(a)
This Chapter shall be known as the "Cannabis Business Tax."
(b)
The purpose of this Chapter is to adopt a business license tax, for
general revenue purposes, pursuant to Sections 37101 and 37100.5 of
the California Government Code, upon commercial cannabis businesses
that engage in business in the City of Santa Monica. The cannabis
business tax is levied based upon business gross receipts. It is not
a sales and use tax, a tax upon income, or a tax upon real property.
(c)
The cannabis business tax is a general tax enacted solely for general
governmental purposes of the City and not for specific purposes. All
of the revenue received by the City from the tax imposed by this Chapter
shall be placed into the City's general fund.
(Added by Measure HMP, 11/8/22)
The intent of this Chapter is to impose a business license tax
applicable to cannabis businesses that operate in the City of Santa
Monica, regardless of whether such business would have been legal
at the time this Chapter was adopted. Nothing in this Chapter shall
be interpreted to authorize or permit any business activity that would
not otherwise be legal or permissible under laws applicable to the
activity at the time the activity is undertaken.
(Added by Measure HMP, 11/8/22)
The following words and phrases shall have the meanings set
forth below, which shall govern the application and interpretation
of this Chapter.
means the use of cannabis or cannabis products by individuals
twenty-one years of age and older without the need for a physician's
recommendation or prescription.
shall include all activities engaged in or caused to be engaged
in within the City, including any commercial or industrial enterprise,
trade, profession, occupation, vocation, or livelihood, whether or
not carried on for gain or profit, but shall not include the services
rendered by an employee to their employer.
means all parts of the Cannabis sativa Linnaeus, Cannabis
indica, or Cannabis ruderalis, whether growing or not; the seeds thereof;
the resin, whether crude or purified, extracted from any part of the
plant; and every compound, manufacture, salt, derivative, mixture,
or preparation of the plant, its seeds, or resin. "Cannabis" also
means the separated resin, whether crude or purified, obtained from
cannabis. Cannabis does not include the mature stalks of the plant,
fiber produced from the stalks, oil or cake made from the seeds of
the plant, any other compound, manufacture, salt, derivative, mixture,
or preparation of the mature stalks (except the resin extracted therefrom),
fiber, oil, or cake, or the sterilized seed of the plant which is
incapable of germination. For the purpose of this Chapter, cannabis
shall also include "industrial hemp" or "hemp" products or products
containing psychoactive cannabinoids, including cannabinoids derived
from industrial hemp.
means any commercial activity involving cannabis, including
but not limited to cultivating, transporting, distributing, manufacturing,
compounding, converting, processing, preparing, storing, packaging,
delivering, testing, dispensing, retailing and wholesaling of cannabis
or cannabis products, whether or not carried on for gain or profit.
means the tax due pursuant to this Chapter 6.204 for operating a cannabis business in Santa Monica or otherwise engaging in commercial cannabis activity within the City.
means raw cannabis that has been transformed into a concentrate,
an edible product, or a topical product. It also means marijuana products
as defined by Section 11018.1 of the California Health and Safety
Code and is not limited to medical cannabis products.
means all areas occupied by any portion of a cannabis plant
whether contiguous or noncontiguous on any one site. When plants occupy
multiple horizontal planes (as when plants are placed on shelving
above other plants) each plane shall be counted as a separate canopy
area.
means the City of Santa Monica.
means the Santa Monica Municipal Code.
means any commercial activity involving the planting, growing,
harvesting, drying, curing, grading, or trimming of cannabis and includes,
but is not limited to, the operation of a nursery.
means the commercial transfer of cannabis or cannabis products
to a customer. "Delivery" also includes the use by a retailer of any
technology platform owned and controlled by the retailer.
means the Director of Finance for the City of Santa Monica
or the Director of Finance's designee(s).
means the procurement, sale, and transport of cannabis and
cannabis products between persons engaged in commercial cannabis activity.
means each and every person engaged in the operation or conduct
of any business, whether as owner, member of the owner's family, partner,
associate, agent, manager or solicitor, and each and every other person
employed or working in such business for a wage, salary, commission,
barter or any other form of compensation.
means the commencing, conducting, operating, managing, or
carrying on of a cannabis business, whether done as an owner, or by
means of an officer, agent, manager, employee, or otherwise, whether
operating from a fixed location in the City or coming into the City
from an outside location to engage in such activities. A person shall
be deemed engaged in business if any of the following apply:
Such person or person's employee maintains a fixed place of
business within the City for the benefit or partial benefit of such
person;
Such person or person's employee owns or leases real property
within the City for business purposes;
Such person or person's employee regularly maintains a stock
of tangible personal property in the City for sale in the ordinary
course of business;
Such person or person's employee regularly conducts solicitation
of business within the City; or
Such person or person's employee performs work or renders services
in the City.
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The foregoing specified activities shall not be a limitation
on the meaning of "engaged in business."
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means evidence such as, without limitation, use of signs,
circulars, cards or any other advertising media, including the use
of internet or telephone solicitation, or representation to a government
agency or to the public that such person is engaged in business in
the City for the purpose of operating a cannabis business.
shall include the total of amounts actually received or receivable
from all sales and the total of amounts actually received or receivable
for the performance of any act or service, of whatever nature it may
be, for which a charge is made or credit allowed, whether or not such
act or service is done as a part of or in connection with the sale
of materials, goods, wares, or merchandise. Included in "gross receipts"
shall be all receipts, cash, credits and property of any kind or nature,
without any deduction therefrom on account of the cost of the property
sold, the cost of the materials used, labor or service costs, interest
paid or payable, or losses, or other expense whatsoever. Excluded
from "gross receipts" shall be the following:
Cash discounts allowed and taken on sales;
Any tax required by law to be included in or added to the purchase
price and collected from the consumer or purchaser;
Such part of the sale price of property returned by purchasers
upon rescission of the contract of sale as is refunded either in cash
or by credit;
Whenever there are included within the gross receipts amounts
which reflect sales for which credit is extended and such amount proved
uncollectible in a subsequent year, those amounts may be excluded
from the gross receipts in the year they prove to be uncollectible;
provided, however, if the whole or portion of such amounts excluded
as uncollectible are subsequently collected they shall be included
in the amount of gross receipts for the period when they are recovered;
and
Receipts of refundable deposits, except that such deposits when
forfeited and taken into income of the business shall not be excluded.
means an agricultural product, whether growing or not, that
is limited to types of the plant Cannabis sativa L. and any part of
that plant as defined in Section 81000 of the State Food and Agricultural
Code or Section 11018.5 of the State Health and Safety Code.
means a person that conducts the production, propagation, compounding, blending, extracting, infusing, or otherwise causes to be prepared a cannabis product. A person engaged in light manufacturing is a manufacturer for purposes of this Chapter 6.204.
means cannabis, as that term is defined in this Chapter 6.204.
means the use of cannabis or cannabis products pursuant to
a physician's recommendation or prescription to treat a medical condition.
means an individual, firm, partnership, joint venture, association,
corporation, limited liability company, estate, trust, business trust,
receiver, syndicate, or any other group or combination acting as a
unit, whether organized as a nonprofit or for-profit entity, and includes
the plural as well as the singular number.
means any sale, exchange, or barter or other transaction
for any consideration.
means the State of California.
means a cannabis business that: (1) offers or performs tests
of cannabis or cannabis products; (2) offers no service other than
such tests; (3) sells no products, excepting only testing supplies
and materials; (4) is accredited by an accrediting body that is independent
from all other persons involved in the cannabis industry in the State;
and (5) is registered with the State Department of Public Health.
(Added by Measure HMP, 11/8/22)
(a)
Upon the effective date of this Chapter there is established and
imposed upon each person who is engaged in business as a cannabis
business an annual cannabis business tax at the rates set forth in
this Chapter. Such tax is payable regardless of whether the business
has been issued a permit and is operating lawfully in the City, or
is operating unlawfully. The City's acceptance of payment of the cannabis
business tax required herein from a cannabis business operating unlawfully
in the City shall not constitute the City's approval or consent to
such unlawful operations.
(b)
Adult-Use Non-Medicinal Cannabis Retailers. The cannabis
business tax upon every person who engages in business as a retailer
of adult-use non-medicinal cannabis or adult-use non-medicinal cannabis
products shall be at the tax rate of three percent of the gross receipts
derived from the retail sale of adult-use non-medicinal cannabis or
adult-use non-medicinal cannabis products. Such tax rate may increase
or decrease by resolution adopted by the City Council but shall not
exceed the maximum tax rate of ten percent without voter approval.
(c)
Medicinal Cannabis Retailers. The cannabis business
tax upon every person who engages in business as a retailer of medicinal
cannabis or medicinal cannabis products shall be at the tax rate of
two percent of the gross receipts derived from the retail sale of
medicinal cannabis or medicinal cannabis products. Such tax rate may
increase or decrease by resolution adopted by the City Council but
shall not exceed the maximum tax rate of ten percent without voter
approval.
(d)
Distribution, Manufacturing, Cultivation, or Laboratory Testing. The cannabis business tax upon every person who engages in business
and where such business primarily involves the distribution, or the
manufacturing, or the cultivation, or laboratory testing of cannabis
or cannabis products, shall be at the tax rate of one percent of the
gross receipts derived from such distribution, manufacturing, cultivation,
or laboratory testing of cannabis or cannabis products. Such tax rate
may increase or decrease by resolution adopted by the City Council
but shall not exceed the maximum tax rate of ten percent without voter
approval.
(Added by Measure HMP, 11/8/22)
The provisions of this Chapter shall not apply to personal cannabis
cultivation as defined in the Medicinal and Adult Use Cannabis Regulation
and Safety Act. This Chapter shall not apply to personal use of cannabis
that is specifically exempted from state licensing requirements, that
meets the definition of personal use or equivalent terminology under
State law, and for which the individual receives no compensation whatsoever
related to that personal use.
(Added by Measure HMP, 11/8/22)
The cannabis business tax established under this Chapter shall
be imposed and payable on an annual basis, and shall be subject to
arrears, and collected by the Director in a manner consistent with
the following:
(a)
Each cannabis business shall, on or before June 30th of each fiscal
year, prepare and submit a tax statement on the form prescribed by
the Director and remit to the Director the cannabis business tax due.
(b)
Tax statements and payments for all outstanding cannabis business
tax owed to the City are immediately due and payable to the Director
upon the cessation of a cannabis business.
(c)
The Director may, at his or her discretion, establish shorter reporting
and payment periods for any taxpayer as the Director reasonably deems
necessary to ensure collection of the tax.
(Added by Measure HMP, 11/8/22)
(a)
Any person who fails or refuses to pay any cannabis business tax
required to be paid pursuant to this Chapter on or before the due
date shall pay penalties as follows:
(1)
A penalty of twenty percent of the cannabis business tax due, in
addition to the amount of the tax, who fail to pay the cannabis business
tax prior to September 1st ("delinquent date").
(2)
An additional penalty of ten percent of the cannabis business tax
due shall be added for each month or portion thereof that said tax
remains unpaid after the delinquent date. In no case, however, shall
the penalty exceed one hundred percent of the original cannabis business
tax due.
(b)
To the extent permitted by law, the Director may establish rules
and regulations that establish an applicable interest rate. The Director
of Finance shall have the power to reduce or waive any penalty or
interest applicable under this Chapter so long as such reduction or
waiver is in writing and in compliance with any City-issued rules
or regulations concerning this Chapter. Any request for reduction
or waiver of any penalty or interest assessed pursuant to this Chapter
shall be made in writing no later than thirty days following the assessment
of such penalty or interest.
(c)
Whenever a check or electronic payment is submitted in payment of
a cannabis business tax and the payment is subsequently returned unpaid
by the bank, the taxpayer will be liable for the tax amount due plus
any fees, penalties, and interest as provided for in this Chapter,
and any other amount allowed under State law.
(Added by Measure HMP, 11/8/22)
(a)
It shall be the duty of the Director to collect the taxes, penalties,
interest, and fees provided for herein, and to perform the duties
required by this Chapter.
(b)
For purposes of the administration and enforcement of this Chapter,
the Director may from time to time promulgate such administrative
interpretations, rules, and procedures consistent with the purpose,
intent, and express terms of this Chapter as he or she deems reasonably
necessary to implement or clarify such provisions or aid in enforcement,
including, but not limited to:
(1)
Provided to all cannabis business taxpayers forms for the reporting
of the tax;
(2)
Provide information to any taxpayer concerning the provisions of
this Chapter;
(3)
Receive and record all taxes remitted to the City as provided in
this Chapter;
(4)
Maintain records of taxpayer reports and taxes collected pursuant
to this Chapter;
(5)
Assess penalties and interest to taxpayers pursuant to this Chapter;
(6)
Determine amounts owed and enforce collection pursuant to this Chapter;
and
(7)
Identify a designee of the Director for any section of this Chapter
referring to the Director.
(c)
The Director may as a courtesy send a tax notice to the cannabis
business. However, the Director is not required to send a delinquency
or other notice or bill to any person subject to the provisions of
this Chapter. Failure to send such notice or bill shall not affect
the validity of any tax or penalty due under the provisions of this
Chapter.
(Added by Measure HMP, 11/8/22)
The procedure for challenging a business license tax, as provided in Chapter 6.16 of the Code, shall apply to the cannabis business tax established by this Chapter. Subject to the limitations provided in Chapter 6.16, any appeal relating to a cannabis business tax must be taken within the time and manner set forth in Chapter 6.16.
(Added by Measure HMP, 11/8/22)
This tax is intended to be applied in a manner consistent with
the Constitution of the United States and the Constitution of California
and California law. None of the tax provided for by this Chapter shall
be applied in a manner that causes an undue burden upon interstate
commerce, a violation of the equal protection or the due process clauses
of the Constitutions of the United States or California, or a violation
of any other provision of California law. If a person believes that
the cannabis business tax, as applied to him or her, is impermissible
under applicable law, he or she may request that the Director release
him or her from the obligation to pay the impermissible portion of
the tax.
(Added by Measure HMP, 11/8/22)
If a cannabis business subject to the tax required under this
Chapter is operating both within and outside the City, it is the intent
of the City to apply the cannabis business tax so that the measure
of the tax fairly reflects the proportion of the taxed activity actually
carried on in the City. To the extent Federal or State law requires
that any tax due from any taxpayer be apportioned, the taxpayer may
indicate said apportionment on his or her tax return. The Director
may promulgate administrative procedures for apportionment as he or
she finds reasonably useful or necessary.
(Added by Measure HMP, 11/8/22)
(a)
For the purpose of ascertaining the amount of cannabis business tax
owed, or verifying any representations made by any taxpayer to the
City in support of his or her tax calculation, the Director shall
have the power to inspect any location where commercial cannabis activity
occurs and to audit and examine all books and records (including,
but not limited to, bookkeeping records, State and Federal income
tax returns, and other records relating to the gross receipts of the
business) of persons engaged in a cannabis business. In conducting
such investigation, the Director shall have the power to inspect any
equipment, such as computers or point of sale machines that may contain
such records.
(b)
It shall be the duty of every person liable for the collection and
payment to the City of any tax imposed by this Chapter to keep and
preserve, for a period of at least five years, all records as may
be necessary to determine the amount of such tax as he or she may
have been liable for the collection of and payment to the City, which
records the Director shall have the right to inspect at all reasonable
times.
(Added by Measure HMP, 11/8/22)
(a)
The payment of a cannabis business tax required by this Chapter,
and its acceptance by the City, shall not entitle any person to carry
on any cannabis business unless the person has complied with all of
the requirements of this Code and all other applicable State laws.
(b)
No tax paid under the provisions of this Chapter shall be construed
as authorizing the conduct or continuance of any illegal or unlawful
business, or any business in violation of any local or State law.
(Added by Measure HMP, 11/8/22)
(a)
Nothing contained in this Chapter shall be deemed to repeal, amend,
be in lieu of, replace or in any way affect any requirements for any
permit or license required by, under or by virtue of any other provision
of this Code or any other ordinance or resolution of the City Council,
nor be deemed to repeal, amend, be in lieu of, replace or in any way
affect any tax, fee, or other charge imposed, assessed or required
by, under or by virtue of any other provision of this Code or any
other ordinance or resolution of the City Council. Any references
made or contained in any other Chapter of this Code to any licenses,
license taxes, fees, or charges, or to any schedule of license fees,
shall be deemed to refer to the licenses, license taxes, fees or charges,
or schedule of license fees, provided for in such other Chapter of
this Code.
(b)
Notwithstanding subsection (a) of this Section, a business subject to the cannabis business tax shall not be required to pay the business license tax required by Section 6.12.010 of Chapter 6.12 of this Code, solely with respect to business activities that are subject to the cannabis business tax. A business that engages in activities that are subject to the cannabis business tax and activities that are not subject to the cannabis business tax must: (1) obtain business licenses for each location or business activity as provided in Chapter 6.04 of the Code; and (2) pay the business license tax, as applicable, to the activities that are not subject to the cannabis business tax.
(Added by Measure HMP, 11/8/22)
(a)
If the Director is not satisfied with the return or returns of cannabis
business taxes, or the amount of the taxes paid to the City by any
person, the Director may compute and determine the amount required
to be paid upon the basis of the facts contained in the return or
returns or upon the basis of any information within the Director's
possession or that may come into the Director's possession. One or
more deficiency determinations may be made of the amount due for one
or more than one period. The amount of each deficiency determination
is immediately due and payable. Each determination shall become final
and delinquent one calendar month after notice thereof as herein provided.
The Director shall give written notice of a deficiency determination
to each person against whom a determination is made. The notice may
be served personally, electronically, or by US mail. In case of service
by mail of any notice required by this Chapter, the service is complete
at the time of deposit in the mail.
(b)
If any person fails or refuses to make, within the time provided
in this Chapter, any return or payment of said tax or any portion
thereof required by this Chapter, or makes a fraudulent return or
otherwise willfully attempts to evade this Chapter, the Director shall
proceed in such manner as he or she may deem best to obtain facts
and information on which to estimate the taxes due. As soon as the
Director procures facts and information upon which to base the assessment
of any tax imposed by this Chapter, the Director shall determine and
assess against such person the taxes, interest and penalties provided
for by this Chapter. When such a determination is made, the Director
shall give written notice of the amount so assessed. Such determination
and notice shall be made and mailed within three years after discovery
by the Director of any fraud, intent to evade, or failure to file
a return. The amount of each deficiency determination is immediately
due and payable. Any determination shall become final and delinquent
one calendar month after notice thereof as herein provided.
(c)
If the Director believes that the collection of any cannabis business tax will be jeopardized by delay, or if any determination will be jeopardized by delay, the Director shall thereupon make a determination of the taxes due. The amount determined is immediately due and payable. If the amount specified in the determination is not paid within ten days after service of notice thereof upon the person against whom the determination is made, the amount becomes final and delinquent, and the delinquency penalty or penalties and the interest provided in Section 6.204.070 shall attach to the amount of the taxes, unless a petition for redetermination is filed within the ten days.
(Added by Measure HMP, 11/8/22)
(a)
Any person directly interested may request a redetermination within
one calendar month after service of notice thereof. If a request for
redetermination is not filed within the applicable period, the determination
becomes final and delinquent at the expiration of the period.
(b)
If a request for redetermination is made within the applicable period,
the Director shall reconsider the determination, and, if the person
has so requested in their petition, shall grant the person an oral
hearing and shall give the person ten days' notice of the time and
place of the hearing. The Director may continue the hearing from time
to time as may be necessary.
(c)
The Director may decrease or increase the amount of the determination
before it becomes final but the amount may be increased only if a
claim for the increase is asserted by the Director at or before the
hearing.
(d)
The decision of the Director upon a petition for redetermination
becomes final and delinquent fifteen days after service upon the petitioner
of notice thereof.
(Added by Measure HMP, 11/8/22)
(a)
Under any of the following circumstances, the Director may make and
give notice of an assessment of the amount of tax owed by a person
under this Chapter at any time:
(2)
If the person has not paid the cannabis business tax due under the
provisions of this Chapter;
(3)
If the person has not, after notice from the Director, filed a corrected
statement, or furnished to the Director adequate substantiation of
the information contained in a statement already filed, or paid any
additional amount of tax due under the provisions of this Chapter;
or
(4)
If the Director determines that the nonpayment of any cannabis business
tax is due to fraud, a penalty of twenty-five percent of the amount
of the tax shall be added thereto in addition to penalties and interest
otherwise stated in this Chapter and other penalties allowed by law.
(b)
The notice of assessment shall separately set forth the amount of
any tax known by the Director to be due or estimated by the Director,
after consideration of all information within the Director's knowledge
concerning the business and activities of the person assessed, to
be due under each applicable section of this Chapter and shall include
the amount of any penalties or interest accrued on each amount to
the date of the notice of assessment.
(Added by Measure HMP, 11/8/22)
The notice of tax assessment in Section 6.204.170 shall be served upon the person either by personal delivery, or by a deposit of the notice in the United States mail, postage prepaid thereon, addressed to the person at the address of the location of the business or to such other address as he or she shall register with the City for the purpose of receiving notice under this Chapter; or, should the person have no address registered with the Director for such purpose, then to such person's last known address. For the purposes of this Section, service by mail shall be deemed to have occurred at the time of deposit in the mail.
(Added by Measure HMP, 11/8/22)
(a)
Whenever the amount of any cannabis business tax, penalty, or interest
has been overpaid, paid more than once, or has been erroneously or
illegally collected or received by the City under this Chapter, it
may be refunded to the claimant who paid the tax provided that a written
claim for refund is filed with the Director within one year of when
the payment was made, and all applicable provisions of this Chapter
are satisfied.
(b)
The Director shall have the right to examine and audit all the books
and business records of the claimant for a refund under this Chapter,
in order to determine the eligibility of the claimant to the claimed
refund. No claim for refund shall be allowed if the claimant refuses
to allow such examination of claimant's books and business records
after request by the Director to do so. In the event that the cannabis
business tax was erroneously paid and the error is attributable to
the City, the City shall refund the amount of tax erroneously paid
up to one year from when the error was identified.
(Added by Measure HMP, 11/8/22)
The conviction and punishment of any person for failure to pay
the required cannabis business tax shall not excuse or exempt such
person from any civil action for the tax debt unpaid at the time of
such conviction. No civil action shall prevent a criminal prosecution
for any violation of the provisions of this Chapter or of any State
law requiring the payment of all taxes.
(Added by Measure HMP, 11/8/22)
Any person violating any of the provisions of this Chapter shall
be guilty of a misdemeanor.
(Added by Measure HMP, 11/8/22)
All remedies and penalties prescribed by this Chapter, or which
are available under any other provision of the Santa Monica Municipal
Code and any other provision of law or equity, are cumulative. The
use of one or more remedies by the City shall not bar the use of any
other remedy for the purpose of enforcing the provisions of this Chapter.
(Added by Measure HMP, 11/8/22)
