AB224: Bill Text

AB224,48 Section 48. Subchapter V (title) of chapter 139 [precedes 139.97] of the statutes is created to read:

AB224,24,23 chapter 139

AB224,24,24 subchapter v

AB224,24,25 marijuana tax and regulation

AB224,49 Section 49. 139.97 of the statutes is created to read:

AB224,25,2 139.97 Definitions. In this subchapter:

AB224,25,4 (1) "Department", if used without further qualification, means the department of revenue.

AB224,25,7 (2) "Lot" means a definite quantity of marijuana or usable marijuana identified by a lot number, every portion or package of which is consistent with the factors that appear in the labeling.

AB224,25,9 (3) "Lot number" means a number that specifies the person who holds a valid license under this subchapter and the harvesting or processing date for each lot.

AB224,25,10 (4) "Marijuana" has the meaning given in s. 961.70 (3).

AB224,25,13 (5) "Marijuana processor" means a person who processes marijuana into usable marijuana, packages and labels usable marijuana for sale in retail outlets, or sells usable marijuana at wholesale to marijuana retailers.

AB224,25,15 (6) "Marijuana producer" means a person who produces marijuana and sells it at wholesale to marijuana processors or other marijuana producers.

AB224,25,17 (8) "Marijuana retailer" means a person who sells usable marijuana at a retail outlet.

AB224,25,19 (9) "Permittee" means a marijuana producer, marijuana processor, or marijuana retailer who is issued a permit under s. 139.972.

AB224,25,21 (10) "Retail outlet" means a location for the retail sale of usable marijuana or marijuana-infused products.

AB224,25,22 (11) "Sales price" has the meaning given in s. 77.51 (15b).

AB224,25,23 (12) "Usable marijuana" means dried marijuana flowers.

AB224,50 Section 50. 139.971 of the statutes is created to read:

AB224,26,3 139.971 Marijuana tax. (1) (a) An excise tax is imposed on a marijuana producer at the rate of 25 percent of the sales price on each wholesale sale in this state of marijuana to a marijuana processor or to another marijuana producer.

AB224,26,6 (b) An excise tax is imposed on a marijuana processor at the rate of 25 percent of the sales price on each wholesale sale in this state of usable marijuana to a marijuana retailer.

AB224,26,8 (c) An excise tax is imposed on a marijuana retailer at the rate of 25 percent of the sales price on each retail sale in this state of usable marijuana.

AB224,26,13 (2) Each person liable for the taxes imposed under sub. (1) shall pay the taxes to the department no later than the 15th day of the month following the month in which the person's tax liability is incurred and shall include with the payment a return on a form prescribed by the department. The department shall deposit all taxes collected under this section into the marijuana fund.

AB224,51 Section 51. 139.972 of the statutes is created to read:

AB224,26,18 139.972 Permits required. (1) (a) No person may operate in this state as a marijuana producer, marijuana processor, or marijuana retailer without first filing an application for and obtaining the proper permit from the department to perform such operations.

AB224,26,21 (b) This section applies to all officers, directors, agents, and stockholders holding 5 percent or more of the stock of any corporation applying for a permit under this section.

AB224,26,23 (c) Subject to ss. 111.321, 111.322, and 111.335, no permit under this section may be granted to any person to whom any of the following applies:

AB224,26,25 1. The person has been convicted of a misdemeanor, not involving chs. 340 to 349, at least 3 times.

AB224,27,1 2. The person has been convicted of a felony, unless pardoned.

AB224,27,3 3. During the preceding 3 years, the person has been committed under s. 51.20 for being drug dependent.

AB224,27,8 4. The person chronically and habitually uses alcohol beverages or other substances to the extent that his or her normal faculties are impaired. A person is presumed chronically and habitually to use alcohol beverages or other substances to the extent that his or her normal faculties are impaired if, within the preceding 3 years, any of the following applies:

AB224,27,10 a. The person has been committed for involuntary treatment under s. 51.45 (13).

AB224,27,11 b. The person has been convicted of a violation of s. 941.20 (1) (b).

AB224,27,21 c. In 2 or more cases arising out of separate incidents, a court has found the person to have committed a violation of s. 346.63 or a local ordinance in conformity with that section; a violation of a law of a federally recognized American Indian tribe or band in this state in conformity with s. 346.63; or a violation of the law of another jurisdiction, as defined in s. 340.01 (41m), that prohibits use of a motor vehicle while intoxicated, while under the influence of a controlled substance, a controlled substance analog, or a combination thereof, with an excess or specified range of alcohol concentration, or while under the influence of any drug to a degree that renders the person incapable of safely driving, as those or substantially similar terms are used in that jurisdiction's laws.

AB224,27,23 5. The person has income which comes principally from gambling or has been convicted of 2 or more gambling offenses.

AB224,27,24 6. The person has been guilty of crimes relating to prostitution.

AB224,28,2 7. The person has been guilty of crimes relating to loaning money or anything of value to persons holding licenses or permits pursuant to ch. 125.

AB224,28,3 8. The person is under the age of 21.

AB224,28,5 9. The person has not been a resident of this state continuously for at least 90 days prior to the application date.

AB224,28,13 (d) 1. Before the department issues a new or renewed permit under this section, the department shall give notice of the permit application to the governing body of the municipality where the the permit applicant intends to operate a retail outlet or other premises of a marijuana producer, marijuana processor, or marijuana retailer. No later than 30 days after the department submits the notice, the governing body of the municipality may file with the department a written objection to granting or renewing the permit. At the municipality's request, the department may extend the period for filing objections.

AB224,29,2 2. A written objection filed under subd. 1. shall provide all the facts on which the objection is based. In determining whether to grant or deny a permit for which an objection has been filed under this paragraph, the department shall give substantial weight to objections from a municipality based on chronic illegal activity associated with the premises for which the applicant seeks a permit, the premises of any other operation in this state for which the applicant holds or has held a valid permit or license, the conduct of the applicant's patrons inside or outside the premises of any other operation in this state for which the applicant holds or has held a valid permit or license, and local zoning ordinances. In this subdivision, "chronic illegal activity" means a pervasive pattern of activity that threatens the public health, safety, and welfare of the municipality, including any crime or ordinance violation, and is documented in crime statistics, police reports, emergency medical response data, calls for service, field data, or similar law enforcement agency records.

AB224,29,7 (e) After denying a permit, the department shall immediately notify the applicant in writing of the denial and the reasons for the denial. After making a decision to grant or deny a permit for which a municipality has filed an objection under par. (d), the department shall immediately notify the governing body of the municipality in writing of its decision and the reasons for the decision.

AB224,29,9 (f) 1. The department's denial of a permit under this section is subject to judicial review under ch. 227.

AB224,29,11 2. The department's decision to grant a permit under this section regardless of an objection filed under par. (d) is subject to judicial review under ch. 227.

AB224,29,13 (g) The department shall not issue a permit under this section to any person who does not hold a valid certificate under s. 73.03 (50).

AB224,29,22 (2) Each person who applies for a permit under this section shall submit with the application a $250 fee. Each person who is granted a permit under this section shall annually pay to the department a $1,000 fee for as long as the person holds a valid permit under this section. A permit issued under this section is valid for one year and may be renewed, except that the department may revoke or suspend a permit prior to its expiration. A person is not entitled to a refund of the fees paid under this subsection if the person's permit is denied, revoked, or suspended. The department shall deposit the fees collected under this subsection into the marijuana fund.

AB224,30,2 (3) The department may not issue a permit under this section to operate any premises which are within 1,000 feet of the perimeter of the grounds of any elementary or secondary school, playground, recreation facility, child care facility, public park, public transit facility, or library.

AB224,30,11 (4) Under this section, a separate permit is required for and issued to each class of permittee and the permit holder shall perform only the operations authorized by the permit. A permit issued under this section is not transferrable from one person to another or from one premises to another. A separate permit is required for each place in this state where the operations of a marijuana producer, marijuana processor, or marijuana retailer occur, including each retail outlet. No person who has been issued a permit to operate as a marijuana retailer, or who has any direct or indirect financial interest in the operation of a marijuana retailer, shall be issued a permit to operate as a marijuana producer or marijuana processor.

AB224,30,13 (5) Each person issued a permit under this section shall post the permit in a conspicuous place on the premises to which the permit relates.

AB224,52 Section 52. 139.973 of the statutes is created to read:

AB224,30,16 139.973 Regulation. (1) No permittee may employ a person who is under the age of 21 to work in the business to which the permit relates.

AB224,30,18 (2) A retail outlet shall sell no products or services other than usable marijuana or paraphernalia intended for the storage or use of usable marijuana.

AB224,30,20 (3) No marijuana retailer may allow a person who is under the age of 21 to enter or be on the premises of a retail outlet in violation of s. 961.71 (2m).

AB224,30,23 (4) The maximum amount of usable marijuana that a retail outlet may sell to an individual consumer in a single transaction may not exceed the permissible amount under s. 961.70 (5).

AB224,31,2 (5) No marijuana retailer may display any signage in a window, on a door, or on the outside of the premises of a retail outlet that is visible to the general public from a public right-of-way, other than a single sign that is no larger than 1,600 square inches identifying the retail outlet by the permittee's business or trade name.

AB224,31,4 (6) No marijuana retailer may display usable marijuana in a manner that is visible to the general public from a public right-of-way.

AB224,31,6 (7) No marijuana retailer or employee of a retail outlet may consume, or allow to be consumed, any usable marijuana on the premises of the retail outlet.

AB224,31,10 (8) Except as provided under sub. (5), no marijuana producer, marijuana processor, or marijuana retailer may place or maintain, or cause to be placed or maintained, an advertisement of usable marijuana in any form or through any medium.

AB224,31,19 (9) (a) On a schedule determined by the department, every marijuana producer and marijuana processor shall submit representative samples of the marijuana and usable marijuana produced or processed by the marijuana producer or marijuana processor to a testing laboratory registered under s. 50.66 for testing marijuana and usable marijuana in order to certify that the marijuana and usable marijuana comply with standards prescribed by the department by rule, including testing for potency and for mold, fungus, pesticides, and other contaminants. The laboratory testing the sample shall destroy any part of the sample that remains after the testing.

AB224,31,22 (b) Marijuana producers and marijuana processors shall submit the results of the testing provided under par. (a) to the department in the manner prescribed by the department by rule.

AB224,32,3 (c) If a representative sample inspected and tested under par. (a) does not meet the standards prescribed by the department, the department shall take the necessary action to ensure that the entire lot from which the sample was taken is destroyed. The department shall promulgate rules to determine lots and lot numbers for purposes of this subsection and for the reporting of lots and lot numbers to the department.

AB224,32,7 (10) A marijuana processor shall affix a label to all usable marijuana that the marijuana processor sells to marijuana retailers. The label shall specify the ingredients and the concentration of tetrahydrocannabinols in the usable marijuana.

AB224,32,9 (11) (a) No permittee may sell marijuana or usable marijuana that contains more than 3 parts tetrahydrocannabinols to one part cannabidiol.

AB224,32,13 (b) No permittee may sell marijuana or usable marijuana that tests positive under sub. (9) (a) for mold, fungus, pesticides, or other contaminants if the contaminants, or level of contaminants, are identified by a testing laboratory to be potentially unsafe to the consumer.

AB224,32,17 (12) Immediately after beginning employment with a marijuana retailer, every employee of a marijuana retailer shall receive training, approved by the department, on the safe handling of usable marijuana offered for sale and on security and inventory accountability procedures related to such sales.

AB224,53 Section 53. 139.974 of the statutes is created to read:

AB224,32,25 139.974 Records and reports. (1) Every permittee shall keep accurate and complete records of the production and sales of marijuana and usable marijuana in this state. The records shall be kept on the premises described in the permit and in such manner as to ensure permanency and accessibility for inspection at reasonable hours by the department's authorized personnel. The department shall prescribe reasonable and uniform methods of keeping records and making reports and shall provide the necessary forms to permittees.

AB224,33,10 (2) If the department determines that any permittee's records are not kept in the prescribed form or are in such condition that the department requires an unusual amount of time to determine from the records the amount of the tax due, the department shall give notice to the permittee that the permittee is required to revise the permittee's records and keep them in the prescribed form. If the permittee fails to comply within 30 days, the permittee shall pay the expenses reasonably attributable to a proper examination and tax determination at the rate of $30 a day for each auditor used to make the examination and determination. The department shall send a bill for such expenses and the permittee shall pay the amount of such bill within 10 days.

AB224,33,20 (3) If any permittee fails to file a report when due, the permittee shall be required to pay a late filing fee of $10. A report that is mailed is filed on time if it is mailed in a properly addressed envelope with postage prepaid, the envelope is officially postmarked, or marked or recorded electronically as provided under section 7502 (f) (2) (c) of the Internal Revenue Code, on the date due, and the report is actually received by the department or at the destination that the department prescribes within 5 days of the due date. A report that is not mailed is timely if it is received on or before the due date by the department or at the destination that the department prescribes. For purposes of this subsection, "mailed" includes delivery by a delivery service designated under section 7502 (f) of the Internal Revenue Code.

AB224,33,25 (4) Sections 71.78 (1), (1m), and (4) to (9) and 71.83 (2) (a) 3. and 3m., relating to confidentiality of income, franchise, and gift tax returns, apply to any information obtained from any permittee under this subchapter on a tax return, report, schedule, exhibit, or other document or from an audit report relating to any of those documents, except that the department of revenue shall publish production and sales statistics.

AB224,54 Section 54. 139.975 of the statutes is created to read:

AB224,34,4 139.975 Administration and enforcement. (1) The department shall administer and enforce this subchapter and promulgate rules necessary to administer and enforce this subchapter.

AB224,34,6 (2) The duly authorized employees of the department have all necessary police powers to prevent violations of this subchapter.

AB224,34,13 (3) Authorized personnel of the department of justice and the department of revenue, and any law enforcement officer, within their respective jurisdictions, may at all reasonable hours enter the premises of any permittee and examine the books and records to determine whether the tax imposed by this subchapter has been fully paid and may enter and inspect any premises where marijuana or usable marijuana is produced, processed, made, sold, or stored to determine whether the permittee is complying with this subchapter.

AB224,34,17 (4) The department may suspend or revoke the permit of any permittee who violates s. 100.30, any provision of this subchapter, or any rules promulgated under sub. (1). The department shall revoke the permit of any permittee who violates s. 100.30 3 or more times within a 5-year period.

AB224,34,25 (5) No suit shall be maintained in any court to restrain or delay the collection or payment of the tax levied in s. 139.971. The aggrieved taxpayer shall pay the tax when due and, if paid under protest, may at any time within 90 days from the date of payment sue the state to recover the tax paid. If it is finally determined that any part of the tax was wrongfully collected, the secretary of administration shall pay the amount wrongfully collected out of the marijuana fund. A separate suit need not be filed for each separate payment made by any taxpayer, but a recovery may be had in one suit for as many payments as may have been made.

AB224,35,6 (6) (a) Any person may be compelled to testify in regard to any violation of this subchapter of which the person may have knowledge, even though such testimony may tend to incriminate the person, upon being granted immunity from prosecution in connection with the testimony, and upon the giving of such testimony, the person shall not be prosecuted because of the violation relative to which the person has testified.

AB224,35,8 (b) The immunity provided under par. (a) is subject to the restrictions under s. 972.085.

AB224,35,10 (7) The provisions on timely filing under s. 71.80 (18) apply to the tax imposed under this subchapter.

AB224,35,16 (8) Sections 71.74 (1), (2), (10), (11) and (14), 71.77, 71.91 (1) (a) and (c) and (2) to (7), 71.92, and 73.0301 as they apply to the taxes under ch. 71 apply to the taxes under this subchapter. Section 71.74 (13) as it applies to the collection of the taxes under ch. 71 applies to the collection of the taxes under this subchapter, except that the period during which notice of an additional assessment shall be given begins on the due date of the report under this subchapter.

AB224,35,20 (9) Any building or place of any kind where marijuana or usable marijuana is sold, possessed, stored, or manufactured without a lawful permit or in violation of s. 139.972 or 139.973 is declared a public nuisance and may be closed and abated as such.

AB224,35,23 (10) At the request of the secretary of revenue, the attorney general may represent this state or assist a district attorney in prosecuting any case arising under this subchapter.

AB224,55 Section 55. 139.976 of the statutes is created to read:

AB224,36,7 139.976 Theft of tax moneys. All marijuana tax moneys received by a permittee for the sale of marijuana or usable marijuana on which the tax under this subchapter has become due and has not been paid are trust funds in the permittee's possession and are the property of this state. Any permittee who fraudulently withholds, appropriates, or otherwise uses marijuana tax moneys that are the property of this state is guilty of theft under s. 943.20 (1), whether or not the permittee has or claims to have an interest in those moneys.

AB224,56 Section 56. 139.977 of the statutes is created to read:

AB224,36,14 139.977 Seizure and confiscation. (1) All marijuana and usable marijuana produced, processed, made, kept, stored, sold, distributed, or transported in violation of this subchapter, and all tangible personal property used in connection with the marijuana or usable marijuana is unlawful property and subject to seizure by the department or a law enforcement officer. Except as provided in sub. (2), all marijuana and usable marijuana seized under this subsection shall be destroyed.

AB224,36,23 (2) If marijuana or usable marijuana on which the tax has not been paid is seized as provided under sub. (1), it may be given to law enforcement officers to use in criminal investigations or sold to qualified buyers by the department, without notice. If the marijuana or usable marijuana is sold, after deducting the costs of selling and storing the property, the department shall pay the sale proceeds into the marijuana fund. If the department finds that the marijuana or usable marijuana may deteriorate or become unfit for use in criminal investigations or for sale, or that those uses would otherwise be impractical, the department may order them destroyed.

AB224,37,5 (3) If marijuana or usable marijuana on which the tax has been paid is seized as provided under sub. (1), it shall be returned to the true owner if ownership can be ascertained and the owner or the owner's agent is not involved in the violation resulting in the seizure. If the ownership cannot be ascertained or if the owner or the owner's agent was guilty of the violation that resulted in the seizure of the marijuana or usable marijuana, it may be sold or otherwise disposed of as provided in sub. (2).

AB224,37,25 (4) If tangible personal property other than marijuana or usable marijuana is seized as provided under sub. (1), the department shall advertise the tangible personal property for sale by publication of a class 2 notice under ch. 985. If no person claiming a lien on, or ownership of, the property has notified the department of the person's claim within 10 days after last insertion of the notice, the department shall sell the property. If a sale is not practical the department may destroy the property. If a person claiming a lien on, or ownership of, the property notifies the department within the time prescribed in this subsection, the department may apply to the circuit court in the county where the property was seized for an order directing disposition of the property or the proceeds from the sale of the property. If the court orders the property to be sold, all liens, if any, may be transferred from the property to the sale proceeds. Neither the property seized nor the proceeds from the sale shall be turned over to any claimant of lien or ownership unless the claimant first establishes that the property was not used in connection with any violation under this subchapter or that, if so used, it was done without the claimant's knowledge or consent and without the claimant's knowledge of facts that should have given the claimant reason to believe it would be put to such use. If no claim of lien or ownership is established as provided under this subsection the property may be ordered destroyed. In case of a sale, the net proceeds after deducting costs, expenses, and established claims shall be paid into the marijuana fund.

AB224,57 Section 57. 139.978 of the statutes is created to read: