Top Billing

February 2019

A monthly update on key legislation for Treasurer Ma

Financial Institutions for Cannabis

Senate Bill 51, Robert M. Hertzberg (D-Van Nuys)

[Creates a limited-purpose state charter for privately funded banks to service licensed cannabis businesses with the goal of providing alternative banking opportunities for the cash-only cannabis industry.]

Would create the Cannabis Limited Charter Banking and Credit Union Law, to be administered by the Commissioner of Business Oversight and the Department of Business Oversight.

The bill would create the Cannabis Limited Charter Bank and Credit Union Advisory Board and specify its composition, to include the Treasurer, the Controller, and the Chief of the Bureau of Cannabis Control, and commit to it the general responsibility for ensuring that this law functions in a safe and efficient way.

Name Translation on Ballot Materials

Assembly Bill 57, Evan Low (D-Silicon Valley)

[Standardizes the way names are translated into character-based languages on the California ballot.]

Current law requires the translation of ballots and ballot materials into languages other than English when specified circumstances exist. This bill would require that, if a jurisdiction provides a translation of the candidates’ alphabet-based names into a character-based language, such as Chinese, Japanese, or Korean, phonetic transliterations of the alphabet-based names of candidates be provided.

The bill would also require that if a candidate’s name is to appear on the ballot in more than one jurisdiction in an election then all of those jurisdictions must use the same phonetic transliteration or character-based translation of the name.

Expand the Low-Income Housing Tax Credit

Assembly Bill 10, David Chiu (D-San Francisco)

[Increases California’s Low Income Housing Tax Credit (LIHTC) by $500 million.]

Would, under the law governing the taxation of insurers, the Personal Income Tax Law, and the Corporation Tax Law, for calendar years beginning in 2020, increase the aggregate housing credit dollar amount that may be allocated among low-income housing projects by an additional $500,000,000, as specified, and would allocate to farmworker housing projects $25,000,000 per year of that amount. The bill, under those laws, would modify the definition of applicable percentage relating to qualified low-income buildings to depend on whether the building is a new or existing building and federally subsidized, or a building that is, among other things, at least 15 years old, serving households of very low income or extremely low income, and will complete substantial rehabilitation, as specified.

Eliminate Sunset Date for Low-Income Housing Tax Credits

Senate Bill 9, Jim Beall (D-San Jose)

[Eliminates the sunset date for reauthorization to certificate and bifurcate state Low-Income Housing Tax Credits.]

Current law, beginning on or after January 1, 2009, and before January 1, 2020, requires, in the case of a project that receives a preliminary reservation of a state low-income housing tax credit that the credit be allocated to the partners of a partnership owning the project in accordance with the partnership agreement, as provided. Existing law, beginning on or after January 1, 2016, and before January 1, 2020, authorizes 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 for each taxable year in which the credit is allowed, as described. This bill would delete the January 1, 2020, date with respect to both of these provisions, thereby requiring the allocation of credits among partners in accordance with the partnership agreement and authorizing the sale of a credit, as described above, indefinitely.

ScholarShare 529 Tax Deduction on State Income Taxes

Assembly Bill 211, Ian Calderon (D-Whittier)

[Provides a state income tax deduction for those who contribute to a California ScholarShare 529 account, not to exceed $5,000 for single taxpayers, or $10,000 for joint filers.]

Would, for taxable years beginning on or after January 1, 2019, allow under the Personal Income Tax Law a deduction against gross income in the amount equal to the monetary contribution made by a qualified taxpayer to the California qualified tuition program established pursuant to the Golden State ScholarShare Trust Act not to exceed either $5,000 or $10,000, as provided.

The bill would require the ScholarShare Investment Board to report to the Legislature, on an annual basis, specified data related to this deduction and ScholarShare accounts.

Tax Deductions on Ordinary Business Expenses for Cannabis Businesses

Assembly Bill 37, Reginald Byron Jones-Sawyer Sr. (D-Los Angeles)

[Allows cannabis businesses to receive the same state income tax deductions as regular businesses on ordinary business expenses.]

Would, for each taxable year beginning on and after January 1, 2019, specifically provide in the Personal Income Tax Law for nonconformity to that federal law disallowing a deduction or credit for business expenses of a trade or business whose activities consist of trafficking specified controlled substances, only for commercial cannabis activity, as defined under the Medicinal Adult-Use Cannabis Regulation and Safety Act by a licensee under MAUCRSA, thus allowing deduction of business expenses paid or incurred during the taxable year in carrying on that commercial cannabis activity under the Personal Income Tax Law.

Extension of the Sales Tax Exclusion Program

Senate Bill 162, Cathleen Galgiani (D-Stockton)

[Extends CAEATFA’s Sales and Use Tax Exclusion Program’s sunset date until January 1, 2030.]

The California Alternative Energy and Advanced Transportation Financing Authority Act establishes the California Alternative Energy and Advanced Transportation Financing Authority (CAEATA). The act authorizes, until January 1, 2021, the authority to provide financial assistance to a participating party in the form of specified sales and use tax exclusions for projects, including those that promote California-based manufacturing, California-based jobs, advanced manufacturing, reduction of greenhouse gases, or reduction in air and water pollution or energy consumption. This bill would extend the authorization to provide financial assistance in the form of a sales and use tax exclusion for qualifying projects until January 1, 2030, and would extend the sales and use tax exclusion until January 1, 2030.

Temporary Tax Reductions on Cannabis Cultivation and Excise Taxes

Assembly Bill 286, Rob Bonta (D-Oakland)

[Temporarily reduces the state’s cannabis excise tax from 15 percent to 11 percent and suspends the cultivation tax altogether to help the fledgling industry establish itself and undercut black market sales.]

Would create the Cannabis Limited Charter Banking and Credit Union Law, to be administered by the Commissioner of Business Oversight and the Department of Business Oversight.

The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, and additionally amended by statute, imposes an excise tax commencing January 1, 2018, on the purchase of cannabis and cannabis products at the rate of 15 percent of the average market price of any retail sale by a cannabis retailer. This bill would reduce that excise tax rate to 11 percent on and after the operative date of this bill until June 1, 2022, at which time the excise tax rate would revert back to 15 percent. This bill would suspend the imposition of the cultivation tax on and after the operative date of this bill until June 1, 2022.

Online Retailers Sales Tax: Expansion to Marketplace Facilitators

Assembly Bill 147, Autumn Burke (D-Marina del Rey)

[Extends retailers sales tax to online marketplace facilitators and requires them to collect and remit taxes on behalf of third-party sellers.]

AB 147, which would make Amazon and other internet giants liable for state tax filings by third-party sellers and small businesses, has its first hearing before the Standing Committee on Revenue and Taxation on February 25 at 2:30 PM, Room 126, State Capitol. The proposed law would allow the state to collect up to an additional $1 billion in annual sales tax.

This bill would require districts that impose district use taxes in accordance with the Transactions and Use Tax Law to include a provision that provides that a retailer engaged in business in the district includes any retailer that, in the preceding calendar year or the current calendar year, has total cumulative sales of tangible personal property to purchasers in the state in excess of $500,000, thereby requiring those retailers to collect those district use taxes.