ARTICLE 4. Licenses [56181. - 56196.]

Cal. Food and Agricultural Code - FAC 4.
in effect

Cal. Food and Agricultural Code - FAC § 56181. Section 56181.

Except as otherwise provided in Section 55610, any person engaged in the business of buying, receiving on consignment, soliciting for sale on commission, or negotiating the sale of farm products from a licensee or producer for resale shall be licensed as provided in this chapter.

Cal. Food and Agricultural Code - FAC § 56182. Section 56182.

Any person required by Section 56181 to be licensed shall file an application with the director for a license to transact business before engaging in such business. The application shall be accompanied by the application fee which is provided in Article 17 (commencing with Section 56571) of this chapter.

Cal. Food and Agricultural Code - FAC § 56182.5. Section 56182.5.

(a) It is unlawful for a licensee that has changed its legal entity to do any of the following: (1) Continue to operate after the change. (2) Purchase or handle any farm product from a person who had a farm product contract with the former licensee at the time of the change in entity without notifying that person, in writing, of the change in entity. (3) Use any invoice, contract, or other document associated with the purchase, consignment, or brokerage of any farm product that identifies the former licensee unless the new entity is conspicuously identified on the same invoice, contract, or other document as the entity responsible for the transaction. (b) The new entity shall notify the director in writing of the change in legal entity within 15 days of the change. The new legal entity shall, before it conducts business that requires a license, obtain a new license for the business. (c) Notwithstanding subdivision (b), if a licensee conducts business without a new license as a result of a change of legal entity, it may, within 120 days of the change, upon a showing of no substantial change in financial resources and liabilities, petition the director to grant a new license retroactive to the first day of the month during which the change occurred, and the director may grant the license with retroactive effect upon a finding that doing so would be consistent with the purposes of this chapter. Upon granting the petition, the director shall (1) require the licensee to pay an additional fee in an amount that will cover the expenses of the department in the matter, but not to exceed the fee for a new license, (2) place conditions on the license that are consistent with the purposes of this chapter as the director deems appropriate, and (3) require the licensee to pay an amount, for deposit in the Farm Products Trust Fund, equal to the amount that would have been required had the license been obtained in accordance with subdivision (b).

Cal. Food and Agricultural Code - FAC § 56182.6. Section 56182.6.

(a) If the Secretary of State suspends the corporate status of any licensee or if the corporate status is forfeited, the license is revoked by operation of law. The former licensee shall provide written notice of the suspension or forfeiture to the director, and to each person with whom it has a farm product contract, within 15 days of the date the Secretary of State mails the notice of suspension or forfeiture. (b) The former licensee, may, upon a showing of no substantial change in financial resources and liabilities, and within 90 days of the suspension or forfeiture of corporate status, petition the director for an order to reissue its license formerly held under this chapter. If the corporate status has been reinstated by the Secretary of State, the director may reissue the license if the director finds that doing so would be consistent with the purposes of this chapter. As a condition to reissuing the license, the director may (1) require the former licensee to undertake such financial guarantees, including the filing and maintaining of bonds, as the director deems necessary to protect the interests of contracting parties and (2) impose other conditions on the license that are consistent with the purposes of this chapter as the director deems appropriate.

Cal. Food and Agricultural Code - FAC § 56183. Section 56183.

The application shall in each case state all of the following: (a) Every class of farm products which the applicant proposes to handle. (b) The full name of the person that is applying for such license. If the applicant is a firm, exchange, association, or corporation, the full name of each member of the firm, or the names of the officers of the exchange, association, or corporation shall be given in the application. (c) The principal business address of the applicant in this state and elsewhere. (d) The name of each person authorized to receive and accept service of summons and legal notices of all kinds for the applicant.

Cal. Food and Agricultural Code - FAC § 56183.5. Section 56183.5.

(a) An initial application, at a minimum, shall include the following: (1) A release authorizing the department, during consideration of the application and for the duration of licensure, to have access to and obtain financial information from both of the following: (A) The applicant’s files with credit reporting agencies. (B) The applicant’s files with banks, savings and loan associations, or any other financial institutions with whom the applicant has done business in the past or with whom the applicant intends to do business during the year of licensure. (2) A notice signed by the applicant that the department may obtain criminal record information during the course of a licensing investigation or upon presentation with a reasonable basis to believe the licensee has been convicted of a crime. An applicant whose application is incomplete shall be given written notice that a failure to complete it within 60 calendar days shall result in denial of the application. (b) The documents and information procured pursuant to this section shall be considered the records of a consumer and shall not be construed to be a public record. The documents and information shall remain confidential, except in actions brought by the department to enforce this division, or as a result of the issuance of a subpoena in accordance with Section 1985.4 of the Code of Civil Procedure. The unauthorized release of the documents received from the Department of Justice or the information contained in those documents is a misdemeanor. (c) The department shall adopt regulations that specify the proper and necessary information and supporting documentation the department requires for an application to be considered complete.

Cal. Food and Agricultural Code - FAC § 56184. Section 56184.

In addition to the general requirements which are applicable to all applications as set forth in this article, the following requirements shall apply to each applicant who engages in the designated activity: (a) Each applicant who intends to engage in business as a commission merchant shall include a complete schedule of commissions, together with an itemized listing of all charges for all services. Such designated commissions and charges shall not be changed or varied except by written contract between the parties. If changed by a written contract, such charges shall be clearly set forth in detail in such written contract. Any services which are rendered for which charges are made, if not listed in the schedule on the application, shall be rendered on a strictly cost basis. (b) Each application for an agent’s license shall include such information as the director may consider proper or necessary, and shall include the name and address of applicant, and the name and address of the licensee that is represented or sought to be represented by the agent, and the written endorsement or nomination of such licensee.

Cal. Food and Agricultural Code - FAC § 56185. Section 56185.

The department shall accept or deny an application within 90 calendar days of receipt of a completed application. The department may deny, condition, suspend, or revoke a license issued pursuant to this chapter upon any of the following grounds and in the manner provided in this chapter: (a) Upon one flagrant violation, as determined by the department, or upon repeated violations, by the holder or applicant, of any one or combination of the sections of this division or under any one or combination of the regulations promulgated by the department under the authority of this division. (b) Upon one flagrant violation, as determined by the department, or upon repeated violations, by a holder’s or applicant’s agent, employee, or contractor, or of an organization or entity in which the holder or applicant holds a significant financial interest, of any one or combination of the sections of this division or any one or combination of the regulations promulgated under this division under circumstances where the holder or applicant knew or should have known and failed to take reasonable measures to prevent the violation or failed to report the violation to the department upon learning of the violation. (c) Upon the conviction of the holder or applicant of a crime that includes as one of its elements the financial victimization of another person. However, if the licensee was licensed prior to January 1, 1998, and the department knew of, or was on notice of, the conviction, that conviction may not form the basis of a disciplinary action under this subdivision. (d) On the grounds of a false or misleading statement by a holder or applicant that the holder or applicant knew or should have known to be false or misleading, directed to any official of any government concerning the scope of any indicia of authority, including, but not limited to, the holder’s or applicant’s license associated with the holder’s or applicant’s business, the standards under which the indicia was authorized, the contents of the application for licensure, or the holder’s or applicant’s relationship to the indicia. (e) On the grounds that a holder or applicant, or a holder’s or applicant’s agency, employee, or contractor, or an organization or entity in which a holder or applicant holds a significant financial interest, deceived a grower in any material matter. Deception, for purposes of this subdivision, does not require scienter, but requires active misrepresentation where the actor knew the representation to be false or where the actor should have known, with due consideration, that he or she did not know whether or not the representation was true or false.

Cal. Food and Agricultural Code - FAC § 56185.5. Section 56185.5.

(a) The Legislature finds there to be a substantial nexus between the conduct specified in Section 56185 and an applicant’s or holder’s fitness for licensure. (b) The department shall not dismiss an action where a violation, however minor, has been established. The department shall not dismiss an action because the applicant or holder establishes factors in mitigation. (c) However, the department may impose discipline other than denial or revocation of the license. As an alternative to revocation of a license, the department may stay a revocation subject to terms for a period of probation. As an alternative to denial the department may issue a license subject to conditions. Terms of probation or terms of conditional licensure may include, but are not limited to, a requirement of restitution, payment for extra audits, immediate revocation on a new violation, or any other terms that respond to the particular violations or circumstances found. (d) Once a finding of a violation has been made, the department may consider the following factors in assessing the appropriate level of discipline: (1) The relative isolation or infrequency of the conduct. (2) Whether the conduct was a part of a pattern or practice. (3) Whether the actor had been warned before. (4) Whether the actor considered the consequences of the conduct. (5) Whether the actor reasonably relied on others. (6) The severity of the consequences. (7) The mens rea of the actor. (8) In the case of a criminal conviction, evidence of rehabilitation. (9) The total licensing history. (e) The following factors shall not be considered in assessing the appropriate level of discipline: (1) The social or economic contributions of the applicant or holder. (2) General testimonials as to good character and worthiness to be licensed. (3) Economic hardship on the licensee. (4) “Mercy of the court” pleas in connection with criminal convictions, pattern or practice violations, or deception. (5) In the case of a felony criminal conviction, the department shall not consider rehabilitation unless the convicted person has a valid certificate of rehabilitation.

Cal. Food and Agricultural Code - FAC § 56185.75. Section 56185.75.

(a) If an application for a license indicates, or the department determines during the application review process, that the applicant was issued a license that was revoked within the preceding two years, the department shall cease any further review of the application until two years have elapsed from the date of the revocation. The cessation of review shall not constitute a denial of the application for the purposes of this chapter, or any other provision of law. (b) If an application for a license indicates, or the department determines during the application review process, that the applicant had previously applied for a license and the application was denied within the last year, the department shall cease further review of the application until 30 days have elapsed from the date of the notification of the denial or from the effective date of the decision and order of the department upholding a denial. The cessation of review shall not constitute a denial of the new applicant for purposes of this chapter, or any other provision of law. (c) Nothing in subdivision (a) or (b) prohibits the department from taking into account the basis for denial or revocation in considering any new application subsequent to the elapse of the applicable period of prohibition.

Cal. Food and Agricultural Code - FAC § 56186. Section 56186.

The department shall require the applicant to make a showing of character, responsibility, and good faith in seeking to carry on the business that is stated in the application, and may make investigations, hold hearings, and make determinations respecting such matters.

Cal. Food and Agricultural Code - FAC § 56186.5. Section 56186.5.

A license is forfeited by operation of law prior to its expiration date when one of the following occurs: (a) The holder surrenders the license to the department. (b) The holder dies. (c) The partnership holder dissolves. (d) The holder of a significant financial interest in a corporation transfers his or her interest to another person or entity, regardless of relationship. (e) The holder files for bankruptcy under provisions other than those permitting and governing reorganization under bankruptcy.

Cal. Food and Agricultural Code - FAC § 56186.75. Section 56186.75.

(a) The withdrawal of an application for a license after it has been filed with the department does not deprive the department of its authority to institute or continue a proceeding against the applicant or to enter an order denying the license, unless the department consents in writing to such a withdrawal. (b) The expiration or forfeiture by operation of law of a license, or its forfeiture or cancellation by order of the department or by order of a court of law, or its surrender without the written consent of the department, does not deprive the department of its authority to institute or continue a disciplinary proceeding against the holder upon any ground provided by law or to enter an order revoking the license or otherwise taking disciplinary action against the holder. (c) Any action brought by the department against an applicant or holder does not abate by reason of the sale or other transfer of ownership of the business that is a party to the action, except with the written consent of the department. (d) Nothing in this division or in any other provision of this code deprives the department of the authority to settle or adjudicate a disposition of a case other than by revocation or denial. The department or the department’s designee may compromise with the applicant or holder in a written stipulation and order. The department may, following a hearing, order probation on terms and conditions as determined by the department. The authority conferred by this subdivision shall include, but not be limited to, the authority to order payment of amounts determined owing, the authority to dismiss an action on the department’s own initiative, the authority to order administrative penalties, the authority to order a respondent to pay for heightened audit scrutiny, the authority to suspend a license for a period of years, or any combination of remedies other than final revocation or denial of a license.

Cal. Food and Agricultural Code - FAC § 56189. Section 56189.

Any person who is adjudicated liable for payment of a claim for farm products that arose out of the conduct of a business licensed or requiring a license under this chapter or Chapter 6 (commencing with Section 55401), and who has not made full settlement with all producer-creditors, shall not be licensed by the director as a principal for four years from the date of the adjudication.

Cal. Food and Agricultural Code - FAC § 56189.2. Section 56189.2.

In addition to the other requirements of this chapter, each application for a license, except for a cash buyer’s license, shall include an affidavit in which the applicant affirms that he or she is current in making all payments required under undisputed contract agreements, and that he or she will do all of the following: (a) Abide by all provisions of this chapter and Chapter 6 (commencing with Section 55401). (b) Will prepare and retain financial records adequate to document all transactions with suppliers. (c) Will prepare and retain current financial information, including, but not limited to, profit-and-loss statements and a balance sheet that presents fairly the financial condition as of the applicant’s most recent yearend. The affidavit shall be on a form prescribed by the secretary and shall be submitted under penalty of perjury.

Cal. Food and Agricultural Code - FAC § 56189.5. Section 56189.5.

(a) Licensees or applicants for a license shall be required to furnish and maintain a surety bond in a form and amount satisfactory to the director, if within the preceding four years the director determines that they have done any of the following: (1) Engaged in conduct which demonstrates a lack of financial responsibility including, but not limited to, delinquent accounts payable, judgments of liability, insolvency, or bankruptcy. (2) Failed to assure future financial responsibility unless a surety bond is posted. (3) Otherwise violated this chapter which resulted in license revocation. (b) The bond shall not be less than ten thousand dollars ($10,000) or 20 percent of the annual dollar volume of business based on farm product value returned to the grower, whichever is greater, as assurance that the licensee’s or applicant’s business will be conducted in accordance with this chapter and that the licensee or applicant will pay all amounts due farm products creditors. (c) The director, based on changes in the nature and volume of business conducted by the licensee, may require an increase or authorize a reduction in the amount of the bond, but in no case shall the bond be reduced below ten thousand dollars ($10,000). A licensee who is notified by the director to provide a bond in an increased amount shall do so within a reasonable time as specified by the director. If the licensee fails to do so, the director may, after notice and opportunity for hearing, suspend or revoke the license of any licensee.

Cal. Food and Agricultural Code - FAC § 56190. Section 56190.

(a) The department shall notify the applicant or holder in writing of the department’s decision to bring charges to deny, suspend, or revoke a license. (1) The notice shall inform the applicant or holder of the charges against him or her, of the department’s proposed disciplinary action, and of his or her rights under this chapter. (2) The notice shall be served by certified mail to the applicant or holder’s last known address. (3) Except where the license has been temporarily suspended, the notice shall be mailed to the applicant or holder at least 30 calendar days in advance of the impending action. (b) The department’s proposed action shall become final unless the applicant or holder appeals prior to the end of the notice period by submitting a notice of defense to the department in a form specified by the department. The notice shall be transmitted to the department in a form that is written, including, but not limited to, by facsimile. (c) If the department receives a timely notice of defense, the department shall schedule a hearing within 90 calendar days of receipt of the notice of defense, except where the license has been temporarily suspended. Pending the final decision at the conclusion of the hearing, a revocation shall be stayed. A temporary suspension shall not be stayed. (d) Proceedings for the revocation or denial of a license issued under this chapter shall be conducted by hearing officers appointed for that purpose by the department. The department may elect to use hearing officers employed by the Office of Administrative Hearings. The hearing officers shall be independent of the Market Enforcement Bureau, but may be employees of the department. The hearing officers shall be qualified administrative law judges. (e) Proceedings shall be conducted generally in accordance with the provisions of Chapters 4.5 (commencing with Section 11400) and 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. However, proceedings need not conform strictly to any “rules of court” adopted as regulations by the Office of Administrative Hearings to guide the conduct of hearings conducted by the Office of Administrative Hearings. The department has all power granted by Chapters 4.5 (commencing with Section 11400) and 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. (1) The sole parties to the proceedings shall be the department and the applicant or holder. Third party intervention shall not be permitted. The disputes, claims, and interests of third parties shall not be within the jurisdiction of the proceedings. However, nothing in this paragraph prohibits any interested party from submitting an amicus brief if the hearing officer requests written briefs. (2) The validity of a department regulation or order shall not be within jurisdiction of the proceedings. (3) Law and motion matters shall be handled by the assigned hearing officer. (4) The hearing officer may not enter into settlement discussions. (5) The hearing officer may not issue sanctions. (f) In all proceedings conducted in accordance with this section, the standard of proof to be applied is the preponderance of the evidence. When the department seeks to revoke an existing license, the department shall have the burden of proof and the burden of producing evidence. (g) Decisions following a hearing shall be adopted by the department or the department’s designee and become final unless remanded for reconsideration or alternated in accordance with Chapters 4.5 (commencing with Section 11400) and 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. (h) The department shall maintain a library of decisions that shall be made available to any person, including the parties to administrative actions during discovery.

Cal. Food and Agricultural Code - FAC § 56194. Section 56194.

The director shall issue to any individual or member of a partnership, a card which specifies that he or his firm is licensed. The licensee shall show such card upon the request of any interested person.

Cal. Food and Agricultural Code - FAC § 56195. Section 56195.

The director may also issue to each agent a separate card for each principal which the agent represents, which shall bear the signature of the agent. Any agent shall show the card upon the request of any interested person. Any agent that displays a void or expired license card is guilty of a misdemeanor, punishable as provided in Section 56631 of this chapter.

Cal. Food and Agricultural Code - FAC § 56196. Section 56196.

All indicia of the possession of a license are at all times the property of this state. Each licensee is entitled to the possession of them only for the duration of the license.
Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026

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