Senate Standing Committee on Governance and Finance

The Senate Committee on Governance and Finance will come to order. So good morning, everybody, and welcome to our Committee. The Senate Committee continues to welcome the public in person and via the Teleconference Service for individuals wishing to provide public comment on today's agenda items.

The participant number is 877-726-8163 and the access Code is 736-2834 we are holding our Committee hearings here in the O Street building, and I want to ask all the Members of the Committee to please be present in room 1200 so that we can establish our quorum and begin our hearing. We are going to start today as a Subcommittee so that we can begin without delays. And we have two bills on today's agenda. We're going to be limiting testimony, and we'll take everybody in the room.

And in regards to the teleconference line, we will be taking 30 minutes worth of testimony on either of the two items. For the teleconference, please state your name, organization, or if speaking on behalf of yourself and your position. We want to be able to capture as many people as we can. So I'm going to ask everybody to be concise. We want to make sure everybody gets a chance to testify. Before we hear.

Well, we don't have a quorum, so I was going to see if we could establish a quorum. So we'll move on and hear our first author. I want to welcome Senator Bradford. You have file item number one, SB 512. Welcome, sir.

Good morning, Madam Chair Members, and thank you for this opportunity to present SB 512. This measure would just exclude the state's cannabis excise tax, as well as other local taxes from the definition of gross receipts under the state's sales and use tax law. Additionally, this Bill would prohibit local jurisdictions from including the sales, the states, I should say, excise tax and the definition of gross receipts. The amendments that we took last week incorporate the Committee's suggestion, so I thank you for that.

Under your previous analysis, high taxes, excessive regulatory hurdles, and various hurdles that cannabis businesses have to deal with have done little to help the legal cannabis market grow or succeed the way the voters had intended under Prop. 64. Taxes, taxing the taxes and ultimately increasing purchase prices disincentivizes the consumer from purchasing from legal retailers. It only helps encourage the illegal market, and as we see how the retail market, legal retail market, I say, struggles every day by making these clarifications.

SB 512 will help remedy the situation by ensuring taxes are calculated on the actual goods being sold. With me today to provide testimony is Jerred Kiloh, President of the United Cannabis Business Association, and Kika Keith, the owner of Gorilla Rx Wellness. I respectfully ask for your Aye vote.

Thank you very much. Lead witnesses in support. I want to welcome you. Come to the mic.

Thank you once again for the opportunity to speak. The saddest part about today's Committee meeting is that the cannabis industry is begging for crumbs today. We should be demanding equitable taxation that's commensurate with the representation we receive and the services that could support and uplift this industry. We are pleading for people to listen that this is an unsustainable path for California cannabis.

$1.0 billion a year in taxes are collected from this industry, and we still don't have the proper enforcement tools to reduce the growth of the illicit industry. We tinker with a seriously flawed Prop 64 every year, and somehow we keep nipping at the edges of what really needs to be done. AB 195 changed the collection, the calculation, and the participants in the taxing structure.

And in doing so, it changed the definition of the state's 15% excise tax away from a cost of goods tax to a gross receipts tax. Those changes were drastic, and for an industry that sees drastic changes every year, we took it in stride until we found the conflicts with existing local and state laws, and we raised the red flag.

Heads of the local and state taxing authorities were asked to clean up this conflict because the legal cannabis consumer is caught in the middle of a taxing loop. After these meetings, the conflict still remains. So this is why we're here today, using the Legislator again to clean up the mess that is California cannabis. We currently have a 39% consumer tax rate in the largest revenue generating city in the state.

That is on top of all the other high costs of doing business that are included in the sticker price of our track and trace our tested and our compliant products. My annual permit fee to run a retail is $96,000 a year, and that is built into the sticker price that the consumer sees. And when they enter the higher path retail in Los Angeles, they have to see the sticker price and also pay the taxes.

Imagine buying $100 worth of product and paying $39 in consumer taxes on top of the $100 price. SB 512 is a cleanup Bill. We figure it's to clarify the application of our excise tax after the definition of that tax was changed under AB 195. This is normal cleanup duties when a major overhauls are done to a system this complex. After all, the tax conflicts we are discussing affect the customer directly.

Please try to imagine explaining this tax structure to a consumer and why we have to charge. I have to say I'm charging a 16 and a half percent excise tax because the state excise tax taxes the local gross receipts tax, and the local gross receipts tax taxes, the state excise tax. So I need to charge you, the customer, 12,99% gross receipts tax. Imagine this is a conversation I'm having with someone trying to buy a joint.

Please see that these crumbs we are fighting for today are so important because of all the competitiveness of the illegal competition. And this just increases the cost of doing business for us. And all we're looking for is to be a competitive price in the illicit industry to reduce their stranglehold on California cannabis. I respectfully ask for your Aye vote. Thank you.

Thank you very much. Ma'am, if I could just take a minute before you speak. It looks like we have a quorum. If we could take the roll, please.

[Roll call]. You have a quorum.

I have a quorum. Excellent. You may proceed.

Excellent. Good morning. My name is Kika Keith. I am the proud owner of Gorilla Rx Wellness Co. The first Black woman owned social equity dispensary in Los Angeles. I have provided you all a document so you can follow along with my presentation. I'm also the co-founder of the Social Equity Owners and Workers Association. My story is representative of hundreds of retail equity founders across the state.

It has been a long and challenging journey for us to open doors, and I'd like to share with you some of the extraordinary barriers that social equity retailers face in our industry. My path to licensure in Los Angeles took over 1,730 days and over $350,000 in rent before I ever opened my doors while waiting on regulators and bureaucratic delays. The excessive waiting period and financial burden are some of the most significant barriers faced by social equity operators.

In addition to the challenges in obtaining licenses, social equity operators now face the considerable financial barriers once we open our doors. I have provided you on the front sheet a snapshot of my first six months in business. Gorilla Rx had a tax Bill of a half $1.0 million. Not to mention the $206,000 that my customers were charged for sales tax. The successive tax unfairly hurt social equity businesses, other social equity operators, and most importantly, the disproportionately disadvantaged communities in which I serve.

Let's remember the goal of Proposition 64. It was to undercut the illicit market prices and encourage legal sales. But high taxes are driving consumers back to the illegal market, which is the antithesis of the intent of the law. My dispensary is located on Crenshaw Boulevard in the heart of south central Los Angeles. There is still a proliferation of illegal dispensaries. Please take a look at the map I provided on the second page, and you can see the concentration of illegal retailers in Black and brown communities.

As social equity retailers, we face unique operational challenges, and these taxes, Senators, are the first step that must be eliminated, especially the double taxation that is driving my customers back to the streets. I have provided you an actual receipt because we throw around these percentages. 12%, 16.9. But we really don't understand what it means. Just think when you go to the grocery store and what these taxes mean. So you see there's a receipt here for $300 transaction that my neighborhood customer paid $115 in taxes.

That's 38.5%, 15%, or as Jerred said, actually 16% in the California excise tax was $45. Nexus city tax, it should have been 10%. But then here comes a double taxation so it actually goes to 11.5%. They're paying another 34.50 for the same transaction. And now take a look at the sales tax, which should be 9.5%. And if you look on the back, I've actually highlighted the percentages of what they should be and what the actual rate that these customers are paying.

Now, you tell me, why would my customers come back? We are in an urgent need for your support of SB 512. My community is facing a public health crisis. My people cannot afford to consume tested cannabis. It is the State of California's responsibility to ensure that legal cannabis is affordable and accessible to consumers who want to do the right thing. Look, this will help us undercut the illicit market and increase revenue for the state in the long run. It is a win-win for everyone involved.

The impact of your vote has even greater implications to strengthen the communities, specifically our communities that are economically disadvantaged. By reducing the taxes, we can create new jobs, increase living wages, and provide health benefits. This means increase payroll taxes, increase income and sales taxes when they go and spend money at small businesses in my community. So I urge you all for a Aye vote and support SB 512. Thank you.

Thank you very much. And thank you for the evidence, if you will. It's always helpful to see it in writing. We're going to move on to lead witnesses in support in Room 1200 witnesses in support want to welcome you to the mic.

Madam Chair and Members George, Miller, on behalf of Weed Maps, in support. Like I said, I feel like we had the Tea Party, Boston Tea Party over less than this.

Thank you very much.

Madam Chair and Members Amy Jenkins, on behalf of the California Cannabis Industry Association and independent companies, CannaCraft and SPARC, in strong support. Thank you.

Thank you.

Madam Chair and Members, Rand Martin, on behalf of the parent company, please help strengthen the legal market against the illegal market by passing SB 512. Thank you.

Thank you very much.

Talia Dimato on behalf of California Normal. We represent consumers also in strong support of this excellent Bill. Thank you.

Thank you very much.

Good morning. Jonatan Cvetko, Executive Director of UCBA, as well as here in representation by Andrew Samuels and the Montebello Cannabis Operators Association. All in support. Thank you.

Thank you very much. Is there anyone else in the room that would like to testify in support? Seeing none, we'll move on to lead witnesses in opposition. Is there anybody that would like to serve as a lead opposition witness in Room 1200? Seeing no movement. Is there anybody that would like to testify in opposition as a Me too to this Bill? Seeing none, we're going to move on to the teleconference line.

Moderator, if you could queue up Members of the public that would like to testify either in support or in opposition, now is the time.

Thank you very much. And if so, please press one zero at this time. Again, it's one zero, and we'll first go to line 79. Your line is open. Oh he took himself out.

My name is Edgar Escobar. Yes, my name is Edgar Escobar, CEO of Edgar LLC. I'm a social equity manufacturer and distributor in L.A. in strong support of SB 512. Thank you.

Thank you very much.

Next is, line 29. Line 29, your line is open.

Yes, my name is Virgil Grant from California Minority alliance and creator of Social Equity for L.A., in strong support of SB 512.

Thank you very much.

Line 57.

This is Ken Jones with California Minority Alliance Board Member. We need to continue to correct all the steps and missteps of the industry and in strong support of SB 512, which is a good corrective first start.

Thank you, sir.

Line 16.

I am Sarah Armstrong. I represent Americans for Safe access. On behalf of Americans for Safe Access, the California division, we stand in strong support of this worthy Bill. Thank you.

Thank you.

Line 58.

Good morning. My name is Javier Montes. I'm the Vice President of UCBA and retail shop owner in Los Angeles, calling in support of SB 512.

Thank you.

Line 76.

Hi, my name is Martin Guterres on behalf of the Healing Tree, and I am in support of SB 512.

Line 36.

Hello, my name is Luis Rivera. I'm with Social Equity L.A., and I'm also a social equity operator and owner, and we're in strong support of SB 512. Thank you.

Thank you.

Next up line 28.

Hello, my name is Armin Proni, and I'm calling on behalf of the Coachella Valley Cannabis Alliance Network, and I'm in strong support of SB 512. Thank you.

Thank you.

Line. Pardon me, with Line 104.

Is that me?

You're on.

Yes, hi, my name is Aaron Stoney. I'm an owner of a cannabis retail shop in Carmel, California, Big Sur Cannabisanicals. And I am in strong support of SB 512.

Thank you.

Line 12.

Hi, my name is Tigran Khachatryan. I've been in the business 10 years. I'm in strong support of SB 512. I've been in the business 10 years. I've never seen the sales so low. Let's please fix this. Let's help everyone. Thank you.

Thank you very much.

Line 27.

Hello, my name is Arama Kimian. I'm calling on behalf of One up Montebello LLC, and I strongly support SB 512 because it is necessary. Thank you.

Thank you.

Line 72.

Good morning. Coltrane Klein, on behalf of the California Cannabis Manufacturer Association, in support. Thank you.

Thank you.

Line 78.

Hello, my name is Carlos Delatorre. I'm the owner and operator of Cornerstone Wellness, which is a Latino owned business and one of the original dispensaries in the City of Los Angeles. I've been here from the beginning, and I've always supported a regulated and equitable industry for over 16 years. I strongly support AB 512.

Thank you.

Line 109.

Yes, this is Gene Damon, Humboldt County. I wanted to comment on SCA Four.

We're just taking identification, and whether you're in support or opposition.

Of SCA Four?

No, I'm sorry. It's SB 512.

Okay, what time will SCA Four be up?

Once we're finished with SB 512.

Okay, I'll wait then.

Thank you.

Line 55.

Thank you. My name is Louis Harris. I'm a Member of the Social Equity Owners and Workers Association, and I'm in support of SB 512. Thank you.

Thank you very much.

Line 15.

Hi, my name is Millie Limon. I'm with Cornerstone Wellness, and I support SB 512.

Thank you.

Line 40.

Good morning. I'm Steve Neal, Director of the Long Beach Collective Association, the trade association for the legal cannabis operations in Long Beach, and we are in strong support.

Thank you.

Line 81.

Hi, my name is Giselle Barr from Original Green Cross. I strongly support SB 512, which is much needed for our community, our customers, and retail cannabis retail stores all over California.

Thank you.

Line 63.

Hi, my name is Michael Mesias. I am social equity verified out of the City of Long Beach. I'm also CEO of CCAT Security and also a medical patient myself. I am strongly in support of SB 512. Thank you.

Thank you.

Line 32

Hi, my name is Rocio Contreras, Senior Cannabis Consultant of 12 years at Cornerstone Wellness in Eagle Rock, California, and I am in strong support of SB 512.

Thank you.

Line 43.

43. We can go to line 62.

My name is Justin Dunn, and I'm with JWC deliveries, and we are in strong support of SB 512.

Thank you.

Line 108.

Good morning, Madam Chair, Members of the Committee. On Behalf, this is Sam Rodriguez. On behalf of Good Farmers, Great Neighbors based in Santa Barbara County, this is a sensible reform measure to fix a tax-on-tax dysfunctional methodology. We want to thank the author, Senator Steve Bradford. We are in strong support.

Thank you.

Line 60.

Yeah, good morning. My name is Sequoyah Hudson. I am a small equity operator up in Northern California, as well as the CEO of the Humboldt Sun Growers Guild. And I want to express my strong support for SD 512, which will help fix and process.

Thank you very much. I want to make sure we get through everybody that's on the phone, and so time is ticking. If you could just say whether you're in support or in opposition, that would be great. Thank you.

Line 83.

Hello, my name is Justin Chu with the Original Green Cross in Torrance. I am in strong support of SB 512.

Thank you.

Line 21.

I'm Nick from Cornerstone Wellness. Strong support of SB 512.

Thank you.

Line 95. 95? Line 102.

Hi, my name is Nita McKinley. I'm with Firehouse Deliveries, LLC, micro business. We are in support, strong support of the SB 512.

Thank you very much.

Line 47.

I am Woody Harriet, calling on behalf of the Cannabis Distributors Association and Mammoth Distribution. I support SB 512. Thank you.

Thank you.

Line 85. We'll move on to Line 97.

I'm a social equity owner operator at Flower Policy, and I am in support of SC Five.

Thank you very much.

Line 26.

Hi, my name is Arturo Ledesma for Friendly Farm Friendly Brand USA, and I am in support of SB 512.

Thank you.

Line 71.

Hello, my name is Jessica Bray. I'm the Director at Green Cross in Torrance, and I support SB 512.

Thank you.

Line 114.

I'm here to speak on behalf in support of SB 84.

That'll be the next Bill. We'll be taking it up presently. Thank you.

Line nine.

My name is Bob Jones. Because of the recent study of the damage done by cannabis, I'm against anything that facilitates its availability.

Thank you very much.

Line 46.

I'm Alex Martin. I work for Cornerstone Wellness, and I support SB 512.

Thank you.

Line 45.

Morning. My name is Amir Gresham. I'm a board Member of Social Equity Owners and Workers Association. Newly licensee retailer in the Los Angeles. I support SB 512.

Thank you.

116. Please go ahead. Move on to line 118.

Hi, my name is James Doherty. I'm with Gorilla Rx, and I am strongly in support of Senate Bill 512.

Thank you.

Line 126. Line 126. Line 127.

Good morning, everybody. My name is Alfred Torregano. I am a board member of the Social Equity Owners and Workers Association, as well as the Cannabis Equity Policy Council. Founder of Spaceflight Retail Dispensary in Los Angeles, and I am in strong support of 512. Thank you to the Senator Bradford for this amazing piece of legislation.

Thank you very much.

Line 52.

Hi, yes. My name is James Wilhelm. I have Wilhelm's Finest Farms, and I am supporting SB 512.

Thank you.

Line 138.

Greg White here representing Social Equity LA and Edgar LLC. Strong support of SB 512.

Thank you.

Line 133. 133.

Hey. My name is Mona. I strongly support SCA four. Thank you.

Thank you.

Line 132.

Hi, my name is Charles Lockett. I'm the founder and operator of SGF Delivery in Los Angeles and board Member of Social Equity Owners and Workers Association. I support SB 512, and I want to thank Senator Bradford.

Thank you very much.

Line 149.

Hi, my name is Jesse Mopes, calling from Delta-9 T.H.C. in Los Angeles. And I support SB 512. Thank you.

Thank you very much.

Line 151.

Hi, my name is Ashtyn Gibson. I'm the owner of Urban Roots logistics micro business in Sacramento and dispensary in Palm Springs, and I'm a huge supporter of SB 512.

Thank you.

Line 160.

Hello.

Hi. Go ahead.

My name is Nina Parks. I am calling representing Equity Trade and Network, as well as Supernova Women. I am calling in support of SB 512. Thank you.

Thank you.

Actually, I have line 137. 137 you're open.

My name is Sheila Baron, and I'm here on behalf of Gorilla Rx Wellness, and I am in support of SB 512.

Thank you.

And give me just a moment. We have got one more in queue.

Okay.

And we've got line 166. 166 your line is open.

Thanks. My name is Ann Lawrence, and I'm the owner of Rose Collective, and I support SB 512.

Thank you very much.

And currently, none further. End queue.

Very good. Thank you to everybody who testified and did it expeditiously. We were able to get everybody in. We're going to bring it back to Committee for discussion. Comments, questions, concerns. Senator Glazer.

Thank you. Well, first, I think there's a lot of common ground, at least from my point of view, in terms of the problems in the marketplace today. I certainly don't dispute that. And at so many levels, both the inability to crack down on the illegal growing of cannabis, to the licensing problems, to the regulations. I mean, somebody described it as a mess.

They probably know more than I, but at least from this vantage point over many years, it's been a problem, and I recognize the author's efforts to try to make it better. The issues that I have with the Bill is not about the need to try to find relief. It's about how we're doing it. I wanted to ask a couple of questions to the consultant who worked on this Bill for the Committee.

Very good.

On page two of your analysis, you write this: Prop 64 explicitly provides that gross receipts from the sale of marijuana or marijuana products for sales and use tax purposes, includes the cannabis excise tax, which this measure proposes to change. Is there any legal opinion that you've gotten from Ledge Council or anywhere else that says that this is appropriate for the Legislature to reverse an explicit element of a ballot proposition?

I'm not in receipt of any advice of that nature.

So we haven't gotten any advice from Ledge Council as to whether this is even a legal Bill that can stand up to a challenge that... Is there anything in the measure that tries to mitigate this vulnerability of reversing what the voters seem to have, as you write explicitly, provided?

The measure does include a legislative finding that it is consistent and furthers the purposes of the act, which was Proposition 64. And so that is included within the Bill.

How do you do that when it reverses an explicit element of the measure? How are they proposing that those findings provide that mitigation?

They'd have to check with the author, but it was the author's decision to include that finding within the measure, and it is also a necessary one for the Legislature to amend Prop 64.

Got it. Next question. Also, at the bottom of page two, you reviewed the fact that last year, quoting the Legislature, comprehensively reformed cannabis taxation, including suspending the cultivation tax and shifting the point of collection of the excise tax from cannabis distributors to retailers. So part of the complaint that's been advanced in the support of this Bill is the effect on retailers in terms of this tax.

And we had a witness very articulately provide information and evidence that talks about how this taxation is being forced on them versus on the cultivators. If the Legislature made these changes last year, are we in a position to be able to make changes along those same lines this year that don't affect Proposition 64's explicit prohibition, but does change the taxation levels that we create here?

Yes. So AB 195 I would have to double check, but I believe it also included a similar finding, that it was consistent and furthers the purposes of the Act. And I'm not aware of any subsequent litigation on AB 195 that challenged the Legislature's action in that regard.

And so we could actually reduce the excise tax then. If we wanted to.

I can't predict what a court may do.

But Prop 64 didn't say we had to. It didn't assess a specific tax rate. It said how taxations -- how taxes would be calculated. Is that, am I...?

No. Proposition 64 did impose a 15% excise tax rate.

Okay. So we couldn't change that. Are there other taxes in regard to cannabis that we can change?

Well, this Proposition 64 also imposed a cultivation tax, but as part of AB 195, we suspended the operation of the cultivation tax and then directed the Department of Finance, I believe, in three years to calculate an equivalent tax rate that was effective, I believe, July 1 of 2025, if I recall correctly.

So that was the defense from last year's measure to an accusation that we were somehow going against the will of the people in Prop 64. Is there anything that's being applied to this measure to do something similar, to defend at least this, what appears to be a complete reversal of what Prop 64 required?

Only that I'm aware of, and I would defer to the author that the legislative finding it is consistent with and furthers the purposes of the Act.

Okay, so that really remains the question for me. Not that there's problems in the industry and that we should look for ways to mitigate, but how we do it. Are we doing it the right way or are we doing it the wrong way? And that's what troubles me in the Bill before us.

Senator Wiener.

Thank you very much, Madam Chair. I fully support this Bill, and honestly, I wish it would go further, but I know we have constraints, and I appreciate you bringing this forward. California is either committed to having a legal, healthy, legal cannabis market or we're not. We're either committed to sort of draining the illicit market or we're not. And right now, we have a system that is absolutely...

If we were to sit down and say, let's legalize cannabis, let's go out of our way to fuel the illicit market, we would design a lot of the system we have now by having super high taxes, high regulations, and basically threatening to destroy the industry. We have so many bills moving through this Committee and public safety on -- Senator Alvarado-Gil has a Bill which I supported after some amendments to allow increased seizure of some of these illegal grows. That's a real issue in terms of environmental, etcetera.

We have had... the chairs, had bills about illegal theft of water, which we moved out of, I guess, public safety. I guess it was last year. And these issues don't just appear. They appear because we've set up a system designed to fail and we are making it difficult to impossible for the legal cannabis market to survive, let alone thrive. And this is one piece of it.

We have very high state taxes created by Prop 64, and then we have allowed cities to just pile on, on top of it. It's absolutely absurd. And I think when we legalize cannabis, we said, let's tax it and regulate it, and that's fine. I support that. But there have to be limits. And I'm not allergic to taxes. I'm a lefty Democrat from San Francisco. But sometimes you can go too far and we've gone too far.

And this is at least one step in providing relief to this industry. And I want to just say, on top of just wanting to support the industry, it's also about consumer safety, right.

It is much better and safer for consumers to be able to go to a business that is a legit legal business and purchase product and know exactly what is in that product, what type of cannabis, what the quantity is, and be confident in the purity and safety of the product as opposed to not really knowing for sure. So I support this Bill and I'm happy to move it.

There is a motion. Other comments. Senator Dahle?

Thank you, Madam Chair and Members. I didn't even comment on this Bill when it first came about. I laid off the Bill, obviously. I hate that our state charges so many taxes on a variety of issues. But on this particular issue, representing my district, where we have cultivation mainly, we do have dispensaries, obviously, but most of cultivation and mostly illegal cultivation.

And as somebody who has worked with the chair on many of these issues in different committees, talking about the illegal grows that we have in California and the lack of enforcement, basically zero enforcement. We have a little bit that counties can do what they are able to do. So we passed Prop 64 to try to bring this Wild west approach into some sort of area where we can actually regulate and tax, and the voters passed it.

And here we are now, years later, trying to figure out what's the proper place to go and how do we do it. But until know, I think it was really great you brought your information, and I'm a business owner in California, too. I don't do what you do, but I'm taxed on taxes and I'm taxed locally, and I talk about that at length here, and nobody seems to care. We can afford it. We can just pass it on to our customers.

Well, in your case, you have this map on the back here with a circle with all these illegal folks who are doing business next to you. That's a problem for your business. And we have no enforcement. What is the enforcement that is happening to your business? I'd like to ask the author where we are enforcing people to stop doing what they're doing. If we don't do anything to the illegal people, what's going to make this situation change?

This Bill is not about enforcement. This Bill is about encouraging and supporting and standing up a legal industry. That was passed by the voters of California. But I will assure you if you talk to 90% of the folks who voted for Prop 64, they were unaware of all these taxes that were included in the measure when it was passed.

What we're trying to do is, again, make it where your resident, your consumer, whomever will go into a legal facility as clearly as Senator Wiener expressed, to know that it's been tested, it's safe, but at the same time, it's not 40% more than the legal operator next door. So we're almost standing up these illegal operations by allowing these exorbitant taxes to be placed on the consumer that chooses to go into the legal establishment.

So this is not about enforcement, but I guarantee it's about dissuading and encouraging folks to use and patronize legal operators who are doing it the safe and right way.

Well, I thank you for that. I want to just say that I have people that are destroying our streams and polluting our environment and we do nothing to stop them. And I have legal operators who are farmers who are downstream or upstream of these illegal grows, which there's no enforcement for getting penalized for the quality of the stream that they're on, and there's no justice in this.

And then last year we took the point of sale or the tax away from them and put it to the retailer, which is not in my district. So if I have a legal grow in my district, we don't get the tax there to actually go out and enforce the laws that are on the books to get the illegals out.

So that's my problem with this whole system, is that you can continue to talk, I think the hypocrisy of every other business in California that's faced with the same amount of issues, regulations and taxes, we don't do anything to help them and we have illegals going on in those. So for those reasons, I'm going to lay off the Bill. I'm assuming it gets out of here. No problem.

And I had very great conversations with the sponsors of the Bill yesterday on a Zoom, and they encouraged me to talk about the illicit market because they're frustrated as well. And I know you are, too. But somewhere there has to be equity. And we have a Proposition that was put into place, and we are manipulating that. And where the taxes get collected is where you can do the money goes to those counties and cities to do the enforcement, and we don't do any enforcement.

So for those reasons, I'm going to, again, lay off the Bill because I think we're not going to fix any problems here and we're going to be right back here trying to figure it out. And it's very difficult to run a business in California, any kind of business, because of these same types of issues in all businesses. Thank you.

Senator Blakespear.

Yes, thank you. Well, I appreciate my colleagues' comments. I think there are potentially a lot of bills, but this is the one in front of us, and I am going to be supporting it because I'd like to strengthen the legal market against the illegal market. I think Senator Glazer's, the root of his questioning was about whether we're walking into legal problems that are avoidable.

So I guess I would just like to ask the author, is this something that you perceive that we're going to immediately end up in litigation about the constitutionality of this? And is that a problem that you've thought?

We've thought through it, and an answer right now is no. It's very unclear. But I think the question should have been asked when we passed AB 195 last year, who clearly moved it to another section of the law. So we haven't seen any red flags with that. And that took more of a drastic approach than what we're trying to do here.

So it's still to be debated, but so far there has been no red flags that this is going to be unconstitutional or will be challenged again. I think we would have saw it with the passage of 195 last year.

Okay, thanks very much.

Senator Seyarto.

So I'm a little torn. I'm not usually a big cannabis advocate because for me, it is a public safety issue and things like that in communities. But as this has evolved over the last few years, some of the landscape has really changed. And one of those landscapes is the illicit drug market, not just for cannabis, but for a lot of other drugs.

And those drugs are being used to lace what we would normally see as what we thought were safer drugs such as marijuana and cannabis. From a public safety perspective, even though you may not agree with the use of cannabis, it is a lot safer to buy it from a place where we know that it's not laced with fentanyl and we don't have a grip on that issue at all.

That part of me is really kind of leaning towards that we need to make sure that the people that are legally and safely, if you can call it anything safe, safely distributing this instead of forcing people into an illicit market. This is a taxation issue also.

And these are. These are exorbitant taxes that are meant to be collected and then hopefully spent on what my colleague from Bieber was talking about, which is enforcement, so that we don't have the illegal illicit market and that we seem to be losing that battle. And I'd like to see us win that battle. I think there are other ways to ensure that that happens. So I'm kind of leaning towards support on your Bill today.

If I think other things come to light later on about the illegalities or whatever, when it gets to the floor, I want to reserve my right to change my vote, but I'd like to see it get off the floor, because I would like to see that people who are doing what the law says they can do are able to do that and keep our people safe. Because at the end of the day, that's really what we need to be focused on. Thank you.

Thank you.

So let me just say right up front that I'm going to support your Bill. I have in the past and will continue to do it. I agree with a lot that's been said up here. Proposition 64 was a collaborative effort to try to pass a measure that the public would vote for. And anytime you pass a Proposition, you're stuck with the language in the Proposition. Right? I mean, that's the whole point, is it's taken out of the hands of the Legislature.

This Proposition included a clause that said, as long as it's in furtherance of the goal of the Proposition, the bottom line is there are local tax dollars for enforcement. But the question is there are all these funds that were set up and are those funds functioning the way that people thought they were going to function, or do we need to readjust the percentages that go into the funds? And what that says is that we need a new Proposition, we need a cleanup where we go in, we figure out how do we make sure that there's local enforcement to shut down some of these illicit operators.

And I'm going to continue to do the water diversion, because it's critical in rural California. They're just destroying the landscape and polluting the water system and taking out hundreds of thousands of acre feet that communities need, that downstream communities rely on. And so anyway, I won't belabor it. This is an issue that's very near and dear to my heart because we got to get this right.

We have said we want to support the legalization, and yet, as my good friend from San Francisco said, we've set up all these roadblocks to having that happen. So I want to thank you all for coming twice, I think it was two times in a row, and being persistent. I'm going to support the Bill because I think that it's the right direction to go in, but I think we're probably going to need to go out and fix the pieces that aren't working anymore.

And with that, we do have a motion from Senator Wiener. We're going to allow you. Yes. Senator Glazer.

One final comment. Seems like there's the votes. First of all, I appreciate take the discussion of the Committee. Seems like there's the votes to move the Bill out today. But I would like to ask the author to ask for alleged council opinion. I'm going to stay off the Bill today, but hope that that can assuage me so I can go up on the Bill on the floor. But I think that would be a healthy thing for us to do.

Very good. Senator Bradford, we're going to allow you to conclude.

Thank you. And I want to appreciate the debate and discussion on this measure. And it's no one here that's more concerned with making sure that it's done right. I think my record since being in the Senate has clearly shown that we are trying to make sure that this industry is stood up correctly, fairly, legally. And by continuing to allow exorbitant taxes, we're only encouraging the legal market.

And we want those taxes to come in and stand up those public safety programs and enforcement programs that don't exist right now because the funding is not coming in, because understanding whether you're a legal grower or a legal dispensary, you're not paying taxes. So there's no money for those enforcement programs that we truly know are needed and wanted. And also we talked about safety. Ms. Keith's operation, if you haven't gone, I encourage you to come to LA and visit her operation.

It's amazing and it is clean, it's safe. But go to a legal operator, they don't care. As soon as you walk in, you smell the product, you see folks using it, that doesn't happen there. And this is what it's all about. But she cannot survive and legal operators cannot survive under this current tax structure. And we continue to want to call this a drug. Let's change the narrative.

It's a plant. It's a plant that was here before any of us were here. And the only reason it was ever made illegal was to arrest people that look like me. Black and brown people in the 30s. That's the only reason it was ever classified as a drug. So let's do that history part, and let's understand that seven of the first year presidents not only grew it, but consumed it as well. But it wasn't a drug then.

So this is a common sense measure to allow those legal operators to do it right, to stand up those public safety programs, those enforcement programs, to eradicate the legal market. And I respectfully ask for your aye vote.

Please call the roll.

Motion is to pass to the Committee on Appropriations. Senator Caballero? Aye. Caballero aye. Seyarto? Aye. Seyarto I. Blakespear? Aye. Blakespear aye. Dahle? Durazo? Glazer? Skinner? Wiener? Aye. Wiener aye. Four to zero.

We'll leave that on call for the absent Members. Thank you very much. Thank you to everybody who participated. We're going to move on to the second item on our agenda, which is SCA four. Senator Seyarto. Senator Seyarto, the floor is yours.

Good morning, everybody. Thank you, honorable chair and Committee Members, for hearing this Bill. It's very, very important to me because it is the reason I am absolutely giving up a lot of my retirement days so that I could be up here to help people. What does SCA 4 do? It restores the very provision, the popular provisions of Prop 58 and 198 relating to intergenerational transfers of property and how they are taxed. It affects both primary and residential properties and other residential and business properties.

But more than that, what it does, it allows the public, it puts this issue back in front of the public and allows them to be focused on this issue alone and vote on this again. So, in order to understand why that's important, we need a little bit of a historical perspective. Prop 19 passed in 2020, and there were two parts to Prop 19, but the ballot title was the home protection for seniors, severely disabled families and Victims of Wildfire or Natural Disasters Act.

And who wouldn't vote for something like that? However, one part was very helpful in doing that, but then in generating support for that, another part of it got introduced, and that is not helpful. At all. And in fact, it's destructive for a lot of communities, a lot of people. And some of those people, you wouldn't even expect it to be. It was the proverbial Trojan horse. What SCA four does is deal with what's inside the horse, the shiny exterior that everybody sees when it rolls in.

They think that's great, but if they don't see what's inside, they only find out later what it is. And what it was is destructive to them. So why is it needed? For one? It's the right thing to do. We don't use the Legislature, we don't use our political process to fool people we shouldn't be. But you know what? It happens. And when it happens, when we make policy that's bad, it's up to us to try and fix it before it gets worse.

We know that we deal with these things on a daily basis, and a lot of our bills are meant to stop the destruction that was caused many years ago. And now we're recognizing that destruction. Well, this is our opportunity to take to something that we have recognized as destructive to people and fixing it. Now, the benefits sought by the proponents of taking this very important protection away from taxpayers never materialized on the scale that they dreamed it would be.

But the cost to our citizens is being felt in a big way. People have so little trust in our government, and what happened here, this little travesty, is the reason why. It is not a tool that will help our housing supply issues. It is not a tool that is creating substantial increases to property tax revenue. The bottom line is my house, the house that my wife and I bought and our children grew up in, that is our family's house.

When my kids come home, they don't call up and say, hey, mom and Dad, we're coming to your house. They say, hey, mom and Dad, we're coming to our house. We're coming home. And just because they have to grieve over one of us dying or when the second one dies doesn't mean they should have to give up their house. And that's what this is doing to people. So thank you today to this Committee for thoughtfully and carefully considering this Bill.

I look forward to addressing any of the concerns you have and am willing to continue to work on some of those concerns. I have brought a couple of witnesses with me today, Jeffrey Prang, who is the Los Angeles County Tax assessor, and Veronica Nelson from the Sacramento Realtors Association. She is the Vice President of the organization. So, Mr. Prang, I'm sorry.

Yes, please. Come forward if you've concluded. We'll allow your first lead witness.

Good morning, Madam Chair, Senators. My name is Jeff Prang. I'm the Los Angeles County Assessor. I'm representing the largest assessment agency in the United States. I'm also here representing the California Assessors Association. So SCA4, which is before you, seeks to rectify the most harmful elements of Proposition 19 that have impacted countless families across the State of California and their ability to pass down their property and the intergenerational wealth so that so many families rely on for financial and economic stability.

SCA4 would allow voters to reinstate Propositions 58 and 193, restoring those longtime benefits that were eviscerated by Proposition 19, the constitutional exclusion from reassessment from when property is transferred between parents and children or grandparents and grandchildren. Prop 19 was the most significant change to California's property tax system since Proposition 13 in 1978. It contained numerous glaring deficiencies, contradictions, and ambiguities on issues fundamental to its implementation. And I will tell you candidly, Proposition 19 was an administrative dumpster fire, and it still remains that way.

Many of these questions remain unanswered as legislative solutions have been slow and coming.

I just want to remind the audience that this is a Senate hearing, and so we're not going to be clapping. It's not an entertainment venue or an athletic event. So you may continue, Mr. Prang.

Thank you, Madam Chair. Many of these questions about Prop 19 remain unanswered as legislative solutions have been slow in coming. As a result, many homeowners continue to make very important and often irreversible financial decisions in a climate of legislative and legal uncertainty. The longer we wait for clarification, the greater the harm. As an example, homeowners unaware that to receive the limited tax breaks afforded under Prop 19 by filing the homeowners exemption, they must remain in the House forever.

If they move, they will get hit with a full reassessment at full market value and accompanying tax increase. It will be a public service nightmare as more and more of these incidents occur, not just for my office, but for all assessors, and, frankly, for your office as well as people seek answers to impacts that are devastating to families. In fact, many families are still unaware of the constitutional change regarding inheritance that has occurred, at least not until a loved one has passed.

Indeed, I am convinced that most voters overwhelmingly were unaware of the Prop 19 changes to family inheritance, because when they do become aware of it, they're very angry. And I am convinced that Proposition 19 never would have passed if people were aware of the inheritance provision when asked directly and clearly, Californians have said they do not want the tax code to force families to sell properties that they've worked hard to acquire.

That's why Proposition 58 passed with 75% of the vote and after being placed on the ballot by a unanimous vote of the Legislature, Proposition 193 extend the same protections to grandparents and grandchildren. Prop 19 passed narrowly Following a campaign that emphasized its benefits for seniors, wildfire victims and the disabled, while completely avoiding the important family inheritance issue, which I believe was misleading and disingenuous.

The public should be given the opportunity to weigh in on this provision and the opportunity to restore Prop 58 and 193 and the benefits that they offer to families. Otherwise, a significant number of family businesses and homes will have to be sold due to unaffordable tax bills. As you are aware, property tax Administration is extremely complex, confusing and technical.

To expect voters to fully understand the implications of a ballot measure such as Prop 19 during a campaign that barely, if at all, disclose the impact on family inheritance is not reasonable, Californians should be granted a do over so that they may make an informed decision on family inheritance.

Importantly, I wanted to put a finer point on the negative impact of Proposition 19 on family inheritance and its particular concern to underrepresented communities that are very concerned about generational wealth, which is greatly compromised by the drastic reduction in inheritance benefits. Inheritance of family property has been an important historical factor in helping raise families from poverty.

As an elected official with a primary responsibility for implementing Prop 19 and having personally heard from thousands of property owners, I'm happy to share with you the administrative challenges and the overwhelming feedback I have received. I urge you to support SCA4. I'm happy to answer any questions that you may have.

Thank you very much.

Thank you, ma'am.

Appreciate your testimony here today. The next witness, please, Ms. Nelson.

Good morning.

Good morning.

Good morning. I'm Veronica Nelson, first Vice President of Sacramento Realtors and representing CABREB California Association of Black Real Estate Brokers, along with our nearly 700 Members across California, our model democracy and housing. We were established in 1947 when black, brown and people of color could not become realtors or own property.

We support SCA Four because the intent is to repeal the devastating impact of Prop 19, which is very important in our fight for democracy and housing and our initiative in building generational wealth in the black communities. As a real estate agent in the Sacramento region and Northern California, I work diligently with my clients to help them achieve the dream of home ownership.

All my clients want to leave a legacy for their children, and they work hard to be able to purchase that forever home that they will leave for their children and their children's children. SCA4 protects the next generation of California families and communities from being taxed out of their property when a parent dies. SCA4 protects family businesses, businesses that have been built with family sweat and tears over generations, which are threatened with unaffordable property taxes when parents pass away and kids take over.

SCA Four preserves affordable housing when a parent landlord dies. Currently, buildings are reassessed on transfer. Properties under rent control are sold due to higher taxes. SCA Four restores constitutional rights approved by the Legislature and then passed by voters with the passage of Prop 58 in 1986, enabling the transfer of certain limited property between parents and children while keeping the tax Bill the same.

On a personal note, my great great grandfather, who was a janitor and had a third grade education, was given a certain number of acres of land in or about the 1940s in lieu of his compensation. This is in another state. However, my great great grandfather put in writing that the land is never to leave the bloodline. It will go from one generation to the next. My family has maintained, worked, live partied, had weddings, funerals on this land for six generations.

This would not have been possible if we had been taxed at higher rates or beyond our financial means. On behalf of the Sacramento Realtors, California Association of Real Estate Brokers, our President Francis Young, and our nearly 700 Members, we'd like to thank the author, his coauthors for bringing this constitutional amendment. This legislation is needed so we can restore protection for taxpayers and keep the family home, the family home.

I urge you to join us and vote yes on SCA4 to repeal the devastating impact of Prop 19, which is very important in our fight for democracy and housing and our initiative in building generational wealth in black and brown communities. Thank you.

Thank you very much for your testimony. Now is the time for individuals that would like to add on as a me too, to come forward to the mic to form a line if you'd like to be able to testify. And again, what we need you to do is to say your name, whether you're affiliated with any group, and then whether you're in support or in opposition. And we're going to get everybody that's here an opportunity to do that, but we have to move it expeditiously.

Sir, you're first.

Dennis Albion on behalf of the Family Business Association of California, we support this measure. Thank you.

Thank you very much.

Alice Quay I'm in strong support of SCA Four.

Thank you. Thank you very much.

Johanna Altorfer in support of SCA Four. We're driving housing prices up and families out of our state. Thank you. Thank you very much.

Jane Van Tamlin in support of SCA Four. Thank you very much. Not right to tax people. Thank you very much. Thank you very much.

David Perry. I reside in my family home in San Francisco. I support SCA Four. Thank you very much.

Name is Raymond Kwong. I'm the founder of the Chinese Family Alliance, and I believe my views represent thousands of Chinese family voters in the State of California. And we strongly support SCA Four. Thank you very, that's.

Thank you very much.

Thank you very much.

Hi. My name is Yu Sang Moy.

Thank you very much.

My name is Lily Lim. I support SCA 4. Thank you.

Thank you very much.

My name is Jane, and I come from San Francisco. I support SCA 4. Thank you.

Thank you.

My name is Choy Pong. I come from San Francisco. Support SCA 4.

Thank you very much.

My name is Kos Balel. I'm from San Francisco. I strongly support SCA 4. Thanks.

Thank you.

Good morning, everyone. My name is Lisa Sang from San Francisco. I strongly support SCA 4. Thank you.

Thank you very much.

Hi. I'm Weng Lee from Sacramento. I strongly support SCA 4. Thank you.

Thank you.

Hello. My name is Simon Lee from Sacramento. I support SCA 4.

Thank you very much.

Hi. My name is Mayna Yung. I'm a board member of Business and Housing Network with thousands of mom and pop owners throughout California, mostly immigrants. We are strongly in support of SCA 4.

Thank you very much.

My name is Winnie Fong from San Francisco, and I represent a lot of senior people who cannot drive over here, and they give me the word to let you know that they support SCA 4, and it's good not just for the owner, also for the tenants.

Thank you very much.

I'm from San Francisco. My name is Yama. Support SCA 4.

Thank you.

My name is Betty G. I'm from San Francisco. I'm a homeowner. I support SCA 4. Thank you.

Thank you very much.

Hello. My name is Suzanne L. Carlos.

You support SCA 4?

I support SCA 4. Please honor my father's legacy. Thank you.

Thank you very much.

Hi. My name is Bridget Dimambro. I'm from Saratoga, California, and I totally support this bill. Make sure it's radio--it's active. Thank you very much.

Thank you very much.

Good morning. I'm Eyu Riddell from Piedmont, California. Strongly support SCA 4. Please, support us. Thank you.

Thank you very much.

Hello. George Chechopoulos from Millbrae, California, San Mateo County. I'm a 45 year real estate broker, and I strongly support SCA 4. Thank you.

Thank you very much.

My name is John Barelier. I support SCA 4.

Thank you, sir. Appreciate it.

Jack Quay, Santa Clara County. Please vote yes on SCA 4. Thank you.

Good morning. My name is Carol Latia. I live in San Leandro. I inherited my parents' house upon their death in Oakland, so I rent the property. I keep the property taxes below what is normal. My tenants stay and stay and they're most appreciative--

Thank you very much. You support SCA 4. Thank you.

Hi. My name is Diana Snyder. I'm from Castro Valley, and on behalf of my small family business that's second generation and our family, we ask that you please support SCA 4 to continue small businesses.

Thank you.

Good morning. My name is Jennifer Kennedy. I'm from Pasadena, Los Angeles County, and Parents for Liberty, Pasadena, and am thrilled to support SCA 4. Thank you.

Thank you very much.

Hi. Denise Aguilar with Freedom Angels in support.

Thank you.

Hello. Tara Thornton, also Freedom Angels in support.

Thank you very much.

Hello. Mike Maciag from nearby Mountain View, California in a small music store yesterday patronizing this, and I learned the owner is praying that her 85-year-old landlord doesn't die so she can stay in business.

Thank you very much. You're in support. Yes, sir.

Madam Chair and Committee Members, Tobias Wolken with the California Taxpayers Association in support.

Thank you very much.

Scott Kaufman with the Howard Jarvis Taxpayers Association and on behalf of Tom Bordonaro, Assessor of San Luis Obispo County, Paul Dictos, Assessor of Fresno County, the Apartment Owners Association of California, the California Taxpayer Protection Committee, the Central Coast Taxpayers Association, Central Valley BizFed, Central Valley Taxpayers Association, the Coalition of Labor, Agriculture and Business.

Santa Barbara County, Coalition of Sensible Taxpayers, Contra Costa Taxpayers Association, Glendora Chamber of Commerce, Libertarian Party of Santa Clara County, Monterey County Farm Bureau, Orange County Taxpayers Association, Placer County Taxpayers Association, Pro-Small Biz California, San Luis Obispo County Farm Bureau, Silicon Valley Taxpayers Association, Solano County Taxpayers Association, Ventura County Taxpayers Association, San Luis Obispo County Farm Bureau, Western Manufactured Housing Communities Association in support.

Thank you very much.

Hi, my name is Gina C. Louis. Judge Quentin Kopp gives his apologies that he couldn't be here today, but the San Francisco Taxpayers Association supports SCA 4. Thank you.

Thank you very much. Is there anyone else in Room 1200 that would like to testify? We're going to move on to testimony in opposition. Is there anybody that would like to testify in opposition in Room 1200?

Thank you, Madam Chair and Senators. Doug Suburs here today on behalf of the California Professional Firefighters in respectful opposition to SCA 4. The California Professional Firefighters represents more than 34,000 career professional firefighters and emergency medical services personnel statewide across 180 locals. As you know, Proposition 19 was approved by the voters of California on November 3rd, 2020, and enacted several reforms to California's property tax law.

CPF supported Proposition 19 and was part of the stakeholder in the extensive legislative discussion around these policies over the last several years. I want to, I guess, focus on two portions of the property tax policy that was adopted in Proposition 19. First, Proposition 19 expanded provisions to protect homeowners and vulnerable groups such as seniors, wildfire victims, and severely disabled by expanding the ability for a homeowner to exercise a base year value transfer from one county to another.

This was also before the voters in Proposition 5 in 2018. Additionally, Proposition 19 included provisions to revise the property tax reassessment requirements on inherited properties. These important changes adjust how properties that are transferred between parents or grandparents and their children or grandchildren will be reassessed. Reforming intergenerational transfer policies were subject to significant legislative discussion and were subject to a 2017 LAO report which suggested the Legislature may want to revisit the inheritance exclusion.

Property tax revenue generated under Proposition 19 goes to local governments and the critical services they provide, including fire and other public safety services. The LAO performed an analysis on Proposition 19 and found that some of the provisions of the Proposition decrease property tax and others increase them, which on balance is likely to create a net positive on property tax collection collection. SCA 4 seeks to repeal portions of Proposition 19 that raise revenue and we believe will create a net property tax loss for local jurisdictions.

According to a recent BOE report, 2021-2022 property tax revenue increased four percent statewide and contributed billions to schools and billions to county, cities, and special districts. Property tax revenue is vital to support local services, including firefighting, emergency medical services personnel, and education. For these reasons, CPF is opposed to SCA 4 and respectfully urges your no vote.

Thank you very much. Is there anyone else that would like to testify in opposition?

Chair and Members, Vanessa Chavez with the California Association of Realtors in opposition to SCA 4. Enacted in 2020 by the voters, Proposition 19 allows wildfire victims, seniors, and severely disabled individuals to transfer the tax basis of their primary residence to a replacement dwelling of any value. Additionally, Proposition 19 implemented LAO's recommendation to revise the property tax inheritance exclusion. In 2017, the LAO reported on the intergenerational exclusion.

This report made a recommendation to the Legislature that they may want to reconsider revisiting the intergenerational exclusion and the goal of the policy. The Legislature responded to the recommendation through the introduction of SCA 3 [Hill] in 2019. This measure which largely mirrored the provisions enacted in Proposition 19 reflected the direction of the Legislature in trying to address two questions. One: how should this exemption be applied, and two: how to balance fairness to new and existing property owners.

The LAO analysis lamented that the intergenerational exclusion restricted the homes available to new property owners. As California continues its trend towards a more diverse group of new homeowners, limited housing inventory restricts the opportunities of emerging homeowners of living in certain communities due to the housing options available in their region.

Additionally, the LAO detailed that absent a change in the law, the number of inherited properties was likely to grow, finding that many inherited homes would be converted from primary residences to other uses instead of putting them on the market and making them available to families who live within the community those homes are located. Repealing the intergenerational exclusion upends carefully negotiated language and eliminates the opportunity to provide a permanent funding source to wildfire prevention efforts. For these reasons, we respectfully request your no vote on SCA 4. Thank you.

Good morning. Brandon. Brandon Knapp with California Tax Reform Association in opposition. Thank you.

Thank you very much. Is there anyone else in the room that would like to testify in opposition? Perfect timing.

Yes. James Michael Agpalo with AFSCME California in respectful opposition. Thank you.

Thank you very much. Is there anyone else in Room 1200 that would like to speak in opposition? Seeing none, we're going to move on to the teleconference line. Moderator, if you could queue up individuals to testify. I want to remind people that we've got 30 minutes. We were able to get through the last item in 30 minutes on the line, but it really requires cooperation. The more time you take--