text:
(a) For taxable years beginning on or after January 1, 2013, a qualified taxpayer that apportions its business income under Section 25128.7 shall apply the following provisions:

(1) Notwithstanding Section 25137, qualified sales assigned to this state shall be equal to 50 percent of the amount of qualified sales that would be assigned to this state pursuant to Section 25136 but for the application of this section. The remaining 50 percent shall not be assigned to this state.

(2) All other sales shall be assigned pursuant to Section 25136.

(b) For purposes of this section:

(1) “Qualified taxpayer” means a member, as defined in paragraph (10) of subdivision (b) of Section 25106.5 of Title 18 of the California Code of Regulations as in effect on the effective date of the act adding this section, of a combined reporting group that is also a qualified group.

(2) “Qualified group” means a combined reporting group, as defined in paragraph (3) of subdivision (b) of Section 25106.5 of Title 18 of the California Code of Regulations, as in effect on the effective date of the act adding this section, that satisfies the following conditions:

(A) Has satisfied the minimum investment requirement for the taxable year.

(B) For the combined reporting group’s taxable year beginning in calendar year 2006, the combined reporting group derived more than 50 percent of its United States network gross business receipts from the operation of one or more cable systems.

(C) For purposes of satisfying the requirements of subparagraph (B), the following rules shall apply:

(i) If a member of the combined reporting group for the taxable year was not a member of the same combined reporting group for the taxable year beginning in calendar year 2006, the gross business receipts of that nonincluded member shall be included in determining the combined reporting group’s gross business receipts for its taxable year beginning in calendar year 2006 as if the nonincluded member were a member of the combined reporting group for the taxable year beginning in calendar year 2006.

(ii) The gross business receipts shall include the gross business receipts of a qualified partnership, but only to the extent of a member’s interest in the partnership.

(3) “Cable system” and “network” shall have the same meaning as defined in Section 5830 of the Public Utilities Code, as in effect on the effective date of the act adding this section. “Network services” means video, cable, voice, or data services.

(4) “Gross business receipts” means gross receipts as defined in paragraph (2) of subdivision (f) of Section 25120 (other than gross receipts from sales or other transactions between or among members of a combined reporting group, limited, if applicable, by Section 25110).

(5) “Minimum investment requirement” means qualified expenditures of not less than two hundred fifty million dollars ($250,000,000) by a combined reporting group during the calendar year that includes the beginning of the taxable year.

(6) “Qualified expenditures” means any combination of expenditures attributable to this state for tangible property, payroll, services, franchise fees, or any intangible property distribution or other rights, paid or incurred by or on behalf of a member of a combined reporting group.

(A) An expenditure for other than tangible property shall be attributable to this state if the member of the combined reporting group received the benefit of the purchase or expenditure in this state.

(B) A purchase of or expenditure for tangible property shall be attributable to this state if the property is placed in service in this state.

(C) Qualified expenditures shall include expenditures by a combined reporting group for property or services purchased, used, or rendered by independent contractors in this state.

(D) Qualified expenditures shall also include expenditures by a qualified partnership, but only to the extent of the member’s interest in the partnership.

(7) “Qualified partnership” means a partnership if the partnership’s income and apportionment factors are included in the income and apportionment factors of a member of the combined reporting group, but only to the extent of the member’s interest in the partnership.

(8) “Qualified sales” means gross business receipts from the provision of any network services, other than gross business receipts from the sale or rental of customer premises equipment. “Qualified sales” shall include qualified sales by a qualified partnership, but only to the extent of a member’s interest in the partnership.

(c) The rules in this section with respect to qualified sales by a qualified partnership are intended to be consistent with the rules for partnerships under paragraph (3) of subdivision (f) of Section 25137-1 of Title 18 of the California Code of Regulations.

history: (History: Added November 6, 2012, by initiative Proposition 39, Sec. 9. Note: Prop. 39 is titled the California Clean Energy Jobs Act.)


kind: section

code: RTC

text:
If the allocation and apportionment provisions of this act do not fairly represent the extent of the taxpayer’s business activity in this state, the taxpayer may petition for or the Franchise Tax Board may require, in respect to all or any part of the taxpayer’s business activity, if reasonable:

(a) Separate accounting;

(b) The exclusion of any one or more of the factors;

(c) The inclusion of one or more additional factors which will fairly represent the taxpayer’s business activity in this state; or

(d) The employment of any other method to effectuate an equitable allocation and apportionment of the taxpayer’s income.

history: (History: Added by Stats. 1966, Ch. 2.)

division: 2. OTHER TAXES

part: 11. CORPORATION TAX LAW

chapter: 17. Allocation of Income

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 17. Allocation of Income > 2. Uniform Division of Income for Tax Purposes Act


text: This act shall be so construed as to effectuate its general purpose to make uniform the law of those states which enact it. Enactment of Article IV of the Multistate Tax Compact (as set forth in Section 38006 of the code) pertaining to the allocation and apportionment of income shall be construed as a reenactment of Sections 25120 to 25137, inclusive, without any inference that a change in interpretation is implied by such enactment.

history: (History: Amended by Stats. 1974, Ch. 1381.)

article: 2. Uniform Division of Income for Tax Purposes Act


text: Sections 25120 to 25139, inclusive, may be cited as the Uniform Division of Income for Tax Purposes Act.


text:
Accounting procedures shall be adopted which will separately reflect the revenues attributable to dividends received by corporations having commercial domiciles in this state.

In view of pending litigation concerning the proper treatment of intercompany dividends, it is not intended by enactment of this act that any inference be drawn from it in such litigation.

history: (History: Amended by Stats. 1966, 1st Ex. Sess., Ch. 167.)


text:
(a) For purposes of this section, the following definitions shall apply:

(1) “Entity” means an individual, corporation, association, partnership, limited liability company, estate, trust, or any combination thereof.

(2) “Person” means an individual or corporation.

(3) “Professional athletic team” means any entity which has all of the following characteristics:

(A) Employs concurrently during the taxable year five or more persons, who are compensated for being participating members of an athletic team engaging in public contests.

(B) Is a member of a league composed of at least five entities which are engaged in the operation of an athletic team and which are located in this and other states or in other countries.

(C) Has total minimum paid attendance in the aggregate for all contests wherever played during the taxable year of 40,000 persons.

(D) Has minimum gross income in the taxable year of one hundred thousand dollars ($100,000).

(b) For purposes of this chapter, a team shall be considered to have its operations based in the state or country in which the team derives its territorial rights under the rules of the league of which it is a member.

(c) The business income of a professional athletic team derived directly or indirectly from its operations as a professional athletic team shall be allocated to this state pursuant to the following three-factor formula:

(1) Computation of the property factor under Section 25129:

(A) For a team that has its operations based in this state, the average value of all real and tangible personal property, wherever located, and owned or rented and used during the taxable year, shall be deemed to have been owned or rented and used in this state during the taxable year.

(B) For a team that has its operations based outside of this state, the average value of all real and tangible personal property, wherever located, and owned or rented and used during the taxable year, shall be deemed to have been owned or rented and used outside this state during the taxable year.

(2) Computation of the payroll factor under Section 25132:

(A) For a team that has its operations based in this state, the total compensation paid everywhere during the taxable year shall be deemed to have been paid in this state during the taxable year.

(B) For a team that has its operations based outside of this state, the total compensation paid everywhere during the taxable year shall be deemed to have been paid outside this state during the taxable year.

(3) Computation of the sales factor under Section 25134:

(A) For a team that has its operations based in this state, the total sales everywhere during the taxable year shall be deemed to have been made in this state during the taxable year.

(B) For a team that has its operations based outside of this state, the total sales everywhere during the taxable year shall be deemed to have been made outside this state during the taxable year.

(d) If any team that has its operations based in this state is required to allocate or apportion a part of its business income derived directly or indirectly from its operations as a professional athletic team to another state or country by the laws, regulations, or requirements of the other state or country and pays an income or franchise tax measured by income thereon as a result of the allocation or apportionment, then all of the following shall apply:

(1) The business income of the team otherwise subject to this section shall be reduced for purposes of this section by the amount of the business income which is allocated or apportioned to and taxed by the other state or country.

(2) This section shall not apply to any team in the same league that has its operations based in the other state or country, and the business income of any such team derived directly or indirectly from its operations as a professional athletic team shall be allocated or apportioned to this state in a manner consistent with the method of allocation or apportionment imposed by the other state or country on the business income of the team that has its operations based in this state.

(e) For purposes of the minimum tax imposed under Sections 23151 and 23151.1, an entity which operates a professional athletic team shall be treated as a corporation. The liability under Sections 23151 and 23151.1 of any corporation owning any portion or share of an entity shall be satisfied by payment of the minimum tax by that entity, if the corporation is not otherwise doing business in this state.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 226. Effective January 1, 2001.)


text: This part is known and may be cited as the “Cigarette and Tobacco Products Tax Law.”

history: (History: Amended by Stats. 1989, Ch. 634, Sec. 1. Effective September 21, 1989.)

part: 13. CIGARETTE TAX

chapter: 1. General Provisions and Definitions

path: 2. OTHER TAXES > 13. CIGARETTE TAX > 1. General Provisions and Definitions


text: Except where the context otherwise requires, the definitions given in this chapter govern the construction of this part.

history: (History: Added by Stats. 1959, Ch. 1040.)


text: “Cigarette” means any roll for smoking, made wholly or in part of tobacco, irrespective of size or shape and irrespective of whether the tobacco is flavored, adulterated or mixed with any other ingredient, where such roll has a wrapper or cover made of paper or any other material, except where such wrapper is wholly or in the greater part made of tobacco and such roll weighs over three pounds per thousand.


text: “Untaxed cigarette” means any cigarette which has not yet been distributed in such manner as to result in a tax liability under this part.


text:
“Untaxed tobacco product” means either of the following:

(a) Any tobacco product that has not yet been distributed in a manner that results in a tax liability under this part.

(b) Any tobacco product that was distributed in a manner that resulted in a tax liability under this part, but that was returned to the distributor after the tax was paid and for which the distributor has either claimed a deduction pursuant to subdivision (c) of Section 30123 or 30131.2, or a refund or credit pursuant to Section 30176.2 or Section 30178.2.

history: (History: Amended by Stats. 2007, Ch. 295, Sec. 1. Effective October 5, 2007.)


text: “Sale” includes any transfer of title or possession for a consideration, exchange or barter, in any manner or by any means whatever.


text:
“Distribution” includes:

(a) The sale of untaxed cigarettes or tobacco products in this state.

(b) The use or consumption of untaxed cigarettes or tobacco products in this state.

(c) The placing in this state of untaxed cigarettes or tobacco products in a vending machine or in retail stock for the purpose of selling the cigarettes or tobacco products to consumers.

history: (History: Amended by Stats. 1989, Ch. 634, Sec. 3. Effective September 21, 1989.)


text: “Use or consumption” includes the exercise of any right or power over cigarettes or tobacco products incident to the ownership thereof, other than the sale of the cigarettes or tobacco products or the keeping or retention thereof by a licensed distributor for the purpose of sale.

history: (History: Amended by Stats. 1998, Ch. 420, Sec. 4. Effective January 1, 1999.)


text: “Person” includes any individual, firm, partnership, joint venture, limited liability company, association, social club, fraternal organization, corporation, estate, trust, business trust, receiver, trustee, syndicate, this state, any county, city and county, municipality, district, or other political subdivision of the state, or any other group or combination acting as a unit.

history: (History: Amended by Stats. 1994, Ch. 1200, Sec. 70. Effective September 30, 1994.)


text:
“Distributor” includes:

(a) Every person who, after 4 o’clock a.m. on July 1, 1959, and within the meaning of the term “distribution” as defined in this chapter, distributes cigarettes.

(b) Every person who, on or after 12:01 a.m. on January 1, 1989, and within the meaning of the term “distribution” as defined in this chapter, distributes tobacco products.

(c) Every person who sells or accepts orders for cigarettes or tobacco products which are to be transported from a point outside this state to a consumer within this state.

history: (History: Amended by Stats. 1989, Ch. 634, Sec. 5. Effective September 21, 1989.)


text: “Dealer” includes every person, other than one holding a distributor’s or wholesaler’s license, who engages in this state in the sale of cigarettes or tobacco products.

history: (History: Amended by Stats. 1989, Ch. 634, Sec. 6. Effective September 21, 1989.)


text: “In this State” or “in the State” means within the exterior limits of the State of California and includes all territory within these limits owned by or ceded to the United States of America.


text:
(a) “Transporter” means any person transporting into or within this state any of the following:

(1) Cigarettes not contained in packages to which are affixed California cigarette tax stamps or meter impressions.

(2) Tobacco products upon which the tobacco products surtax imposed by Article 2 (commencing with Section 30121), Article 2.5 (commencing with Section 30130.50), and Article 3 (commencing with Section 30131) of Chapter 2 has not been paid.

(b) “Transporter” shall not include any of the following:

(1) A licensed distributor.

(2) A common carrier.

(3) A person transporting cigarettes and tobacco products under federal internal revenue bond or customs control that are non-tax paid under Chapter 52 of the Internal Revenue Act of 1954 as amended.

history: (History: Amended November 8, 2016, by initiative Proposition 56, Sec. 5.1.)


text: “Package” means the indivdual packet, box or other container in which retail sales of cigarettes are normally made or intended to be made. “Package” does not include such containers as cartons, cases, bales or boxes which contain smaller packaging units of cigarettes.

history: (History: Amended by Stats. 1967, Ch. 963.)


text:
“Wholesaler” includes:

(a) Any person, other than a licensed distributor, who engages in this state in making sales for resale of cigarettes that are contained in packages to which are affixed stamps or meter impressions.

(b) Any person, other than a licensed distributor, who engages in this state in making sales for resale of tobacco products on which the tax imposed in Sections 30123 and 30131.2 has been paid.

history: (History: Amended by Stats. 2001, Ch. 251, Sec. 18. Effective January 1, 2002.)


text: “Wholesale cost” means the cost of tobacco products to the distributor prior to any discounts or trade allowances.

history: (History: Added by Stats. 1989, Ch. 634, Sec. 7. Effective September 21, 1989.)


text:
(a) “Stamps and meter impressions” means the indicia of payment of tax, as required by Section 30161, and include, but are not limited to, stamps, meter impressions, or any other indicia developed using current technology.

(b) The board shall prescribe and approve the types of stamps and meter impressions, and the methods of applying stamps and meter impressions to packages of cigarettes.

history: (History: Added by Stats. 2002, Ch. 1124, Sec. 54. Effective September 30, 2002.)


text: “Importer” means any purchaser for resale in the United States of cigarettes or tobacco products manufactured outside of the United States for the purpose of making a first sale or distribution within the United States.

history: (History: Amended by Stats. 2006, Ch. 501, Sec. 14. Effective January 1, 2007.)


text: Every distributor shall pay a tax upon his or her distributions of cigarettes at the rate of one and one-half mills ($0.0015) for the distribution after 4:00 a.m. on July 1, 1959, of each cigarette until 12:01 a.m. on August 1, 1967, at the rate of three and one-half mills ($0.0035) for the distribution of each cigarette on and after August 1, 1967, until 12:01 a.m. on October 1, 1967, at the rate of five mills ($0.005) on and after 12:01 a.m. on October 1, 1967, until 12:01 a.m. on January 1, 1994, and at the rate of six mills ($0.006) on and after 12:01 a.m. on January 1, 1994.

history: (History: Amended by Stats. 1994, Ch. 146, Sec. 210. Effective January 1, 1995.)

chapter: 2. Imposition of Tax

article: 1. Tax on Distributors

path: 2. OTHER TAXES > 13. CIGARETTE TAX > 2. Imposition of Tax > 1. Tax on Distributors


text:
(a) It is the intent of the Legislature in enacting this section to facilitate the collection of all applicable state surtaxes, sales or use taxes, and escrow and other payment obligations on cigarettes sold to residents of the state and to ensure compliance with the Prevent All Cigarette Trafficking Act of 2009 (PACT Act; Public Law 111-154).

(b) Except as provided in subdivision (d), no person may engage in a retail sale of cigarettes or tobacco products in California unless the sale is a vendor-assisted, face-to-face sale.

(c) For the purposes of this section, the following definitions shall apply:

(1) “Cigarette” has the same meaning as provided in Section 375 of Title 15 of the United States Code, as amended from time to time.

(2) “Consumer” means a person who purchases cigarettes or tobacco products. “Consumer” does not include any person licensed under this part or under Division 8.6 (commencing with Section 22970) of the Business and Professions Code and lawfully operating as a manufacturer, distributor, wholesaler, or retailer of cigarettes or tobacco products.

(3) “Delivery sale” means sale of cigarettes or tobacco products into and in this state in either of the following cases:

(A) The consumer submits the order for the sale by means of a telephone or other method of voice transmission, the mail, or the Internet or other online service, or the seller is otherwise not in the physical presence of the consumer when the request for purchase or order is made.

(B) The cigarettes or tobacco products are delivered to the consumer by common carrier, private delivery service, or other method of remote delivery, or the seller is not in the physical presence of the consumer when the consumer obtains possession of the cigarettes or tobacco products.

(4) “Delivery seller” means a person who makes a delivery sale.

(5) “Face-to-face sale” means a sale in which the purchaser is in the physical presence of the seller or the seller’s employee or agent at the time of the sale. A face-to-face sale does not include a delivery sale.

(6) “Indian country” shall have the same meaning as provided in Section 1151 of Title 18 of the United States Code, and includes any other land held by the United States in trust or restricted status for one or more Indian tribes.

(7) “Interstate commerce” means commerce between a state and any place outside the state, commerce between a state and Indian country in the state, or commerce between points in the same state but through a place outside of the state or through any Indian country.

(8) “Tobacco products” shall have the same meaning as otherwise defined under this part with the exception of cigars.

(d) A person may engage in delivery sale of cigarettes or tobacco products to a person in California provided that all of the following conditions are met:

(1) The delivery seller has fully complied with all of the requirements of Chapter 10A (commencing with Section 375) of Title 15 of the United States Code, otherwise known as the Jenkins Act.

(2) The delivery seller obtains and maintains any applicable license under this part and under Division 8.6 (commencing with Section 22970) of the Business and Professions Code, as if the delivery sales occurred entirely within this state.

(3) The delivery seller complies with any applicable state law that imposes escrow or other payment obligations on tobacco product manufacturers, including, but not limited to, Sections 104555 to 104557, inclusive, of the Health and Safety Code.

(4) The delivery seller complies with any applicable state law or local ordinance that imposes restrictions on the retail sale of cigarettes or tobacco products directly to the public from a retail location, including Section 104559.5 of the Health and Safety Code, as if the delivery sales occurred entirely within the state and place.

(5) The Attorney General may require the delivery seller to report to the Attorney General its delivery sales of cigarettes and tobacco products to California consumers in the form and manner specified by the Attorney General.

(e) Any violation of this section by any person is a misdemeanor. Each offense shall be punishable by a fine not to exceed five thousand dollars ($5,000), or imprisonment not to exceed one year in a county jail, or both the fine and imprisonment. The amount of any fines assessed shall be deposited in the Cigarette and Tobacco Products Compliance Fund.

(f) The California Department of Tax and Fee Administration may provide information relative to a seller’s failure or attempt to comply with the PACT Act and the Jenkins Act to the Attorney General.

(g) The Attorney General or a city attorney, county counsel, or district attorney may bring a civil action to enforce this section against a person that violates this section and, in addition to any other remedy provided by law, the court shall assess a civil penalty in accordance with the following schedule:

(1) A civil penalty of not less than one thousand dollars ($1,000) and not more than two thousand dollars ($2,000) for the first violation.

(2) A civil penalty of not less than two thousand five hundred dollars ($2,500) and not more than three thousand five hundred dollars ($3,500) for the second violation within a five-year period.

(3) A civil penalty of not less than four thousand dollars ($4,000) and not more than five thousand dollars ($5,000) for the third violation within a five-year period.

(4) A civil penalty of not less than five thousand five hundred dollars ($5,500) and not more than six thousand five hundred dollars ($6,500) for a fourth violation within a five-year period.

(5) A civil penalty of up to ten thousand dollars ($10,000) for a fifth or subsequent violation within a five-year period.

(h) This section does not prohibit the lawful sale of a tobacco product that occurs by means of a vending machine.

(i) Nothing in this section shall relieve the seller of cigarettes from any other applicable requirement of state law relating to the sale or distribution of cigarettes or tobacco products in this state.

(j) The California Department of Tax and Fee Administration shall enforce the licensing and tax provisions of this section. Other provisions of this section shall be enforced by the Attorney General.

(k) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

history: (History: Amended by Stats. 2025, Ch. 462, Sec. 5. (SB 863) Effective January 1, 2026.)

article: 1. Tax on Distributors


text:
(a) The taxes imposed by this part shall not apply to the sale of cigarettes or tobacco products to either of the following:

(1) United States Army, Air Force, Navy, Marine Corps or Coast Guard exchanges and commissaries and Navy or Coast Guard ships’ stores.

(2) The United States Veterans’ Administration.

(b) This section shall remain in effect only until the first day of the first calendar month commencing more than 60 days after existing federal law is amended by Congress to permit state taxation of sales of cigarettes by or through federal military installations.

history: (History: Amended by Stats. 1992, Ch. 1336, Sec. 6. Effective January 1, 1993.)

article: 1. Tax on Distributors


text: The taxes imposed by this part shall not apply to the distribution of cigarettes or tobacco products that are non-tax-paid under Chapter 52 of the Internal Revenue Act of 1954 as amended, and the cigarettes or tobacco products are under internal revenue bond or customs control.

history: (History: Amended by Stats. 1989, Ch. 634, Sec. 9. Effective September 21, 1989.)

article: 1. Tax on Distributors


text: The taxes imposed by this part shall not apply to the sale of cigarettes or tobacco products by the manufacturer to a licensed distributor.

history: (History: Amended by Stats. 1989, Ch. 634, Sec. 10. Effective September 21, 1989.)

article: 1. Tax on Distributors


text:
(a) The tax and surcharge imposed by this part shall not apply to the sale or transfer of untaxed cigarettes or tobacco products to a law enforcement agency for use in a criminal investigation when that sale or transfer is authorized by the board.

(b) A law enforcement agency authorized by the board to receive or purchase cigarettes or tobacco products as provided in subdivision (a) shall not be required to apply for, or obtain, a license as a distributor pursuant to Section 30140.

(c) A law enforcement agency making distributions of cigarettes and tobacco products received or purchased under subdivision (a) is not required to collect or remit the tax or surcharge imposed by this part with respect to those authorized distributions.

history: (History: Amended by Stats. 1999, Ch. 941, Sec. 34. Effective January 1, 2000.)

article: 1. Tax on Distributors


text: The taxes imposed by this part shall not apply to the sale of cigarettes or tobacco products by a distributor to a common carrier engaged in interstate or foreign passenger service or to a person authorized to sell cigarettes or tobacco products on the facilities of the carrier. Whenever cigarettes or tobacco products are sold by distributors to common carriers engaged in interstate or foreign passenger service for use or sale on facilities of the carriers, or to persons authorized to sell cigarettes or tobacco products on those facilities, the tax imposed under this part shall not be levied with respect to the sales of the cigarettes or tobacco products by the distributors, but a tax is hereby levied upon the carriers or upon the persons authorized to sell cigarettes or tobacco products on the facilities of the carriers, as the case may be, for the privilege of making sales in California at the same rate as set under this part. Those common carriers and authorized persons shall pay the tax imposed by this section and file reports with the board, as provided in Section 30186.

history: (History: Amended November 8, 2016, by initiative Proposition 56, Sec. 5.2.)

article: 1. Tax on Distributors


text: The taxes imposed by this part shall not apply to the sale of cigarettes or tobacco products by the original importer to a licensed distributor if the cigarettes or tobacco products are manufactured outside the United States.

history: (History: Amended by Stats. 1989, Ch. 634, Sec. 12. Effective September 21, 1989.)

article: 1. Tax on Distributors


text: The taxes imposed by this part shall not apply to the sale or gift of federally tax-free cigarettes or tobacco products when the cigarettes or tobacco products are delivered directly from the manufacturer under Internal Revenue bond to a veterans’ home of the State of California or a hospital or domiciliary facility of the United States Veterans’ Administration for gratuitous issue to veterans receiving hospitalization or domiciliary care. The tax shall not be imposed with respect to the use or consumption of such cigarettes or tobacco products by the institution or by the veteran patients or domiciliaries.

history: (History: Amended by Stats. 1989, Ch. 634, Sec. 13. Effective September 21, 1989.)

article: 1. Tax on Distributors


text: The taxes imposed by this part shall not apply to the use or consumption of untaxed cigarettes transported or brought into this state in a single lot or shipment of not more than 400 cigarettes by an individual for his own use or consumption, or of not more than 400 untaxed cigarettes obtained at one time from any of the instrumentalities listed in Section 30102.

history: (History: Amended by Stats. 1970, Ch. 547.)

article: 1. Tax on Distributors


text: The taxes resulting from a distribution of cigarettes or tobacco products within the meaning of subdivision (b) of Section 30008 shall be paid by the user or consumer.

history: (History: Amended by Stats. 1989, Ch. 634, Sec. 14. Effective September 21, 1989.)

article: 1. Tax on Distributors


text:
(a) Every distributor engaged in business in this state and selling or accepting orders for cigarettes or tobacco products with respect to the sale of which the tax imposed under this part is inapplicable shall, at the time of making the sale or accepting the order or, if the purchaser is not then obligated to pay the tax with respect to his or her distribution of the cigarettes or tobacco products, at the time the purchaser becomes so obligated, collect the tax from the purchaser, if the purchaser is other than a licensed distributor, and shall give to the purchaser a receipt therefor in the manner and form prescribed by the board.

(b) Every person engaged in business in this state and making gifts of untaxed cigarettes or tobacco products as samples with respect to which the tax imposed under this part is inapplicable shall, at the time of making the gift or, if the donee is not then obligated to pay the tax with respect to his or her distribution of the cigarettes or tobacco products, at the time the donee becomes so obligated, collect the tax from the donee, if the donee is other than a licensed distributor, and shall give the donee a receipt therefor in the manner and form prescribed by the board. This section shall not apply to those distributions of cigarettes or tobacco products that are exempt from tax under Section 30105.5.

(c) “Engaged in business in the state” means and includes any of the following:

(1) Maintaining, occupying, or using, permanently or temporarily, directly or indirectly, or through a subsidiary, or agent, by whatever name called, an office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business.

(2) Having any representative, agent, salesperson, canvasser or solicitor operating in this state under the authority of the distributor or its subsidiary for the purpose of selling, delivering, or the taking of orders for cigarettes or tobacco products.

(d) The taxes required to be collected by this section constitute debts owed by the distributor, or other person required to collect the taxes, to the state.

history: (History: Amended November 8, 2016, by initiative Proposition 56, Sec. 5.3.)

article: 1. Tax on Distributors


text: Unless the contrary is established, it shall be presumed that all cigarettes or tobacco products acquired by a distributor are untaxed cigarettes or tobacco products, and that all cigarettes or tobacco products manufactured in this state or transported to this state, and no longer in the possession of the distributor, have been distributed.

history: (History: Amended by Stats. 1989, Ch. 634, Sec. 16. Effective September 21, 1989.)

article: 1. Tax on Distributors


text: Any claim for exemption from tax under this part shall be made to the board in such manner as the board shall prescribe.

history: (History: Added by Stats. 1959, Ch. 1040.)

article: 1. Tax on Distributors


text:
The taxes imposed by this part are in lieu of all other state, county, municipal, or district taxes on the privilege of distributing cigarettes or tobacco products.

This section does not prohibit the application of Part 1 (commencing with Section 6001), Part 1.5 (commencing with Section 7200), Part 1.6 (commencing with Section 7251), or Article 2 (commencing with Section 37021) of Part 17 to the sale, storage, use or other consumption of cigarettes or tobacco products.

history: (History: Amended by Stats. 1989, Ch. 634, Sec. 17. Effective September 21, 1989.)

article: 1. Tax on Distributors


text:
For purposes of this article:

(a) “Cigarettes” has the same meaning as in Section 30003, as it read on January 1, 1988.

(b) “Tobacco products” includes, but is not limited to, a product containing, made, or derived from tobacco or nicotine that is intended for human consumption, whether smoked, heated, chewed, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means, including, but not limited to, cigars, little cigars, chewing tobacco, pipe tobacco, or snuff, but does not include cigarettes. Tobacco products shall also include electronic cigarettes. Tobacco products shall not include any product that has been approved by the United States Food and Drug Administration for sale as a tobacco cessation product or for other therapeutic purposes where that product is marketed and sold solely for such approved use. Tobacco products does not include any food products as that term is defined pursuant to Section 6359.

(c) “Electronic cigarettes” means any device or delivery system sold in combination with nicotine which can be used to deliver to a person nicotine in aerosolized or vaporized form, including, but not limited to, an e-cigarette, e-cigar, e-pipe, vape pen, or e-hookah. Electronic cigarettes include any component, part, or accessory of such a device that is used during the operation of the device when sold in combination with any liquid or substance containing nicotine. Electronic cigarettes also include any liquid or substance containing nicotine, whether sold separately or sold in combination with any device that could be used to deliver to a person nicotine in aerosolized or vaporized form. Electronic cigarettes do not include any device not sold in combination with any liquid or substance containing nicotine, or any battery, battery charger, carrying case, or other accessory not used in the operation of the device if sold separately. Electronic cigarettes shall not include any product that has been approved by the United States Food and Drug Administration for sale as a tobacco cessation product or for other therapeutic purposes where that product is marketed and sold solely for such approved use. As used in this subdivision, nicotine does not include any food products as that term is defined pursuant to Section 6359.

(d) “Fund” means the Cigarette and Tobacco Products Surtax Fund created by Section 30122.

history: (History: Amended November 8, 2016, by initiative Proposition 56, Sec. 3.1. Operative April 1, 2017, by Sec. 10 of Proposition 56. Note: This section was added on Nov. 8, 1988, by iniative Prop. 99, the Tobacco Tax and Health Protection Act of 1988.)

path: 2. OTHER TAXES > 13. CIGARETTE TAX > 2. Imposition of Tax > 2. Cigarette and Tobacco Products Surtax


text:
(a) The Cigarette and Tobacco Products Surtax Fund is hereby created in the State Treasury. The fund shall consist of all revenues deposited therein pursuant to this article. Moneys in the fund may only be appropriated for the following purposes:

(1) Tobacco-related school and community health education programs.

(2) Tobacco-related disease research.

(3) Medical and hospital care and treatment of patients who cannot afford to pay for those services, and for whom payment will not be made through any private coverage or by any program funded in whole by the federal government.

(4) Programs for fire prevention; environmental conservation; protection, restoration, enhancement, and maintenance of fish, waterfowl, and wildlife habitat areas; and enhancement of state and local park and recreation purposes.

(b) The fund consists of six separate accounts, as follows:

(1) The Health Education Account, which shall only be available for appropriation for programs for the prevention and reduction of tobacco use, primarily among children, through school and community health education programs. Revenues from the Health Education Account shall not be used to match federal funds for any purpose.

(2) The Hospital Services Account, which shall only be available for appropriation for payment to public and private hospitals licensed pursuant to subdivision (a) of Section 1250 of the Health and Safety Code for the treatment of hospital patients who cannot afford to pay for that treatment and for whom payment for hospital services will not be made through private coverage or by any program funded in whole by the federal government.

(3) The Physician Services Account, which shall only be available for appropriation for payment to physicians for services to patients who cannot afford to pay for those services, and for whom payment for physician services will not be made through private coverage or by any program funded in whole by the federal government.

(4) The Research Account, which shall only be available for appropriation for tobacco-related disease research. Revenues from the Public Research Account shall not be used to match federal funds for any purpose.

(5) The Public Resources Account, which shall only be available for appropriation in equal amounts for both of the following:

(A) Programs to protect, restore, enhance, or maintain fish, waterfowl, and wildlife habitat on an equally funded basis.

(B) Programs to enhance state and local park and recreation resources.

(6) The Unallocated Account, which shall be available for appropriation for any purpose specified in subdivision (a).

history: (History: Amended by Stats. 2005, Ch. 14, Sec. 2. Effective June 17, 2005. Applicable from July 1, 2004, as provided in Sec. 4 of Ch. 14. Note: This section was added on Nov. 8, 1988, by initiative Prop. 99.)

article: 2. Cigarette and Tobacco Products Surtax


text:
(a) In addition to the tax imposed upon the distribution of cigarettes by this chapter, there shall be imposed upon every distributor a tax upon the distribution of cigarettes at the rate of twelve and one-half mills ($0.0125) for each cigarette distributed.

(b) There shall be imposed upon every distributor a tax upon the distribution of tobacco products, based on the wholesale cost of these products, at a tax rate, as determined annually by the State Board of Equalization, which is equivalent to the combined rate of tax imposed on cigarettes by subdivision (a) and the other provisions of this part.

(c) The wholesale cost used to calculate the amount of tax due under subdivision (b) does not include the wholesale cost of tobacco products that were returned by a customer during the same reporting period in which the tobacco products were distributed, when the distributor refunds the entire amount the customer paid for the tobacco products either in cash or credit. For purposes of this subdivision, refund or credit of the entire amount shall be deemed to be given when the purchase price less rehandling and restocking costs is refunded or credited to the customer. The amount withheld for rehandling and restocking costs may be a percentage of the sales price determined by the average cost of rehandling and restocking returned merchandise during the previous accounting cycle.

history: (History: Amended by Stats. 2001, Ch. 426, Sec. 2. Effective October 2, 2001. Note: This section was added on Nov. 8, 1988, by initiative Prop. 99.)


text:
(a) With the exception of payments of refunds made pursuant to Article 1 (commencing with Section 30361) of Chapter 6, and reimbursement of the State Board of Equalization for expenses incurred in the administration and collection of the tax imposed by Section 30123, pursuant to its powers vested by this part, all moneys raised pursuant to the taxes imposed by Section 30123 shall be deposited into the fund as provided in subdivision (b).

(b) Moneys shall be deposited in the fund according to the following formula:

(1) Twenty percent shall be deposited in the Health Education Account.

(2) Thirty-five percent shall be deposited in the Hospital Services Account.

(3) Ten percent shall be deposited in the Physician Services Account.

(4) Five percent shall be deposited in the Research Account.

(5) Five percent shall be deposited in the Public Resources Account.

(6) Twenty-five percent shall be deposited in the Unallocated Account.

(c) Any amounts appropriated from any account specified in subdivision (b) which is not encumbered within the period prescribed by law shall revert to the account from which it was appropriated.

(d) This section shall become operative July 1, 1996.

history: (History: Repealed (in Sec. 3) and added by Stats. 1995, Ch. 194, Sec. 4. Effective July 27, 1995. Section operative July 1, 1996, by its own provisions. Note: Section 30124 originally was added on Nov. 8, 1988, by initiative Prop. 99.)


text: Funds expended pursuant to this article shall be used only for the purposes expressed in this article and shall be used to supplement existing levels of service and not to fund existing levels of service. The fund and accounts in the fund may be used for loans to the General Fund as provided in Sections 16310 and 16381 of the Government Code. The loans shall be repaid with interest from the General Fund at the Pooled Money Investment Account rate.

history: (History: Amended by Stats. 1994, Ch. 136, Sec. 4. Effective July 5, 1994. Note: This section was added on Nov. 8, 1988, by initiative Prop. 99.)


text: The annual determination required of the State Board of Equalization pursuant to subdivision (b) of Section 30123 shall be made based on the wholesale cost of tobacco products as of March 1, and shall be effective during the state’s next fiscal year.

history: (History: Added November 8, 1988, by initiative Proposition 99. Operative January 1, 1989, by Section 30128.)


text: This article shall take effect on January 1, 1989.

history: (History: Added November 8, 1988, by initiative Proposition 99. Note: This section prescribes a delayed operative date for Article 2, commencing with Section 30121.)


text: The tax imposed by Section 30123 shall be imposed on every cigarette and tobacco product in the possession or under the control of every dealer and distributor on and after 12:01 a.m. on January 1, 1989, pursuant to rules and regulations promulgated by the State Board of Equalization.


text: This article may be amended only by vote of four-fifths of the membership of both houses of the Legislature. All amendments to this article must be consistent with its purposes.


text:
Definitions.

For the purposes of this article:

(a) “Cigarette” has the same meaning as that in Section 30003 as it read on January 1, 2015.

(b) “Tobacco products” has the same meaning as that in subdivision (b) of Section 30121, as amended by this act.

history: (History: Added November 8, 2016, by initiative Proposition 56, Sec. 4.1.)

path: 2. OTHER TAXES > 13. CIGARETTE TAX > 2. Imposition of Tax > 2.5. California Healthcare, Research and Prevention Tobacco Tax Act of 2016


text:
California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Cigarette Distribution Tax.

(a) In addition to any other taxes imposed upon the distribution of cigarettes under this part, there shall be imposed an additional tax upon every distributor of cigarettes at the rate of one hundred mills ($0.100) for each cigarette distributed on or after the first day of the first calendar quarter commencing more than 90 days after the effective date of this act.

(b) The board shall adopt regulations providing for the implementation of an equivalent tax on electronic cigarettes as that term is defined in subdivision (c) of Section 30121, and the methods for collection of the tax. Such regulations shall include imposition of an equivalent tax on any device intended to be used to deliver aerosolized or vaporized nicotine to the person inhaling from the device when sold separately or as a package; any component, part, or accessory of such a device that is used during the operation of the device, whether sold separately or as a package with such device; and any liquid or substance containing nicotine, whether sold separately or as a package with any device that would allow it to be inhaled. Such regulations may include, but are not limited to, defining who is a distributor of electronic cigarettes pursuant to Section 30011 and the licensing requirements of any such person.

(c) Notwithstanding any other provision of this part, all revenues resulting from the tax imposed by subdivision (a) and all revenues resulting from the equivalent increase in the tax on tobacco products, including electronic cigarettes, imposed by subdivision (b) of Section 30123, shall be deposited into the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund created by Section 30130.53.

article: 2.5. California Healthcare, Research and Prevention Tobacco Tax Act of 2016


text:
California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Cigarette Floor Taxes.

(a) (1) In addition to any other tax, every dealer and wholesaler, for the privilege of holding or storing cigarettes for sale, use, or consumption, shall pay a floor stock tax for each cigarette in its possession or under its control in this state at 12:01 a.m. on the first day of the first calendar quarter commencing more than 90 days after the effective date of this act at the rate of one hundred mills ($0.100) for each cigarette.

(2) Every dealer and wholesaler shall file a return with the board on or before the first day of the first calendar quarter commencing more than 180 days after the effective date of this act on a form prescribed by the board, showing the number of cigarettes in its possession or under its control in this state at 12:01 a.m. on the first day of the first calendar quarter commencing more than 90 days after the effective date of this act. The amount of tax shall be computed and shown on the return.

(b) (1) Every licensed cigarette distributor, for the privilege of distributing cigarettes and for holding or storing cigarettes for sale, use, or consumption, shall pay a cigarette indicia adjustment tax for each California cigarette tax stamp that is affixed to any package of cigarettes and for each unaffixed California cigarette tax stamp in its possession or under its control at 12:01 a.m. on the first day of the first calendar quarter commencing more than 90 days after the effective date of this act at the following rates:

(A) Two dollars and fifty cents ($2.50) for each stamp bearing the designation “25.”

(B) Two dollars ($2) for each stamp bearing the designation “20.”

(C) One dollar ($1) for each stamp bearing the designation “10.”

(2) Every licensed cigarette distributor shall file a return with the board on or before the first day of the first calendar quarter commencing 180 days after the effective date of this act on a form prescribed by the board, showing the number of stamps described in subparagraphs (A), (B), and (C) of paragraph (1). The amount of tax shall be computed and shown on the return.

(c) The taxes required to be paid by this section are due and payable on or before the first day of the first calendar quarter commencing 180 days after the effective date of this act. Payments shall be made by remittances payable to the board and the payments shall accompany the return and forms required to be filed by this section.

(d) Any amount required to be paid by this section that is not timely paid shall bear interest at the rate and by the method established pursuant to Section 30202 from the first day of the first calendar quarter commencing 180 days after the effective date of this act, until paid, and shall be subject to determination, and redetermination, and any penalties provided with respect to determinations and redeterminations.


text:
California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund.

(a) The California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund is hereby established in the State Treasury.

(b) All revenues raised pursuant to the taxes imposed by this article, less refunds made pursuant to Article 1 (commencing with Section 30361) of Chapter 6, shall be deposited into the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund.

(c) Notwithstanding any other law, the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund is a trust fund established solely to carry out the purposes of this act and all revenues deposited into the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund, together with interest earned by the fund, are hereby continuously appropriated for the purposes of this act without regard to fiscal year and shall be expended only in accordance with the provisions of this act and its purposes.

(d) Notwithstanding any other law, revenues deposited into the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund, including any interest earned by the fund, shall only be used for the specific purposes set forth in this act, and shall be appropriated and expended only for the purposes expressed in this act and shall not be subject to appropriation, reversion, or transfer by the Legislature, the Governor, the Director of Finance, or the Controller for any purpose other than those specified in this act, nor shall such revenues be loaned to the General Fund or any other fund of the state or any local government fund.


text:
California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Effect on Tobacco Consumption and Tax Revenue.

(a) The board shall determine within one year of the effective date of this act, and annually thereafter, the effect that the additional taxes imposed on cigarettes by this article, and the resulting increase in the tax on tobacco products required by subdivision (b) of Section 30123, have on the consumption of cigarettes and tobacco products in this state. To the extent that a decrease in consumption is determined by the board to be a direct result of the additional tax imposed on cigarettes by this article, and the resulting increase in the tax on tobacco products required by subdivision (b) of Section 30123, the board shall determine the fiscal effect the decrease in consumption has on the Cigarette and Tobacco Products Surtax Fund created by Section 30122 (Proposition 99 as approved by the voters at the November 8, 1988, statewide general election), the Breast Cancer Fund created by Section 30461.6, and the California Children and Families Trust Fund created by Section 30131 (Proposition 10 as approved by the voters at the November 3, 1998, statewide general election), and the revenues derived from Section 30101.

(b) The Controller shall transfer from the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund to those affected funds described in subdivision (a) the amount necessary to offset the revenue decrease directly resulting from the imposition of additional taxes by this article.

(c) The board shall determine within one year of the effective date of this act, and annually thereafter, the effect, if any, that the additional taxes imposed on cigarettes by this article, and the resulting increase in the tax on tobacco products required by subdivision (b) of Section 30123, have on the consumption of cigarettes and tobacco products in this state, including from the illegal sale of cigarettes and tobacco products. To the extent that there is a loss of state or local government sales and use tax revenues and such loss is determined by the board to be a direct result of the additional tax imposed on cigarettes by this article, and the resulting increase in the tax on tobacco products required by subdivision (b) of Section 30123, including from the illegal sale of cigarettes and tobacco products, the board shall determine the fiscal effect on state and local government sales and use tax revenues.

(d) The Controller shall transfer from the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund to the general fund of the state and those affected local governments described in subdivision (c) the amount necessary to offset the state and local sales and use tax revenue decrease directly resulting from the imposition of additional taxes by this article, including from the illegal sale of cigarettes and tobacco products.

(e) Transfers under this section shall be made by the Controller at such times as the Controller determines necessary to further the intent of this section.


text:
California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Distribution of Revenue.

After deducting and transferring the necessary funds pursuant to Section 30130.54 and subdivisions (a), (b), (c), (d), and (e) of Section 30130.57, the Controller shall annually allocate and transfer the remaining funds in the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund as follows:

(a) Eighty-two percent shall be transferred to the Healthcare Treatment Fund, which is hereby created, and shall be used by the State Department of Health Care Services to increase funding for the existing healthcare programs and services described in Chapter 7 (commencing with Section 14000) to Chapter 8.9 (commencing with Section 14700), inclusive, of Part 3 of Division 9 of the Welfare and Institutions Code, including those that provide healthcare, treatment, and services for Californians with tobacco-related diseases and conditions, by providing improved payments, for all healthcare, treatment, and services described in Chapter 7 (commencing with Section 14000) to Chapter 8.9 (commencing with Section 14700), inclusive, of Part 3 of Division 9 of the Welfare and Institutions Code. To the extent possible given the limits of funding under this article, payments and support for the nonfederal share of payments for healthcare, services, and treatment shall be increased based on criteria developed and periodically updated as part of the annual state budget process, provided that these funds shall not be used to supplant existing state general funds for these same purposes. These criteria shall include, but not be limited to, ensuring timely access, limiting specific geographic shortages of services, or ensuring quality care. Consistent with federal law, the funding shall be used to draw down federal funds. The funding shall be used only for care provided by health care professionals, clinics, health facilities that are licensed pursuant to Section 1250 of the Health and Safety Code, and to health plans contracting with the State Department of Health Care Services to provide health benefits pursuant to this section. The funding can be used for the nonfederal share of payments from governmental entities where applicable. The department shall, if required, seek any necessary federal approval for the implementation of this section.

(b) Thirteen percent shall be used for the purpose of funding comprehensive tobacco prevention and control programs, provided that these funds are not to be used to supplant existing state or local funds for these same purposes. These funds shall be apportioned in the following manner:

(1) Eighty-five percent to the State Department of Public Health Tobacco Control Program to be used for the tobacco control programs described beginning at Section 104375 of the Health and Safety Code. The State Department of Public Health shall award funds to state and local governmental agencies, tribes, universities and colleges, community-based organizations, and other qualified agencies for the implementation, evaluation, and dissemination of evidence-based health promotion and health communication activities in order to monitor, evaluate, and reduce tobacco and nicotine use, tobacco-related disease rates, and tobacco-related health disparities, and develop a stronger evidence base of effective prevention programming with not less than 15 percent of health promotion, health communication activities, and evaluation and tobacco use surveillance funds being awarded to accelerate and monitor the rate of decline in tobacco-related disparities with the goal of eliminating tobacco-related disparities.

(2) Fifteen percent to the State Department of Education to be used for school programs to prevent and reduce the use of tobacco and nicotine products by young people as described in Section 104420 of the Health and Safety Code with not less than 15 percent of these funds being awarded to accelerate and monitor the rate of decline in tobacco-related disparities for the purpose of eliminating tobacco-related disparities.

(c) Five percent to the University of California for medical research of cancer, heart and lung tobacco-related diseases pursuant to Article 2 (commencing with Section 104500) of Chapter 1 of Part 3 of Division 103 of the Health and Safety Code to supplement the Cigarette and Tobacco Products Surtax Medical Research Program, provided that these funds be used under the following conditions:

(1) The funds shall be used for grants and contracts for basic, applied, and translational medical research in California into the prevention of, early detection of, treatments for, complementary treatments for, and potential cures for all types of cancer, cardiovascular and lung disease, oral disease, and tobacco-related diseases. Notwithstanding any other provision of law, the University of California, through the Tobacco Related Disease Research Program, shall have authority to expend funds received under this act for the purposes set forth in this subdivision.

(2) Any grants and contracts awarded shall be awarded using existing medical research program infrastructure and on the basis of scientific merit as determined by an open, competitive peer review process that assures objectivity, consistency, and high quality.

(3) Individuals or entities that receive the grants and contracts pursuant to this subdivision must reside or be located entirely within California.

(4) The research must be performed entirely within California.

(5) The funds shall not be used to supplant existing state or local funds for these same purposes.


text:
Independent Audit and Disclosure.

To provide full public accountability concerning the uses to which funds from the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 are put, and to ensure full compliance with the California Healthcare, Research and Prevention Tobacco Tax Act of 2016:

(a) The nonpartisan California State Auditor shall conduct at least biennially an independent financial audit of the state and local agencies receiving funds pursuant to the California Healthcare, Research and Prevention Tobacco Tax Act of 2016. An audit conducted pursuant to this section shall include, but not be limited to, a review of the administrative costs expended by the state agencies that administer the fund.

(b) Based on the independent audit, the nonpartisan California State Auditor shall prepare a report detailing its review and include any recommendations for improvements. The report shall be made available to the public.

(c) Each state agency and department receiving funds pursuant to this act shall, on an annual basis, publish on its respective Internet Web site an accounting of how much money was received from the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund and how that money was spent. The annual accounting shall also be posted on any social media outlets the state agency or department deems appropriate.

(d) The use of the funds received by the State Department of Health Care Services pursuant to subdivision (a) of Section 30130.55 shall be subject to the same restrictions, including, but not limited to, audits and prevention of fraud, imposed by existing law.

(e) The use of the funds received by the State Department of Public Health, the State Department of Education, and the University of California pursuant to subdivisions (b) and (c) of Section 30130.55 shall be subject to oversight by the Tobacco Education and Research Oversight Committee pursuant to Sections 104365 and 104370 of the Health and Safety Code.


text:
Implementation and Administrative Costs.

(a) Moneys from the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund shall be used to reimburse the board for expenses incurred in the administration, calculation, and collection of the tax imposed by this article and for expenses incurred in the calculation and distribution of funds and in the promulgation of regulations as required by this act, provided, however, that after deducting the necessary funds pursuant to subdivision (b) of Section 30130.54, not more than 5 percent annually of the funds remaining in the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund shall be used for such administrative costs.

(b) Moneys from the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund shall be used to reimburse the independent nonpartisan California State Auditor up to four hundred thousand dollars ($400,000) annually for actual costs incurred to conduct each of the audits required by Section 30130.56 for the purpose of providing public transparency and ensuring that the revenues generated by this article are used for healthcare, tobacco use prevention and research.

(c) Moneys from the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund in the amount of forty million dollars ($40,000,000) annually shall be used to provide funding to the University of California for the purpose and goal of increasing the number of primary care and emergency physicians trained in California. This goal shall be achieved by providing this funding to the University of California to sustain, retain, and expand graduate medical education programs to achieve the goal of increasing the number of primary care and emergency physicians in the State of California based on demonstrated workforce needs and priorities.

(1) For the purposes of this subdivision, “primary care” means internal medicine, family medicine, obstetrics/gynecology, and pediatrics.

(2) Funding shall be prioritized for direct graduate medical education costs for programs serving medically underserved areas and populations.

(3) For the purposes of this subdivision, all allopathic and osteopathic residency programs accredited by federally recognized accrediting organizations and located in California shall be eligible to apply to receive funding to support resident education in California.

(4) The University of California shall annually review physician shortages by specialty across the state and by region. Based on this review, to the extent that there are demonstrated state or regional shortages of nonprimary care physicians, funds may be used to expand graduate medical education programs that are intended to address such shortages.

(d) Moneys from the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund in the amount of thirty million dollars ($30,000,000) annually shall be used to provide funding to the State Department of Public Health state dental program for the purpose and goal of educating about, preventing and treating dental disease, including dental disease caused by use of cigarettes and other tobacco products. This goal shall be achieved by the program providing this funding to activities that support the state dental plan based on demonstrated oral health needs, prioritizing serving underserved areas and populations. Funded program activities shall include, but not be limited to, the following: education, disease prevention, disease treatment, surveillance, and case management.

The department shall have broad authority to fully implement and effectuate the purposes of this subdivision, including the determination of underserved communities, the development of program protocols, the authority to reimburse state-sponsored services related to the program, and the authority to contract with one or more individuals or public or private entities to provide program activities.

(e) Moneys from the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund in the amount of forty-eight million dollars ($48,000,000) annually shall be used for the purpose of funding law enforcement efforts to reduce illegal sales of tobacco products, particularly illegal sales to minors; to reduce cigarette smuggling, tobacco tax evasion, the sale of tobacco products without a license and the sale of counterfeit tobacco products; to enforce tobacco-related laws, court judgments, and legal settlements; and to conduct law enforcement training and technical assistance activities for tobacco-related statutes; provided that these funds are not to be used to supplant existing state or local funds for these same purposes. These funds shall be apportioned in the following manner:

(1) Thirty million dollars ($30,000,000) annually to the California Department of Justice/Office of the Attorney General to be distributed to local law enforcement agencies to support and hire front-line law enforcement peace officers for programs, including, but not limited to, enforcement of state and local laws related to the illegal sales and marketing of tobacco to minors, and increasing investigative activities and compliance checks to reduce illegal sales of cigarettes and tobacco products to minors and youth.

(2) Six million dollars ($6,000,000) annually to the board to be used to enforce laws that regulate the distribution and retail sale of cigarettes and other tobacco products, such as laws that prohibit cigarette and tobacco product smuggling, counterfeiting, selling untaxed cigarettes and other tobacco products, and selling cigarettes and other tobacco products without a proper license.

(3) Six million dollars ($6,000,000) annually to the California Department of Public Health to be used to support programs, including, but not limited to, providing grants and contracts to local law enforcement agencies to provide training and funding for the enforcement of state and local laws related to the illegal sales of tobacco to minors, increasing investigative activities, and compliance checks, and other appropriate activities to reduce illegal sales of tobacco products to minors, including, but not limited to, the Stop Tobacco Access to Kids Enforcement (STAKE) Act, pursuant to Section 22952 of the Business and Professions Code.

(4) Six million dollars ($6,000,000) annually to the California Attorney General to be used for activities, including, but not limited to, enforcing laws that regulate the distribution and sale of cigarettes and other tobacco products, such as laws that prohibit cigarette smuggling, counterfeiting, selling untaxed tobacco, selling tobacco without a proper license and selling tobacco to minors, and enforcing tobacco-related laws, court judgments, and settlements.

(f) Not more than 5 percent of the funds received pursuant to this article shall be used by any state or local agency or department receiving such funds for administrative costs.

(g) The California State Auditor shall promulgate regulations pursuant to the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) to define administrative costs for purposes of this article. Such regulations shall take into account the differing nature of the agencies or departments receiving funds.

(h) The board shall determine beginning two years following the effective date of this act, and annually thereafter, any reduction in revenues, following the first year after the effective date of this act, resulting from a reduction in the consumption of cigarettes and tobacco products due to the additional taxes imposed on cigarettes by this article, and the increase in the tax on tobacco products required by subdivision (b) of Section 30123. If the board determines there has been a reduction in revenues, the amount of funds allocated pursuant to subdivisions (c), (d) and (e) shall be reduced proportionately.


text:
Statutory References.

Unless otherwise stated, all references in this act refer to statutes as they existed on January 1, 2016.


text: Notwithstanding Section 30122, the California Children and Families Trust Fund is hereby created in the State Treasury for the exclusive purpose of funding those provisions of the California Children and Families Act of 1998 that are set forth in Division 108 (commencing with Section 130100) of the Health and Safety Code.

history: (History: Amended by Stats. 1999, Ch. 126, Sec. 8. Effective July 14, 1999. Note: This section was added on Nov. 3, 1998, by initiative Prop. 10.)

path: 2. OTHER TAXES > 13. CIGARETTE TAX > 2. Imposition of Tax > 3. California Children and Families Trust Fund Account


text:
The following definitions apply for purposes of this article:

(a) “Cigarette” has the same meaning as in Section 30003, as it read on January 1, 1997.

(b) “Tobacco products” shall have the same meaning as in subdivision (b) of Section 30121, as amended by the California Healthcare, Research and Prevention Tobacco Tax Act of 2016.

history: (History: Amended November 8, 2016, by initiative Proposition 56, Sec. 3.2. Note: This section was added on Nov. 8, 1988, by initiative Prop. 10.)

article: 3. California Children and Families Trust Fund Account


text:
(a) In addition to the taxes imposed upon the distribution of cigarettes by Article 1 (commencing with Section 30101) and Article 2 (commencing with Section 30121) and any other taxes in this chapter, there shall be imposed an additional surtax upon every distributor of cigarettes at the rate of twenty-five mills ($0.025) for each cigarette distributed.

(b) In addition to the taxes imposed upon the distribution of tobacco products by Article 1 (commencing with Section 30101) and Article 2 (commencing with Section 30121), and any other taxes in this chapter, there shall be imposed an additional tax upon every distributor of tobacco products, based on the wholesale cost of these products, at a tax rate, as determined annually by the State Board of Equalization, which is equivalent to the rate of tax imposed on cigarettes by subdivision (a).

(c) The wholesale cost used to calculate the amount of tax due under subdivision (b) does not include the wholesale cost of tobacco products that were returned by a customer during the same reporting period in which the tobacco products were distributed, when the distributor refunds the entire amount the customer paid for the tobacco products either in cash or credit. For purposes of this subdivision, refund or credit of the entire amount shall be deemed to be given when the purchase price less rehandling and restocking costs is refunded or credited to the customer. The amount withheld for rehandling and restocking costs may be a percentage of the sales price determined by the average cost of rehandling and restocking returned merchandise during the previous accounting cycle.

history: (History: Amended by Stats. 2001, Ch. 426, Sec. 3. Effective October 2, 2001. Note: This section was added on Nov. 3, 1998, by initiative Prop. 10.)


text: Except for payments of refunds made pursuant to Article 1 (commencing with Section 30361) of Chapter 6, reimbursement of the State Board of Equalization for expenses incurred in the administration and collection of the taxes imposed by Section 30131.2, and transfers of funds in accordance with subdivision (c) of Section 130105 of the Health and Safety Code, all moneys raised pursuant to the taxes imposed by Section 30131.2 shall be deposited in the California Children and Families Trust Fund and are continuously appropriated for the exclusive purpose of the California Children and Families Program established by Division 108 (commencing with Section 130100) of the Health and Safety Code.

history: (History: Amended by Stats. 1999, Ch. 126, Sec. 9. Effective July 14, 1999. Note: This section was added on Nov. 3, 1998, by initiative Prop. 10.)


text:
(a) All moneys raised pursuant to taxes imposed by Section 30131.2 shall be appropriated and expended only for the purposes expressed in the California Children and Families Act, and shall be used only to supplement existing levels of service and not to fund existing levels of service. No moneys in the California Children and Families Trust Fund shall be used to supplant state or local General Fund money for any purpose.

(b) Notwithstanding any other provision of law and the designation of the California Children and Families Trust Fund as a trust fund, the Controller may use the money raised pursuant to Section 30131.2 for the California Children and Families Trust Fund and all accounts created pursuant to subdivision (d) of Section 130105 of the Health and Safety Code for loans to the General Fund as provided in Sections 16310 and 16381 of the Government Code. Any such loan shall be repaid from the General Fund with interest computed at 110 percent of the Pooled Money Investment Account rate, with the interest commencing to accrue on the date the loan is made from the fund or account. This subdivision does not authorize any transfer that will interfere with the carrying out of the object for which this fund or those accounts were created.

history: (History: Amended by Stats. 2008, Ch. 751, Sec. 72. Effective September 30, 2008. Note: This section was added on Nov. 3, 1998, by initiative Prop. 10.)


text: The annual determination required of the State Board of Equalization pursuant to subdivision (b) of Section 30131.2 shall be made based on the wholesale cost of tobacco products as of March 1, and shall be effective during the state’s next fiscal year.

history: (History: Added November 3, 1998, by initiative Proposition 10. Effective (by Sec. 7 of Prop. 10) on date election results were certified.)


text: The taxes imposed by Section 30131.2 shall be imposed on every cigarette and on tobacco products in the possession or under the control of every dealer and distributor on and after 12:01 a.m. on January 1, 1999, pursuant to rules and regulations promulgated by the State Board of Equalization.


text: Every person desiring to engage in the sale of cigarettes or tobacco products as a distributor (including a common carrier or authorized person mentioned in Section 30104), except a person who desires merely to sell or accept orders for cigarettes or tobacco products which are to be transported from a point outside this state to a consumer within this state, shall file with the board an application, in such form as the board may prescribe, for a distributor’s license. A distributor shall apply for and obtain a license for each place of business at which he or she engages in the business of distributing cigarettes or tobacco products.

history: (History: Amended by Stats. 1989, Ch. 634, Sec. 18. Effective September 21, 1989.)

chapter: 3. Licenses, Bonds and Registration

article: 1. Licenses and Bonds

path: 2. OTHER TAXES > 13. CIGARETTE TAX > 3. Licenses, Bonds and Registration > 1. Licenses and Bonds


text:
(a) The board may adopt rules and regulations which provide for the issuance of a license to a person who is not engaged in business in this state.

(b) A holder of a license shall collect the tax imposed by this part, give receipts for the collected tax, and pay the tax to the board in the same manner as licensees engaged in business in this state.

history: (History: Added by Stats. 1989, Ch. 634, Sec. 19. Effective September 21, 1989.)

article: 1. Licenses and Bonds


text: Every applicant for a license as a distributor shall file with the board, security in the amount and form as the board prescribes. Any security in the form of cash, insured deposits in banks or savings and loan institutions, or a bond or bonds duly executed by an admitted surety insurer, payable to the state, conditioned upon faithful performance of all the requirements of this part and expressly providing for the payment of all taxes, penalties, and other obligations of the person arising out of this part shall be held by the board in trust to be used solely in the manner provided in this section.

history: (History: Amended by Stats. 1993, Ch. 1113, Sec. 5. Effective January 1, 1994.)

article: 1. Licenses and Bonds


text:
(a) The board shall fix the amount of the security required of any distributor and may increase or reduce the amount at any time. A minimum security in the amount of one thousand dollars ($1,000) shall be furnished by every distributor that is required to be licensed.

(b) Except as provided in subdivision (d), if a distributor desires to defer payments for stamps or meter register settings, as provided in Article 2 (commencing with Section 30166) of Chapter 3.5, the board shall require a security as follows:

(1) If a distributor elects, under Section 30168, to make payments on a monthly basis, the board shall require a security equal to not less than 70 percent of the amount and no more than twice the amount, as fixed by the board, of the distributor’s purchases of stamps and meter register settings for which payment may be deferred.

(2) If a distributor elects, under Section 30168, to make payments on a twice-monthly basis, the board shall require a security equal to not less than 50 percent of the amount and no more than twice the amount, as fixed by the board, of the distributor’s purchases of stamps and meter register settings for which payment may be deferred.

(3) If a distributor elects, under Section 30168, to make payments on a weekly basis, the board shall require a security equal to not less than 25 percent of the amount and no more than twice the amount, as fixed by the board, of the distributor’s purchases of stamps and meter register settings for which payment may be deferred.

(c) The security required by the board pursuant to subdivision (b) may be in the form of any of the following, in the amount required by paragraph (1) or (2) of subdivision (b):

(1) Cash, or a cash equivalent.

(2) A surety bond.

(d) Upon authorization by the board, no additional security shall be required for a distributor that desires to defer payments for stamps or meter register settings, as provided in Article 2 (commencing with Section 30166) of Chapter 3.5, if the distributor’s average monthly purchase of stamps or meter register settings for the previous 12 months does not exceed seventy-two thousand (72,000) stamps or meter register settings and if the distributor meets all of the following:

(1) Has been licensed under this part for a minimum of five years.

(2) Has not been delinquent in the filing of any reports or returns required under this part for the preceding three consecutive years.

(3) Has not been delinquent in the payment of any tax under this part, or for any other tax or fee administered or collected by the board, for the preceding three consecutive years.

(4) Provides to the board and updates, as necessary, an electronic mail address for the purpose of receiving payment information, including, but not limited to, amounts owing for stamps and meter register settings purchased.

(5) Any other criteria the board may require.

history: (History: Amended (as amended by Stats. 2006, Ch. 70, Sec. 1) by Stats. 2006, Ch. 501, Sec. 15. Effective January 1, 2007.)

article: 1. Licenses and Bonds


text: Every bond shall contain a provision substantially to the effect that when the surety exercises his right to withdraw as surety the withdrawal shall be effective on the first day of the calendar month after receipt of the notice by the board if the notice is received on or before the fifteenth day of the month, otherwise the withdrawal shall be effective on the first day of the second calendar month after receipt of the notice by the board.

history: (History: Added by Stats. 1959, Ch. 1040.)

article: 1. Licenses and Bonds


text: The license of any distributor may be suspended without prior notice upon cancellation of his or her bond, or if the bond becomes void or unenforceable for any reason, or if the distributor fails to pay any amounts due under this part. The license shall be reinstated if the distributor files a valid bond, provides other security as defined in Section 30141 or pays the delinquent amounts, as the case may be. Upon the petition of any distributor whose license has been suspended under this section, a hearing shall be afforded him or her after five days’ notice of the time and place of hearing.

history: (History: Amended by Stats. 1993, Ch. 1113, Sec. 7. Effective January 1, 1994.)

article: 1. Licenses and Bonds


text: Upon receipt of a certificate of the board setting forth the amount of a distributor’s delinquencies, the State Treasurer shall pay to the board the amount so certified from the money deposited with him by the distributor or from the amounts received from the sale of bonds or other obligations deposited with the Treasurer by the distributor. Securities deposited with the State Treasurer which have a prevailing market price may be sold by him for the purposes of this section at private sale at a price not lower than the prevailing market price thereof.

article: 1. Licenses and Bonds


text: Upon receipt of a completed application and such bonds or other security as may be required by the board under this part, the board shall issue to the applicant a license as a distributor. A separate license shall be issued for each place of business of the distributor within the State. A license is valid only for engaging in business as a distributor at the place designated thereon, and it shall at all times be conspicuously displayed at the place for which issued. The license is not transferable and is valid until canceled, suspended, or revoked.

article: 1. Licenses and Bonds


text: Whenever any distributor fails to comply with any provision of this part or any rule or regulations of the board prescribed and adopted under this part, the board upon hearing, after giving the distributor at least 10 days’ notice in writing specifying the time and place of hearing and requiring him to show cause why his license should not be revoked, may revoke the license held by him. The notice may be served personally or by mail in the manner prescribed for service of notice of a deficiency determination. The board shall not issue a new license to a distributor whose license has been revoked unless it is satisfied that he will comply with the provisions of this part and the rules and regulations of the board.

article: 1. Licenses and Bonds


text: Any person required to obtain a license as a distributor under this chapter who engages in business as a distributor without a license or after a license has been canceled, suspended, or revoked, and each officer of any corporation which so engages in business, is guilty of a misdemeanor.

article: 1. Licenses and Bonds


text: Every distributor, except one to whom a license is issued under Article 1 (commencing with Section 30140), required under Section 30108 to collect the tax imposed under this part from a purchaser shall register with the board and give the names and addresses of all agents operating in this state, the location of all distribution or sales houses or offices or other places of business in this state, and such other information as the board may require.

history: (History: Amended by Stats. 1982, Ch. 454, Sec. 165.)

article: 2. Registration

path: 2. OTHER TAXES > 13. CIGARETTE TAX > 3. Licenses, Bonds and Registration > 2. Registration


text: Every person desiring to engage in the sale of cigarettes or tobacco products as a wholesaler shall file with the board an application, in that form as the board may prescribe, for a wholesaler’s license. A wholesaler shall apply for and obtain a license for each place of business at which he or she engages in the business of selling cigarettes or tobacco products as a wholesaler.

history: (History: Amended by Stats. 1994, Ch. 903, Sec. 12. Effective January 1, 1995.)

article: 3. Wholesalers

path: 2. OTHER TAXES > 13. CIGARETTE TAX > 3. Licenses, Bonds and Registration > 3. Wholesalers


text: No fee shall be charged nor shall a bond be required of any person for the issuance to him of a wholesaler’s license.

history: (History: Added by Stats. 1968, Ch. 1187.)

article: 3. Wholesalers


text: Upon receipt of a completed application, the board shall issue to the applicant a license as a wholesaler. A separate license shall be issued for each place of business of the wholesaler within the state. A license is valid only for engaging in business as a wholesaler at the place designated thereon, and it shall at all times be conspicuously displayed at the place for which issued. The license is not transferable and is valid until canceled, suspended, or revoked.

article: 3. Wholesalers


text: Whenever any wholesaler fails to comply with any provision of this part or any rule or regulation of the board prescribed and adopted under this part, the board upon hearing, after giving the wholesaler at least 10 days’ notice in writing specifying the time and place of hearing and requiring him to show cause why his license should not be revoked or suspended, may revoke or suspend the license held by him. The notice may be served personally or by mail in the manner prescribed for service of notice of a deficiency determination. The board shall not issue a license to a wholesaler whose license has been revoked or suspended unless it is satisfied that he will comply with the provisions of this part and the rules and regulations of the board.

history: (History: Amended by Stats. 1970, Ch. 547.)

article: 3. Wholesalers


text: Any person required to obtain a license as a wholesaler under this part who engages in business as a wholesaler without a license or after a license has been canceled, suspended, or revoked, and each officer of any corporation which so engages in business, is guilty of a misdemeanor.

article: 3. Wholesalers


text: Except for the use or consumption of cigarettes by other than a licensed distributor, and as may be authorized under the provisions of Section 30165, the tax imposed by this part with respect to distributions of cigarettes shall be paid by distributors through the use of stamps or meter impressions. The board shall furnish stamps for sale and provide for the sale of meter register settings for metering machines approved by the board.

history: (History: Added by Stats. 1961, Ch. 884.)

chapter: 3.5. Stamps and Meter Machines

article: 1. Use of Stamps and Impressions

path: 2. OTHER TAXES > 13. CIGARETTE TAX > 3.5. Stamps and Meter Machines > 1. Use of Stamps and Impressions


text:
(a) Stamps and meter impressions shall be of the designs, specifications, and denominations as may be prescribed by the board. Stamps and meter impressions shall be generated by a technology capable of being read by a scanning or similar device and shall be encrypted with, at a minimum, the following information:

(1) The name and address of the distributor affixing the stamp or meter impression.

(2) The date the stamp or meter impression was affixed.

(3) The denominated value of the stamp or meter impression.

(b) The board shall prescribe by regulation the method and manner in which stamps or meter impressions are to be affixed to packages of cigarettes and may provide for the cancellation of stamps or meter impressions.

(c) This section shall become operative on January 1, 2005.

history: (History: Repealed (in Sec. 1) and added by Stats. 2002, Ch. 881, Sec. 2. Effective January 1, 2003. Section operative January 1, 2005, by its own provisions.)

article: 1. Use of Stamps and Impressions


text:
(a) Except as otherwise provided in this section, an appropriate stamp shall be affixed to, or an appropriate meter impression shall be made on each package of cigarettes prior to the distribution of the cigarettes.

(b) No stamp or meter impression may be affixed to, or made upon, any package of cigarettes if any one of the following occurs:

(1) The package does not comply with all requirements of the Federal Cigarette Labeling and Advertising Act (15 U.S.C. Sec. 1331 and following) for the placement of labels, warnings, or any other information upon a package of cigarettes that is to be sold within the United States.

(2) The package is labeled “For Export Only,” “U.S. Tax Exempt,” “For Use Outside U.S.,” or similar wording indicating that the manufacturer did not intend that the product be sold in the United States.

(3) The package, or a package containing individually stamped packages, has been altered by adding or deleting the wording, labels, or warnings described in paragraph (1) or (2).

(4) The package was imported into the United States after January 1, 2000, in violation of Section 5754 of Title 26 of the United States Code.

(5) (A) The package bears a cigarette brand name which is a registered U.S. trademark of a participating manufacturer and the package was imported by anyone other than the participating manufacturer of that cigarette brand.

(B) For purposes of this paragraph, “participating manufacturer” has the same meaning as defined in paragraph (1) of subdivision (a) of Section 104557 of the Health and Safety Code and in Section II(jj) of the Master Settlement Agreement described in Article 3 (commencing with Section 104555) of Chapter 1 of Part 3 of Division 103 of the Health and Safety Code.

(c) Pursuant to its authority under Section 30148, the board shall revoke the license issued to a distributor that is determined to be in violation of this section.

(d) A violation of subdivision (b) shall constitute unfair competition under Section 17200 of the Business and Professions Code.

history: (History: Amended by Stats. 2000, Ch. 18, Sec. 1. Effective May 5, 2000.)

article: 1. Use of Stamps and Impressions


text: A metering machine may be used and a meter may be stored, transferred, transported, repaired, opened, set or used only in accordance with rules and regulations prescribed by the board. Meters, meter register settings, or unaffixed stamps shall not be sold, exchanged or in any manner transferred by a distributor to another person without prior written approval of the board.

article: 1. Use of Stamps and Impressions


text: The board by regulation may provide that the tax imposed by this part with respect to cigarettes shall be paid without the use of stamps or meter impressions in connection with a particular type of transaction.

article: 1. Use of Stamps and Impressions