1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 5901 GREEN VALLEY CIRCLE 3 CULVER CITY, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 FEBRUARY 22, 2017 10 (Prepared from audio recording) 11 12 13 14 ITEM F 15 PUBLIC HEARINGS 16 F1 PROPOSED ADOPTION OF CIGARETTE AND TOBACCO 17 PRODUCTS TAX REGULATION 4001, RETAIL STOCK 18 19 20 21 22 23 24 25 26 27 PREPARED BY: Kathleen Skidgel 28 CSR NO. 9039 1 1 P R E S E N T 2 3 For the Board of Equalization: Fiona Ma, CPA 4 Chairwoman 5 Diane L. Harkey Vice Chair 6 Jerome E. Horton 7 Member 8 Sen. George Runner (Ret.) Member 9 Yvette Stowers 10 Appearing for Betty T. Yee, State Controller 11 (per Government Code Section 7.9) 12 Joann Richmond 13 Chief Board Proceedings 14 Division 15 For Board of Equalization Staff: Pamela Mash 16 Tax Counsel Legal Department 17 Steve Smith 18 Tax Counsel IV Legal Department 19 20 ---oOo--- 21 22 23 24 25 26 27 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 FEBRUARY 22, 2017 4 ---oOo--- 5 MS. MA: Ms. Richmond, next item. 6 MS. RICHMOND: Our next item is item F, 7 Public Hearings; item F1 is Proposed Adoption of 8 Cigarette and Tobacco Products Tax Regulation 4001, 9 Retail Stock. 10 MS. HARKEY: Thank you. 11 MS. MA: Okay. Are there any -- there's no 12 speakers, scheduled speakers? We're just going to 13 have the Department? 14 MS. RICHMOND: There are no speakers. 15 MS. MA: Okay. Great. 16 Okay. To the Department, please, um, 17 introduce yourself for the record and you may 18 begin. 19 MS. MASH: Chairwoman Ma, Members of the 20 Board, I'm Pamela Mash from the Board's Legal 21 Department, along with Steve Smith, also from the 22 Legal Department. 23 I'm here to request that the Board vote to 24 adopt proposed Regulation 4001, Retail Stock. The 25 proposed regulation defines the term "retail stock" 26 and explains the presumption of distribution. 27 The Board received a written comment from 28 Ms. Celeste Cummings regarding subdivision (b) of 3 1 this regulation. Staff doesn't recommend any 2 changes to Regulation 4001 because subdivision (b) 3 is necessary to clarify that the product purchased 4 by a person who only makes retail sales to consumers 5 is part of that person's retail stock because it's 6 intended and available for retail sales to 7 consumers. 8 Also, subdivision (b) was proposed by Ms. 9 Stowers, supported by staff and SEIU Local 1000, and 10 unanimously supported by the other Board Members. 11 The Board also received a written 12 comment -- written public comment from Mr. Craig 13 Houghton on behalf of the Table Mountain Rancheria 14 Band of Indians regarding this regulation. Staff 15 doesn't recommend any of Mr. Houghton's changes 16 because the changes don't relate to the original 17 text of the regulation, which generally clarifies 18 when product is placed in retail stock that's 19 available for sale to customers. 20 Also, the changes are intended to recognize 21 the federal preemption of California's taxation of 22 product purchased by Indian retailers, um, for sale 23 to Indians in Indian country, and the suggested 24 changes are not consistent with the Legal 25 Department's understanding of when California tax is 26 preempted by federal law. 27 For these reasons, we request that the 28 Board vote to adopt proposed Regulation 4001 as it 4 1 stands. 2 MR. HORTON: So moved. 3 MS. MASH: Thank you. 4 MS. HARKEY: Second. 5 MS. MA: Second? 6 MS. HARKEY: Second. 7 MR. RUNNER: Second. 8 MS. MA: Second? 9 MR. RUNNER: I think. 10 MS. MA: Okay. Mr. Horton moves, 11 Mr. Runner seconds, the adoption of staff 12 recommendation on item F1. 13 Without objection, motion carries. 14 ---oOo--- 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Kathleen Skidgel, Hearing Reporter for 8 the California State Board of Equalization state 9 that I transcribed from recorded audio, to the best 10 of my ability, the proceedings in the above-entitled 11 hearing; and that the preceding pages 1 through 5 12 constitute my transcription of the proceedings. 13 14 Dated: March 17, 2017 15 16 17 ____________________________ 18 Kathleen Skidgel, CSR #9039 19 Hearing Reporter 20 21 22 23 24 25 26 27 28 6