ARE YOU SURE? YEAH. I THINK
WE'LL GO AHEAD AND GET STARTED
WITH PERMISSION, GOOD AFTERNOON
AND WELCOME TO THIS HEARING OF
THE ASSEMBLY COMMITTEE ON
REVENUE AND TAXATION. AS A
REMINDER TO THOSE IN THE ROOM
AND WATCHING REMOTELY, PLEASE
MAKE SURE TO SUBMIT POSITION
LETTERS AT LEAST ONE PRIOR WEEK
PRIOR TO THE COMMITTEE HEARING
IN ORDER TO HAVE THEM REFLECTED
IN THE BILLS ANALYSIS. PURSUANT
TO OUR COMMITTEE RULES BILLS
WITH THE FISCAL IMPACT OF PLUS
OR -150,000 WILL BE REFERRED TO
OUR SUSPENSE FILE, WHICH WILL BE
TAKEN UP AT OUR HEARING ON JULY
1ST. PLEASE NOTE THAT FILE ITEM
ONE, SB 726 BY SENATOR ARCHULETA
HAS BEEN PULLED. FINALLY,
ASSEMBLY MEMBER HANEY WILL BE
JOINING US AS A SUBSTITUTE FOR
ASSEMBLY MEMBER GIBSON FOR
TODAY'S HEARING. ONLY DO WE HAVE
A QUORUM? NO, WE DON'T HAVE ALL
WE NEED. OKAY. SO WE WILL START
AS A SUBCOMMITTEE ON OUR FIRST,
THE FIRST MEASURE ON OUR AGENDA
IS FILE ITEM TWO, SB 974 BY
SENATOR GROVE. SENATOR, PLEASE
BEGIN WHENEVER YOU ARE READY.
THANK YOU, MADAM CHAIR. AND
MEMBERS, TODAY I'M HERE TO
PRESENT SB 974, WHICH MAKES
TECHNICAL CHANGES IN THE LITHIUM
EXTRACTION EXCISE FUND. LITHIUM
EXTRACTION IS AN IMPORTANT
PROCESS OF PRODUCTION OF
BATTERIES AND PRODUCTS LIKE CELL
PHONES, LAPTOPS AND ELECTRIC
VEHICLES. HOWEVER, BECAUSE OF
ITS POTENTIALLY NEGATIVE
ENVIRONMENTAL IMPACTS OF THIS
EXTRACTION SITES, THE
LEGISLATURE CREATED THE LITHIUM
EXTRACTION EXCISE FUND, WHICH IS
IMPOSES A TAX ON EVERY METRIC
TON OF LITHIUM PRODUCED UNDER
EXISTING LAW, 80% OF THAT
REVENUE FUND GOES TO COUNTIES
THAT PROVIDE OR THAT PRODUCE
LITHIUM, AND 20% GOES TO THE
SALT AND SEE LITHIUM FUND. THESE
FUNDS ARE DISTRIBUTED AMONG THE
AFFECTED COMMUNITIES AND USED TO
MITIGATE THE EFFECTS OF LITHIUM
MINING. ALTHOUGH THE ALLOCATION
SYSTEM TO THE SALTON SEA REGION
MADE SENSE WHEN IMPERIAL COUNTY
IN THE STATE OF CALIFORNIA WAS
THE ONLY PRODUCER OF LITHIUM.
OTHER COUNTIES ARE NOW EXPLORING
AND EXPLORING AND HAVE BEGUN
LITHIUM PRODUCTION. FOR EXAMPLE,
THE RIO TINTO MINE IN BORON IS
ALMOST 200 MILES AWAY FROM THE
SALTON SEA. SB 974 MAKES NO
CHANGES TO THE FUNDING STRUCTURE
OF IMPERIAL COUNTY, AND ALL
REVENUE GENERATED IN IMPERIAL
COUNTY WILL STAY IN THAT COUNTY.
THE BILL SIMPLY UPDATES THE TAX
ALLOCATION THAT OTHER COUNTIES
UHMS FOR OTHER COUNTIES, SO THAT
THEY'RE ABLE TO KEEP THEIR FAIR
SHARE OF THE FUND AND TO
REPURPOSE THOSE DOLLARS BACK
INTO EXTRACTION COMMUNITY IN
WHICH THE LITHIUM HAS BEEN MINED
WITH ME HERE TO TESTIFY IS DYLAN
ELLIOTT ON BEHALF OF KERN
COUNTY. AND I RESPECTFULLY ASK
FOR YOUR AYE VOTE. THANK YOU.
THANK YOU, MADAM CHAIR. MEMBERS
DYLAN ELLIOTT, ON BEHALF OF THE
KERN COUNTY BOARD OF
SUPERVISORS, THE SPONSORS OF SB
974, WHICH WOULD UPDATE THE
PROVISIONS SET OUT IN THE
LITHIUM EXTRACTION EXCISE FUND
BY ENSURING THAT COUNTIES BEGIN
PRODUCING LITHIUM, THAT BEGIN
PRODUCING LITHIUM WILL BE ABLE
TO DIRECT THEIR ALLOCATION OF
THE LITHIUM FUNDS TOWARDS THEIR
MOST DIRECTLY AFFECTED
COMMUNITIES. AS SENATOR GROVE
SHARED, CURRENTLY, A LITHIUM
EXTRACTION EXCISE TAX IS IMPOSED
UPON EVERY METRIC TON OF LITHIUM
PRODUCED. THIS MONEY GOES INTO
THE LITHIUM FUND, 80% OF WHICH
GOES TO COUNTIES PROPORTIONATE
TO THE AMOUNTS COLLECTED AND 20%
TO THE SALT AND SEE LITHIUM
FUND. THIS IS BECAUSE AT THE
TIME OF ESTABLISHMENT, LITHIUM
PRODUCTION WAS PRIMARILY
EXPECTED TO TAKE PLACE IN THE
IMPERIAL VALLEY, SPECIFICALLY
AROUND THE SALTON SEA. AS OTHER
COUNTIES KERN COUNTY, FOR
EXAMPLE, HAVE BEGUN TO EXPLORE
LITHIUM PRODUCTION. CURRENT LAW
WOULD REQUIRE 20% OF THEIR
CONTRIBUTION TO THE LITHIUM FUND
TO GO TOWARDS THE SALTON SEA,
RATHER THAN BACK INTO THE
COMMUNITY IMPACTED BY THAT
EXTRACTION, OR POTENTIALLY
SPECIFIC TO KERN COUNTY. LITHIUM
PRODUCTION IS SET TO BEGIN IN
THE TOWN OF BORON, AND ALL
NECESSARY PERMITTING FOR THAT
MINE HAS BEEN RECEIVED WITH THE
ENACTMENT OF SB 974, THE FULL
PORTION OF THE REVENUE RECEIVED
FROM THIS MINE COULD BE PUT BACK
INTO THE AFFECTED COMMUNITY,
RATHER THAN THE 80% UNDER
EXISTING LAW. FOR THIS REASON,
THE KERN COUNTY BOARD OF
SUPERVISORS IS PROUD TO SUPPORT
AND SPONSOR SB 974. RESPECTFULLY
ASK YOUR AYE VOTE. HAPPY TO
ANSWER ANY QUESTIONS. THANK YOU.
ALL RIGHT. THANK YOU. ANY OTHER
WITNESSES IN SUPPORT? NICOLE
WATERMAN, ON BEHALF OF SAN
BERNARDINO COUNTY AND SUPPORT.
GOOD AFTERNOON. ALEJANDRO SOLIS,
ON BEHALF OF, COMMUNITY GROUPS
OUT OF LITHIUM VALLEY, EL VALLE
AND LOS AMIGOS DE LA COMUNIDAD
IN SUPPORT. THANK YOU. THANK
YOU, ANY WITNESSES IN
OPPOSITION? QUESTIONS FROM THE
COMMITTEE. CAN YOU. WHEN? WHEN
IS, THE EXTRACTION, SCHEDULED TO
BEGIN. SO, BORON HAS GOT ALL
THEIR AFFECTED PERMITS THAT ARE
NEEDED TO BE ABLE TO START THE
EXTRACTION. AND I KNEW THEY'RE
DOING EXPLORATION AND STUFF NOW
ON THE DEEPER PARTS OF THE MINE.
OKAY. SO IT'S ACTUALLY MINED.
IT'S DIFFERENT THAN WHAT'S,
WHAT'S GOING ON, IN THE SALTON
SEA, IT'S MINED, BUT IT'S A
BYPRODUCT OF WHAT ACTUALLY COMES
. IT'S A BYPRODUCT. SO WHEN THEY
PRODUCE THE PRODUCT THAT THEY DO
NOW, IT'S THEY SEPARATE OUT THE
LITHIUM FROM IT. IT'S A
BYPRODUCT OF WHAT'S BEING MINED.
AND IS IT EXPECTED TO BE, A HIGH
VOLUME? I MEAN, THIS WAS
UNEXPECTED, I ASSUME, BUT NOW
ARE WAS UNEXPECTED. AND THEN AND
JUST SO YOU KNOW, THAT WE DID
WORK WITH SENATOR PADILLA AND
THEN MY COUNTY, PLANNING
DIRECTOR LORELEI OVIATT WORKED
WITH THE WITH THAT AREA PLANNING
DIRECTOR AND THE, SUPERVISORS
DOWN THERE TO HELP WITH THEM
WITH SOME STUFF. AND THEY'VE
BEEN VERY GENEROUS AND THEY
UNDERSTAND, JUST LIKE NOT ONLY
WITH KERN COUNTY, BUT OTHER
COUNTY AREAS, COUNTIES THAT HAVE
THE POTENTIAL OF MINING LITHIUM
TO ALLOW THOSE EXTRACTION SITES.
BECAUSE THERE'S SOME THE MINE IS
A COMPANY TOWN AND SCHOOLS TAXES
, THINGS LIKE THAT WOULD BE
LIMITED IF ALL THESE RESOURCES
WENT JUST DOWN TO THE SALTON
SEA. WELL, IT VERY EXCITING
DEVELOPMENT FOR KERN COUNTY. THE
POTENTIAL IS REALLY UNLIMITED.
SO, OBVIOUSLY WE ONLY HAVE A
SUBCOMMITTEE RIGHT NOW, BUT IF
YOU WOULD LIKE TO CLOSE, JUST
RESPECTFULLY ASK YOUR I VOTE FOR
FAIRNESS. WE'LL BE EXTRACTING
THE LITHIUM AND OUR COMMUNITY
WOULD LIKE TO BE ABLE TO, LIKE I
SAID, USE THOSE RESOURCES TO
BENEFIT THE TOWN WHERE THE
EXTRACTION IS TAKING PLACE. ALL
RIGHT. AS SOON AS AGAIN. AS SOON
AS WE HAVE A QUORUM, WE'LL TAKE
A VOTE. THANK YOU, MADAM CHAIR.
THANK YOU, THANK YOU. ALL RIGHT.
WE HAVE, SENATOR PORTANTINO.
AND, THIS IS FILE ITEM FIVE. YOU
RAN IN AHEAD OF YOUR COLLEAGUES.
GOOD FOR YOU, SB 1192, WHENEVER
YOU ARE READY, YOU MAY BEGIN.
THANK YOU, MADAM CHAIR. AND
COMMITTEE MEMBERS, I'D LIKE TO
BEGIN BY ACCEPTING THE PROPOSED
AMENDMENTS OUTLINED IN THE
ANALYSIS. AND THANK YOUR STAFF.
EVEN MR. ROUGH, FOR ALL OF HIS
HELP IN GETTING THIS TO WHERE IT
IS. SB 1192 EXTENDS THE PASS
THROUGH ENTITY TAX PROVISION OF
THE SMALL BUSINESS RELIEF ACT.
IT GIVES CALIFORNIA AN
OPPORTUNITY TO DO SOMETHING IT
DOES SO WELL, GET AHEAD OF A
PROBLEM. AND THE SALT WORKAROUND
WAS ENACTED AS PART OF THE 2021
BUDGET, EFFECTIVE FOR TAX YEARS
BEGINNING ON OR AFTER JANUARY
1ST, 2021, UNTIL DECEMBER 31ST,
2025. THE SUNSET DATE COINCIDES
WITH THE SCHEDULED EXPIRATION OF
THE FEDERAL SALT CAP AS A
REMINDER, UNDER THE FRAMEWORK IN
CALIFORNIA, ELIGIBLE BUSINESSES
ENTITIES CAN ELECT TO PAY ON
BEHALF OF THEIR OWNERS OR THEN
RECEIVE A FEDERAL TAX DEDUCTION,
AND SO WITH ME, I HAVE, JOHN
ROSS AND OTHERS TO SPEAK IN
FAVOR OF THIS IMPORTANT TAX FIX
TO BENEFIT OUR TAXPAYERS. MR.
FIRST, YOUR FIRST, JASON FOX
WITH THE CALIFORNIA SOCIETY OF
CERTIFIED PUBLIC ACCOUNTANTS,
THE PASS THROUGH ENTITY TAX, OR
PT, HAS BEEN A WIN WIN TAX
POLICY BY OFFERING SUBSTANTIAL
RELIEF FOR NUMEROUS SMALL
BUSINESSES WITHOUT ANY
DISCERNABLE NEGATIVE IMPACT ON
STATE REVENUE. HOWEVER, WHEN IT
ORIGINALLY ESTABLISHED THE PT
PROVISIONS WERE SET TO EXPIRE
THE SAME TIME AS THE EXISTING
FEDERAL LIMITS ON STATE AND
LOCAL TAX DEDUCTIONS, THIS
APPROACHING SUNSET DATE HAS
CREATED UNCERTAINTY FOR
TAXPAYERS AND TAX PRACTITIONERS,
WHO NEED TO MAKE IMPORTANT TAX
AND BUSINESS DECISIONS IN 24 AND
25, INCLUDING WHETHER TO OPT IN
FOR THE PT ELECTION, HOW TO PLAN
FOR THE USE OF THEIR CREDITS,
HOW THESE DECISIONS MAY IMPACT
OTHER RELATED TAX MATTERS. FOR
THIS CREATES UNCERTAINTY FOR TAX
AGENCIES WORKING TO MANAGE
RESOURCES FOR EFFECTIVELY
ADMINISTERING THE PT PROVISIONS.
SO WHILE IT'S UNCERTAIN WHEN OR
HOW CONGRESS MAY ADDRESS THE
FEDERAL LIMITS, CALIFORNIA, AS
THE SENATOR NOTED, CAN BE
PROACTIVE AND TAKE ACTION NOW TO
PROVIDE TAXPAYERS, TAX
PRACTITIONERS AND TAX AGENCIES
WITH SOME CLARITY AND GUIDANCE
ON WHAT CALIFORNIA IS GOING TO
DO RELATED TO THE PT PROVISIONS,
JUST AS IMPORTANTLY, IT ENSURES
THAT THE PT WILL REMAIN A
BENEFICIAL OPTION FOR COUNTLESS
TAXPAYERS IN CALIFORNIA AND
BEYOND. SO WITH THAT, WE WOULD
URGE SUPPORT FOR SB 1192. GOOD
AFTERNOON, CHAIR ERWIN AND
MEMBERS, JOHN ROSS, ON BEHALF OF
PWC Â, KPMG, DELOITTE AND GRANT
THORNTON, NATIONAL ACCOUNTING
FIRMS, I THINK WE'VE COVERED
ALMOST ALL OF IT. BUT JUST TO BE
QUICK AND EASY, ONE PROBLEM THAT
WILL SORT OF BRING THIS INTO
FOCUS CONGRESS WILL PROBABLY ACT
NEAR THE END OF 25 IF THIS LAW
HAS ALREADY EXPIRED. AND, YOU
WOULD BE RUSHING IN 2026 TO TRY
AND EXTEND IT IF NECESSARY. AND
TAXPAYERS HAVE TO MAKE QUARTERLY
ESTIMATED PAYMENTS, PROBABLY IN
THE FIRST QUARTER OF 26 AND THE
SECOND DOING THAT IN HOPES OR IN
AS INSURANCE. THE CALIFORNIA
WILL ACT. SO IT JUST CREATES A
SITUATION WHERE TAXPAYERS COULD
BE PAYING MONEY IN THAT THEY'LL
THEN BE GETTING BACK. AND IT
CONFUSES THE PROCESS FOR THE
FTB. SO WE THINK THIS IS A
REALLY SMART AND PRUDENT, THING
TO DO. AND THAT'S WHERE I VOTE.
ALL RIGHT. THANK YOU. ANY OTHER
WITNESSES IN SUPPORT CHAIR
MEMBERS WITH CAPITAL ADVOCACY
HERE ON BEHALF OF THE CALIFORNIA
LIFE SCIENCES IN SUPPORT OF SB
1192. THANK YOU. VERY GOOD. ANY
WITNESSES IN OPPOSITION? ALL
RIGHT. I THINK WE HAVE A QUORUM.
CAN WE PLEASE HAVE ERWIN HERE TO
I'M HERE, I'M HERE. BAYNES HANEY
. GRAYSON. HERE. PATTERSON JIM.
THREE OF US. WE HAVE QUORUM. ALL
RIGHT. DID I ALREADY ASK
QUESTIONS OF THE COMMITTEE? I
THINK THERE WERE. ALL RIGHT, SO
WE HAVE A MOTION BY ASSEMBLY
MEMBER GRAYSON. A SECOND BY
ASSEMBLY MEMBER HANEY. MR.
PORTANTINO WOULD YOU LIKE TO
CLOSE? JUST APPRECIATE THE WORK
ON THIS, IMPORTANT TAX FIX AND
RESPECTFULLY ASK FOR AN AYE
VOTE. ALL RIGHT, JUST HOLD ON.
SHALL WE DO THE VOTE? ON ITEM
NUMBER FIVE, SB 1192, THE MOTION
IS DUE. PASS AS AMENDED TO
APPROPRIATIONS. ERWIN I ERWIN,
EYE TO EYE TO EYE. BAYNES.
HANEY. HANEY. I GRAYSON.
GRAYSON. I JIM. PATTERSON RIVAS
4 TO 0. PASSES 4 TO 0 AND THAT
BILL IS OUT. WE CAN GO. ALL
RIGHT. WE HAVE WHY DON'T WE,
SOME, SENATOR TO SENATOR WILK
IS, FILE ITEM THREE. WHY DON'T
YOU COME UP? BUT WE ARE FIRST
GOING TO, VOTE ON SENATOR GROVES
, BILL. SO THAT WAS A MOTION BY
ASSEMBLY MEMBER GRAYSON AND A
SECOND BY ASSEMBLY MEMBER SEGER
TO, MISS HYLAND, PLEASE CALL THE
ROLL. OH, AND THE MOTION IS DUE.
PASS TO APPROPRIATIONS ON ITEM
NUMBER TWO. SB 974. THE MOTION
IS DUE. PASS TO APPROPRIATIONS.
IRWIN I IRWIN I TO I BAINES.
HANEY HANEY. I GRAYSON. GRAYSON
I JIM PATTERSON. RIVAS THAT BILL
PASSES 4 TO 0. THAT BILL IS OUT
4 TO 0. AND WE WILL HOLD THE
ROLL OPEN, AND NOW WE'RE ON FILE
ITEM THREE, SENATE BILL 1004 BY
SENATOR WILK. SENATOR, PLEASE
BEGIN. THANK YOU, MADAM CHAIR
AND COMMITTEE MEMBERS, FOR THE
OPPORTUNITY TO PRESENT SB 1004,
WHICH WOULD EXCLUDE FROM TAXABLE
INCOME SETTLEMENT PAYMENTS MADE
IN CONNECTION WITH ANY WILDFIRE
THAT OCCURS IN CALIFORNIA. I
FIRST LIKE TO START BY ACCEPTING
THE COMMITTEE'S SUGGESTED
AMENDMENTS TO MAKE THE BILL
PROSPECTIVE, AS WELL AS
INCLUDING A FIVE YEAR SUNSET.
THE LEGISLATURE HAS DECIDED
MULTIPLE TIMES THAT THESE
SETTLEMENTS SHOULD NOT BE TAXED
IN 2022, SB 1246 AND AB 1249
WERE SIGNED INTO LAW, MAKING
SETTLEMENTS RELATED TO THE
THOMAS FIRE, THE WOLSELEY FIRE,
THE BUTTE FIRE, THE NORTH BAY
FIRES, AND THE CAMPFIRE TAX
EXEMPT. SIMILARLY SB 370 AND SB
542 PROPOSED DO THE SAME FOR THE
KINCADE FIRE AND THE ZOGG FIRE
AND PASS THE SENATE UNANIMOUSLY
IN 2023. IN 2020, THE BOBCAT
FIRE, WHICH BURNED OVER 150
115,000 ACRES IN AND AROUND MY
DISTRICT, WAS ACTUALLY ACTUALLY
MORE OF IT'S IN SENATOR
PORTANTINO'S DISTRICT THAN MY
DISTRICT. BUT SENATOR
PORTANTINO'S, SENATOR CHOBOQ AND
MINE WAS DETERMINED TO HAVE
CAUSE IT HAD BEEN DETERMINED TO
BE CAUSED BY TREE COMING IN
CONTACT WITH POWER LINES.
UNFORTUNATELY, ANY SETTLEMENTS
MY CONSTITUENTS RECEIVE RELATED
TO THIS FIRE WILL NOT BE TAX
FREE. BECAUSE THE BOBCAT FIRE
WAS NOT INCLUDED IN THE PAST
LEGISLATIVE EFFORTS, ALL
WILDFIRE VICTIMS SHOULD BE
AFFORDED THE SAME TAX RELIEF AS
THOSE AFFECTED BY THESE
PREVIOUSLY MENTIONED FIRES. SB
1004 WILL ENSURE THAT ALL
WILDFIRE SETTLEMENTS ARE TAX
FREE, REGARDLESS OF WHERE YOU
LIVE, AND I KNOW MY
UNDERSTANDING IS THIS BILL IS
GOING TO BE REFERRED TO THE
SUSPENSE FILE, BUT WHEN
APPROPRIATE, I'D LOVE TO ASK FOR
AN AYE VOTE. ALL RIGHT. THANK
YOU VERY MUCH, SENATOR. DO YOU
HAVE ANY WITNESSES IN SUPPORT?
YES. SO RIGHTEOUS A CAUSE. I
DIDN'T FEEL LIKE I NEEDED TO
BRING. ANY WITNESSES, ANY
WITNESSES IN OPPOSITION. I JUST
ASK IF THERE'S ANYONE IN THE
ROOM AS WELL. YEAH. NO, THERE'S.
EVERYBODY KNOWS IT'S A RIGHTEOUS
BILL. ACCORDING TO SENATOR
WELCH. DO WE HAVE QUESTIONS FROM
THE COMMITTEE? YEAH. WE. THIS
THIS IS SUCH A COMMON SENSE
THING. IT SEEMS SO SILLY TO COME
EVERY TIME FOR THESE, FOR THESE
BILLS. BUT WE HAD A SIMILAR BILL
LAST YEAR, WHICH I THINK IT WAS
KILLED IN APPROPRIATION. SO GOOD
LUCK TO YOU. HOPEFULLY WE WILL
GET IT PASSED THIS YEAR. AND
SENATOR WILK, WOULD YOU LIKE TO
CLOSE RESPECTFULLY ASK FOR YOUR
AYE VOTE WITHOUT OBJECTION. THIS
WILL BE MOVED TO OUR SUSPENSE
FILE. THANK YOU VERY MUCH. THANK
YOU. AND CAN YOU TELL YOUR
COLLEAGUES TO HURRY UP? WE'RE
READY FOR THEM TALKING TO ME.
THEY SHOULD ALL BE HERE,
SENATORS. THEY SHOULD ALL BE
HERE. THEY SHOULD ALL BE HERE.
WE'VE BEEN OUT FOR AN HOUR.
YEAH. OH THAT'S NOT GOOD. WHO DO
YOU WANT? WHO DO I NEED TO TEXT,
BRADFORD. HE'S. HE WORKS ON HIS
OWN CLOCK. I CAN'T HELP YOU
THERE. THANK YOU. THANK YOU,
SENATOR. THANK YOU. OH BRADFORD.
BRADFORD. THANK YOU FOR BEING ON
TIME. BOTH OF YOU. WE'RE MOVING
THROUGH QUICKLY. WE APPRECIATE
IT. AND YOU KNOW, CUTTING BACK.
YEAH. THIS IS MOSTLY A CUTTING
TAXES. THE TAX CREDIT COMMITTEE.
WOULD YOU? THIS IS THE FUN
COMMITTEE. WE'RE NOT CUTTING
TAXES.
ALL RIGHT. SENATOR ALVARADO
GILL, YOU ARE UP. I'M ALL RIGHT,
THIS IS FILE ITEM SIX, SB 1261.
YOU MAY BEGIN. THANK YOU, MADAM
CHAIR AND COMMITTEE MEMBERS,
WE'RE HERE TO PRESENT SENATE
BILL 1261, WHICH WOULD ADJUST
THE PERCENTAGE OF THE DEPARTMENT
OF FOOD AND AGRICULTURE BUDGET.
THAT IS DEDICATED TO THE FAIRS
AND EXPOSITION FUND FROM THREE
FOURTHS OF 1% TO 5% FOR MORE
THAN 70 YEARS. THE SOURCE OF
STATE FUNDING FOR CALIFORNIA
FAIRS HAS BEEN DEPENDENT ON
HORSE RACING LICENSE FEES. IN
2009, THE LEGISLATURE RECOGNIZED
THAT THE NEED FOR THE NEW SOURCE
OF FUNDING FOR THE CONTINUATION
OF FAIRS AND THUS CONTINUOUSLY
APPROPRIATED 32 MILLION FROM THE
STATE'S GENERAL FUND TO BE PAID
INTO THE FAIRS AND EXPOSITION
FUND. HOWEVER, THE 2011 2012
BUDGET ACT ELIMINATED THOSE
GENERAL FUND CONTRIBUTIONS,
REQUIRING FAIRS TO BE
SELF-SUFFICIENT TO ADDRESS THAT
PROBLEM, THE LEGISLATURE ENACTED
AB 1490 NINE INCHES 2017, WHICH
DIRECTED THE GOVERNOR'S BUDGET
PROPOSAL TO INCLUDE THREE
FOURTHS OF 1% OF THE AMOUNT OF
REVENUE FROM THE SALES AND USE
TAXES GENERATED ON THE
FAIRGROUNDS, THOSE TO BE
ALLOCATED TO FAIRS, THE FAIRS
AND EXPOSITION FUND SUPPORTS
PROJECTS AT FAIRS THAT ADDRESS
DEFERRED MAINTENANCE, EMERGENCY
SERVICES, PROTECTION OF FAIR
PROPERTY, AND THE HEALTH AND
SAFETY OF OUR VISITORS WITHOUT
AN ADJUSTED PERCENTAGE.
DEDICATED TO THE FAIRS AND
EXPOSITION FUND, CALIFORNIA
FAIRS RUN THE RISK OF NOT
RECEIVING THE NECESSARY FUNDING
THAT THEY NEED. HERE TO TESTIFY
WITH ME TODAY IN SUPPORT IS NORM
TOWN OF THE WESTERN FAIRS
ASSOCIATION. WELCOME, NORM.
THANK YOU. SENATOR. MADAM CHAIR,
MEMBERS. NORM TOWN, REPRESENTING
WESTERN FAIRS ASSOCIATION AND
THE CALIFORNIA FAIR ALLIANCE IN
SUPPORT OF THE BILL. WE ARE THE
SPONSORS. IT'S A VERY IMPORTANT
BILL FOR THE FAIR INDUSTRY. WE
THANK YOU, SENATOR, FOR CARRYING
THIS BILL FOR US. AND THE
COMMITTEE ANALYSIS IS RIGHT ON
POINT. I'LL AVOID BEING
REPETITIVE. I'M HAPPY TO ANSWER
ANY QUESTIONS YOU MIGHT HAVE.
THANK YOU. THANK YOU VERY MUCH.
DO WE HAVE ANY OTHER WITNESSES
IN SUPPORT IN THE ROOM? GOOD
AFTERNOON. I'M ERIC LA ON BEHALF
OF THE CALIFORNIA STATE
ASSOCIATION OF COUNTIES AND
SUPPORT. THANK YOU. THANK YOU.
ANY PRIMARY WITNESSES IN
OPPOSITION, ANY WITNESSES IN
OPPOSITION? QUESTIONS FROM THE
COMMITTEE. ALL RIGHT. MISS
OLVERA. WELL OBVIOUSLY, THIS
BILL IS GOING TO BE REFERRED TO
OUR SUSPENSE FILE, BUT, IF YOU
WOULD LIKE, PLEASE, CLOSE. YES.
IF I COULD JUST CLOSE, WHAT DOES
THIS REALLY LOOK LIKE IN
PRACTICALITY? SO I DO, VISIT MY
FAIRGROUNDS VERY OFTEN. THE LAST
VISIT WAS TO THE CALAVERAS,
FAIRGROUNDS IN SAN ANDREAS, DUE
TO THE ARROW FIRE, WE HAD A
NEARLY 6000 ACRES BURNED, AND IT
BECAME THE, BASE CAMP FOR CAL
FIRE, AND WE WERE VERY FORTUNATE
THAT WE HAD WORKING BATHROOMS
THAT WE HAD SHELTERS FOR OVER
100 LIVESTOCK THAT WERE
DISPLACED, MEMBERS OF MY
COMMUNITY THAT WERE DISPLACED,
THAT HAD MOVED INTO MOBILE HOMES
AND MOBILE UNITS HAD A SAFE
PLACE ON CALIFORNIA STATE
GROUNDS IN ORDER TO, TAKE
RESPITE DURING THIS TIME.
THANKFULLY WE HAD NO LOSS OF
LIFE, VERY SMALL AMOUNT OF LOSS
OF PROPERTY. BUT THIS IS A
PLACE, THE FAIRGROUNDS HAVE
BECOME, PARTICULARLY IN THE
RURAL COMMUNITIES, A PLACE TO
CONGREGATE NOT ONLY FOR
CELEBRATION AND COMMUNITY, BUT
IN VERY OFTEN TIMES OF NATURAL
DISASTER. SO I, I HOPE THAT THE
THIS THE COMMITTEE WILL SEE THIS
AS A BENEFIT TO CALIFORNIA
STATEWIDE. THANK YOU. THANK YOU
VERY MUCH FOR BRINGING THIS BILL
FORWARD. AND I KNOW WITH OUR
VENTURA COUNTY FAIRGROUNDS, THEY
HAVE BEEN USED ALSO AS A BASE
FOR THE THOMAS FIRE. AND, RIGHT
NOW THEY'RE HOSTING THE X GAMES.
SO THERE IS A LOT OF BENEFITS TO
OUR FAIRGROUNDS. AND WITHOUT
OBJECTION, THIS BILL IS GOING TO
BE REFERRED TO OUR SUSPENSE
FILE. THANK YOU SO MUCH, MADAM
CHAIR. THANK YOU. COMMITTEE.
THANK.
ALL RIGHT, MR. BRADFORD, WE ARE
READY FOR YOU. WE ARE READY TO
THROW DOWN. THIS IS GOING TO BE
OUR LAST ITEM. SB 1059 BY
SENATOR BRADFORD. AND AND YOU
MAY BEGIN WHENEVER YOU ARE.
THANK YOU, MADAM CHAIR, THIS
MEASURE WILL ASSIST LEGAL
CANNABIS INDUSTRIES BY
ALLEVIATING SOME OF THE
TREMENDOUS TAX BURDENS THAT'S
PLACED ON THIS INDUSTRY. WE ALL
KNOW ABOUT THE TAX ON TAX. THIS
BILL WOULD ELIMINATE THE LOCAL
GOVERNMENTS, COLLECTION OF TAX
ON A TAX. THE CALIFORNIA
CANNABIS MARKET IS IN CRISIS, AS
WE ALL KNOW, JUST LAST WEEK, THE
CITY OF LONG BEACH IMPLEMENTED A
LAW THAT REDUCED THE NUMBER OF
THE AMOUNT OF TAXES, I SHOULD
SAY, BECAUSE THIS INDUSTRY IS
STRUGGLING, HIGH TAXES,
EXCESSIVE REGULATORY HURDLES,
AND VARIOUS CHALLENGES THAT
CANNABIS BUSINESSES FACE HAVE
DONE LITTLE TO HELP THE LEGAL
CANNABIS MARKET SUCCEED. AND THE
WAY THE VOTERS HAD INTENDED WITH
PROP 64 WAS PASSED. WE HAVE THE
LARGEST MARKET OF CANNABIS IN
THE WORLD BY TOTAL RETAIL SALES.
BUT WHEN YOU LOOK AT THE NUMBER
OF CANNABIS PRODUCTS SOLD,
CALIFORNIA RANKS BEHIND OTHER
WEST COAST STATES AND SELLS
FEWER CANNABIS PRODUCTS THAN
MICHIGAN, DESPITE HAVING ONE
QUARTER OF OUR STATE'S
POPULATION, HUNDREDS OF STORES
ACROSS THE STATE ARE ON THE
VERGE OF FAILURE. MANY IN MY
DISTRICT AND THROUGHOUT LA ARE
DYING ON THE VINE EVERY DAY. AS
OF DECEMBER OF LAST YEAR, 15% OF
OUR STATE'S CANNABIS OPERATORS
ARE IN DEFAULT OF THEIR SALES
TAX OBLIGATIONS AND THEIR
TROUBLES, WILL ONLY BE
COMPOUNDED BY A 50% PENALTY IF
THEY MISS THEIR SALES TAX
PAYMENTS. FINALLY, MANY OF THE
INDUSTRIES ARE PREPARING FOR AN
INCREASE OF CANNABIS EXCISE TAX
NEXT YEAR. HERE TO MAKE UP FOR
THOSE LOSSES AND REVENUES.
OTHERWISE GENERATED BY THE
CULTIVATION TAX. THESE TAXES ARE
BURDENSOME. SOME, SO MUCH SO
THAT THE CITY OF LONG BEACH,
AGAIN, AS I STATED, IS REDUCING
THEIR LOCAL TAXES FOR CANNABIS
BUSINESSES TO SAVE THE INDUSTRY.
AND SOME JURISDICTIONS,
JURISDICTIONS LIKE THE CITY OF
LOS ANGELES, THESE CANNABIS
TAXES OR FEES ARE CALCULATED
AFTER THE STATE EXCISE TAX IS
APPLIED. THIS CALCULATION METHOD
IS UNFAIR TO CONSUMERS AND
DISADVANTAGES LICENSED RETAILERS
THAT CONTINUE TO STRUGGLE
AGAINST THE THRIVING ILLICIT
MARKET, THIS ISN'T THE ONLY
MEASURE, THIS YEAR THAT
ADDRESSES THE TAX ON TAX, WE'VE
SEEN IT WITH SB 11, 911, I
SHOULD SAY BY CARILLO AND AGRX
15 BY OUR CHAIR, SB TEN 1559, I
SHOULD SAY, ADDRESSES THESE
ISSUES AND ENSURES TAXES ARE
BASED ON THE ACTUAL GOODS BEING
SOLD. THIS BILL ALONE WILL NOT
SOLVE THE ISSUES OF OUR CANNABIS
MARKET, BUT IT WILL PROVIDE THE
NEEDED CLARITY AND RELIEF, WITH
ME TODAY TO PROVIDE TESTIMONY AS
JARED KILO, WITH THE UNITED
CANNABIS BUSINESS ASSOCIATION
AND DALE, GARY. YEAH. GARRETT
GEHRINGER YEAH. WITH CALIFORNIA
NORMAL, THIS BILL HAS RECEIVED
BIPARTISAN SUPPORT AND I RESPECT
LAST YEAR, I VOTE THE BILL
SECOND. THANK YOU. YOUR WITNESS,
WELL, THANK YOU, MADAM CHAIR,
MEMBERS OF THE COMMITTEE,
SENATOR SAID IT VERY WELL. I'D
JUST LIKE TO SAY THIS BILL ALSO,
I THINK CLEARS UP SOME CONFUSION
ABOUT HOW THESE TAXES WORK,
THERE ARE AT LEAST 36 CITIES AND
COUNTIES BY MY COUNT, THAT HAVE
GROSS RECEIPTS. TAX ON CANNABIS,
THE WAY THIS IS COLLECTED REALLY
VARIES FROM PLACE TO PLACE. AS
WE KNOW IN LOS ANGELES, THEY
INCLUDE THE EXCISE TAX AND THEIR
TAX BASE. AND THEN THEY PUT
THEIR TAX ON TOP OF IT. I HAVE A
HERE A RECEIPT FROM A COUNTY UP
NORTH WHERE THEY ACTUALLY
INCLUDE THE SALES TAX AS WELL AS
THE EXCISE TAX, AND THROW THAT
IN, WE THINK THIS IS REALLY,
EXCESSIVE IN AN OVERTAXED
INDUSTRY. I'D JUST LIKE TO POINT
OUT THAT THE TAX ON A JOINT OF
MARIJUANA AT THE PRESENT TIME IS
AROUND $1 PER JOINT, THE EXCISE
TAX ON A GLASS OF WINE IS $0.01,
BEER IS TWO AND A HALF CENTS.
AND, SHOT OF LIQUOR IS 4 OR
$0.08. SO WE HOPE YOU'LL BRING A
SMALL MODICUM OF TAX RELIEF TO
THIS MUCH UNBURDENED INDUSTRY
AND HELP UNDERCUT THE ILLEGAL
MARKET, SO WE RESPECTFULLY URGE
YOUR. AYE, VOTE. THANK YOU.
THANK YOU. JARED. KYLO, I'M
HEARING A Dð PASS FOR CANNABIS
BILL AND TAX. AND REV FEELS VERY
, I DON'T KNOW. I'M WITHOUT
WORDS AT THIS PARTICULAR POINT,
SO THANK YOU FOR THAT, I'LL KEEP
IT SHORTER THAN PREVIOUS
HEARING. Dð PASS MAKES ME FEEL
CONFIDENT, I THINK WHERE WE'RE
AT RIGHT NOW IS WE'VE GOT LIKE,
37% MORE RETAIL LICENSES SINCE
2022, AND YET WE STILL HAVE
DECLINING REVENUE. SO THIS ISN'T
ABOUT AN ACCESS ISSUE, IF WE ARE
LOOKING FOR WHAT IS THE REASON
FOR WHY CANNABIS AND CANNABIS
PRODUCTS ARE BEING PURCHASED
THROUGH EITHER ILLEGAL SOURCES
OR THROUGH SOURCES LIKE, HEMP
STORES THAT ARE SELLING CANNABIS
UNDER THE GUISE OF HEMP? WE'RE
SEEING THOSE THOSE INDUSTRIES
GROW ALMOST EXPONENTIALLY. WE'VE
SEEN ALMOST A, YOU KNOW, ABOUT A
FIVE FOLD INCREASE IN HEMP SALES
IN CALIFORNIA AND A COUPLE OF
YEARS, AND NOW ALL WE'RE REALLY
TRYING TO DO IS UNDERSTAND WHERE
CDTFA IS. INFORMATION IS COMING
THROUGH, EVEN THROUGH THEIR
WEBSITE, IT'S HARD TO GET A
FOLLOW THROUGH OF WHAT ACTUAL
CANNABIS IS BEING SOLD VERSUS
TOTAL REVENUE. AND EVEN THEN,
WE'RE LOOKING AT THE DEBT
SOMETIMES BROUGHT IN FROM THESE
OTHER CANNABIS BUSINESSES.
SOMETIMES REPORTED ALMOST $754
MILLION IN CANNABIS DEBT DUE TO,
UNPAID TAXES. I'M NOT SURE IF
CDTFA ACTUALLY REPORTS THAT
UNDUE TAXES THAT HAVEN'T BEEN
COLLECTED YET AS DEBT AND THEIR
REPORTING, BUT IF THEY DID, I
THINK WE'D START TO SEE THAT
THERE IS ACTUALLY MORE
CALCULATION OF TAX DUE THAN
THERE IS COLLECTION OF TAX. AND
THAT MIGHT BE A BETTER INDICATOR
OF WHERE THE HEALTH OF THIS
INDUSTRY ACTUALLY IS SITTING. AS
OF TODAY, SO WITH THAT, WE HAVE
A $8 BILLION VALUATION OF THE
ILLICIT INDUSTRY, A $2 BILLION
OF THE ILLEGAL HEMP INDUSTRY.
AND WE'VE GOT A $4 BILLION,
ESTIMATION ON CANNABIS. SO I'M
HOPING THAT CANNABIS CAN FIND
ITS FOOTING AND GET A FIRMER
FOOTHOLD ON BEING ABLE TO GROW
LIKE SOME OF THE OTHER ILLICIT
NON-TAXED ENTITIES FOR CANNABIS
ARE. SO REQUEST FOR YOUR I VOTE.
THANK YOU, THANK YOU. OTHER
WITNESSES IN SUPPORT NICOLE
WATERMAN ON BEHALF OF THE
CALIFORNIA CANNABIS INDUSTRY
ASSOCIATION AND SUPPORT. GOOD
AFTERNOON, MADAM CHAIR. MEMBERS
OF THE COMMITTEE, SAM RODRIGUEZ,
ON BEHALF OF GOOD FARMERS, GREAT
NEIGHBORS BASED IN SANTA BARBARA
COUNTY, I WANT TO COMMEND THE
SENATOR FOR HIS EFFORTS, WE HAVE
THE CITY OF LOMPOC WHO
ENTERTAINED THE IDEA OF ADDING
THE EXCISE TAX ON TOP OF THE
SALES TAX. SO THANK YOU FOR YOUR
EFFORTS. SARAH PALERMO WITH THE
CALIFORNIA RETAILERS ASSOCIATION
AND SUPPORT. GOOD AFTERNOON.
KRISTIN HEIDELBACH, UFCW WESTERN
STATES COUNSEL IN SUPPORT SEAN
BACON WITH THE CANNABIS
DISTRIBUTION ASSOCIATION AND
SUPPORT. MADAM CHAIR MEMBERS
GEORGE MILLER, ON BEHALF OF
WEEDMAPS IN SUPPORT. THANK YOU.
ANY WITNESSES IN OPPOSITION, ANY
QUESTIONS OR COMMENTS FROM THE
COMMITTEE, THIS IS Ó ASSEMBLY
MEMBER HAYDEN. THANK YOU. THANK
YOU, I APPRECIATE IT. THIS IS A
GREAT BILL. THANK YOU SO MUCH
FOR YOUR LEADERSHIP IN THIS AREA
GENERALLY, SENATOR, I THINK
YOU'VE YOU'VE REALLY, FOCUSED IN
ON WHAT WE NEED TO DO TO BE ABLE
TO SUPPORT OUR LEGAL CANNABIS
INDUSTRY, WHICH REALLY IS I
THINK, OVERTAXED AND
OVERREGULATED IN WAYS THAT ARE
REALLY ARBITRARY AND WRONG AND
MISGUIDED. AND YOU'VE BEEN ABLE
TO PUT FORWARD BILLS THAT I
THINK WILL HELP TO FIX THAT,
ALSO, THIS IS A GREAT ANALYSIS.
THIS IS REALLY IT IS YOU'RE
RIGHT. THIS IS THE FUN
COMMITTEE. I CAN SEE THERE'S
LIKE, JOKES BUILT IN HERE AND
EVERYTHING WE TAKE IT VERY
SERIOUSLY. NO, IT IS, IT IS
GOOD. IT'S VERY WELL DONE. I
JUST WANTED TO ASK IF I COULD BE
A COAUTHOR AS WELL OF THE BILL.
AND, I'M EXCITED TO VOTE FOR
THIS, AND WE'D LOVE TO ADD YOU.
THANKS FOR HAVING ME IN THE
COMMITTEE. ALL RIGHT. ANYBODY
ELSE, SO, OBVIOUSLY OUR LEGAL
INDUSTRY DOES NEED HELP. AND I
THINK BRINGING UP TRANSPARENCY
FROM CDTFA IS I THINK THAT'S
IMPORTANT TO FOCUS ON. I ALSO
THINK THAT WE NEED TO HAVE MORE
ENFORCEMENT OF THE ILLICIT ART,
MARKET. BUT, HOPEFULLY THAT'S
GOING TO BE COMING SOON, SO, SO,
SENATOR BRADFORD, WOULD YOU LIKE
TO CLOSE THIS IS STRAIGHT COMMON
SENSE MEASURE HELPING TO ACHIEVE
THE GOALS THAT THE VOTERS, HOPE
FOR WHEN WE PASS PROP 64 EIGHT
YEARS AGO. AND I RESPECTFULLY
ASK FOR YOUR VOTE. ALL RIGHT.
THE MOTION IS Dð PASS TO THE
COMMITTEE ON BUSINESS AND
PROFESSIONS. THAT MOTION WAS
MOVED BY ASSEMBLY MEMBER
GREYSON, SECOND BY ASSEMBLY
MEMBER HANEY. MISS HYLAND,
PLEASE CALL THE ROLL ON ITEM
NUMBER FOUR, SB 1059, THE MOTION
IS Dð. PASS TO BUSINESS AND
PROFESSIONS. IRWIN I IRWIN I TO
NOT VOTING TO NOT VOTING. BAINES
HANEY. HANEY I GRAYSON. GRAYSON
I JIM PATTERSON OAN THREE OF US
THAT BILLS ON CALL BILL IS ON
CALL. WE NEED ONE MORE PERSON.
THANK YOU. ONE MORE VOTE. ALL
RIGHT. THANK YOU VERY MUCH.
THANK YOU. I WE NEED TO CALL.
YOU'RE DONE. YEAH, YOU ARE DONE.
YES, YES. WE JUST NEED A COPY.
THANK YOU VERY MUCH. WE NEEDED
YOUR, THERE THERE ARE THREE
MEMBERS, BUT ONLY ONE. I.
ALL RIGHT. YOU'RE THE ONE WE
NEED. MISS HYLAND, DO YOU WANT
TO GO THROUGH? YES, ITEM NUMBER
ONE WAS PULLED BY THE AUTHOR.
ITEM NUMBER TWO, SB 974 BY MISS
GROVE HAS PASSED, ABSENTEE
BAINES THREE OF US I, ITEM
NUMBER THREE HAS GONE TO
SUSPENSE. ITEM NUMBER FOUR IS ON
CALL SB 1059 BY MISTER SENATOR
BRADFORD, WHICH IS A DUE PASS TO
BUSINESS AND PROFESSIONS CALLING
ABSENTEES. BAINES THREE OF US
THREE OF US I THAT BILL IS
PASSED. THAT BILL IS OUT 4 TO 0.
ITEM NUMBER FIVE SB 1192 BY
SENATOR PORTANTINO HAS PASSED.
THE MOTION WAS Dð PASS AS
AMENDED TO APPROPRIATIONS.
CALLING ABSENTEES BAINES RIVAS
CGRTS RIVAS I. AND ITEM NUMBER
SIX IS GOING TO SUSPENSE. THANK
YOU VERY MUCH. YOU'RE FREE TO
LEAVE THE BUILDING PRESENTING.
OH, THERE.
ALL RIGHT. WE HAVE OUR LAST
MEMBER. MISS BAINES. OKAY ITEM
NUMBER ONE WAS PULLED BY THE
AUTHOR. OUR ITEM NUMBER TWO HAS
PASSED. SB 974 BY MISS GROVE. IT
WAS A Dð PASS TO APPROPRIATIONS
ABSENTEE. BAINES BAINES I, ITEM
NUMBER THREE IS GOING TO
SUSPENSE. ITEM NUMBER FOUR, SB
1059 BY SENATOR BRADFORD HAS
PASSED. IT'S A Dð PASS TO
BUSINESS. AND PROFESSIONS
CALLING ABSENTEES. BAINES.
BAINES. I ITEM NUMBER FIVE, SB
1192 BY SENATOR PORTANTINO. THAT
BILL HAS PASSED. IT'S A DO PASS
AS AMENDED, TO APPROPRIATION
CALLING ABSENTEE BAINES. BAINES
I AND ITEM NUMBER SIX IS GOING
TO SUSPENSE. ALL RIGHT. THANK
YOU VERY MUCH. AND WITH THAT OUR
COMMITTEE IS ADJOURNED.