, as a condition of receiving
program funds, to cooperate fully with the review conducted pursuant
this section by the department's Office of State Audits and
Evaluations.
30035.8. Any action by the department to adopt and update
instructions to any state or local agency for the purpose of carrying
out the department's obligations pursuant to this chapter
constitutes a department action to adopt and update instructions for
the preparation, development, or administration of the state budget
pursuant to Section 11357 and is exempt from the rulemaking
provisions of the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2).
SEC. 66. Section 11362.769 of the Health and Safety Code is
amended to read:
11362.769. Indoor and outdoor medical cannabis cultivation shall
be conducted in accordance with state and local laws. State agencies,
including, but not limited to, the Department of Food and
Agriculture, the State Board of Forestry and Fire Protection, the
Department of Fish and Wildlife, the State Water Resources Control
Board, the California regional water quality control boards, and
traditional state law enforcement agencies shall address
environmental impacts of medical cannabis cultivation and shall
coordinate, when appropriate, with cities and counties and their law
enforcement agencies in enforcement efforts.
SEC. 67. Section 11362.775 of the Health and Safety Code is
amended to read:
11362.775. (a) Subject to subdivision (b), qualified patients,
persons with valid identification cards, and the designated primary
caregivers of qualified patients and persons with identification
cards, who associate within the State of California in order
collectively or cooperatively to cultivate cannabis for medical
purposes, shall not solely on the basis of that fact be subject to
state criminal sanctions under Section 11357, 11358, 11359, 11360,
11366, 11366.5, or 11570.
(b) This section shall remain in effect only until one year after
the Bureau of Medical Cannabis Regulation posts a notice on its
Internet Web site that the licensing authorities have commenced
issuing licenses pursuant to the Medical Cannabis Regulation and
Safety Act (Chapter 3.5 (commencing with Section 19300) of Division 8
of the Business and Professions Code), and is repealed upon
issuance of licenses. Code).
(c) This section is repealed on one
year after the date upon which the notice is posted pursuant to
subdivision (b).
SEC. 68. Section 11362.777 of the Health and Safety Code is
amended to read:
11362.777. (a) The Department of Food and Agriculture shall
establish a Medical Cannabis Cultivation Program to be administered
by the secretary and, except as specified in subdivision (c), shall
administer this section as it pertains to the commercial cultivation
of medical cannabis. For purposes of this section and Chapter 3.5
(commencing with Section 19300) of Division 8 of the Business and
Professions Code, medical cannabis is an agricultural product.
(b) (1) A person or entity shall not cultivate medical cannabis
without first obtaining both of the following:
(A) A license, permit, or other entitlement, specifically
permitting cultivation pursuant to these provisions, from the city,
county, or city and county in which the cultivation will occur.
(B) A state license issued by the department pursuant to this
section.
(2) A person or entity shall not submit an application for a state
license pursuant to this section unless that person or entity has
received a license, permit, or other entitlement, specifically
permitting cultivation pursuant to these provisions, from the city,
county, or city and county in which the cultivation will occur.
(3) A person or entity shall not submit an application for a state
license pursuant to this section if the proposed cultivation of
cannabis will violate the provisions of any local ordinance or
regulation, or if medical cannabis is prohibited by the city, county,
or city and county in which the cultivation is proposed to occur,
either expressly or otherwise under principles of permissive zoning.
(c) (1) Except as otherwise specified in this subdivision, and
without limiting any other local regulation, a city, county, or city
and county, through its current or future land use regulations or
ordinance, may issue or deny a permit to cultivate medical cannabis
pursuant to this section. A city, county, or city and county may
inspect the intended cultivation site for suitability before issuing
a permit. After the city, county, or city and county has approved a
permit, the applicant shall apply for a state medical cannabis
cultivation license from the department. A locally issued cultivation
permit shall only become active upon licensing by the department and
receiving final local approval. A person shall not cultivate medical
cannabis before obtaining both a permit from the city, county, or
city and county and a state medical cannabis cultivation license from
the department.
(2) A city, county, or city and county that issues or denies
conditional licenses to cultivate medical cannabis pursuant to this
section shall notify the department in a manner prescribed by the
secretary.
(3) A city, county, or city and county's locally issued
conditional permit requirements must be at least as stringent as the
department's state licensing requirements.
(d) (1) The secretary may prescribe, adopt, and enforce
regulations relating to the implementation, administration, and
enforcement of this part, including, but not limited to, applicant
requirements, collections, reporting, refunds, and appeals.
(2) The secretary may prescribe, adopt, and enforce any emergency
regulations as necessary to implement this part. Any emergency
regulation prescribed, adopted, or enforced pursuant to this section
shall be adopted in accordance with Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code, and, for purposes of that chapter, including Section 11349.6 of
the Government Code, the adoption of the regulation is an emergency
and shall be considered by the Office of Administrative Law as
necessary for the immediate preservation of the public peace, health
and safety, and general welfare.
(3) The secretary may enter into a cooperative agreement with a
county agricultural commissioner to carry out the provisions of this
chapter, including, but not limited to, administration,
investigations, inspections, licensing and assistance pertaining to
the cultivation of medical cannabis. Compensation under the
cooperative agreement shall be paid from assessments and fees
collected and deposited pursuant to this chapter and shall provide
reimbursement to the county agricultural commissioner for associated
costs.
(e) (1) The department, in consultation with, but not limited to,
the Bureau of Medical Cannabis Regulation, the State Water Resources
Control Board, and the Department of Fish and Wildlife, shall
implement a unique identification program for medical cannabis. In
implementing the program, the department shall consider issues,
including, but not limited to, water use and environmental impacts.
In implementing the program, the department shall ensure compliance
with Section 19332.2 of the Business and Professions Code.
(2) The department shall establish a program for the
identification of permitted medical cannabis plants at a cultivation
site during the cultivation period. The unique identifier shall be
attached at the base of each plant. A unique identifier, such as, but
not limited to, a zip tie, shall be issued for each medical cannabis
plant.
(A) Unique identifiers will only be issued to those persons
appropriately licensed by this section.
(B) Information associated with the assigned unique identifier and
licensee shall be included in the trace and track program specified
in Section 19335 of the Business and Professions Code.
(C) The department may charge a fee to cover the reasonable costs
of issuing the unique identifier and monitoring, tracking, and
inspecting each medical cannabis plant.
(D) The department may promulgate regulations to implement this
section.
(3) The department shall take adequate steps to establish
protections against fraudulent unique identifiers and limit illegal
diversion of unique identifiers to unlicensed persons.
(f) (1) A city, county, or city and county that issues or denies
licenses, permits, or other entitlements to cultivate medical
cannabis pursuant to this section shall notify the department in a
manner prescribed by the secretary.
(2) Unique identifiers and associated identifying information
administered by a city, county, or city and county shall adhere to
the requirements set by the department and be the equivalent to those
administered by the department.
(g) This section does not apply to a qualified patient cultivating
cannabis pursuant to Section 11362.5 if the area he or she uses to
cultivate cannabis does not exceed 100 square feet and he or she
cultivates cannabis for his or her personal medical use and does not
sell, distribute, donate, or provide cannabis to any other person or
entity. This section does not apply to a primary caregiver
cultivating cannabis pursuant to Section 11362.5 if the area he or
she uses to cultivate cannabis does not exceed 500 square feet and he
or she cultivates cannabis exclusively for the personal medical use
of no more than five specified qualified patients for whom he or she
is the primary caregiver within the meaning of Section 11362.7 and
does not receive remuneration for these activities, except for
compensation provided in full compliance with subdivision (c) of
Section 11362.765. For purposes of this section, the area used to
cultivate cannabis shall be measured by the aggregate area of
vegetative growth of live cannabis plants on the premises. Exemption
from the requirements of this section does not limit or prevent a
city, county, or city and county from exercising its police authority
under Section 7 of Article XI of the California Constitution.
SEC. 69. Section 44559.11 of the Health and Safety Code is amended
to read:
44559.11. (a) It is the intent of the Legislature to ensure that
the state, through the authority, may make maximum, efficient use of
capital access programs enacted by all federal and state agencies, as
well as funding available from any governmental program whose goals
may be advanced by providing funding to the Capital Access Loan
Program.
(b) In furtherance of this intent, and notwithstanding any other
provision of this article, when the contributions required pursuant
to Section 44559.4 are entirely funded by a public or quasi-public
entity other than the authority's fee revenue under Sections 44525
and 44548, the authority may, by regulation adopted pursuant to
subdivision (b) of Section 44520 or subdivision (e) of Section
44559.14, establish alternate provisions as necessary to enable the
authority to participate in the alternative funding source program,
including implementing loan loss reserve programs to benefit any
individual person engaged in qualifying activities in furtherance of
the public or quasi-public entity's policy objectives in the state
that require financing.
SEC. 70. Section 44559.14 is added to the Health and Safety Code,
to read:
44559.14. (a) (1) It is the intent of the Legislature in enacting
the act adding this section to create and fund a program to assist
residential property owners and small business owners in seismically
retrofitting residences and small businesses with a priority on
soft-story buildings and unreinforced brick and concrete buildings.
It is not the intent of the Legislature to assist the physical
expansion of small businesses and residences.
(2) The Legislature hereby establishes the California Seismic
Safety Capital Access Loan Program. The program shall cover losses on
qualified loans by participating lenders to qualified residential
property owners or qualified small businesses for eligible projects,
as specified under this section. The program shall be administered by
the California Pollution Control Financing Authority and follow the
terms and conditions for the Capital Access Loan Program in this
article with the additional program requirements specified under this
section.
(b) For purposes of this section, unless the context requires
otherwise, the following words and terms shall have the following
meanings:
(1) "Seismic retrofit construction" means alteration performed on
or after January 1, 2017, of a qualified building or its components
to substantially mitigate seismic damage. "Seismic retrofit
construction" includes, but is not limited to, all of the following:
(A) Anchoring the structure to the foundation.
(B) Bracing cripple walls.
(C) Bracing hot water heaters.
(D) Installing automatic gas shutoff valves.
(E) Repairing or reinforcing the foundation to improve the
integrity of the foundation against seismic damage.
(F) Anchoring fuel storage.
(G) Installing an earthquake-resistant bracing system for
mobilehomes that are registered with the Department of Housing and
Community Development.
(2) "Eligible costs" means the costs paid or incurred on or after
January 1, 2017, for an eligible project, including any engineering
or architectural design work necessary to permit or complete the
eligible project less the amount of any grant provided by a public
entity for the eligible project. "Eligible costs" do not include
costs paid or incurred for any of the following:
(A) Maintenance, including abatement of deferred or inadequate
maintenance, and correction of violations unrelated to the seismic
retrofit construction.
(B) Repair, including repair of earthquake damage.
(C) Seismic retrofit construction required by local building codes
as a result of addition, repair, building relocation, or change of
use or occupancy.
(D) Other work or improvement required by local building or
planning codes as a result of the intended seismic retrofit
construction.
(E) Rent reductions or other associated compensation, compliance
actions, or other related coordination involving the qualified
residential property owner or qualified small business and any other
party, including a tenant, insurer, or lender.
(F) Replacement of existing building components, including
equipment, except as needed to complete the seismic retrofit
construction.
(G) Bracing or securing nonpermanent building contents.
(H) The offset of costs, reimbursements, or other costs
transferred from the qualified residential property owner or
qualified small business to others.
(3) "Eligible project" means seismic retrofit construction that is
necessary to ensure that the qualified building is capable of
substantially mitigating seismic damage, and the financing necessary
to pay eligible costs of the project.
(4) "Qualified building" means a building that is certified by the
appropriate local building code enforcement authority for the
jurisdiction in which the building is located as hazardous and in
danger of collapse in the event of a catastrophic earthquake.
(5) "Qualified loan" means a loan or portion of a loan as defined
in subdivision (j) of Section 44559.1, where the proceeds of the loan
or portion of the loan are limited to the eligible costs for an
eligible project under this program, and where the loan or portion of
the loan does not exceed two hundred fifty thousand dollars
($250,000).
(6) "Qualified small business" means a business referred to in
subdivisions (i) and (m) of Section 44559.1 that owns and occupies,
or intends to occupy, a qualified building for the operation of the
business.
(7) "Qualified residential property owner" means either an owner
and occupant of a residential building that is a qualified building
or a qualified small business that owns one or more residential
buildings, including a multiunit housing building, that is a
qualified building.
(c) (1) The California Seismic Safety Capital Access Loan Program
Fund is established in the State Treasury and shall be administered
by the authority pursuant to Sections 44548 and 44549 for this
program. For purposes of this section, the references in Sections
44548 and 44549 to "small business" shall include "qualified
residential property owner," as defined in this section.
Notwithstanding Section 13340 of the Government Code, all moneys in
the fund are continuously appropriated to the authority for carrying
out this section. The authority may divide the fund into separate
accounts. All moneys accruing to the authority pursuant to this
section from any source shall be deposited into the fund.
(2) All moneys in the fund derived from any source shall be held
in trust for the life of this program, for program expenditures and
costs of administering this section, as follows:
(A) Program expenditures shall include both of the following:
(i) Contributions paid by the authority in support of qualified
loans.
(ii) Costs for a qualified expert to validate that the proceeds of
the loans are eligible costs, as defined under this section.
(iii) Reasonable costs to educate the small business community,
residential property owners, and participating lenders about the
program, including travel within the state.
(B) Administrative expenditures shall be limited to 5 percent of
the initial appropriation plus 5 percent of all moneys recaptured,
and shall include all of the following:
(i) Personnel costs.
(ii) Service and vending contracts, other than program
expenditures described in subparagraph (A), that are necessary to
carry out the program.
(iii) Other reasonable direct and indirect administrative costs.
(3) The
authority may direct the Treasurer to invest moneys in the fund that
are not required for its current needs in the eligible securities
specified in Section 16430 of the Government Code as the authority
shall designate. The authority may direct the Treasurer to deposit
moneys in interest-bearing accounts in state or national banks or
other financial institutions having principal offices located in the
state. The authority may alternatively require the transfer of moneys
in the fund to the Surplus Money Investment Fund for investment
pursuant to Article 4 (commencing with Section 16470) of Chapter 3 of
Part 2 of Division 4 of Title 2 of the Government Code. All interest
or other increment resulting from an investment or deposit shall be
deposited into the fund, notwithstanding Section 16305.7 of the
Government Code. Moneys in the fund shall not be subject to transfer
to any other fund pursuant to any provision of Part 2 (commencing
with Section 16300) of Division 4 of Title 2 of the Government Code,
excepting the Surplus Money Investment Fund.
(d) The authority shall adopt regulations pursuant to Section
44520 to implement the program, including, but not limited to,
provisions to:
(1) Establish a new loss reserve account for each participating
lender enrolling loans in this program.
(2) Obtain a certification from each participating lender and
qualified small business or qualified residential property owner upon
enrollment of a qualified loan that the proceeds of the loan will be
used for the eligible costs of an eligible project.
(3) Contribute an additional incentive from the fund for each loan
enrolled for a qualified small business or qualified residential
property owner located in a severely affected community.
(4) Restrict the enrollment of a qualified loan in any other
Capital Access Loan Program for a qualified small business or
qualified residential property owner offered by the authority as long
as funds are available for this program.
(5) Limit the term of loss coverage for each qualified loan to no
more than 10 years.
(6) Recapture from the loss reserve account the authority's
contribution for each enrolled loan upon the maturation of that loan
or after 10 years from the date of enrollment, whichever happens
first, to be deposited in the fund and applied to future program and
administrative expenditures.
(e) The authority may adopt regulations relating to residential
property owner or small business financing as emergency regulations
in accordance with Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code. For purposes
of that Chapter 3.5, including Section 11349.6 of the Government
Code, the adoption of the regulations shall be considered by the
Office of Administrative Law to be necessary for the immediate
preservation of the public peace, health and safety, and general
welfare. The regulations shall be repealed 180 days after their
effective date, unless the adopting authority or agency complies with
that Chapter 3.5.
SEC. 71. Section 50800.5 of the Health and Safety Code is amended
to read:
50800.5. (a) There is hereby created in the State Treasury the
Emergency Housing and Assistance Fund. Notwithstanding Section 13340
of the Government Code, all money in the fund is continuously
appropriated to the department to carry out the purposes of this
chapter. Any repayments, interest, or new appropriations shall be
deposited in the fund, notwithstanding Section 16305.7 of the
Government Code. Money in the fund shall not be subject to transfer
to any other fund pursuant to any provision of Part 2 (commencing
with Section 16300) of Division 4 of Title 2 of the Government Code,
except to the Surplus Money Investment Fund.
(b) All moneys in the Emergency Housing and Assistance Fund,
created pursuant to Section 50800.5 as it existed prior to the
effective date of the act that adds this chapter, shall be
transferred, on the effective date of the act that adds this chapter,
to the Emergency Housing and Assistance Fund created by subdivision
(a).
(c) The department may require the transfer of moneys in the
Emergency Housing and Assistance Fund to the Surplus Money Investment
Fund for investment pursuant to Article 4 (commencing with Section
16470) of Chapter 3 of Part 2 of Division 4 of Title 2 of the
Government Code. All interest, dividends, and pecuniary gains from
these investments shall accrue to the Emergency Housing and
Assistance Fund, notwithstanding Section 16305.7 of the Government
Code.
(d) To the extent funds are made available by the Legislature,
moneys in the fund may be used for the purposes of Chapter 19
(commencing with Section 50899.1) of Part 2 of Division 31 of the
Health and Safety Code.
SEC. 72. Chapter 19 (commencing with Section 50899.1) is added to
Part 2 of Division 31 of the Health and Safety Code, to read:
CHAPTER 19. CALIFORNIA EMERGENCY SOLUTIONS GRANTS PROGRAM
50899.1. This chapter may be cited as the California Emergency
Solutions Grants Program.
50899.2. The California Emergency Solutions Grants Program shall
be administered by the California Department of Housing and Community
Development.
50899.3. The following definitions shall apply to all activities
conducted pursuant to this chapter:
(a) "Department" means the California Department of Housing and
Community Development.
(b) "Homelessness" means the same as defined by the United States
Department of Housing and Urban Development in the federal Emergency
Solutions Grants Program at Section 576.2 of Title 24 of the Code of
Federal Regulations.
(c) "Continuum of care" means the same as defined by the United
States Department of Housing and Urban Development at Section 586.2
of Title 24 of the Code of Federal Regulations.
(d) "Continuum of care service area" means the entire geographic
area within the boundaries of a continuum of care.
(e) "Subrecipient" means an entity that enters into a written
agreement with the department to implement activities pursuant to
this chapter.
(f) "California ESG Regulations" means the regulations set forth
in Section 8400 and following of Title 25 of the California Code of
Regulations, pertaining to the administration of the Federal
Emergency Shelter Grants Program.
(g) "Federal ESG Program" means collectively the California ESG
Regulations and the federal laws in connection with which the
California ESG Regulations were adopted, including Title IV of the
McKinney-Vento Homeless Assistance Act (42 U.S.C. Secs. 11371-11378,
incl.), and any amendments thereto, the Homeless Emergency Assistance
and Rapid Transition to Housing (HEARTH) Act of 2009 (42 U.S.C.
Secs. 11302-11304, incl. and 11360-11378, incl.), and any amendments
and any implementing federal regulations thereto.
50899.4. Funding for the California Emergency Solutions Grants
Program shall be made available upon appropriation to the department
for the purpose of addressing the crisis of homelessness in
California. In furtherance of this purpose, the department shall make
grants to qualifying subrecipients throughout the state to implement
activities that address the needs of homeless individuals and
families and assist them to regain stability in permanent housing as
quickly as possible. Funded activities may include without limitation
activities eligible under the Federal ESG Program, including (a)
engaging homeless individuals and families living on the street; (b)
operating homeless shelters and providing essential services to
shelter residents; (c) rapidly rehousing homeless individuals and
families; and (d) preventing families and individuals from becoming
homeless. In addition, the California Emergency Solutions Grants
Program may facilitate technical assistance activities to improve the
capacity of subrecipients and the continuum of care to end
homelessness.
50899.5. Any moneys appropriated and made available for the
purposes of this chapter, and all moneys received by the department
pursuant to this chapter, shall be used for the purposes of this
chapter, including the administration of the California Emergency
Solutions Grants Program. The administrative expenses of the
department in administering the California Emergency Solutions Grants
Program shall not exceed 5 percent of the funds appropriated for the
purposes of this chapter. Notwithstanding any other provision of
law, the department may provide an additional amount, not to exceed 5
percent of the moneys appropriated and made available for the
purposes of this chapter, for technical assistance to subrecipients
and continuums of care to develop, implement, carry out, or improve
implementation of activities pursuant to this chapter.
Notwithstanding any other provision of law, the department may also
allocate an amount, not to exceed 5 percent of the funding provided
to a subrecipient, for the general administration costs of those
subrecipients that are cities, counties, or other political
subdivisions of the State of California, in furthering the purposes
of this chapter.
50899.6. The California Emergency Solutions Grants Program
generally will be administered by the department in a manner
consistent with the Federal ESG Program. However, the department may
administer the California Emergency Solutions Grants Program
differently from the Federal ESG Program, and include such
modifications as the department may determine are necessary to
address the purposes of this chapter or to improve the effectiveness
or efficiency of the California Emergency Solutions Grants Program,
including but not limited to:
(a) The participation of all continuum of care service areas
within California, using a formula distribution that reflects the
entire continuum of care service area.
(b) The modification of formula factors in the Federal ESG Program
for use in the California Emergency Solutions Grants Program.
50899.7. The department shall review, adopt, amend, and repeal
guidelines to implement this chapter. Any guidelines adopted to
implement this chapter shall not be subject to Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code. In the event of any inconsistency between such
guidelines or terms and the Federal ESG Program, the guidelines shall
prevail for the purposes of this chapter.
SEC. 73. Section 50912.5 is added to the
Health and Safety Code , to read:
50912.5. There shall be within the agency a director of
enterprise risk management and compliance appointed by the Governor
and serving at the pleasure of the executive director of the agency.
The director of enterprise risk management and compliance shall
assist in the implementation of processes, tools, and systems to
identify, assess, measure, manage, monitor, and mitigate risks
related to the development of new programs or changes to existing law
or regulations that may result in new or increased risk to the
agency, as well as other duties as may be required by the executive
director.
SEC. 74. Section 51341 of the Health and Safety Code is amended to
read:
51341. The Legislature finds and declares that:
(a) There is a continuing and urgent need to provide affordable
mortgage financing to meet the increasingly unfulfilled housing needs
of citizens of this state.
(b) There is a need to develop financial mechanisms to make homes
affordable to low- and moderate-income buyers who intend to occupy
the homes as their primary residences.
(c) The high cost of housing impedes the ability of California
employers to compete in the national marketplace for employees.
(d) Affordable housing enhances the quality of life for California
residents and provides fuel for the state's economic engine.
(e) Housing is a critical component of the California economy,
both as an income producing sector and a principal factor in economic
development.
(f) California's housing crisis severely impacts families
struggling to provide safe, stable homes for their children to grow
and learn and the workers who are the backbone of many of the state's
most important industries.
(g) The percentage of Californians able to purchase their own
homes continues to decline.
(h) There is a need to streamline the agency's homeownership
assistance programs to make them more efficient and effective.
(i) Therefore, this chapter is enacted to make home purchases more
affordable to low- and moderate-income Californians seeking the
opportunity to own and occupy their own homes.
SEC. 75. Section 51342 of the Health and Safety Code is repealed.
SEC. 76. Section 51344 of the Health and Safety Code is amended
and renumbered to read:
51342. (a) There is hereby continued in the State Treasury a Home
Purchase Assistance Fund. "Fund," as used in this chapter, means the
Home Purchase Assistance Fund. Notwithstanding Section 13340 of the
Government Code, all moneys in the fund are continuously appropriated
to the agency, without regard to fiscal years, for expenditure
pursuant to this chapter and defraying administrative costs of the
agency. Notwithstanding Section 16305.7 of the Government Code, any
interest earned or other increment derived from investments made from
moneys in the fund shall be deposited in the fund.
(b) On and after July 1, 2016, all of the following shall apply:
(1) Any unobligated amounts remaining in any fund established for
the purposes of Chapter 9 (commencing with Section 51450) or Chapter
11 (commencing with Section 51500), including, but not limited to,
the California Homebuyer's Downpayment Assistance Program, the School
Facility Fee Program, and the Extra Credit Teacher Program, shall be
transferred to the Home Purchase Assistance Fund for expenditure by
the agency for the purposes of this chapter.
(2) The agency shall have no obligation to continue administering
loan programs authorized by Chapter 9 (commencing with Section 51450)
or Chapter 11 (commencing with Section 51500).
(3) Notwithstanding Section 16305.7 of the Government Code, any
interest earned, or other increment derived, from investments made
from moneys transferred to the fund pursuant to paragraph (1), and
any loan receivables, repayments made, or other sums accruing to the
agency pursuant to Chapter 9 (commencing with Section 51450) or
Chapter 11 (commencing with Section 51500) shall be deposited into
the fund for expenditure by the agency for the purposes of this
chapter.
SEC. 77. Section 51345 of the Health and Safety Code is amended
and renumbered to read:
51343. (a) The agency shall administer a home purchase assistance
program in accordance with this chapter. The purpose of the home
purchase assistance program is to assist low- and moderate-income
homebuyers to qualify for the purchase of owner-occupied homes. The
agency shall make assistance to first-time homebuyers a priority use
of these funds.
(b) Homeownership assistance under this chapter may be provided
for any purposes authorized under Section 51402, including, but not
limited to, all of the following:
(1) An interest rate subsidy to reduce the interest rate.
(2) A deferred-payment, low-interest, subordinate mortgage loan,
including downpayment assistance, closing cost assistance, or both,
to make financing affordable to low- and moderate-income homebuyers.
(3) Buying down the cost of mortgage insurance.
(c) The amount of home purchase assistance shall be available only
in conjunction with first mortgage loan financing provided by the
agency or the Department of Veterans Affairs.
(d) The term of the home purchase assistance shall not exceed the
term of the primary loan.
(e) Assistance under this chapter is available only for
owner-occupied residential structures.
(f) (1) The agency may, in its discretion, permit the lien of the
downpayment assistance loan to be subordinated to refinancing if it
determines that one of the following applies:
(A) The borrower has demonstrated hardship and subordination is
required to avoid foreclosure.
(B) The borrower has acquired subordinate financing to build an
accessory dwelling on the property.
(C) The borrower has acquired subordinate financing to make the
property compliant with the federal Americans with Disabilities Act
of 1990 (Public Law 101-336), facilitate rehabilitation needed to
allow the owner to age in place, or both.
(D) The new loan meets the agency's underwriting requirements.
(2) The agency may permit subordination on those terms and
conditions as it determines are reasonable.
(3) The amount of home purchase assistance shall not be due and
payable upon the sale of the home if the first mortgage loan is
insured by the Federal Housing Administration (FHA) or if the first
mortgage loan is, or has been, transferred to the FHA, or if the
requirement is otherwise contrary to the regulations of the United
States Department of Housing and Urban Development governing FHA
insured first mortgage loans.
(g) All repayments shall be deposited in the fund for ongoing use
in this downpayment assistance program.
SEC. 78. Section 51347 of the Health and Safety Code is repealed.
SEC. 79. Section 51348 of the Health and Safety Code is repealed.
SEC. 80. Section 51349 of the Health and Safety Code is amended to
read:
51349. (a) The agency shall have all the powers conferred upon it
by this part and Part 4 (commencing with Section 51600) in
administering this chapter.
(b) The authority provided by this section shall be conferred upon
the Department of Veterans Affairs by any contract executed pursuant
to Section 51346, with respect to the assistance being provided
pursuant to the contract.
(c) Notwithstanding any other law, the agency, pursuant to the
objectives specified in Section 50952, may, with its own funds or
from funds derived from other sources, create its own home purchase
assistance programs, home purchase assistance products, or both, on
such terms and conditions as the agency deems prudent. Nothing in
this chapter shall be deemed to prohibit the agency from exercising
its discretion pursuant to this subdivision.
SEC. 81. Section 51455 of the Health and Safety Code is amended to
read:
51455. (a) Except as provided in subdivision (b), Sections 51450,
51451, 51452, and 51454 shall not be operative on and after January
1, 2002.
(b) Except as provided in Section 51453 and 51453.5, until July 1,
2016, the School Facilities Fee Assistance Fund established by
Section 51452 and the programmatic authority necessary to operate the
programs authorized by Section 51451 shall continue on and after
January 1, 2002, only with respect to any repayment obligation
pertaining to that assistance or to any regulatory agreement imposed
as a condition of that assistance.
(c) Sections 51451.5, 51453, and 51453.5 shall not be operative on
and after July 1, 2016.
(d) On and after July 1, 2016, any unobligated amounts remaining
in the School Facilities Fee Assistance Fund, including the repayment
of disbursed moneys, or any interest earned from the investment of
those moneys or any other moneys accruing to the fund from any
source, shall be transferred to the Home Purchase Assistance Fund and
are continuously appropriated to the agency for the purposes
described in Section 51342.
SEC. 82. Section 51511 is added to the Health and Safety Code, to
read:
51511. (a) This chapter, except for this section, shall not be
operative on and after July 1, 2016.
(b) On and after July 1, 2016, any unobligated amounts remaining
in any fund established for the purposes of this chapter, including
the repayment of disbursed moneys, or any interest earned from the
investment of those moneys or any other moneys accruing to the fund
from any source, shall be transferred to the Home Purchase Assistance
Fund and are continuously appropriated to the agency for the
purposes described in Section 51342.
SEC. 83. Section 51618 of the Health and Safety Code is repealed.
SEC. 84. Section 51619 of the Health and Safety Code is repealed.
SEC. 85. Section 51622 of the Health and Safety Code is amended to
read:
51622. (a) The agency may contract with any private person or
public agency for review of the administration of this part and for
assistance in implementing this part.
(b) The agency shall prepare a biennial report on the condition
of the program of loan and bond insurance authorized by this part.
The report of the evaluation shall include an evaluation of program
effectiveness in relation to cost and shall include recommendations
and suggested legislation for the improvement of the program, if any.
The agency shall obtain an annual agreed-upon procedures engagement
of the insurance fund's books and accounts with respect to its
activities under this part to be made at least once for each calendar
year by an independent certified public accountant. A copy of the
annual agreed-upon procedures engagement and biennial report shall be
transmitted to the Governor, to the chairperson and vice-chairperson
of the Senate and Assembly housing policy committees, the Senate and
Assembly budget committees, and the Joint Legislative Budget
Committee, and made available for review by interested parties no
later than November 1 of each year for the annual agreed-upon
procedures engagement and November 1 biennially for the program
evaluation report.
(c) For purposes of this section, the agreed-upon procedures
engagement shall be conducted in accordance with the Statements on
Standards for Attestation Engagements Number 10, as issued by the
American Institute of Certified Public Accountants.
SEC. 86. Section 12206 of the Revenue and Taxation Code is amended
to read:
12206. (a) (1) There shall be allowed as a credit against the
"tax," described by Section 12201, a state low-income housing tax
credit in an amount equal to the amount determined in subdivision
(c), computed in accordance with Section 42 of the Internal Revenue
Code, relating to low-income housing credit, except as otherwise
provided in this section.
(2) "Taxpayer," for purposes of this section, means the sole owner
in the case of a "C" corporation, the partners in the case of a
partnership, and the shareholders in the case of an "S" corporation.
(3) "Housing sponsor," for purposes of this section, means the
sole owner in the case of a "C" corporation, the partnership in the
case of a partnership, and the "S" corporation in the case of an "S"
corporation.
(b) (1) The amount of the credit allocated to any housing sponsor
shall be authorized by the California Tax Credit Allocation
Committee, or any successor thereof, based on a project's need for
the credit for economic feasibility in accordance with the
requirements of this section.
(A) Except for projects to provide farmworker housing, as defined
in subdivision (h) of Section 50199.7 of the Health and Safety Code,
that are allocated credits solely under the set-aside described in
subdivision (c) of Section 50199.20 of the Health and Safety Code,
the low-income housing project shall be located in California and
shall meet either of the following requirements:
(i) The project's housing sponsor has been allocated by the
California Tax Credit Allocation Committee a credit for federal
income tax purposes under Section 42 of the Internal Revenue Code,
relating to low-income housing credit.
(ii) It qualifies for a credit under Section 42(h)(4)(B) of the
Internal Revenue Code, relating to special rule where 50 percent or
more of building is financed with tax-exempt bonds subject to volume
cap.
(B) The California Tax Credit Allocation Committee shall not
require fees for the credit under this section in addition to those
fees required for applications for the tax credit pursuant to Section
42 of the Internal Revenue Code, relating to low-income housing
credit. The committee may require a fee if the application for the
credit under this section is submitted in a calendar year after the
year the application is submitted for the federal tax credit.
(C) (i) For a project that receives a preliminary reservation of
the state low-income housing tax credit, allowed pursuant to
subdivision (a), on or after January 1, 2009, and before January 1,
2020, the credit shall be allocated to the partners of a partnership
owning the project in accordance with the partnership agreement,
regardless of how the federal low-income housing tax credit with
respect to the project is allocated to the partners, or whether the
allocation of the credit under the terms of the agreement has
substantial economic effect, within the meaning of Section 704(b) of
the Internal Revenue Code, relating to determination of distributive
share.
(ii) This subparagraph does not apply to a project that receives a
preliminary reservation of state low-income housing tax credits
under the set-aside described in subdivision (c) of Section 50199.20
of the Health and Safety Code unless the project also receives a
preliminary reservation of federal low-income housing tax credits.
(2) (A) The California Tax Credit Allocation Committee shall
certify to the housing sponsor the amount of tax credit under this
section allocated to the housing sponsor for each credit period.
(B) In the case of a partnership or an "S" corporation, the
housing sponsor shall provide a copy of the California Tax Credit
Allocation Committee certification to the taxpayer.
(C) The taxpayer shall attach a copy of the certification to any
return upon which a tax credit is claimed under this section.
(D) In the case of a failure to attach a copy of the certification
for the year to the return in which a tax credit is claimed under
this section, no credit under this section shall be allowed for that
year until a copy of that certification is provided.
(E) All elections made by the taxpayer pursuant to Section 42 of
the Internal Revenue Code, relating to low-income housing credit,
shall apply to this section.
(F) (i) Except as described in clause (ii), for buildings located
in designated difficult development areas (DDAs) or qualified census
tracts (QCTs), as defined in Section 42(d)(5)(B) of the Internal
Revenue Code, relating to increase in credit for buildings in
high-cost areas, credits may be allocated under this section in the
amounts prescribed in subdivision (c), provided that the amount of
credit allocated under Section 42 of the Internal Revenue Code,
relating to low-income housing credit, is computed on 100 percent of
the qualified basis of the building.
(ii)
Notwithstanding clause (i), the California Tax Credit Allocation
Committee may allocate the credit for buildings located in DDAs or
QCTs that are restricted to having 50 percent of its occupants be
special needs households, as defined in the California Code of
Regulations by the California Tax Credit Allocation Committee, even
if the taxpayer receives federal credits pursuant to Section 42(d)(5)
(B) of the Internal Revenue Code, relating to increase in credit for
buildings in high-cost areas, provided that the credit allowed under
this section shall not exceed 30 percent of the eligible basis of the
building.
(G) (i) The California Tax Credit Allocation Committee may
allocate a credit under this section in exchange for a credit
allocated pursuant to Section 42(d)(5)(B) of the Internal Revenue
Code, relating to increase in credit for buildings in high-cost
areas, in amounts up to 30 percent of the eligible basis of a
building if the credits allowed under Section 42 of the Internal
Revenue Code, relating to low-income housing credit, are reduced by
an equivalent amount.
(ii) An equivalent amount shall be determined by the California
Tax Credit Allocation Committee based upon the relative amount
required to produce an equivalent state tax credit to the taxpayer.
(c) Section 42(b) of the Internal Revenue Code, relating to
applicable percentage: 70 percent present value credit for certain
new buildings; 30 percent present value credit for certain other
buildings, shall be modified as follows:
(1) In the case of any qualified low-income building that receives
an allocation after 1989 and is a new building not federally
subsidized, the term "applicable percentage" means the following:
(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are not
federally subsidized for the taxable year, determined in accordance
with the requirements of Section 42(b)(2) of the Internal Revenue
Code, relating to temporary minimum credit rate for nonfederally
subsidized new buildings, in lieu of the percentage prescribed in
Section 42(b)(1)(A) of the Internal Revenue Code.
(B) For the fourth year, the difference between 30 percent and the
sum of the applicable percentages for the first three years.
(2) In the case of any qualified low-income building that receives
an allocation after 1989 and that is a new building that is
federally subsidized or that is an existing building that is "at risk
of conversion," the term "applicable percentage" means the
following:
(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are federally
subsidized for the taxable year.
(B) For the fourth year, the difference between 13 percent and the
sum of the applicable percentages for the first three years.
(3) For purposes of this section, the term "at risk of conversion,"
with respect to an existing property means a property that satisfies
all of the following criteria:
(A) The property is a multifamily rental housing development in
which at least 50 percent of the units receive governmental
assistance pursuant to any of the following:
(i) New construction, substantial rehabilitation, moderate
rehabilitation, property disposition, and loan management set-aside
programs, or any other program providing project-based assistance
pursuant to Section 8 of the United States Housing Act of 1937,
Section 1437f of Title 42 of the United States Code, as amended.
(ii) The Below-Market-Interest-Rate Program pursuant to Section
221(d)(3) of the National Housing Act, Sections 1715 l (d)
(3) and (5) of Title 12 of the United States Code.
(iii) Section 236 of the National Housing Act, Section 1715z-1 of
Title 12 of the United States Code.
(iv) Programs for rent supplement assistance pursuant to Section
101 of the Housing and Urban Development Act of 1965, Section 1701s
of Title 12 of the United States Code, as amended.
(v) Programs pursuant to Section 515 of the Housing Act of 1949,
Section 1485 of Title 42 of the United States Code, as amended.
(vi) The low-income housing credit program set forth in Section 42
of the Internal Revenue Code, relating to low-income housing credit.
(B) The restrictions on rent and income levels will terminate or
the federally insured mortgage on the property is eligible for
prepayment any time within five years before or after the date of
application to the California Tax Credit Allocation Committee.
(C) The entity acquiring the property enters into a regulatory
agreement that requires the property to be operated in accordance
with the requirements of this section for a period equal to the
greater of 55 years or the life of the property.
(D) The property satisfies the requirements of Section 42(e) of
the Internal Revenue Code, relating to rehabilitation expenditures
treated as separate new building, except that the provisions of
Section 42(e)(3)(A)(ii)(I) shall not apply.
(d) The term "qualified low-income housing project" as defined in
Section 42(c)(2) of the Internal Revenue Code, relating to qualified
low-income building, is modified by adding the following
requirements:
(1) The taxpayer shall be entitled to receive a cash distribution
from the operations of the project, after funding required reserves,
that, at the election of the taxpayer, is equal to:
(A) An amount not to exceed 8 percent of the lesser of:
(i) The owner equity, which shall include the amount of the
capital contributions actually paid to the housing sponsor and shall
not include any amounts until they are paid on an investor note.
(ii) Twenty percent of the adjusted basis of the building as of
the close of the first taxable year of the credit period.
(B) The amount of the cashflow from those units in the building
that are not low-income units. For purposes of computing cashflow
under this subparagraph, operating costs shall be allocated to the
low-income units using the "floor space fraction," as defined in
Section 42 of the Internal Revenue Code, relating to low-income
housing credit.
(C) Any amount allowed to be distributed under subparagraph (A)
that is not available for distribution during the first five years of
the compliance period may be accumulated and distributed any time
during the first 15 years of the compliance period but not
thereafter.
(2) The limitation on return applies in the aggregate to the
partners if the housing sponsor is a partnership and in the aggregate
to the shareholders if the housing sponsor is an "S" corporation.
(3) The housing sponsor shall apply any cash available for
distribution in excess of the amount eligible to be distributed under
paragraph (1) to reduce the rent on rent-restricted units or to
increase the number of rent-restricted units subject to the tests of
Section 42(g)(1) of the Internal Revenue Code, relating to in
general.
(e) The provisions of Section 42(f) of the Internal Revenue Code,
relating to definition and special rules relating to credit period,
shall be modified as follows:
(1) The term "credit period" as defined in Section 42(f)(1) of the
Internal Revenue Code, relating to credit period defined, is
modified by substituting "four taxable years" for "10 taxable years."
(2) The special rule for the first taxable year of the credit
period under Section 42(f)(2) of the Internal Revenue Code, relating
to special rule for 1st year of credit period, shall not apply to the
tax credit under this section.
(3) Section 42(f)(3) of the Internal Revenue Code, relating to
determination of applicable percentage with respect to increases in
qualified basis after 1st year of credit period, is modified to read:
If, as of the close of any taxable year in the compliance period,
after the first year of the credit period, the qualified basis of any
building exceeds the qualified basis of that building as of the
close of the first year of the credit period, the housing sponsor, to
the extent of its tax credit allocation, shall be eligible for a
credit on the excess in an amount equal to the applicable percentage
determined pursuant to subdivision (c) for the four-year period
beginning with the later of the taxable years in which the increase
in qualified basis occurs.
(f) The provisions of Section 42(h) of the Internal Revenue Code,
relating to limitation on aggregate credit allowable with respect to
projects located in a state, shall be modified as follows:
(1) Section 42(h)(2) of the Internal Revenue Code, relating to
allocated credit amount to apply to all taxable years ending during
or after credit allocation year, does not apply and instead the
following provisions apply:
The total amount for the four-year credit period of the housing
credit dollars allocated in a calendar year to any building shall
reduce the aggregate housing credit dollar amount of the California
Tax Credit Allocation Committee for the calendar year in which the
allocation is made.
(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)
(I), (7), and (8) of Section 42(h) of the Internal Revenue Code,
relating to limitation on aggregate credit allowable with respect to
projects located in a state, do not apply to this section.
(g) The aggregate housing credit dollar amount that may be
allocated annually by the California Tax Credit Allocation Committee
pursuant to this section, Section 17058, and Section 23610.5 shall be
an amount equal to the sum of all the following:
(1) Seventy million dollars ($70,000,000) for the 2001 calendar
year, and, for the 2002 calendar year and each calendar year
thereafter, seventy million dollars ($70,000,000) increased by the
percentage, if any, by which the Consumer Price Index for the
preceding calendar year exceeds the Consumer Price Index for the 2001
calendar year. For the purposes of this paragraph, the term
"Consumer Price Index" means the last Consumer Price Index for All
Urban Consumers published by the federal Department of Labor.
(2) The unused housing credit ceiling, if any, for the preceding
calendar years.
(3) The amount of housing credit ceiling returned in the calendar
year. For purposes of this paragraph, the amount of housing credit
dollar amount returned in the calendar year equals the housing credit
dollar amount previously allocated to any project that does not
become a qualified low-income housing project within the period
required by this section or to any project with respect to which an
allocation is canceled by mutual consent of the California Tax Credit
Allocation Committee and the allocation recipient.
(4) Five hundred thousand dollars ($500,000) per calendar year for
projects to provide farmworker housing, as defined in subdivision
(h) of Section 50199.7 of the Health and Safety Code.
(5) The amount of any unallocated or returned credits under former
Sections 17053.14, 23608.2, and 23608.3, as those sections read
prior to January 1, 2009, until fully exhausted for projects to
provide farmworker housing, as defined in subdivision (h) of Section
50199.7 of the Health and Safety Code.
(h) The term "compliance period" as defined in Section 42(i)(1) of
the Internal Revenue Code, relating to compliance period, is
modified to mean, with respect to any building, the period of 30
consecutive taxable years beginning with the first taxable year of
the credit period with respect thereto.
(i) (1) Section 42(j) of the Internal Revenue Code, relating to
recapture of credit, shall not be applicable and the provisions in
paragraph (2) shall be substituted in its place.
(2) The requirements of this section shall be set forth in a
regulatory agreement between the California Tax Credit Allocation
Committee and the housing sponsor, and this agreement shall be
subordinated, when required, to any lien or encumbrance of any banks
or other institutional lenders to the project. The regulatory
agreement entered into pursuant to subdivision (f) of Section
50199.14 of the Health and Safety Code, shall apply, provided that
the agreement includes all of the following provisions:
(A) A term not less than the compliance period.
(B) A requirement that the agreement be recorded in the official
records of the county in which the qualified low-income housing
project is located.
(C) A provision stating which state and local agencies can enforce
the regulatory agreement in the event the housing sponsor fails to
satisfy any of the requirements of this section.
(D) A provision that the regulatory agreement shall be deemed a
contract enforceable by tenants as third-party beneficiaries thereto
and that allows individuals, whether prospective, present, or former
occupants of the building, who meet the income limitation applicable
to the building, the right to enforce the regulatory agreement in any
state court.
(E) A provision incorporating the requirements of Section 42 of
the Internal Revenue Code, relating to low-income housing credit, as
modified by this section.
(F) A requirement that the housing sponsor notify the California
Tax Credit Allocation Committee or its designee and the local agency
that can enforce the regulatory agreement if there is a determination
by the Internal Revenue Service that the project is not in
compliance with Section 42(g) of the Internal Revenue Code, relating
to qualified low-income housing project.
(G) A requirement that the housing sponsor, as security for the
performance of the housing sponsor's obligations under the regulatory
agreement, assign the housing sponsor's interest in rents that it
receives from the project, provided that until there is a default
under the regulatory agreement, the housing sponsor is entitled to
collect and retain the rents.
(H) A provision that the remedies available in the event of a
default under the regulatory agreement that is not cured within a
reasonable cure period include, but are not limited to, allowing any
of the parties designated to enforce the regulatory agreement to
collect all rents with respect to the project; taking possession of
the project and operating the project in accordance with the
regulatory agreement until the enforcer determines the housing
sponsor is in a position to operate the project in accordance with
the regulatory agreement; applying to any court for specific
performance; securing the appointment of a receiver to operate the
project; or any other relief as may be appropriate.
(j) (1) The committee shall allocate the housing credit on a
regular basis consisting of two or more periods in each calendar year
during which applications may be filed and considered. The committee
shall establish application filing deadlines, the maximum percentage
of federal and state low-income housing tax credit ceiling that may
be allocated by the committee in that period, and the approximate
date on which allocations shall be made. If the enactment of federal
or state law, the adoption of rules or regulations, or other similar
events prevent the use of two allocation periods, the committee may
reduce the number of periods and adjust the filing deadlines, maximum
percentage of credit allocated, and the allocation dates.
(2) The committee shall adopt a qualified allocation plan, as
provided in Section 42(m)(1) of the Internal Revenue Code, relating
to plans for allocation of credit among projects. In adopting this
plan, the committee shall comply with the provisions of Sections 42
(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue Code, relating to
qualified allocation plan and relating to certain selection criteria
must be used, respectively.
(3) Notwithstanding Section 42(m) of the Internal Revenue Code,
relating to responsibilities of housing credit agencies, the
California Tax Credit Allocation Committee shall allocate housing
credits in accordance with the qualified allocation plan and
regulations, which shall include the following provisions:
(A) All housing sponsors, as defined by paragraph (3) of
subdivision (a), shall demonstrate at the time the application is
filed with the committee that the project meets the following
threshold requirements:
(i) The housing sponsor shall demonstrate that there is a need and
demand for low-income housing in the community or region for which
it is proposed.
(ii) The project's proposed financing, including tax credit
proceeds, shall be sufficient to complete the project and that the
proposed operating income shall be adequate to operate the project
for the extended use period.
(iii) The project shall have enforceable financing commitments,
either construction or permanent financing, for at least 50 percent
of the total estimated financing of the project.
(iv) The housing sponsor shall have and maintain control of the
site for the project.
(v) The housing sponsor shall demonstrate that the project
complies with all applicable local land use and zoning ordinances.
(vi) The housing sponsor shall demonstrate that the project
development team has the experience and the financial capacity to
ensure project completion and operation for the extended use period.
(vii) The housing sponsor shall demonstrate the amount of tax
credit that is necessary for the financial feasibility of the project
and its viability as a qualified low-income housing project
throughout the extended use period, taking into account operating
expenses, a supportable debt service, reserves, funds set aside for
rental subsidies and required equity, and a development fee that does
not exceed a specified percentage of the eligible basis of the
project prior to inclusion of the development fee in the eligible
basis, as determined by the committee.
(B) The committee shall give a preference to those projects
satisfying all of the threshold requirements of subparagraph (A) if
both of the following apply:
(i) The project serves the lowest income tenants at rents
affordable to those tenants.
(ii) The project is obligated to serve qualified tenants for the
longest period.
(C) In addition to the provisions of subparagraphs (A) and (B),
the committee shall use the following criteria in allocating housing
credits:
(i) Projects serving large families in which a substantial number,
as defined by the committee, of all residential units are low-income
units with three and more bedrooms.
(ii) Projects providing single-room occupancy units serving very
low income tenants.
(iii) Existing projects that are "at risk of conversion," as
defined by paragraph (3) of subdivision (c).
(iv) Projects for which a public agency provides direct or
indirect long-term financial support for at least 15 percent of the
total project development costs or projects for which the owner's
equity constitutes at least 30 percent of the total project
development costs.
(v) Projects that provide tenant amenities not generally available
to residents of low-income housing projects.
(4) For purposes of allocating credits pursuant to this section,
the committee shall not give preference to any project by virtue of
the date of submission of its application except to break a tie when
two or more of the projects have an equal rating.
(k) Section 42(l) of the Internal Revenue Code, relating to
certifications and other reports to secretary, shall be modified as
follows:
The term "secretary" shall be replaced by the term "Franchise Tax
Board."
( l ) In the case in which the credit allowed under
this section exceeds the "tax," the excess may be carried over to
reduce the "tax" in the following year, and succeeding years if
necessary, until the credit has been exhausted.
(m) The provisions of Section 11407(a) of Public Law 101-508,
relating to the effective date of the extension of the low-income
housing credit, apply to calendar years after 1993.
(n) The provisions of Section 11407(c) of Public Law 101-508,
relating to election to accelerate credit, do not apply.
(o) (1) For a project that receives a preliminary reservation
under this section beginning on or after January 1, 2016, and before
January 1, 2020, a taxpayer may make an irrevocable election in its
application to the California Tax Credit Allocation Committee to sell
all or any portion of any credit allowed under this section to one
or more unrelated parties for each taxable year in which the credit
is allowed subject to both of the following conditions:
(A) The credit is sold for consideration that is not less than 80
percent of the amount of the credit.
(B) The unrelated party or parties purchasing any or all of the
credit pursuant to this subdivision is a taxpayer allowed the credit
under this section for the taxable year of the purchase or any prior
taxable year or is a taxpayer allowed the federal credit under
Section 42 of the Internal Revenue Code, relating to low-income
housing credit, for the taxable year of the purchase or any prior
taxable year in connection with any project located in this state.
For purposes of this subparagraph, "taxpayer allowed the credit under
this section" means a taxpayer that is allowed the credit under this
section without regard to the purchase of a credit pursuant to this
subdivision.
(2) (A) The taxpayer that originally received the credit shall
report to the California Tax Credit Allocation Committee within 10
days of the sale of the credit, in the form and manner specified by
the California Tax Credit Allocation Committee, all required
information regarding the purchase and sale of the credit, including
the social security or other taxpayer identification number of the
unrelated party or parties to whom the credit has been sold, the face
amount of the credit sold, and the amount of consideration received
by the taxpayer for the sale of the credit.
(B) The California Tax Credit Allocation Committee shall provide
an annual listing to the Franchise Tax Board, in a form and manner
agreed upon by the California Tax Credit Allocation Committee and the
Franchise Tax Board, of the taxpayers that have sold or purchased a
credit pursuant to this subdivision.
(3) (A) A credit may be sold pursuant to this subdivision to more
than one unrelated party.
(B) (i) Except as provided in clause (ii), a credit shall not be
resold by the unrelated party to another taxpayer or other party.
(ii) All or any portion of any credit allowed under this section
may be resold once by an original purchaser to one or more unrelated
parties, subject to all of the requirements of this subdivision.
(4) Notwithstanding any other law, the taxpayer that originally
received the credit that is sold pursuant to paragraph (1) shall
remain solely liable for all obligations and liabilities imposed on
the taxpayer by this section with respect to the credit, none of
which shall apply to a party to whom the credit has been sold or
subsequently transferred. Parties that purchase credits pursuant to
paragraph (1) shall be entitled to utilize the purchased credits in
the same manner in which the taxpayer that originally received the
credit could utilize them.
(5) A taxpayer shall not sell a credit allowed by this section if
the taxpayer was allowed the credit on any tax return of the
taxpayer.
(6) Notwithstanding paragraph (1), the taxpayer, with the approval
of the Executive Director of the California Tax Credit Allocation
Committee, may rescind the election to sell all or any portion of the
credit allowed under this section if the consideration for the
credit falls below 80 percent of the amount of the credit after the
California Tax Credit Allocation Committee reservation.
(p) The California Tax Credit Allocation Committee may prescribe
rules, guidelines, or procedures necessary or appropriate to carry
out the purposes of this section, including any guidelines regarding
the allocation of the credit allowed under this section. Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code shall not apply to any rule, guideline, or
procedure prescribed by the California Tax Credit Allocation
Committee pursuant to this section.
(q) This section shall remain in effect for as long as Section 42
of the Internal Revenue Code, relating to low-income housing credit,
remains in effect.
SEC. 87. Section 17053.88.5 is added to the Revenue and Taxation
Code, to read:
17053.88.5. (a) In the case of a qualified taxpayer who donates
fresh fruits or fresh vegetables to a food bank located in California
under Chapter 5 (commencing with Section 58501) of Part 1 of
Division 21 of the Food and Agricultural Code, for taxable years
beginning on or after January 1, 2017, and before January 1, 2022,
there shall be allowed as a credit against the "net tax," defined by
Section 17039, an amount equal to 15 percent of the qualified value
of those fresh fruits or fresh vegetables.
(b) For purposes of this section:
(1) "Qualified taxpayer" means the person responsible for planting
a crop, managing the crop, and harvesting the crop from the land.
(2) (A) "Qualified value" shall be calculated by using the
weighted average wholesale price based on the qualified taxpayer's
total like grade wholesale sales of the donated item sold within the
calendar month of the qualified taxpayer's donation.
(B) If no wholesale sales of the donated item have occurred in the
calendar month of the qualified taxpayer's donation, the "qualified
value" shall be equal to the nearest regional wholesale market price
for the calendar month of the donation based upon the same grade
products as published by the United States Department of Agriculture'
s Agricultural Marketing Service or its successor.
(c) If the credit allowed by this section is claimed by the
qualified taxpayer, any deduction otherwise allowed under this part
for that amount of the cost paid or incurred by the qualified
taxpayer that is eligible for the credit shall be reduced by the
amount of the credit provided in subdivision (a).
(d) The donor shall provide to the nonprofit organization the
qualified value of the donated fresh fruits or fresh vegetables and
information regarding the origin of where the donated fruits or
vegetables were grown, and upon receipt of the donated fresh fruits
or fresh vegetables, the nonprofit organization shall provide a
certificate to the donor. The certificate shall contain a statement
signed and dated by a person authorized by that organization that the
product is donated under Chapter 5 (commencing with Section 58501)
of Part 1 of Division 21 of the Food and Agricultural Code. The
certificate shall also contain the type and quantity of product
donated, the name of donor or donors, the name and address of the
donee nonprofit organization, and, as provided by the donor, the
qualified value of the donated fresh
fruits or fresh vegetables and its origins. Upon the request
of the Franchise Tax Board, the qualified taxpayer shall provide a
copy of the certification to the Franchise Tax Board.
(e) The credit allowed by this section may be claimed only on a
timely filed original return.
(f) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
in the following year, and for the six succeeding years if
necessary, until the credit has been exhausted.
(g) In accordance with Section 41, the purpose of the credit is to
increase fresh fruits and vegetable donations to food banks. Using
the information available to the Franchise Tax Board from the
certificates required under subdivision (d) and subdivision (d) of
Section 23688.5, the Franchise Tax Board shall report to the
Legislature on or before December 1, 2019, and each December 1
thereafter until the inoperative date specified in subdivision (h),
regarding the utilization of the credit authorized by this section
and Section 23688.5. The Franchise Tax Board shall also include in
the report the qualified value of the fresh fruits and fresh
vegetables donated, the county in which the products originated, and
the month the donation was made.
(h) (1) A report required to be submitted pursuant to subdivision
(g) shall be submitted in compliance with Section 9795 of the
Government Code.
(2) The requirement for submitting a report imposed under
subdivision (g) is inoperative on January 1, 2021, pursuant to
Section 10231.5 of the Government Code.
(i) This section shall be repealed on December 1, 2022.
SEC. 88. Section 17058 of the Revenue and Taxation Code is amended
to read:
17058. (a) (1) There shall be allowed as a credit against the
"net tax," defined by Section 17039, a state low-income housing tax
credit in an amount equal to the amount determined in subdivision
(c), computed in accordance with Section 42 of the Internal Revenue
Code, relating to low-income housing credit, except as otherwise
provided in this section.
(2) "Taxpayer," for purposes of this section, means the sole owner
in the case of an individual, the partners in the case of a
partnership, and the shareholders in the case of an "S" corporation.
(3) "Housing sponsor," for purposes of this section, means the
sole owner in the case of an individual, the partnership in the case
of a partnership, and the "S" corporation in the case of an "S"
corporation.
(b) (1) The amount of the credit allocated to any housing sponsor
shall be authorized by the California Tax Credit Allocation
Committee, or any successor thereof, based on a project's need for
the credit for economic feasibility in accordance with the
requirements of this section.
(A) The low-income housing project shall be located in California
and shall meet either of the following requirements:
(i) Except for projects to provide farmworker housing, as defined
in subdivision (h) of Section 50199.7 of the Health and Safety Code,
that are allocated credits solely under the set-aside described in
subdivision (c) of Section 50199.20 of the Health and Safety Code,
the project's housing sponsor has been allocated by the California
Tax Credit Allocation Committee a credit for federal income tax
purposes under Section 42 of the Internal Revenue Code, relating to
low-income housing credit.
(ii) It qualifies for a credit under Section 42(h)(4)(B) of the
Internal Revenue Code, relating to special rule where 50 percent or
more of building is financed with tax-exempt bonds subject to volume
cap.
(B) The California Tax Credit Allocation Committee shall not
require fees for the credit under this section in addition to those
fees required for applications for the tax credit pursuant to Section
42 of the Internal Revenue Code, relating to low-income housing
credit. The committee may require a fee if the application for the
credit under this section is submitted in a calendar year after the
year the application is submitted for the federal tax credit.
(C) (i) For a project that receives a preliminary reservation of
the state low-income housing tax credit, allowed pursuant to
subdivision (a), on or after January 1, 2009, and before January 1,
2020, the credit shall be allocated to the partners of a partnership
owning the project in accordance with the partnership agreement,
regardless of how the federal low-income housing tax credit with
respect to the project is allocated to the partners, or whether the
allocation of the credit under the terms of the agreement has
substantial economic effect, within the meaning of Section 704(b) of
the Internal Revenue Code, relating to determination of distributive
share.
(ii) To the extent the allocation of the credit to a partner under
this section lacks substantial economic effect, any loss or
deduction otherwise allowable under this part that is attributable to
the sale or other disposition of that partner's partnership interest
made prior to the expiration of the federal credit shall not be
allowed in the taxable year in which the sale or other disposition
occurs, but shall instead be deferred until and treated as if it
occurred in the first taxable year immediately following the taxable
year in which the federal credit period expires for the project
described in clause (i).
(iii) This subparagraph does not apply to a project that receives
a preliminary reservation of state low-income housing tax credits
under the set-aside described in subdivision (c) of Section 50199.20
of the Health and Safety Code unless the project also receives a
preliminary reservation of federal low-income housing tax credits.
(2) (A) The California Tax Credit Allocation Committee shall
certify to the housing sponsor the amount of tax credit under this
section allocated to the housing sponsor for each credit period.
(B) In the case of a partnership or an "S" corporation, the
housing sponsor shall provide a copy of the California Tax Credit
Allocation Committee certification to the taxpayer.
(C) The taxpayer shall, upon request, provide a copy of the
certification to the Franchise Tax Board.
(D) All elections made by the taxpayer pursuant to Section 42 of
the Internal Revenue Code, relating to low-income housing credit,
apply to this section.
(E) (i) Except as described in clause (ii), for buildings located
in designated difficult development areas (DDAs) or qualified census
tracts (QCTs), as defined in Section 42(d)(5)(B) of the Internal
Revenue Code, relating to increase in credit for buildings in
high-cost areas, credits may be allocated under this section in the
amounts prescribed in subdivision (c), provided that the amount of
credit allocated under Section 42 of the Internal Revenue Code,
relating to low-income housing credit, is computed on 100 percent of
the qualified basis of the building.
(ii) Notwithstanding clause (i), the California Tax Credit
Allocation Committee may allocate the credit for buildings located in
DDAs or QCTs that are restricted to having 50 percent of its
occupants be special needs households, as defined in the California
Code of Regulations by the California Tax Credit Allocation
Committee, even if the taxpayer receives federal credits pursuant to
Section 42(d)(5)(B) of the Internal Revenue Code, relating to
increase in credit for buildings in high-cost areas, provided that
the credit allowed under this section shall not exceed 30 percent of
the eligible basis of the building.
(F) (i) The California Tax Credit Allocation Committee may
allocate a credit under this section in exchange for a credit
allocated pursuant to Section 42(d)(5)(B) of the Internal Revenue
Code, relating to increase in credit for buildings in high-cost
areas, in amounts up to 30 percent of the eligible basis of a
building if the credits allowed under Section 42 of the Internal
Revenue Code, relating to low-income housing credit, are reduced by
an equivalent amount.
(ii) An equivalent amount shall be determined by the California
Tax Credit Allocation Committee based upon the relative amount
required to produce an equivalent state tax credit to the taxpayer.
(c) Section 42(b) of the Internal Revenue Code, relating to
applicable percentage: 70 percent present value credit for certain
new buildings; 30 percent present value credit for certain other
buildings, shall be modified as follows:
(1) In the case of any qualified low-income building placed in
service by the housing sponsor during 1987, the term "applicable
percentage" means 9 percent for each of the first three years and 3
percent for the fourth year for new buildings (whether or not the
building is federally subsidized) and for existing buildings.
(2) In the case of any qualified low-income building that receives
an allocation after 1989 and is a new building not federally
subsidized, the term "applicable percentage" means the following:
(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are not
federally subsidized for the taxable year, determined in accordance
with the requirements of Section 42(b)(2) of the Internal Revenue
Code, relating to temporary minimum credit rate for nonfederally
subsidized new buildings, in lieu of the percentage prescribed in
Section 42(b)(1)(A) of the Internal Revenue Code.
(B) For the fourth year, the difference between 30 percent and the
sum of the applicable percentages for the first three years.
(3) In the case of any qualified low-income building that receives
an allocation after 1989 and that is a new building that is
federally subsidized or that is an existing building that is "at risk
of conversion," the term "applicable percentage" means the
following:
(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are federally
subsidized for the taxable year.
(B) For the fourth year, the difference between 13 percent and the
sum of the applicable percentages for the first three years.
(4) For purposes of this section, the term "at risk of conversion,"
with respect to an existing property means a property that satisfies
all of the following criteria:
(A) The property is a multifamily rental housing development in
which at least 50 percent of the units receive governmental
assistance pursuant to any of the following:
(i) New construction, substantial rehabilitation, moderate
rehabilitation, property disposition, and loan management set-aside
programs, or any other program providing project-based assistance
pursuant to Section 8 of the United States Housing Act of 1937,
Section 1437f of Title 42 of the United States Code, as amended.
(ii) The Below-Market-Interest-Rate Program pursuant to Section
221(d)(3) of the National Housing Act, Sections 1715 l (d)
(3) and (5) of Title 12 of the United States Code.
(iii) Section 236 of the National Housing Act, Section 1715z-1 of
Title 12 of the United States Code.
(iv) Programs for rent supplement assistance pursuant to Section
101 of the Housing and Urban Development Act of 1965, Section 1701s
of Title 12 of the United States Code, as amended.
(v) Programs pursuant to Section 515 of the Housing Act of 1949,
Section 1485 of Title 42 of the United States Code, as amended.
(vi) The low-income housing credit program set forth in Section 42
of the Internal Revenue Code, relating to low-income housing credit.
(B) The restrictions on rent and income levels will terminate or
the federally insured mortgage on the property is eligible for
prepayment any time within five years before or after the date of
application to the California Tax Credit Allocation Committee.
(C) The entity acquiring the property enters into a regulatory
agreement that requires the property to be operated in accordance
with the requirements of this section for a period equal to the
greater of 55 years or the life of the property.
(D) The property satisfies the requirements of Section 42(e) of
the Internal Revenue Code, relating to rehabilitation expenditures
treated as separate new building, except that the provisions of
Section 42(e)(3)(A)(ii)(I) shall not apply.
(d) The term "qualified low-income housing project" as defined in
Section 42(c)(2) of the Internal Revenue Code, relating to qualified
low-income building, is modified by adding the following
requirements:
(1) The taxpayer shall be entitled to receive a cash distribution
from the operations of the project, after funding required reserves,
that, at the election of the taxpayer, is equal to:
(A) An amount not to exceed 8 percent of the lesser of:
(i) The owner equity, which shall include the amount of the
capital contributions actually paid to the housing sponsor and shall
not include any amounts until they are paid on an investor note.
(ii) Twenty percent of the adjusted basis of the building as of
the close of the first taxable year of the credit period.
(B) The amount of the cashflow from those units in the building
that are not low-income units. For purposes of computing cashflow
under this subparagraph, operating costs shall be allocated to the
low-income units using the "floor space fraction," as defined in
Section 42 of the Internal Revenue Code, relating to low-income
housing credit.
(C) Any amount allowed to be distributed under subparagraph (A)
that is not available for distribution during the first five years of
the compliance period may be accumulated and distributed any time
during the first 15 years of the compliance period but not
thereafter.
(2) The limitation on return applies in the aggregate to the
partners if the housing sponsor is a partnership and in the aggregate
to the shareholders if the housing sponsor is an "S" corporation.
(3) The housing sponsor shall apply any cash available for
distribution in excess of the amount eligible to be distributed under
paragraph (1) to reduce the rent on rent-restricted units or to
increase the number of rent-restricted units subject to the tests of
Section 42(g)(1) of the Internal Revenue Code, relating to in
general.
(e) The provisions of Section 42(f) of the Internal Revenue Code,
relating to definition and special rules relating to credit period,
shall be modified as follows:
(1) The term "credit period" as defined in Section 42(f)(1) of the
Internal Revenue Code, relating to credit period defined, is
modified by substituting "four taxable years" for "10 taxable years."
(2) The special rule for the first taxable year of the credit
period under Section 42(f)(2) of the Internal Revenue Code, relating
to special rules for 1st year of credit period, shall not apply to
the tax credit under this section.
(3) Section 42(f)(3) of the Internal Revenue Code, relating to
determination of applicable percentage with respect to increases in
qualified basis after 1st year of credit period, is modified to read:
If, as of the close of any taxable year in the compliance period,
after the first year of the credit period, the qualified basis of any
building exceeds the qualified basis of that building as of the
close of the first year of the credit period, the housing sponsor, to
the extent of its tax credit allocation, shall be eligible for a
credit on the excess in an amount equal to the applicable percentage
determined pursuant to subdivision (c) for the four-year period
beginning with the taxable year in which the increase in qualified
basis occurs.
(f) The provisions of Section 42(h) of the Internal Revenue Code,
relating to limitation on aggregate credit allowable with respect to
projects located in a state, shall be modified as follows:
(1) Section 42(h)(2) of the Internal Revenue Code, relating to
allocated credit amount to apply to all taxable years ending during
or after credit allocation year, does not apply and instead the
following provisions apply:
The total amount for the four-year credit period of the housing
credit dollars allocated in a calendar year to any building shall
reduce the aggregate housing credit dollar amount of the California
Tax Credit Allocation Committee for the calendar year in which the
allocation is made.
(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)
(I), (7), and (8) of Section 42(h) of the Internal Revenue Code,
relating to limitation on aggregate credit allowable with respect to
projects located in a state, do not apply to this section.
(g) The aggregate housing credit dollar amount that may be
allocated annually by the California Tax Credit Allocation Committee
pursuant to this section, Section 12206, and Section 23610.5 shall be
an amount equal to the sum of all the following:
(1) Seventy million dollars ($70,000,000) for the 2001 calendar
year, and, for the 2002 calendar year and each calendar year
thereafter, seventy million dollars ($70,000,000) increased by the
percentage, if any, by which the Consumer Price Index for the
preceding calendar year exceeds the Consumer Price Index for the 2001
calendar year. For the purposes of this paragraph, the term
"Consumer Price Index" means the last Consumer Price Index for All
Urban Consumers published by the federal Department of Labor.
(2) The unused housing credit ceiling, if any, for the preceding
calendar years.
(3) The amount of housing credit ceiling returned in the calendar
year. For purposes of this paragraph, the amount of housing credit
dollar amount returned in the calendar year equals the housing credit
dollar amount previously allocated to any project that does not
become a qualified low-income housing project within the period
required by this section or to any project with respect to which an
allocation is canceled by mutual consent of the California Tax Credit
Allocation Committee and the allocation recipient.
(4) Five hundred thousand dollars ($500,000) per calendar year for
projects to provide farmworker housing, as defined in subdivision
(h) of Section 50199.7 of the Health and Safety Code.
(5) The amount of any unallocated or returned credits under former
Sections 17053.14, 23608.2, and 23608.3, as those sections read
prior to January 1, 2009, until fully exhausted for projects to
provide farmworker housing, as defined in subdivision (h) of Section
50199.7 of the Health and Safety Code.
(h) The term "compliance period" as defined in Section 42(i)(1) of
the Internal Revenue Code, relating to compliance period, is
modified to mean, with respect to any building, the period of 30
consecutive taxable years beginning with the first taxable year of
the credit period with respect thereto.
(i) Section 42(j) of the Internal Revenue Code, relating to
recapture of credit, does not apply and the following requirements of
this section shall be set forth in a regulatory agreement between
the California Tax Credit Allocation Committee and the housing
sponsor, and this agreement shall be subordinated, when required, to
any lien or encumbrance of any banks or other institutional lenders
to the project. The regulatory agreement entered into pursuant to
subdivision (f) of Section 50199.14 of the Health and Safety Code
shall apply, provided that the agreement includes all of the
following provisions:
(1) A term not less than the compliance period.
(2) A requirement that the agreement be recorded in the official
records of the county in which the qualified low-income housing
project is located.
(3) A provision stating which state and local agencies can enforce
the regulatory agreement in the event the housing sponsor fails to
satisfy any of the requirements of this section.
(4) A provision that the regulatory agreement shall be deemed a
contract enforceable by tenants as third-party beneficiaries thereto
and that allows individuals, whether prospective, present, or former
occupants of the building, who meet the income limitation applicable
to the building, the right to enforce the regulatory agreement in any
state court.
(5) A provision incorporating the requirements of Section 42 of
the Internal Revenue Code, relating to low-income housing credit, as
modified by this section.
(6) A requirement that the housing sponsor notify the California
Tax Credit Allocation Committee or its designee if there is a
determination by the Internal Revenue Service that the project is not
in compliance with Section 42(g) of the Internal Revenue Code,
relating to qualified low-income housing project.
(7) A requirement that the housing sponsor, as security for the
performance of the housing sponsor's obligations under the regulatory
agreement, assign the housing sponsor's interest in rents that it
receives from the project, provided that until there is a default
under the regulatory agreement, the housing sponsor is entitled to
collect and retain the rents.
(8) A provision that the remedies available in the event of a
default under the regulatory agreement that is not cured within a
reasonable cure period include, but are not limited to, allowing any
of the parties designated to enforce the regulatory agreement to
collect all rents with respect to the project; taking possession of
the project and operating the project in accordance with the
regulatory agreement until the enforcer determines the housing
sponsor is in a position to operate the project in accordance with
the regulatory agreement; applying to any court for specific
performance; securing the appointment of a receiver to operate the
project; or any other relief as may be appropriate.
(j) (1) The committee shall allocate the housing credit on a
regular basis consisting of two or more periods in each calendar year
during which applications may be filed and considered. The committee
shall establish application filing deadlines, the maximum percentage
of federal and state low-income housing tax credit ceiling that may
be allocated by the committee in that period, and the approximate
date on which allocations shall be made. If the enactment of federal
or state law, the adoption of rules or regulations, or other similar
events prevent the use of two allocation periods, the committee may
reduce the number of periods and adjust the filing deadlines, maximum
percentage of credit allocated, and the allocation dates.
(2) The committee shall adopt a qualified allocation plan, as
provided in Section 42(m)(1) of the Internal Revenue Code, relating
to plans for allocation of credit among projects. In adopting this
plan, the committee shall comply with the provisions of Sections 42
(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue Code, relating to
qualified allocation plan and relating to certain selection criteria
must be used, respectively.
(3) Notwithstanding Section 42(m) of the Internal Revenue Code,
relating to responsibilities of housing credit agencies, the
California Tax Credit Allocation Committee shall allocate housing
credits in accordance with the qualified allocation plan and
regulations, which shall include the following provisions:
(A) All housing sponsors, as defined by paragraph (3) of
subdivision (a), shall demonstrate at the time the application is
filed with the committee that the project meets the following
threshold requirements:
(i) The housing sponsor shall demonstrate that there is a need and
demand for low-income housing in the community or region for which
it is proposed.
(ii) The project's proposed financing, including tax credit
proceeds, shall be sufficient to complete the project and that the
proposed operating income shall be adequate to operate the project
for the extended use period.
(iii) The project shall have enforceable financing commitments,
either construction or permanent financing, for at least 50 percent
of the total estimated financing of the project.
(iv) The housing sponsor shall have and maintain control of the
site for the project.
(v) The housing sponsor shall demonstrate that the project
complies with all applicable local land use and zoning ordinances.
(vi) The housing sponsor shall demonstrate that the project
development team has the experience and the financial capacity to
ensure project completion and operation for the extended use period.
(vii) The housing sponsor shall demonstrate the amount of tax
credit that is necessary for the financial feasibility of the project
and its viability as a qualified low-income housing project
throughout the extended use period, taking into account operating
expenses, a supportable debt service, reserves, funds set aside for
rental subsidies and required equity, and a development fee that does
not exceed a specified percentage of the eligible basis of the
project prior to inclusion of the development fee in the eligible
basis, as determined by the committee.
(B) The committee shall give a preference to those projects
satisfying all of the threshold requirements of subparagraph (A) if
both of the following apply:
(i) The project serves the lowest income tenants at rents
affordable to those tenants.
(ii) The project is obligated to serve qualified tenants for the
longest period.
(C) In addition to the provisions of subparagraphs (A) and (B),
the committee shall use the following criteria in allocating housing
credits:
(i) Projects serving large families in which a substantial number,
as defined by the committee, of all residential units are low-income
units with three and more bedrooms.
(ii) Projects providing single-room occupancy units serving very
low income tenants.
(iii) Existing projects that are "at risk of conversion," as
defined by paragraph (4) of subdivision (c).
(iv) Projects for which a public agency provides direct or
indirect long-term financial support for at least 15 percent of the
total project development costs or projects for which the owner's
equity constitutes at least 30 percent of the total project
development costs.
(v) Projects that provide tenant amenities not generally available
to residents of low-income housing projects.
(4) For purposes of allocating credits pursuant to this section,
the committee shall not give preference to any project by virtue of
the date of submission of its application.
(k) Section 42( l ) of the Internal Revenue Code,
relating to certifications and other reports to secretary, shall be
modified as follows:
The term "secretary" shall be replaced by the term "Franchise Tax
Board."
( l ) In the case in which the credit allowed under
this section exceeds the net tax, the excess may be carried over to
reduce the net tax in the following year, and succeeding years, if
necessary, until the credit has been exhausted.
(m) A project that received an allocation of a 1989 federal
housing credit dollar amount shall be eligible to receive an
allocation of a 1990 state housing
credit dollar amount, subject to all of the following
conditions:
(1) The project was not placed in service prior to 1990.
(2) To the extent the amendments made to this section by the
Statutes of 1990 conflict with any provisions existing in this
section prior to those amendments, the prior provisions of law shall
prevail.
(3) Notwithstanding paragraph (2), a project applying for an
allocation under this subdivision is subject to the requirements of
paragraph (3) of subdivision (j).
(n) The credit period with respect to an allocation of credit in
1989 by the California Tax Credit Allocation Committee of which any
amount is attributable to unallocated credit from 1987 or 1988 shall
not begin until after December 31, 1989.
(o) The provisions of Section 11407(a) of Public Law 101-508,
relating to the effective date of the extension of the low-income
housing credit, apply to calendar years after 1989.
(p) The provisions of Section 11407(c) of Public Law 101-508,
relating to election to accelerate credit, do not apply.
(q) (1) For a project that receives a preliminary reservation
under this section beginning on or after January 1, 2016, and before
Janaury 1, 2020, a taxpayer may make an irrevocable election in its
application to the California Tax Credit Allocation Committee to sell
all or any portion of any credit allowed under this section to one
or more unrelated parties for each taxable year in which the credit
is allowed subject to both of the following conditions:
(A) The credit is sold for consideration that is not less than 80
percent of the amount of the credit.
(B) The unrelated party or parties purchasing any or all of the
credit pursuant to this subdivision is a taxpayer allowed the credit
under this section for the taxable year of the purchase or any prior
taxable year or is a taxpayer allowed the federal credit under
Section 42 of the Internal Revenue Code, relating to low-income
housing credit, for the taxable year of the purchase or any prior
taxable year in connection with any project located in this state.
For purposes of this subparagraph, "taxpayer allowed the credit under
this section" means a taxpayer that is allowed the credit under this
section without regard to the purchase of a credit pursuant to this
subdivision.
(2) (A) The taxpayer that originally received the credit shall
report to the California Tax Credit Allocation Committee within 10
days of the sale of the credit, in the form and manner specified by
the California Tax Credit Allocation Committee, all required
information regarding the purchase and sale of the credit, including
the social security or other taxpayer identification number of the
unrelated party or parties to whom the credit has been sold, the face
amount of the credit sold, and the amount of consideration received
by the taxpayer for the sale of the credit.
(B) The California Tax Credit Allocation Committee shall provide
an annual listing to the Franchise Tax Board, in a form and manner
agreed upon by the California Tax Credit Allocation Committee and the
Franchise Tax Board, of the taxpayers that have sold or purchased a
credit pursuant to this subdivision.
(3) (A) A credit may be sold pursuant to this subdivision to more
than one unrelated party.
(B) (i) Except as provided in clause (ii), a credit shall not be
resold by the unrelated party to another taxpayer or other party.
(ii) All or any portion of any credit allowed under this section
may be resold once by an original purchaser to one or more unrelated
parties, subject to all of the requirements of this subdivision.
(4) Notwithstanding any other law, the taxpayer that originally
received the credit that is sold pursuant to paragraph (1) shall
remain solely liable for all obligations and liabilities imposed on
the taxpayer by this section with respect to the credit, none of
which shall apply to a party to whom the credit has been sold or
subsequently transferred. Parties that purchase credits pursuant to
paragraph (1) shall be entitled to utilize the purchased credits in
the same manner in which the taxpayer that originally received the
credit could utilize them.
(5) A taxpayer shall not sell a credit allowed by this section if
the taxpayer was allowed the credit on any tax return of the
taxpayer.
(6) Notwithstanding paragraph (1), the taxpayer, with the approval
of the Executive Director of the California Tax Credit Allocation
Committee, may rescind the election to sell all or any portion of the
credit allowed under this section if the consideration for the
credit falls below 80 percent of the amount of the credit after the
California Tax Credit Allocation Committee reservation.
(r) The California Tax Credit Allocation Committee may prescribe
rules, guidelines, or procedures necessary or appropriate to carry
out the purposes of this section, including any guidelines regarding
the allocation of the credit allowed under this section. Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code shall not apply to any rule, guideline, or
procedure prescribed by the California Tax Credit Allocation
Committee pursuant to this section.
(s) The amendments to this section made by Chapter 1222 of the
Statutes of 1993 apply only to taxable years beginning on or after
January 1, 1994.
(t) This section shall remain in effect on and after December 1,
1990, for as long as Section 42 of the Internal Revenue Code,
relating to low-income housing credit, remains in effect. Any unused
credit may continue to be carried forward, as provided in subdivision
( l ), until the credit has been exhausted.
SEC. 89. Section 18900.24 of the Revenue and Taxation Code is
amended to read:
18900.24. All money transferred to the Habitat for Humanity Fund,
upon appropriation by the Legislature, shall be allocated as
follows:
(a) To the Franchise Tax Board, the Controller, and the Department
of Housing and Community Development for reimbursement of all costs
incurred by the Franchise Tax Board, the Controller, and the
Department of Housing and Community Development in connection with
their duties under this article.
(b) (1) To the Department of Housing and Community Development for
disbursement to Habitat for Humanity of California, Inc., a
California nonprofit public benefit corporation representing and
supporting California Habitat for Humanity affiliates as a
state-support organization.
(2) Habitat for Humanity of California, Inc., shall submit a plan
to the Department of Housing and Community Development, within 60
calendar days of receiving a disbursement, for the use and
competitive project-specific distribution of moneys pursuant to this
article to Habitat for Humanity affiliates in California that are in
active status, as described on the Business Search page of the
Secretary of State's Internet Web site, and that are exempt from
federal income taxation as an organization described in Section 501
(c)(3) of the Internal Revenue Code.
(c) Habitat for Humanity of California, Inc., shall not use more
than 5 percent of the moneys received pursuant to this article for
administrative expenses.
(d) A Habitat for Humanity affiliate shall not use the moneys
received pursuant to this article for administrative expenses or for
purposes outside of California.
(e) Habitat for Humanity of California, Inc., shall submit an
annual audit of the program to the Department of Housing and
Community Development within 60 calendar days of the completion of
the audit.
SEC. 90. Section 23610.5 of the Revenue and Taxation Code is
amended to read:
23610.5. (a) (1) There shall be allowed as a credit against the
"tax," defined by Section 23036, a state low-income housing tax
credit in an amount equal to the amount determined in subdivision
(c), computed in accordance with Section 42 of the Internal Revenue
Code, relating to low-income housing credit, except as otherwise
provided in this section.
(2) "Taxpayer," for purposes of this section, means the sole owner
in the case of a "C" corporation, the partners in the case of a
partnership, and the shareholders in the case of an "S" corporation.
(3) "Housing sponsor," for purposes of this section, means the
sole owner in the case of a "C" corporation, the partnership in the
case of a partnership, and the "S" corporation in the case of an "S"
corporation.
(b) (1) The amount of the credit allocated to any housing sponsor
shall be authorized by the California Tax Credit Allocation
Committee, or any successor thereof, based on a project's need for
the credit for economic feasibility in accordance with the
requirements of this section.
(A) The low-income housing project shall be located in California
and shall meet either of the following requirements:
(i) Except for projects to provide farmworker housing, as defined
in subdivision (h) of Section 50199.7 of the Health and Safety Code,
that are allocated credits solely under the set-aside described in
subdivision (c) of Section 50199.20 of the Health and Safety Code,
the project's housing sponsor has been allocated by the California
Tax Credit Allocation Committee a credit for federal income tax
purposes under Section 42 of the Internal Revenue Code, relating to
low-income housing credit.
(ii) It qualifies for a credit under Section 42(h)(4)(B) of the
Internal Revenue Code, relating to special rule where 50 percent or
more of building is financed with tax-exempt bonds subject to volume
cap.
(B) The California Tax Credit Allocation Committee shall not
require fees for the credit under this section in addition to those
fees required for applications for the tax credit pursuant to Section
42 of the Internal Revenue Code, relating to low-income housing
credit. The committee may require a fee if the application for the
credit under this section is submitted in a calendar year after the
year the application is submitted for the federal tax credit.
(C) (i) For a project that receives a preliminary reservation of
the state low-income housing tax credit, allowed pursuant to
subdivision (a), on or after January 1, 2009, and before January 1,
2020, the credit shall be allocated to the partners of a partnership
owning the project in accordance with the partnership agreement,
regardless of how the federal low-income housing tax credit with
respect to the project is allocated to the partners, or whether the
allocation of the credit under the terms of the agreement has
substantial economic effect, within the meaning of Section 704(b) of
the Internal Revenue Code, relating to determination of distributive
share.
(ii) To the extent the allocation of the credit to a partner under
this section lacks substantial economic effect, any loss or
deduction otherwise allowable under this part that is attributable to
the sale or other disposition of that partner's partnership interest
made prior to the expiration of the federal credit shall not be
allowed in the taxable year in which the sale or other disposition
occurs, but shall instead be deferred until and treated as if it
occurred in the first taxable year immediately following the taxable
year in which the federal credit period expires for the project
described in clause (i).
(iii) This subparagraph does not apply to a project that receives
a preliminary reservation of state low-income housing tax credits
under the set-aside described in subdivision (c) of Section 50199.20
of the Health and Safety Code unless the project also receives a
preliminary reservation of federal low-income housing tax credits.
(2) (A) The California Tax Credit Allocation Committee shall
certify to the housing sponsor the amount of tax credit under this
section allocated to the housing sponsor for each credit period.
(B) In the case of a partnership or an "S" corporation, the
housing sponsor shall provide a copy of the California Tax Credit
Allocation Committee certification to the taxpayer.
(C) The taxpayer shall, upon request, provide a copy of the
certification to the Franchise Tax Board.
(D) All elections made by the taxpayer pursuant to Section 42 of
the Internal Revenue Code, relating to low-income housing credit,
apply to this section.
(E) (i) Except as described in clause (ii), for buildings located
in designated difficult development areas (DDAs) or qualified census
tracts (QCTs), as defined in Section 42(d)(5)(B) of the Internal
Revenue Code, relating to increase in credit for buildings in
high-cost areas, credits may be allocated under this section in the
amounts prescribed in subdivision (c), provided that the amount of
credit allocated under Section 42 of the Internal Revenue Code,
relating to low-income housing credit, is computed on 100 percent of
the qualified basis of the building.
(ii) Notwithstanding clause (i), the California Tax Credit
Allocation Committee may allocate the credit for buildings located in
DDAs or QCTs that are restricted to having 50 percent of its
occupants be special needs households, as defined in the California
Code of Regulations by the California Tax Credit Allocation
Committee, even if the taxpayer receives federal credits pursuant to
Section 42(d)(5)(B) of the Internal Revenue Code, relating to
increase in credit for buildings in high cost areas, provided that
the credit allowed under this section shall not exceed 30 percent of
the eligible basis of the building.
(F) (i) The California Tax Credit Allocation Committee may
allocate a credit under this section in exchange for a credit
allocated pursuant to Section 42(d)(5)(B) of the Internal Revenue
Code, relating to increase in credit for buildings in high cost
areas, in amounts up to 30 percent of the eligible basis of a
building if the credits allowed under Section 42 of the Internal
Revenue Code, relating to low-income housing credit, are reduced by
an equivalent amount.
(ii) An equivalent amount shall be determined by the California
Tax Credit Allocation Committee based upon the relative amount
required to produce an equivalent state tax credit to the taxpayer.
(c) Section 42(b) of the Internal Revenue Code, relating to
applicable percentage: 70 percent present value credit for certain
new buildings; 30 percent present value credit for certain other
buildings, shall be modified as follows:
(1) In the case of any qualified low-income building placed in
service by the housing sponsor during 1987, the term "applicable
percentage" means 9 percent for each of the first three years and 3
percent for the fourth year for new buildings (whether or not the
building is federally subsidized) and for existing buildings.
(2) In the case of any qualified low-income building that receives
an allocation after 1989 and is a new building not federally
subsidized, the term "applicable percentage" means the following:
(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are not
federally subsidized for the taxable year, determined in accordance
with the requirements of Section 42(b)(2) of the Internal Revenue
Code, relating to temporary minimum credit rate for nonfederally
subsidized new buildings, in lieu of the percentage prescribed in
Section 42(b)(1)(A) of the Internal Revenue Code.
(B) For the fourth year, the difference between 30 percent and the
sum of the applicable percentages for the first three years.
(3) In the case of any qualified low-income building that receives
an allocation after 1989 and that is a new building that is
federally subsidized or that is an existing building that is "at risk
of conversion," the term "applicable percentage" means the
following:
(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are federally
subsidized for the taxable year.
(B) For the fourth year, the difference between 13 percent and the
sum of the applicable percentages for the first three years.
(4) For purposes of this section, the term "at risk of conversion,"
with respect to an existing property means a property that satisfies
all of the following criteria:
(A) The property is a multifamily rental housing development in
which at least 50 percent of the units receive governmental
assistance pursuant to any of the following:
(i) New construction, substantial rehabilitation, moderate
rehabilitation, property disposition, and loan management set-aside
programs, or any other program providing project-based assistance
pursuant to Section 8 of the United States Housing Act of 1937,
Section 1437f of Title 42 of the United States Code, as amended.
(ii) The Below-Market-Interest-Rate Program pursuant to Section
221(d)(3) of the National Housing Act, Sections 1715 l (d)
(3) and (5) of Title 12 of the United States Code.
(iii) Section 236 of the National Housing Act, Section 1715z-1 of
Title 12 of the United States Code.
(iv) Programs for rent supplement assistance pursuant to Section
101 of the Housing and Urban Development Act of 1965, Section 1701s
of Title 12 of the United States Code, as amended.
(v) Programs pursuant to Section 515 of the Housing Act of 1949,
Section 1485 of Title 42 of the United States Code, as amended.
(vi) The low-income housing credit program set forth in Section 42
of the Internal Revenue Code, relating to low-income housing credit.
(B) The restrictions on rent and income levels will terminate or
the federally insured mortgage on the property is eligible for
prepayment any time within five years before or after the date of
application to the California Tax Credit Allocation Committee.
(C) The entity acquiring the property enters into a regulatory
agreement that requires the property to be operated in accordance
with the requirements of this section for a period equal to the
greater of 55 years or the life of the property.
(D) The property satisfies the requirements of Section 42(e) of
the Internal Revenue Code, relating to rehabilitation expenditures
treated as separate new building, except that the provisions of
Section 42(e)(3)(A)(ii)(I) shall not apply.
(d) The term "qualified low-income housing project" as defined in
Section 42(c)(2) of the Internal Revenue Code, relating to qualified
low-income building, is modified by adding the following
requirements:
(1) The taxpayer shall be entitled to receive a cash distribution
from the operations of the project, after funding required reserves,
that, at the election of the taxpayer, is equal to:
(A) An amount not to exceed 8 percent of the lesser of:
(i) The owner equity, which shall include the amount of the
capital contributions actually paid to the housing sponsor and shall
not include any amounts until they are paid on an investor note.
(ii) Twenty percent of the adjusted basis of the building as of
the close of the first taxable year of the credit period.
(B) The amount of the cashflow from those units in the building
that are not low-income units. For purposes of computing cashflow
under this subparagraph, operating costs shall be allocated to the
low-income units using the "floor space fraction," as defined in
Section 42 of the Internal Revenue Code, relating to low-income
housing credit.
(C) Any amount allowed to be distributed under subparagraph (A)
that is not available for distribution during the first five years of
the compliance period may be accumulated and distributed any time
during the first 15 years of the compliance period but not
thereafter.
(2) The limitation on return applies in the aggregate to the
partners if the housing sponsor is a partnership and in the aggregate
to the shareholders if the housing sponsor is an "S" corporation.
(3) The housing sponsor shall apply any cash available for
distribution in excess of the amount eligible to be distributed under
paragraph (1) to reduce the rent on rent-restricted units or to
increase the number of rent-restricted units subject to the tests of
Section 42(g)(1) of the Internal Revenue Code, relating to in
general.
(e) The provisions of Section 42(f) of the Internal Revenue Code,
relating to definition and special rules relating to credit period,
shall be modified as follows:
(1) The term "credit period" as defined in Section 42(f)(1) of the
Internal Revenue Code, relating to credit period defined, is
modified by substituting "four taxable years" for "10 taxable years."
(2) The special rule for the first taxable year of the credit
period under Section 42(f)(2) of the Internal Revenue Code, relating
to special rule for 1st year of credit period, shall not apply to the
tax credit under this section.
(3) Section 42(f)(3) of the Internal Revenue Code, relating to
determination of applicable percentage with respect to increases in
qualified basis after 1st year of credit period, is modified to read:
If, as of the close of any taxable year in the compliance period,
after the first year of the credit period, the qualified basis of any
building exceeds the qualified basis of that building as of the
close of the first year of the credit period, the housing sponsor, to
the extent of its tax credit allocation, shall be eligible for a
credit on the excess in an amount equal to the applicable percentage
determined pursuant to subdivision (c) for the four-year period
beginning with the later of the taxable years in which the increase
in qualified basis occurs.
(f) The provisions of Section 42(h) of the Internal Revenue Code,
relating to limitation on aggregate credit allowable with respect to
projects located in a state, shall be modified as follows:
(1) Section 42(h)(2) of the Internal Revenue Code, relating to
allocated credit amount to apply to all taxable years ending during
or after credit allocation year, does not apply and instead the
following provisions apply:
The total amount for the four-year credit period of the housing
credit dollars allocated in a calendar year to any building shall
reduce the aggregate housing credit dollar amount of the California
Tax Credit Allocation Committee for the calendar year in which the
allocation is made.
(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)
(I), (7), and (8) of Section 42(h) of the Internal Revenue Code,
relating to limitation on aggregate credit allowable with respect to
projects located in a state, do not apply to this section.
(g) The aggregate housing credit dollar amount that may be
allocated annually by the California Tax Credit Allocation Committee
pursuant to this section, Section 12206, and Section 17058 shall be
an amount equal to the sum of all the following:
(1) Seventy million dollars ($70,000,000) for the 2001 calendar
year, and, for the 2002 calendar year and each calendar year
thereafter, seventy million dollars ($70,000,000) increased by the
percentage, if any, by which the Consumer Price Index for the
preceding calendar year exceeds the Consumer Price Index for the 2001
calendar year. For the purposes of this paragraph, the term
"Consumer Price Index" means the last Consumer Price Index for All
Urban Consumers published by the federal Department of Labor.
(2) The unused housing credit ceiling, if any, for the preceding
calendar years.
(3) The amount of housing credit ceiling returned in the calendar
year. For purposes of this paragraph, the amount of housing credit
dollar amount returned in the calendar year equals the housing credit
dollar amount previously allocated to any project that does not
become a qualified low-income housing project within the period
required by this section or to any project with respect to which an
allocation is canceled by mutual consent of the California Tax Credit
Allocation Committee and the allocation recipient.
(4) Five hundred thousand dollars ($500,000) per calendar year for
projects to provide farmworker housing, as defined in subdivision
(h) of Section 50199.7 of the Health and Safety Code.
(5) The amount of any unallocated or returned credits under former
Sections 17053.14, 23608.2, and 23608.3, as those sections read
prior to January 1, 2009, until fully exhausted for projects to
provide farmworker housing, as defined in subdivision (h) of Section
50199.7 of the Health and Safety Code.
(h) The term "compliance period" as defined in Section 42(i)(1) of
the Internal Revenue Code, relating to compliance period, is
modified to mean, with respect to any building, the period of 30
consecutive taxable years beginning with the first taxable year of
the credit period with respect thereto.
(i) Section 42(j) of the Internal Revenue Code, relating to
recapture of credit, does not apply and the following shall be
substituted in its place:
The requirements of this section shall be set forth in a
regulatory agreement between the California Tax Credit Allocation
Committee and the housing sponsor, and this agreement shall be
subordinated, when required, to any lien or encumbrance of any banks
or other institutional lenders to the project. The regulatory
agreement entered into pursuant to subdivision (f) of Section
50199.14 of the Health and Safety Code shall apply, provided that the
agreement includes all of the following provisions:
(1) A term not less than the compliance period.
(2) A requirement that the agreement be recorded in the official
records of the county in which the qualified low-income housing
project is located.
(3) A provision stating which state and local agencies can enforce
the regulatory agreement in the event the housing sponsor fails to
satisfy any of the requirements of this section.
(4) A provision that the regulatory agreement shall be deemed a
contract enforceable by tenants as third-party beneficiaries thereto
and that allows individuals, whether prospective, present, or former
occupants of the building, who meet the income limitation applicable
to the building, the right to enforce the regulatory agreement in any
state court.
(5) A provision incorporating the requirements of Section 42 of
the Internal Revenue Code, relating to low-income housing credit, as
modified by this section.
(6) A requirement that the housing sponsor notify the California
Tax Credit Allocation Committee or its designee if there is a
determination by the Internal Revenue Service that the project is not
in compliance with Section 42(g) of the Internal Revenue Code,
relating to qualified low-income housing project.
(7) A requirement that the housing sponsor, as security for the
performance of the housing sponsor's obligations under the regulatory
agreement, assign the housing sponsor's interest in rents that it
receives from the project, provided that until there is a default
under the regulatory agreement, the housing sponsor is entitled to
collect and retain the
rents.
(8) A provision that the remedies available in the event of a
default under the regulatory agreement that is not cured within a
reasonable cure period include, but are not limited to, allowing any
of the parties designated to enforce the regulatory agreement to
collect all rents with respect to the project; taking possession of
the project and operating the project in accordance with the
regulatory agreement until the enforcer determines the housing
sponsor is in a position to operate the project in accordance with
the regulatory agreement; applying to any court for specific
performance; securing the appointment of a receiver to operate the
project; or any other relief as may be appropriate.
(j) (1) The committee shall allocate the housing credit on a
regular basis consisting of two or more periods in each calendar year
during which applications may be filed and considered. The committee
shall establish application filing deadlines, the maximum percentage
of federal and state low-income housing tax credit ceiling that may
be allocated by the committee in that period, and the approximate
date on which allocations shall be made. If the enactment of federal
or state law, the adoption of rules or regulations, or other similar
events prevent the use of two allocation periods, the committee may
reduce the number of periods and adjust the filing deadlines, maximum
percentage of credit allocated, and the allocation dates.
(2) The committee shall adopt a qualified allocation plan, as
provided in Section 42(m)(1) of the Internal Revenue Code, relating
to plans for allocation of credit among projects. In adopting this
plan, the committee shall comply with the provisions of Sections 42
(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue Code, relating to
qualified allocation plan and relating to certain selection criteria
must be used, respectively.
(3) Notwithstanding Section 42(m) of the Internal Revenue Code,
relating to responsibilities of housing credit agencies, the
California Tax Credit Allocation Committee shall allocate housing
credits in accordance with the qualified allocation plan and
regulations, which shall include the following provisions:
(A) All housing sponsors, as defined by paragraph (3) of
subdivision (a), shall demonstrate at the time the application is
filed with the committee that the project meets the following
threshold requirements:
(i) The housing sponsor shall demonstrate that there is a need for
low-income housing in the community or region for which it is
proposed.
(ii) The project's proposed financing, including tax credit
proceeds, shall be sufficient to complete the project and shall be
adequate to operate the project for the extended use period.
(iii) The project shall have enforceable financing commitments,
either construction or permanent financing, for at least 50 percent
of the total estimated financing of the project.
(iv) The housing sponsor shall have and maintain control of the
site for the project.
(v) The housing sponsor shall demonstrate that the project
complies with all applicable local land use and zoning ordinances.
(vi) The housing sponsor shall demonstrate that the project
development team has the experience and the financial capacity to
ensure project completion and operation for the extended use period.
(vii) The housing sponsor shall demonstrate the amount of tax
credit that is necessary for the financial feasibility of the project
and its viability as a qualified low-income housing project
throughout the extended use period, taking into account operating
expenses, a supportable debt service, reserves, funds set aside for
rental subsidies and required equity, and a development fee that does
not exceed a specified percentage of the eligible basis of the
project prior to inclusion of the development fee in the eligible
basis, as determined by the committee.
(B) The committee shall give a preference to those projects
satisfying all of the threshold requirements of subparagraph (A) if
both of the following apply:
(i) The project serves the lowest income tenants at rents
affordable to those tenants.
(ii) The project is obligated to serve qualified tenants for the
longest period.
(C) In addition to the provisions of subparagraphs (A) and (B),
the committee shall use the following criteria in allocating housing
credits:
(i) Projects serving large families in which a substantial number,
as defined by the committee, of all residential units are low-income
units with three and more bedrooms.
(ii) Projects providing single-room occupancy units serving very
low income tenants.
(iii) Existing projects that are "at risk of conversion," as
defined by paragraph (4) of subdivision (c).
(iv) Projects for which a public agency provides direct or
indirect long-term financial support for at least 15 percent of the
total project development costs or projects for which the owner's
equity constitutes at least 30 percent of the total project
development costs.
(v) Projects that provide tenant amenities not generally available
to residents of low-income housing projects.
(4) For purposes of allocating credits pursuant to this section,
the committee shall not give preference to any project by virtue of
the date of submission of its application except to break a tie when
two or more of the projects have an equal rating.
(5) Not less than 20 percent of the low-income housing tax credits
available annually under this section, Section 12206, and Section
17058 shall be set aside for allocation to rural areas as defined in
Section 50199.21 of the Health and Safety Code. Any amount of credit
set aside for rural areas remaining on or after October 31 of any
calendar year shall be available for allocation to any eligible
project. No amount of credit set aside for rural areas shall be
considered available for any eligible project so long as there are
eligible rural applications pending on October 31.
(k) Section 42( l ) of the Internal Revenue Code,
relating to certifications and other reports to secretary, shall be
modified as follows:
The term "secretary" shall be replaced by the term "Franchise Tax
Board."
( l ) In the case in which the credit allowed under
this section exceeds the "tax," the excess may be carried over to
reduce the "tax" in the following year, and succeeding years if
necessary, until the credit has been exhausted.
(m) A project that received an allocation of a 1989 federal
housing credit dollar amount shall be eligible to receive an
allocation of a 1990 state housing credit dollar amount, subject to
all of the following conditions:
(1) The project was not placed in service prior to 1990.
(2) To the extent the amendments made to this section by the
Statutes of 1990 conflict with any provisions existing in this
section prior to those amendments, the prior provisions of law shall
prevail.
(3) Notwithstanding paragraph (2), a project applying for an
allocation under this subdivision is subject to the requirements of
paragraph (3) of subdivision (j).
(n) The credit period with respect to an allocation of credit in
1989 by the California Tax Credit Allocation Committee of which any
amount is attributable to unallocated credit from 1987 or 1988 shall
not begin until after December 31, 1989.
(o) The provisions of Section 11407(a) of Public Law 101-508,
relating to the effective date of the extension of the low-income
housing credit, apply to calendar years after 1989.
(p) The provisions of Section 11407(c) of Public Law 101-508,
relating to election to accelerate credit, do not apply.
(q) (1) A corporation may elect to assign any portion of any
credit allowed under this section to one or more affiliated
corporations for each taxable year in which the credit is allowed.
For purposes of this subdivision, "affiliated corporation" has the
meaning provided in subdivision (b) of Section 25110, as that section
was amended by Chapter 881 of the Statutes of 1993, as of the last
day of the taxable year in which the credit is allowed, except that
"100 percent" is substituted for "more than 50 percent" wherever it
appears in the section, as that section was amended by Chapter 881 of
the Statutes of 1993, and "voting common stock" is substituted for
"voting stock" wherever it appears in the section, as that section
was amended by Chapter 881 of the Statutes of 1993.
(2) The election provided in paragraph (1):
(A) May be based on any method selected by the corporation that
originally receives the credit.
(B) Shall be irrevocable for the taxable year the credit is
allowed, once made.
(C) May be changed for any subsequent taxable year if the election
to make the assignment is expressly shown on each of the returns of
the affiliated corporations that assign and receive the credits.
(r) (1) For a project that receives a preliminary reservation
under this section beginning on or after January 1, 2016, and before
January 1, 2020, a taxpayer may make an irrevocable election in its
application to the California Tax Credit Allocation Committee to sell
all or any portion of any credit allowed under this section to one
or more unrelated parties for each taxable year in which the credit
is allowed subject to both of the following conditions:
(A) The credit is sold for consideration that is not less than 80
percent of the amount of the credit.
(B) (i) The unrelated party or parties purchasing any or all of
the credit pursuant to this subdivision is a taxpayer allowed the
credit under this section for the taxable year of the purchase or any
prior taxable year or is a taxpayer allowed the federal credit under
Section 42 of the Internal Revenue Code, relating to low-income
housing credit, for the taxable year of the purchase or any prior
taxable year in connection with any project located in this state.
(ii) For purposes of this subparagraph, "taxpayer allowed the
credit under this section" means a taxpayer that is allowed the
credit under this section without regard to the purchase of a credit
pursuant to this subdivision without regard to any of the following:
(I) The purchase of a credit under this section pursuant to this
subdivision.
(II) The assignment of a credit under this section pursuant to
subdivision (q).
(III) The assignment of a credit under this section pursuant to
Section 23363.
(2) (A) The taxpayer that originally received the credit shall
report to the California Tax Credit Allocation Committee within 10
days of the sale of the credit, in the form and manner specified by
the California Tax Credit Allocation Committee, all required
information regarding the purchase and sale of the credit, including
the social security or other taxpayer identification number of the
unrelated party or parties to whom the credit has been sold, the face
amount of the credit sold, and the amount of consideration received
by the taxpayer for the sale of the credit.
(B) The California Tax Credit Allocation Committee shall provide
an annual listing to the Franchise Tax Board, in a form and manner
agreed upon by the California Tax Credit Allocation Committee and the
Franchise Tax Board, of the taxpayers that have sold or purchased a
credit pursuant to this subdivision.
(3) (A) A credit may be sold pursuant to this subdivision to more
than one unrelated party.
(B) (i) Except as provided in clause (ii), a credit shall not be
resold by the unrelated party to another taxpayer or other party.
(ii) All or any portion of any credit allowed under this section
may be resold once by an original purchaser to one or more unrelated
parties, subject to all of the requirements of this subdivision.
(4) Notwithstanding any other law, the taxpayer that originally
received the credit that is sold pursuant to paragraph (1) shall
remain solely liable for all obligations and liabilities imposed on
the taxpayer by this section with respect to the credit, none of
which shall apply to a party to whom the credit has been sold or
subsequently transferred. Parties that purchase credits pursuant to
paragraph (1) shall be entitled to utilize the purchased credits in
the same manner in which the taxpayer that originally received the
credit could utilize them.
(5) A taxpayer shall not sell a credit allowed by this section if
the taxpayer was allowed the credit on any tax return of the
taxpayer.
(6) Notwithstanding paragraph (1), the taxpayer, with the approval
of the Executive Director of the California Tax Credit Allocation
Committee, may rescind the election to sell all or any portion of the
credit allowed under this section if the consideration for the
credit falls below 80 percent of the amount of the credit after the
California Tax Credit Allocation Committee reservation.
(s) The California Tax Credit Allocation Committee may prescribe
rules, guidelines, or procedures necessary or appropriate to carry
out the purposes of this section, including any guidelines regarding
the allocation of the credit allowed under this section. Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code shall not apply to any rule, guideline, or
procedure prescribed by the California Tax Credit Allocation
Committee pursuant to this section.
(t) Any unused credit may continue to be carried forward, as
provided in subdivision ( l ), until the credit has been
exhausted.
(u) This section shall remain in effect on and after December 1,
1990, for as long as Section 42 of the Internal Revenue Code,
relating to low-income housing credit, remains in effect.
(v) The amendments to this section made by Chapter 1222 of the
Statutes of 1993 shall apply only to taxable years beginning on or
after January 1, 1994, except that paragraph (1) of subdivision (q),
as amended, shall apply to taxable years beginning on or after
January 1, 1993.
SEC. 91. Section 23688.5 is added to the Revenue and Taxation
Code, to read:
23688.5. (a) In the case of a qualified taxpayer who donates
fresh fruits or fresh vegetables to a food bank located in California
under Chapter 5 (commencing with Section 58501) of Part 1 of
Division 21 of the Food and Agricultural Code, for taxable years
beginning on or after January 1, 2017, and before January 1, 2022,
there shall be allowed as a credit against the "tax," defined by
Section 23036, an amount equal to 15 percent of the qualified value
of those fresh fruits or fresh vegetables.
(b) For purposes of this section:
(1) "Qualified taxpayer" means the person responsible for planting
a crop, managing the crop, and harvesting the crop from the land.
(2) (A) "Qualified value" shall be calculated by using the
weighted average wholesale price based on the qualified taxpayer's
total like grade wholesale sales of the donated item sold within the
calendar month of the qualified taxpayer's donation.
(B) If no wholesale sales of the donated item have occurred in the
calendar month of the qualified taxpayer's donation, the "qualified
value" shall be equal to the nearest regional wholesale market price
for the calendar month of the donation based upon the same grade
products as published by the United States Department of Agriculture'
s Agricultural Marketing Service or its successor.
(c) If the credit allowed by this section is claimed by the
qualified taxpayer, any deduction otherwise allowed under this part
for that amount of the cost paid or incurred by the qualified
taxpayer that is eligible for the credit shall be reduced by the
amount of the credit provided in subdivision (a).
(d) The donor shall provide to the nonprofit organization the
qualified value of the donated fresh fruits or fresh vegetables and
information regarding the origin of where the donated fruits or
vegetables were grown, and upon receipt of the donated fresh fruits
or fresh vegetables, the nonprofit organization shall provide a
certificate to the donor. The certificate shall contain a statement
signed and dated by a person authorized by that organization that the
product is donated under Chapter 5 (commencing with Section 58501)
of Part 1 of Division 21 of the Food and Agricultural Code. The
certificate shall also contain the type and quantity of product
donated, the name of donor or donors, the name and address of the
donee nonprofit organization, and, as provided by the donor, the
qualified value of the donated fresh fruits or fresh vegetables and
its origins. Upon the request of the Franchise Tax Board, the
qualified taxpayer shall provide a copy of the certification to the
Franchise Tax Board.
(e) The credit allowed by this section may be claimed only on a
timely filed original return.
(f) In the case where the credit allowed by this section exceeds
the "tax," the excess may be carried over to reduce the "tax" in the
following year, and for the six succeeding years if necessary, until
the credit has been exhausted.
(g) This section shall be repealed on December 1, 2022.
SEC. 92. Section 31020 of the Revenue and Taxation Code is
repealed.
SEC. 93. Section 1058.5 of the Water Code is amended to read:
1058.5. (a) This section applies to any emergency regulation
adopted by the board for which the board makes both of the following
findings:
(1) The emergency regulation is adopted to prevent the waste,
unreasonable use, unreasonable method of use, or unreasonable method
of diversion, of water, to promote water recycling or water
conservation, to require curtailment of diversions when water is not
available under the diverter's priority of right, or in furtherance
of any of the foregoing, to require reporting of diversion or use or
the preparation of monitoring reports.
(2) The emergency regulation is adopted in response to conditions
which exist, or are threatened, in a critically dry year immediately
preceded by two or more consecutive below normal, dry, or critically
dry years or during a period for which the Governor has issued a
proclamation of a state of emergency under the California Emergency
Services Act (Chapter 7 (commencing with Section 8550) of Division 1
of Title 2 of the Government Code) based on drought conditions.
(b) Notwithstanding Sections 11346.1 and 11349.6 of the Government
Code, any findings of emergency adopted by the board, in connection
with the adoption of an emergency regulation under this section, are
not subject to review by the Office of Administrative Law.
(c) An emergency regulation adopted by the board under this
section may remain in effect for up to 270 days, as determined by the
board, and is deemed repealed immediately upon a finding by the
board that due to changed conditions it is no longer necessary for
the regulation to remain in effect. An emergency regulation adopted
by the board under this section may be renewed if the board
determines that the conditions specified in paragraph (2) of
subdivision (a) are still in effect.
(d) In addition to any other applicable civil or criminal
penalties, any person or entity who violates a regulation adopted by
the board pursuant to this section is guilty of an infraction
punishable by a fine of up to five hundred dollars ($500) for each
day in which the violation occurs.
(e) (1) Notwithstanding subdivision (b) of Section 1551 or
subdivision (e) of Section 1848, a civil liability imposed under
Chapter 12 (commencing with Section 1825) of Part 2 of Division 2 by
the board or a court for a violation of an emergency conservation
regulation adopted pursuant to this section shall be deposited, and
separately accounted for, in the Water Rights Fund. Funds deposited
in accordance with this subdivision shall be available, upon
appropriation, for water conservation activities and programs.
(2) For purposes of this subdivision, an "emergency conservation
regulation" means an emergency regulation that requires an end user
of water, a water retailer, or a water wholesaler to conserve water
or report to the board on water conservation. Water conservation
includes restrictions or limitations on particular uses of water or a
reduction in the amount of water used or served, but does not
include curtailment of diversions when water is not available under
the diverter's priority of right or reporting requirements related to
curtailments.
SEC. 94. Section 1525 of the Water Code is amended to read:
1525. (a) Each person or entity who holds a permit or license to
appropriate water, and each lessor of water leased under Chapter 1.5
(commencing with Section 1020) of Part 1, shall pay an annual fee
according to a fee schedule established by the board.
(b) Each person or entity who files any of the following shall pay
a fee according to a fee schedule established by the board:
(1) An application for a permit to appropriate water.
(2) A registration of appropriation for a small domestic use,
small irrigation use, or livestock stockpond use.
(3) A petition for an extension of time within which to begin
construction, to complete construction, or to apply the water to full
beneficial use under a permit.
(4) A petition to change the point of diversion, place of use, or
purpose of use, under a permit, license, or registration.
(5) A petition to change the conditions of a permit or license,
requested by the permittee or licensee, that is not otherwise subject
to paragraph (3) or (4).
(6) A petition to change the point of discharge, place of use, or
purpose of use, of treated wastewater, requested pursuant to Section
1211.
(7) An application for approval of a water lease agreement.
(8) A request for release from priority pursuant to Section 10504.
(9) An application for an assignment of a state-filed application
pursuant to Section 10504.
(10) A statement of water diversion and use pursuant to Part 5.1
(commencing with Section 5100) that reports that water was used for
cannabis cultivation.
(c) The board shall set the fee schedule authorized by this
section so that the total amount of fees collected pursuant to this
section equals that amount necessary to recover costs incurred in
connection with the issuance, administration, review, monitoring, and
enforcement of permits, licenses, certificates, and registrations to
appropriate water, water leases, statements of water diversion and
use for cannabis cultivation, and orders approving changes in point
of discharge, place of use, or purpose of use of treated wastewater.
The board may include, as recoverable costs, but is not limited to
including, the costs incurred in reviewing applications,
registrations, statements of water diversion and use for cannabis
cultivation, petitions and requests, prescribing terms of permits,
licenses, registrations, and change orders, enforcing and evaluating
compliance with permits, licenses, certificates, registrations,
change orders, and water leases, inspection, monitoring, planning,
modeling, reviewing documents prepared for the purpose of regulating
the diversion and use of water, applying and enforcing the
prohibition set forth in Section 1052 against the unauthorized
diversion or use of water subject to this division and the water
diversion related provisions of Article 6 (commencing with Section
19331) of Chapter 3.5 of Division 8 of the Business and Professions
Code, and the administrative costs incurred in connection with
carrying out these actions.
(d) (1) The board shall adopt the schedule of fees authorized
under this section as emergency regulations in accordance with
Section 1530.
(2) For filings subject to subdivision (b), the schedule may
provide for a single filing fee or for an initial filing fee followed
by an annual fee, as appropriate to the type of filing involved, and
may include supplemental fees for filings that have already been
made but have not yet been acted upon by the board at the time the
schedule of fees takes effect.
(3) The board shall set the amount of total revenue collected each
year through the fees authorized by this section at an amount equal
to the amounts appropriated by the Legislature for expenditure for
support of water rights program activities from the Water Rights Fund
established under Section 1550, taking into account the reserves in
the Water Rights Fund. The board shall review and revise the fees
each fiscal year as necessary to conform with the amounts
appropriated. If the board determines that the revenue collected
during the preceding year was greater than, or less than, the amounts
appropriated, the board may further adjust the annual fees to
compensate for the over or under collection of revenue.
(e) Annual fees imposed pursuant to this section for the 2003-04
fiscal year shall be assessed for the entire 2003-04 fiscal year.
SEC. 95. Section 1535 of the Water Code is amended to read:
1535. (a) Any fee subject to this chapter that is required in
connection with the filing of an application, registration, request,
statement, or proof of claim, other than an annual fee required after
the period covered by the initial filing fee, shall be paid to the
board.
(b) If a fee established under subdivision (b) of Section 1525,
Section 1528, or Section 13160.1 is not paid when due, the board may
cancel the application, registration, petition, request, statement,
or claim, or may refer the matter to the State Board of Equalization
for collection of the unpaid fee.
SEC. 96. Section 1552 of the Water Code is amended to read:
1552. Except as provided in subdivision (e) of Section 1058.5,
moneys in the Water Rights Fund are available for expenditure, upon
appropriation by the Legislature, for the following purposes:
(a) For expenditure by the State Board of Equalization in the
administration of this chapter and the Fee Collection Procedures Law
(Part 30 (commencing with Section 55001) of Division 2 of the Revenue
and Taxation Code) in connection with any fee or expense subject to
this chapter.
(b) For the payment of refunds, pursuant to Part 30 (commencing
with Section 55001) of Division 2 of the Revenue and Taxation Code,
of fees or expenses collected pursuant to this chapter.
(c) For expenditure by the board for the purposes of carrying out
this division, Division 1 (commencing with Section 100), Part 2
(commencing with Section 10500) and Chapter 11 (commencing with
Section 10735) of Part 2.74 of Division 6, Article 7 (commencing with
Section 13550) of Chapter 7 of Division 7, and the water diversion
related provisions of Article 6 (commencing with Section 19331) of
Chapter 3.5 of Division 8 of the Business and Professions Code.
(d) For expenditures by the board for the purposes of carrying out
Sections 13160 and 13160.1 in connection with activities involving
hydroelectric power projects subject to licensing by the Federal
Energy Regulatory
Commission.
(e) For expenditures by the board for the purposes of carrying out
Sections 13140 and 13170 in connection with plans and policies that
address the diversion or use of water.
SEC. 97. Section 1831 of the Water Code is amended to read:
1831. (a) When the board determines that any person is violating,
or threatening to violate, any requirement described in subdivision
(d), the board may issue an order to that person to cease and desist
from that violation.
(b) The cease and desist order shall require that person to comply
forthwith or in accordance with a time schedule set by the board.
(c) The board may issue a cease and desist order only after notice
and an opportunity for hearing pursuant to Section 1834.
(d) The board may issue a cease and desist order in response to a
violation or threatened violation of any of the following:
(1) The prohibition set forth in Section 1052 against the
unauthorized diversion or use of water subject to this division.
(2) Any term or condition of a permit, license, certification, or
registration issued under this division.
(3) Any decision or order of the board issued under this part,
Section 275, Chapter 11 (commencing with Section 10735) of Part 2.74
of Division 6, or Article 7 (commencing with Section 13550) of
Chapter 7 of Division 7, in which decision or order the person to
whom the cease and desist order will be issued, or a predecessor in
interest to that person, was named as a party directly affected by
the decision or order.
(4) A regulation adopted under Section 1058.5.
(5) Any extraction restriction, limitation, order, or regulation
adopted or issued under Chapter 11 (commencing with Section 10735) of
Part 2.74 of Division 6.
(6) Any diversion or use of water for cannabis cultivation if any
of the following applies:
(A) A license is required, but has not been obtained, under
Article 6 (commencing with Section 19331) of Chapter 3.5 of Division
8 of the Business and Professions Code.
(B) The diversion is not in compliance with an applicable
limitation or requirement established by the board or the Department
of Fish and Wildlife under Section 13149.
(C) The diversion or use is not in compliance with a requirement
imposed under subdivision (d) or (e) of Section 19332.2 of the
Business and Professions Code.
(e) This article does not alter the regulatory authority of the
board under other provisions of law.
SEC. 98. Section 1840 of the Water Code is amended to read:
1840. (a) (1) Except as provided in subdivision (b), a person
who, on or after January 1, 2016, diverts 10 acre-feet of water per
year or more under a permit or license shall install and maintain a
device or employ a method capable of measuring the rate of direct
diversion, rate of collection to storage, and rate of withdrawal or
release from storage. The measurements shall be made using the best
available technologies and best professional practices, as defined in
Section 5100, using a device or methods satisfactory to the board,
as follows:
(A) A device shall be capable of continuous monitoring of the rate
and quantity of water diverted and shall be properly maintained. The
permittee or licensee shall provide the board with evidence that the
device has been installed with the first report submitted after
installation of the device. The permittee or licensee shall provide
the board with evidence demonstrating that the device is functioning
properly as part of the reports submitted at five-year intervals
after the report documenting installation of the device, or upon
request of the board.
(B) In developing regulations pursuant to Section 1841, the board
shall consider devices and methods that provide accurate measurement
of the total amount diverted and the rate of diversion. The board
shall consider devices and methods that provide accurate measurements
within an acceptable range of error, including the following:
(i) Electricity records dedicated to a pump and recent pump test.
(ii) Staff gage calibrated with an acceptable streamflow rating
curve.
(iii) Staff gage calibrated for a flume or weir.
(iv) Staff gage calibrated with an acceptable storage capacity
curve.
(v) Pressure transducer and acceptable storage capacity curve.
(2) The permittee or licensee shall maintain a record of all
diversion monitoring that includes the date, time, and diversion rate
at time intervals of one hour or less, and the total amount of water
diverted. These records shall be included with reports submitted
under the permit or license, as required under subdivision (c), or
upon request of the board.
(b) (1) The board may modify the requirements of subdivision (a)
upon finding either of the following:
(A) That strict compliance is infeasible, is unreasonably
expensive, would unreasonably affect public trust uses, or would
result in the waste or unreasonable use of water.
(B) That the need for monitoring and reporting is adequately
addressed by other conditions of the permit or license.
(2) The board may increase the 10-acre-foot reporting threshold of
subdivision (a) in a watershed or subwatershed, after considering
the diversion reporting threshold in relation to quantity of water
within the watershed or subwatershed. The board may increase the
10-acre-foot reporting threshold to 25 acre-feet or above if it finds
that the benefits of the additional information within the watershed
or subwatershed are substantially outweighed by the cost of
installing measuring devices or employing methods for measurement for
diversions at the 10-acre-foot threshold.
(c) At least annually, a person who diverts water under a
registration, permit, or license shall report to the board the
following information:
(1) The quantity of water diverted by month.
(2) The maximum rate of diversion by months in the preceding
calendar year.
(3) The information required by subdivision (a), if applicable.
(4) The amount of water used, if any, for cannabis cultivation.
(d) Compliance with the applicable requirements of this section is
a condition of every registration, permit, or license.
SEC. 99. Section 1845 of the Water Code is amended to read:
1845. (a) Upon the failure of any person to comply with a cease
and desist order issued by the board pursuant to this chapter, the
Attorney General, upon the request of the board, shall petition the
superior court for the issuance of prohibitory or mandatory
injunctive relief as appropriate, including a temporary restraining
order, preliminary injunction, or permanent injunction.
(b) (1) A person or entity who violates a cease and desist order
issued pursuant to this chapter may be liable in an amount not to
exceed the following:
(A) If the violation occurs in a critically dry year immediately
preceded by two or more consecutive below normal, dry, or critically
dry years or during a period for which the Governor has issued a
proclamation of a state of emergency under the California Emergency
Services Act (Chapter 7 (commencing with Section 8550) of Division 1
of Title 2 of the Government Code) based on drought conditions, ten
thousand dollars ($10,000) for each day in which the violation
occurs.
(B) If the violation is not described by subparagraph (A), one
thousand dollars ($1,000) for each day in which the violation occurs.
(2) Civil liability may be imposed by the superior court. The
Attorney General, upon the request of the board, shall petition the
superior court to impose, assess, and recover those sums.
(3) Civil liability may be imposed administratively by the board
pursuant to Section 1055.
SEC. 100. Section 1846 of the Water Code is amended to read:
1846. (a) A person or entity may be liable for a violation of any
of the following in an amount not to exceed five hundred dollars
($500) for each day in which the violation occurs:
(1) A term or condition of a permit, license, certificate, or
registration issued under this division.
(2) A regulation or order adopted by the board.
(b) Civil liability may be imposed by the superior court. The
Attorney General, upon the request of the board, shall petition the
superior court to impose, assess, and recover those sums.
(c) Civil liability may be imposed administratively by the board
pursuant to Section 1055.
SEC. 101. Section 1847 is added to the Water Code, to read:
1847. (a) A person or entity may be liable for a violation of any
of the requirements of subdivision (b) in an amount not to exceed
the sum of the following:
(1) Five hundred dollars ($500), plus two hundred fifty dollars
($250) for each additional day on which the violation continues if
the person fails to correct the violation within 30 days after the
board has called the violation to the attention of that person.
(2) Two thousand five hundred dollars ($2,500) for each acre-foot
of water diverted or used in violation of the applicable requirement.
(b) Liability may be imposed for any of the following violations:
(1) Violation of a limitation or requirement established by the
board or the Department of Fish and Wildlife under Section 13149.
(2) Failure to submit information, or making a material
misstatement in information submitted, under subdivision (a), (b), or
(c) of Section 19332.2 of the Business and Professions Code.
(3) Violation of any requirement imposed under subdivision (e) of
Section 19332.2 of the Business and Professions Code.
(4) Diversion or use of water for cannabis cultivation for which a
license is required, but has not been obtained, under Article 6
(commencing with Section 19331) of Chapter 3.5 of Division 8 of the
Business and Professions Code.
(c) Civil liability may be imposed by the superior court. The
Attorney General, upon the request of the board, shall petition the
superior court to impose, assess, and recover those sums.
(d) Civil liability may be imposed administratively by the board
pursuant to Section 1055.
SEC. 102. Section 1848 is added to the Water Code, to read:
1848. (a) Except as provided in subdivisions (b) and (c),
remedies under this chapter are in addition to, and do not supersede
or limit, any other remedy, civil or criminal.
(b) Civil liability shall not be imposed both administratively and
by the superior court for the same violation.
(c) No liability shall be recoverable under Section 1846 or 1847
for a violation for which liability is recovered under Section 1052.
(d) In determining the appropriate amount, the court, or the
board, as the case may be, shall take into consideration all relevant
circumstances, including, but not limited to, the extent of harm
caused by the violation, the nature and persistence of the violation,
the length of time over which the violation occurs, and the
corrective action, if any, taken by the violator.
(e) All funds recovered pursuant to this article shall be
deposited in the Water Rights Fund established pursuant to Section
1550.
SEC. 103. Section 5103 of the Water Code is amended to read:
5103. Each statement shall be prepared on a form provided by the
board. The statement shall include all of the following information:
(a) The name and address of the person who diverted water and of
the person filing the statement.
(b) The name of the stream or other source from which water was
diverted, and the name of the next major stream or other body of
water to which the source is tributary.
(c) The place of diversion. The location of the diversion works
shall be depicted on a specific United States Geological Survey
topographic map, or shall be identified using the California
Coordinate System, or latitude and longitude measurements. If
assigned, the public land description to the nearest 40-acre
subdivision and the assessor's parcel number shall also be provided.
(d) The capacity of the diversion works and of the storage
reservoir, if any, and the months in which water was used during the
preceding calendar year.
(e) (1) (A) At least monthly records of water diversions. The
measurements of the diversion shall be made in accordance with
Section 1840.
(B) (i) On and after July 1, 2016, the measurement of a diversion
of 10 acre-feet or more per year shall comply with regulations
adopted by the board pursuant to Article 3 (commencing with Section
1840) of Chapter 12 of Part 2.
(ii) The requirement of clause (i) is extended to January 1, 2017,
for any statement filer that enters into a voluntary agreement that
is acceptable to the board to reduce the statement filer's diversions
during the 2015 irrigation season.
(2) (A) The terms of, and eligibility for, any grant or loan
awarded or administered by the department, the board, or the
California Bay-Delta Authority on behalf of a person that is subject
to paragraph (1) shall be conditioned on compliance with that
paragraph.
(B) Notwithstanding subparagraph (A), the board may determine that
a person is eligible for a grant or loan even though the person is
not complying with paragraph (1), if both of the following apply:
(i) The board determines that the grant or loan will assist the
grantee or loan recipient in complying with paragraph (1).
(ii) The person has submitted to the board a one-year schedule for
complying with paragraph (1).
(C) It is the intent of the Legislature that the requirements of
this subdivision shall complement and not affect the scope of
authority granted to the board by provisions of law other than this
article.
(f) (1) The purpose of use.
(2) The amount of water used, if any, for cannabis cultivation.
(g) A general description of the area in which the water was used.
The location of the place of use shall be depicted on a specific
United States Geological Survey topographic map and on any other maps
with identifiable landmarks. If assigned, the public land
description to the nearest 40-acre subdivision and the assessor's
parcel number shall also be provided.
(h) The year in which the diversion was commenced as near as is
known.
SEC. 104. Section 13149 is added to the Water Code, to read:
13149. (a) (1) (A) The board, in consultation with the Department
of Fish and Wildlife, shall adopt principles and guidelines for
diversion and use of water for cannabis cultivation in areas where
cannabis cultivation may have the potential to substantially affect
instream flows. The principles and guidelines adopted under this
section may include, but are not limited to, instream flow
objectives, limits on diversions, and requirements for screening of
diversions and elimination of barriers to fish passage. The
principles and guidelines may include requirements that apply to
groundwater extractions where the board determines those requirements
are reasonably necessary for purposes of this section.
(B) Prior to adopting principles and guidelines under this
section, the board shall allow for public comment and hearing,
pursuant to Section 13147. The board shall provide an opportunity for
the public to review and comment on the proposal for at least 60
days and shall consider the public comments before adopting the
principles and guidelines.
(2) The board, in consultation with the Department of Fish and
Wildlife, shall adopt principles and guidelines pending the
development of long-term principles and guidelines under paragraph
(1). The principles and guidelines, including the interim principles
and guidelines, shall include measures to protect springs, wetlands,
and aquatic habitats from negative impacts of cannabis cultivation.
The board may update the interim principles and guidelines as it
determines to be reasonably necessary for purposes of this section.
(3) The Department of Fish and Wildlife, in consultation with the
board, may establish interim requirements to protect fish and
wildlife from the impacts of diversions for cannabis cultivation
pending the adoption of long-term principles and guidelines by the
board under paragraph (1). The requirements may also include measures
to protect springs, wetlands, and aquatic habitats from negative
impacts of cannabis cultivation.
(b) (1) Notwithstanding Section 15300.2 of Title 14 of the
California Code of Regulations, actions of the board and the
Department of Fish and Wildlife under this section shall be deemed to
be within Section 15308 of Title 14 of the California Code of
regulations, provided that those actions do not involve relaxation of
existing streamflow standards.
(2) The board shall adopt principles and guidelines under this
section as part of state policy for water quality control adopted
pursuant to Article 3 (commencing with Section 13140) of Chapter 3 of
Division 7.
(3) If the Department of Fish and Wildlife establishes interim
requirements under this section, it shall do so as emergency
regulations in accordance with Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code. The
adoption of those interim requirements is an emergency and shall be
considered by the Office of Administrative Law as necessary for the
immediate preservation of the public peace, health, safety, and
general welfare. Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code,
the emergency regulations shall remain in effect until revised by the
Department of Fish and Wildlife, provided that the emergency
regulations shall not apply after long-term principles and guidelines
adopted by the board under this section take effect for the stream
or other body of water where the diversion is located.
(4) A diversion for cannabis cultivation is subject to both the
interim principles and guidelines and the interim requirements in the
period before final principles and guidelines are adopted by the
board.
(5) The board shall have primary enforcement responsibility for
principles and guidelines adopted under this section, and shall
notify the Department of Food and Agriculture of any enforcement
action taken.
SEC. 105. The California Tax Credit Allocation Committee shall
enter into an agreement with the Franchise Tax Board to pay any costs
incurred by the Franchise Tax Board in the administration of
subdivision (o) of Section 12206, subdivision (q) of Section 17058,
and subdivision (r) of Section 23610.5 of the Revenue and Taxation
Code.
SEC. 106. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution for
certain costs that may be incurred by a local agency or school
district because, in that regard, this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
However, if the Commission on State Mandates determines that this
act contains other costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division 4 of
Title 2 of the Government Code.
SEC. 107. This act is a bill providing for appropriations related
to the Budget Bill within the meaning of subdivision (e) of Section
12 of Article IV of the California Constitution, has been identified
as related to the budget in the Budget Bill, and shall take effect
immediately.
