means all parts of the plant 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 division, "cannabis" does not mean "industrial hemp" as defined by Section 11018.5 of the California Health and Safety Code.

means any business, organization or facility, regardless of form, whether operating for profit or not for profit, that cultivates, possesses, manufactures, distributes, processes, stores, laboratory tests, packages, labels, delivers, and/or sells cannabis and/or cannabis products. "Cannabis business" does not include personal medical or adult cannabis cultivation authorized by state law or this code. A cannabis business shall not be considered to be a religious, social, or charitable organization exempt from the payment of business taxes under this chapter.

means the seeding, planting, watering, warming, cooling, growing, harvesting, drying, curing, grading or trimming of cannabis.

"Cannabis distribution"

means an entity engaged in the business of purchasing cannabis from a cultivator, or cannabis products from a manufacturer, for sale to a dispensary, excluding delivery as part of a retail sale.

"Cannabis manufacturing"

means the process of compounding, blending, extracting, infusing, or otherwise making or preparing a cannabis product.

"Cannabis product"

means cannabis that has undergone a process whereby the raw agricultural product has been transformed into a concentrate, an edible product, or a topical product.

"Cannabis retail"

means any cannabis business activity involving the retail sale to customers of cannabis and/or cannabis products, either individually or in any combination; for any purpose. "Cannabis retail" shall include cannabis delivery to a customer as part of a retail sale.

"City"

means the city of Palm Desert.

"Engaged in a cannabis business"

means the commencing, conducting, operating, managing or carrying on of a cannabis business and the exercise of corporate, franchise or other business powers, whether done as owner, or by means of an officer, agent, manager, employee, or other representative, within the city, whether operating from a fixed location within the city or coming into the city from an outside location to engage in cannabis business activities. By way of example, a person shall be deemed "engaged in cannabis business" within the city if such person or the person's officer, agent, manager, employee, or other representative acting on behalf of such person:

Maintains a fixed place of cannabis business within the city;

Owns, leases, or otherwise has the legal right to occupy real property within the city for cannabis business purposes;

Regularly maintains a stock of tangible personal property within the city in the ordinary course of cannabis business;

Performs work or renders cannabis business services to other cannabis businesses or to retail cannabis customers located within the city.

"Gross receipts"

means the total amount of monetary consideration actually received or receivable by a cannabis business for providing, at wholesale or retail, cannabis and/or cannabis products, for which a charge is made or credit allowed including, but not limited to: membership dues, the value of monetary and in-kind contributions, payments, reimbursement of fees or cultivation, processing, distribution, delivery, retail, storing, exchanging, processing, delivery, making available, or transmitting of cannabis or cannabis products, any payments made, and anything else of value obtained by a cannabis business. Included in "gross receipts" shall be all receipts, cash, credits, and property of any kind without deduction 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 expenses whatsoever. Gross receipts shall not include the following:

Maintains a fixed place of cannabis business within the city;

Owns, leases, or otherwise has the legal right to occupy real property within the city for cannabis business purposes;

Regularly maintains a stock of tangible personal property within the city in the ordinary course of cannabis business;

"Gross receipts"

Cash discounts where allowed and taken on sales;

Sales or other applicable state or local tax required by law to be added to the purchase price of cannabis or cannabis products and collected from the purchaser;

Such part of the sales price of any property returned by purchasers to the seller as refunded by the seller by way of cash or credit allowances or return of refundable deposits previously included in gross receipts; or

Whenever there are included within gross receipts amounts which reflect sales for which credit is extended and such amount proved uncollectable in a subsequent year, those amounts may be excluded from gross receipts in the year they prove to be uncollectable; provided, however, if all or any portion of such amounts excluded as uncollectible are subsequently collected, they shall be included in gross receipts for the period when they are recovered.

"Person"

means any 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, and the plural as well as the singular.

"Space utilized in connection with the cultivation of cannabis"

means any space or ground, floor, or other surface area (whether horizontal or vertical) that is used for cannabis germination, seeding, vegetation, preflowering, flowering, and harvesting; including, without limitation, activities such as growing, planting, lighting, warming, cooling, aerating, fertilizing, watering, irrigating, topping, pinching, cropping, curing, or drying cannabis, as well as storing any products, supplies or equipment related to any such activities, no matter where such storage may take place or such storage space may be located.

"State"

means the state of California.

"Tax administrator"

means the city's director of finance, or designee.

(Ord. 1339 § 1, 2018)

§ 3.50.020 Purpose of tax.

The purpose of this general tax is to establish a tax on cannabis businesses, the proceeds of which will be used for any unrestricted general revenue purposes which can and may include police protection, fire and paramedic services, street operations and maintenance, library services, parks and recreation services, and other general municipal services to the public.

(Ord. 1339 § 1, 2018)

§ 3.50.030 Imposition of tax.

Every person engaged in a cannabis business within the city of Palm Desert, and regardless of whether such business has a permit pursuant to Chapter 5.101, 25.16, 25.18, 25.34 or any other provision of this code, shall pay the following cannabis business tax:

Up to a maximum of twenty dollars per square foot of space utilized in connection with the cannabis cultivation businesses, subject to adjustment by the city council pursuant to Section 3.50.050.

Up to a maximum of three cents for each one dollar of gross receipts, or a fractional part thereof, for cannabis manufacturing businesses, subject to adjustment by the city council pursuant to Section 3.50.050.

Up to a maximum of fifteen cents for each one dollar of gross receipts, or a fractional part thereof, for cannabis retail businesses, subject to adjustment by the city council pursuant to Section 3.50.050.

No cannabis business shall be deemed to be exempt from the payment of the taxes identified above by any other provision of this code, unless expressly exempted under this chapter.

In the event that the city allows a cannabis retailer, cultivator, manufacturer, the business shall pay the cultivation square footage tax, if applicable, in addition, if applicable, to the highest business tax rate for any class that applies to that cannabis business, unless the cannabis business identifies to the city, by reasonable and verifiable standards, the portions of its activities that are tied to cannabis retail and those that are tied to manufacturing, through the cannabis business' books and records kept in the regular course of business, and in accordance with generally accepted accounting principles, and not specifically created and maintained for tax purposes. The cannabis business has the burden of proving the proper apportionment of taxes under this subsection C.

(Ord. 1339 § 1, 2018)

§ 3.50.040 Payment obligation.

All taxpayers subject to this chapter must pay the full tax imposed by this chapter regardless of any rebate, exemption, incentive, or other reduction set forth elsewhere in this code, except as required by California or federal law. Failure to pay the tax shall be subject to penalties, interest charges, and assessments as the city council may establish and the city may use any or all other code enforcement remedies provided in this code. No provision in this code can lower the tax rate set forth in this chapter or otherwise reduce the amount of taxes paid hereunder unless the provision specifically states that the reduction applies.

(Ord. 1339 § 1, 2018)

§ 3.50.050 City council authorization to adjust tax rate and/or methodology.

The city council may impose the tax authorized by this chapter at a lower rate and may otherwise repeal or amend this chapter without a vote of the people. However, as required by California Constitution Article XIIC (Proposition 218), voter approval is required for any amendment that would increase the maximum rate or methodology of any tax levied pursuant to this chapter. The people of the city of Palm Desert affirm that the following actions shall not constitute an increase of the maximum rate or methodology of the tax requiring subsequent voter approval:

The restoration of the rate of the tax to a rate that is no higher than the maximum set by this voterapproved chapter, if the city council has previously acted to reduce the rate of the tax;

An action that interprets or clarifies the methodology of the tax, or any definition applicable to the tax, so long as interpretation or clarification (even if contrary to some prior interpretation or clarification) is not inconsistent with the language of this chapter;

The establishment of a class of person or service that is exempt or excepted from the tax or discontinuation of such exemption or exception; and

Resuming collection of the tax imposed by this chapter, even if the city had, for some period of time, either suspended collection of the tax or otherwise failed to collect the tax, in whole or in part.

(Ord. 1339 § 1, 2018)

§ 3.50.060 Payment of tax does not authorize illegal activity.

The payment of the tax required pursuant to this chapter shall not be construed as authorizing the conduct or continuance of any illegal business or of a legal business in an illegal manner. Nothing in this chapter implies or authorizes that any activity connected with the distribution or possession of cannabis is legal unless otherwise authorized and allowed in strict and full conformance to the provisions of this code, including, without limitation, the provisions of Chapter 5.101, 25.16, 25.18 or 25.34.

(Ord. 1339 § 1, 2018)

§ 3.50.070 Cannabis cultivation/manufacturing tax is not a sales tax.

The tax provided for under the provisions of this chapter is not a sales, transactions or use tax and shall not be calculated or assessed as such. The tax established under this chapter shall not be separately identified or otherwise specifically assessed or charged to any client of a cannabis business.

(Ord. 1339 § 1, 2018)

§ 3.50.080 Amendments and administration.

This chapter was submitted to the voters for approval. Any amendment to this chapter to increase the tax above the maximum rate expressly provided in Section 3.50.010 shall not become effective until such amendment is approved by the voters. The voters expressly authorize the city council to amend, modify, change, or revise any other provision of this chapter as the city council deems in the best interest of the city, as set forth in Section 3.50.050.

The tax administrator or the tax administrator's designee may promulgate rules, regulations and procedures to implement and administer this chapter to ensure the efficient and timely collection of the tax imposed by this chapter, including, without limitation, formulation and implementation of penalties and interest to be assessed for failure to pay the tax as provided.

The tax administrator or the tax administrator's designee may annually audit the taxes imposed by this chapter to verify that tax revenues have been properly expended in accordance with the law.

Pursuant to California Constitution Article XIIIB, the appropriation limit for the city is increased to the maximum extent over the maximum period of time allowed under law consistent with the revenues generated by the tax established by this chapter.

(Ord. 1339 § 1, 2018)

§ 3.50.090 Returns and remittances.

The tax shall be due and payable as follows:

The tax established by this chapter shall be collected monthly. Each person owing tax shall prepare and file a tax return to the tax administrator setting out the total amount of tax owed for the preceding calendar month during which the tax was effective. The return shall be filed not later than the close of business on the day that is thirty calendar days following the last day of the preceding calendar month. At the time the tax return is filed, the full amount of the tax owed for the preceding calendar month shall be remitted to the tax administrator. If the due date falls on Friday, Saturday, Sunday, or a holiday, the due date shall be the next regular business day on which City Hall is open to the public.

All tax returns shall be completed on forms provided by the director of finance.

The tax due shall be that amount due and payable from January 1, 2019 or the first date on which the cannabis business first operated in the city, whichever date occurred last. Tax returns and payments for all outstanding taxes owed to the city are immediately due to the tax administrator upon cessation of business for any reason.

Whenever any payment, statement, report, request, or other communication received by the tax administrator is received after the time prescribed by this section for the receipt thereof, but is in an envelope bearing a postmark showing that it was mailed on or prior to the date prescribed in this section for the receipt thereof, or whenever the tax administrator is furnished substantial proof that the payment, statement, report, request, or other communication was in fact deposited in the United States mail on or prior to the date prescribed for receipt thereof, the tax administrator may regard such payment, statement, report, request, or other communication as having been timely received by the close of business. If the due date falls on Friday, Saturday, Sunday, or a holiday, the due date shall be by the close of the next regular business day on which City Hall is open to the public.

Unless otherwise specifically provided under other provisions of this chapter, the taxes required to be paid pursuant to this chapter shall be deemed delinquent if not paid on or before the due date specified in subsection A or D of this section.

The tax administrator is not required to send a delinquency or other notice or bill to any person subject to the provisions of this chapter and failure to send such notice or bill shall not affect the validity of any tax or penalty due under the provisions of this chapter.

The tax administrator may waive the first and second penalties of twenty-five percent each imposed upon any person if:

The person provides evidence satisfactory to the tax administrator that failure to pay timely was due to circumstances beyond the control of the person and occurred notwithstanding the exercise of ordinary care and absence of willful neglect, and the person paid the delinquent tax and accrued interest owed the city prior to applying to the tax administrator for a waiver.

The waiver provisions specified in this subsection shall not apply to interest accrued on the delinquent tax and a waiver shall be granted only once during any twenty-four-month period.

(Ord. 1339 § 1, 2018)

§ 3.50.100 Failure to pay tax.

Any person who fails or refuses to pay any tax required to be paid pursuant to this chapter on or before the due date shall pay penalties and interest as follows:

A penalty equal to twenty-five percent of the amount of tax in addition to the amount of the tax, plus interest on the unpaid tax calculated from the due date of the tax at a rate established by resolution of the city council; and

An additional penalty equal to twenty-five percent of the amount of the tax if the tax remains unpaid for a period exceeding thirty calendar days beyond the due date, plus interest on the unpaid tax and interest on the unpaid penalties calculated at the rate established by resolution of the city council; and

Interest shall be calculated at the rate of one percent per month, or a fraction thereof, on the total amount due, from the date on which the amount of tax required to be collected becomes due and payable to the city until the date of payment and shall not exceed twelve percent of the amount of tax due.

Whenever a check is submitted in payment of a tax and the check is subsequently returned unpaid by the bank upon which the check is drawn, and the check is not redeemed prior to the due date, the taxpayer will be liable for the tax amount plus any penalties and interest due as provided for in this section plus any amount allowed under state law.

The tax due shall be that amount due and payable from January 1, 2019 or the first date on which the cannabis business first operated in the city, whichever date occurred last, together with applicable penalties and interest calculated in accordance with subsection A of this section.

The tax administrator may waive the first and second penalties of twenty-five percent each imposed upon any person if:

The waiver provisions specified in this subsection shall not apply to interest accrued on the delinquent tax and a waiver shall be granted only once during any twenty-four-month period.

(Ord. 1339 § 1, 2018; Ord. 1355 § 4, 2020)

§ 3.50.110 Refunds.

No refund shall be made of any tax collected pursuant to this chapter, except as provided in this section.

No refund of any tax collected pursuant to this chapter shall be made because of the discontinuation, dissolution, or other termination of a cannabis business.

Whenever the amount of any 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, such amount may be refunded to the person who paid the tax provided that a written claim for refund if timely filed with the tax administrator, pursuant to this code. The period for filing a claim for refund shall be one year from the time the tax was paid or erroneously or illegally collected; provided however, that in no event shall the period to file such claim expire prior to the shortest period allowable for filing a tax refund claim under Government Code Section 911.2. Such a claim must clearly establish claimant's right to the refund by written records showing entitlement thereto, and must clearly set forth the facts and legal theories under which the claimant believes he or she has a right to a refund. Where the amount of any individual refund claim is in excess of the amount set by ordinance or resolution of the city council relating to the settlement of general liability claims against the city by the tax administrator, city council approval shall be required.

The filing of a written claim pursuant to Government Code Section 935 is a prerequisite to any suit thereon.

The tax administrator shall have the right to examine and audit all of the books and business records of the claimant 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 tax administrator to do so.

Any person entitled to a refund of taxes paid pursuant to this chapter may elect in writing to have such refund applied as a credit against a cannabis business's taxes for the next calendar month.

If the tax administrator determines that nonpayment of any remittance due under this chapter is due to fraud, a penalty of one hundred percent of this amount of the tax shall be added thereto in addition to the penalties stated in this section.

In the event the tax administrator or the city has expended funds by the use of auditor or any other individual necessary in the review and collection for such refund, all of such costs and expenses of the city shall be deducted from the amount to be refunded.

In the event that the tax was erroneously paid and the error is attributable to the city, the amount of tax erroneously paid shall be refunded to the claimant. If the error is attributable to the claimant, the city shall retain the amount set forth in this chapter to cover expenses from the amount to be refunded.

The tax administrator shall initiate a refund of any tax which has been overpaid or erroneously collected whenever the overpayment or erroneous collection is uncovered by the city audit of tax revenues.

(Ord. 1339 § 1, 2018)

§ 3.50.120 Enforcement.

It shall be the duty of the tax administrator to enforce each and all of the provisions of this chapter.

For purposes of administration and enforcement of this chapter generally, the tax administrator, with the concurrence of the city attorney, may from time to time promulgate administrative rules and regulations.

The tax administrator shall have the power to audit and examine all books and records of cannabis businesses as well as persons engaged in the operation of cannabis businesses, including both state and federal income tax returns, California sales tax returns, or other evidence documenting the gross receipts of or the transaction prices charged by a cannabis business or persons engaged in the operation of a cannabis business, for the purpose of ascertaining the amount of tax, if any, required to be paid by the provisions of this chapter, and for the purpose of verifying any statements or any item thereof when filed by any person pursuant to the provisions of this chapter. If such cannabis business or person, after written demand by the tax administrator, refuses to make available for audit examination or verification such books, records, or equipment at the tax administrator's request, the tax administrator may, after full consideration of all information within the tax administrator's knowledge concerning the cannabis business and its business and activities of the person so refusing, make an assessment in the manner provided in Section 3.50.130.

The conviction and punishment of any person for failure to pay the required 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.

Any person violating any of the provisions of this chapter or any regulation or rule passed in accordance herewith, or knowingly or intentionally misrepresenting to any officer or employee of the city any material fact in procuring the certificate or permit from the city as provided for in this chapter or Chapter 5.101, 25.16, 25.18 or 25.34 of this code shall be deemed guilty of a misdemeanor.

(Ord. 1339 § 1, 2018)

§ 3.50.130 Debts—Deficiencies—Assessments and appeals.

The amount of any tax, penalties, and interest imposed by the provisions of this chapter shall be deemed a debt to the city and any person operating a cannabis business without having paid any applicable tax, penalties, and interest shall be liable in an action in the name of the city in any court of competent jurisdiction for the amount of the tax, and penalties and interest imposed on such cannabis business.

If the tax administrator is not satisfied that any statement filed as required under the provisions of this chapter is correct, or that the amount of tax is correctly computed, the tax administrator may compute and determine the amount to be paid and make a deficiency determination upon the basis of the facts contained in the statement or upon the basis of any information in his or her possession or that may come into his or her possession. One or more deficiency determinations of the amount of tax due for a period or periods may be made. When a person discontinues engaging in a cannabis business, a deficiency determination may be made at any time within three years thereafter as to any liability arising from engaging in such business whether or not a deficiency determination is issued prior to the date the tax would otherwise be due. Whenever a deficiency determination is made, notice shall be given to the person concerned in the same manner as notices of assessment are given under subsections C, D, and E of this section.

Under any of the following circumstances, the tax administrator may make and give notice of an assessment of the amount of tax owed by a person under this chapter.

If the person has not filed any statement or return required under the provisions of this chapter;

If the person has not paid any tax due under the provisions of this chapter;

If the person has not, after demand by the tax administrator, filed a corrected statement or return, or furnished to the tax administrator adequate substantiation of the information contained in a statement or return already filed, or paid any additional amount of tax due under the provisions of this chapter;

If the tax administrator determines that the nonpayment of any tax due under this chapter 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.

The notice of assessment shall separately set forth the amount of any tax known by the tax administrator to be due or estimated by the tax administrator, after consideration of all information within the tax administrator'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.

The notice of assessment shall be served upon the person either by handing it to him or her personally, 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 cannabis business appearing on the face of the business license issued under Chapter 5.04 of this code, or to such other address as he or she shall register with the tax administrator for the purpose of receiving notices provided under this chapter or Chapter 5.04; or, should the person have no business license issued and should the person have no address registered with the tax administrator for such purpose then to such person's last known address. For the purposes of this section, a service by mail is complete at the time of deposit in the United States mail.

Within ten days after the date of service the person may apply in writing to the tax administrator for a hearing on the assessment. If application for a hearing before the city is not made within the time herein prescribed, the tax assessment by the tax administrator shall become final and conclusive. Upon receipt of any such application for hearing, the tax administrator shall cause the matter to be set for hearing before a hearing officer. At such hearing said applicant may appear and offer evidence why the assessment as made by the tax administrator should not be confirmed and fixed as the tax due. Based upon the submission of such evidence and the review of the city's files, the hearing officer shall issue a written notice and order upholding, modifying or reversing the determination from which the appeal is taken. The notice shall be given within fourteen calendar days after the conclusion of the hearing and shall state the reasons for the decision. The notice shall specify that the decision is final and that any petition for judicial review shall be filed within ninety calendar days from the date of the decision in accordance with the Code of Civil Procedure Section 1094.6. If the hearing officer fails or refuses to act on an appeal within the fourteen-calendar-day period, the appeal shall be deemed to have been denied by the hearing officer on the fifteenth calendar day.

(Ord. 1339 § 1, 2018)

§ 3.50.140 No injunction/writ of mandate.

No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action, or proceeding in any court against this city or against any officer of the city to prevent or enjoin the collection under this chapter of any tax or any amount of tax required to be collected and/or remitted.

(Ord. 1339 § 1, 2018)

§ 3.50.150 Future amendment to cited statute.

Unless specifically provided otherwise, any reference to a state or federal statute in this chapter shall mean such statute as it may be amended from time to time; provided, that such reference to a statute herein shall not include any subsequent amendment thereto, or to any subsequent change of interpretation thereto by a state or federal agency or court of law, to the extent that such amendment or change of interpretation would require voter approval under California law, or to the extent that such change would result in a tax decrease. Only to the extent voter statute (or interpretation) shall remain applicable. For any application or situation that would not require voter approval or would not result in a decrease of a tax, provisions of the amended statute (or new interpretation) shall be applicable to the maximum possible extent. To the extent that the city's authorization to collect or impose any tax imposed under this chapter is expanded or limited as a result of changes in state or federal law, no amendment or modification of this chapter shall be required to conform the tax to those changes, and the tax shall be imposed and collected to the full extent of the authorization up to the full amount of the tax imposed under this chapter.

(Ord. 1339 § 1, 2018)