This chapter shall be known as the Cannabis Business Tax Ordinance.
(Ord. 457 § 1, 2020)
The purpose of this chapter is to adopt a tax, for revenue purposes,
pursuant to Sections 37101 and 37100.5 of the California Government
Code, upon cannabis businesses that engage in business in the city.
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 and shall not be calculated or assessed as such. The cannabis
business tax shall not be separately identified or otherwise specifically
assessed or charged to any member, customer, patient, or caretaker.
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 proceeds from the tax imposed by this chapter shall be placed
in the city's general fund and be available for any lawful municipal
purpose.
(Ord. 457 § 1, 2020)
The intent of this chapter is to levy a tax on all cannabis
or industrial hemp businesses that operate in the city, 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.
(Ord. 457 § 1, 2020)
The following words and phrases shall have the meanings set
forth below when used in this chapter:
"Business"
includes all activities engaged in or caused to be engaged
in within the city, including any commercial or industrial enterprise,
trade, profession, occupation, vocation, calling, or livelihood, whether
or not carried on for gain or profit, but shall not include the services
rendered by an employee to his or her employer.
"Fiscal year"
means July 1 through June 30, of the same accounting period.
"Cannabis"
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" shall not include "industrial hemp," unless otherwise
specified.
"Cannabis product"
means raw 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 product" also means
cannabis products as defined by Section 11018.1 of the California
Health and Safety Code and is not limited to medicinal cannabis products.
"Canopy"
means all areas occupied by any portion of a cannabis or
industrial hemp 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.
"Cannabis business"
means any business activity involving cannabis or industrial
hemp, including, but not limited to, cultivating, transporting, distributing,
manufacturing, compounding, converting, processing, preparing, storing,
packaging, delivering, testing, dispensing, retailing and wholesaling
of cannabis, cannabis products, industrial hemp, industrial hemp products
or of ancillary products and accessories, whether or not carried on
for gain or profit.
"Commercial cannabis permit"
means a permit issued by the city to a person to authorize
that person to operate a cannabis business or engage in business as
a cannabis business within the city.
"Cultivation"
means any activity involving the planting, growing, harvesting,
drying, curing, grading, or trimming of cannabis or industrial hemp
and includes, but is not limited to, the operation of a nursery.
"Employee"
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.
"Engaged in business as a cannabis business"
means the commencing, conducting, operating, managing or
carrying on of a cannabis business, whether done as 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 within the city if:
1.
Such person or person's employee maintains a fixed place of
business within the city for the benefit or partial benefit of such
person;
2.
Such person or person's employee owns or leases real property
within the city for business purposes;
3.
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;
4.
Such person or person's employee regularly conducts solicitation
of business within the city; or
5.
Such person or person's employee performs work or renders services
in the City.
The foregoing specified activities shall not be a limitation
on the meaning of "engaged in business."
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"Evidence of doing business"
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 a cannabis
business in the city.
"Gross receipts,"
except as otherwise specifically provided, means, whether
designated as a sales price, royalty, rent, membership fee, ATM service
fee, delivery fee, slotting fee, any other fee, vaping room service
charge, commission, dividend, or other designation, the total amount
(including all receipts, cash, credits, services and property of any
kind or nature) received or payable for sales of goods, wares or merchandise,
or for the performance of any act or service of any nature for which
a charge is made or credit allowed (whether such service, act or employment
is done as part of or in connection with the sale of goods, wares,
merchandise or not), without any deduction therefrom on account of
the cost of the property sold, the cost of materials used, labor or
service costs, interest paid or payable, losses or any other expense
whatsoever. However, the following shall be excluded from gross receipts:
1.
Cash discounts where allowed and taken on sales;
2.
Any tax required by law to be included in or added to the purchase
price and collected from the consumer or purchaser;
3.
Such part of the sale 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;
4.
Receipts derived from the occasional sale of used, obsolete
or surplus trade fixtures, machinery or other equipment used by the
taxpayer in the regular course of the taxpayer's business;
5.
Cash value of sales, trades or transactions between departments
or units of the same business located in the city of Lemon Grove or
if authorized by the tax administrator in writing in accordance with
Section 546.140 (B);
6.
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;
7.
Receipts of refundable deposits, except that such deposits when
forfeited and taken into income of the business shall not be excluded;
8.
Amounts collected for others where the business is acting as
an agent or trustee and to the extent that such amounts are paid to
those for whom collected. These agents or trustees must provide the
city's finance department with the names and the addresses of the
others and the amounts paid to them. This exclusion shall not apply
to any fees, percentages, or other payments retained by the agent
or trustees.
9.
Payments made by the tax-reporting cannabis business (seller)
to a cannabis business (buyer) for the difference in the original
acquisition price and subsequent renegotiated or finalized selling
price of products or services sold to a specific end customer. This
type of transaction is referred to as a "billback." The tax-reporting
cannabis business must provide supporting documentation to substantiate
the transaction in order to be eligible for an exemption.
"Industrial hemp"
means a crop that is limited to types of the plant Cannabis
sativa L. having no more than three-tenths of one percent tetrahydrocannabinol
(THC) contained in the dried flowering tops, whether growing or not;
the seeds of the plant; the resin extracted from any part of the plant;
and every compound, manufacture, salt, derivative, mixture, or preparation
of the plant, its seeds or resin produced therefrom.
"Industrial hemp products"
means any raw hemp that has undergone a process whereby the
raw agricultural product has been transformed into a concentrate,
an edible product, or a topical product. "Hemp product" also means
hemp products as defined by Section 11018.5 of the California Health
and Safety Code.
"Lighting"
means a source of light that is primarily used for promoting
the biological process of plant growth. Lighting does not include
sources of light that primarily exist for the safety or convenience
of staff or visitors to the facility, such as emergency lighting,
walkway lighting, or light admitted via small skylights, windows or
ventilation openings.
"Medicinal cannabis" or "medicinal cannabis product"
means cannabis or a cannabis product, intended to be sold
or sold for use pursuant to the Compassionate Use Act of 1996 (Proposition
215), found at Section 11362.5 of the
Health and Safety Code, for
a medicinal cannabis patient in California who possesses a physician's
recommendation, or a cannabis card issued pursuant to Health and Safety
Code Section 11362.71.
"Nursery"
means a facility or part of a facility that is used only
for producing clones, immature plants, seeds, and other agricultural
products used specifically for the planting, propagation, and cultivation
of cannabis or industrial hemp industrial hemp.
"Person"
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.
"Processing"
means a cultivation site that conducts only trimming, drying,
curing, grading, packaging, or labeling of cannabis, industrial hemp
and nonmanufactured cannabis products.
"Sale," "sell" and "to sell"
means and includes any sale, exchange, or barter. It shall
also mean any transaction whereby, for any consideration, title to
cannabis, cannabis products, industrial hemp and/or industrial hemp
products are transferred from one person to another and includes the
delivery of cannabis, cannabis products, industrial hemp and/or industrial
hemp products pursuant to an order placed for the purchase of the
same, but does not include the return of cannabis, cannabis products,
industrial hemp and/or industrial hemp products to the licensee from
whom the cannabis, cannabis product, industrial hemp and/or industrial
hemp product was purchased.
"State"
means the state of California.
"Testing laboratory"
means a cannabis business that: (1) offers or performs tests
of cannabis, cannabis products, industrial hemp and/or industrial
hemp 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 Bureau of Cannabis Control or other state agency.
(Ord. 457 § 1, 2020)
Whenever any payment, statement, report, request or other communication
is due, it must be received by the tax administrator on or before
the final due date. A postmark will not be accepted as timely remittance.
If the due date would fall on a Saturday, Sunday or a holiday observed
by the city, the due date shall be the next regular business day on
which the city is open to the public.
(Ord. 457 § 1, 2020)
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 received by the tax administrator on or before the due date as specified in Sections
5.46.060 and
5.46.070.
(Ord. 457 § 1, 2020)
The city may as a courtesy send a tax notice to the cannabis
business which owes the city a cannabis business tax. However, 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. Failure
to send such notice or bill shall not affect the validity of any tax
or penalty due under the provisions of this chapter.
(Ord. 457 § 1, 2020)
The provisions of this chapter shall not apply to personal cannabis
cultivation or personal use of cannabis, to the extent those activities
are authorized in the "Medicinal and Adult Use Cannabis Regulation
and Safety Act," as may be amended. 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 provided that the individual
receives no compensation whatsoever related to that personal cultivation
or use.
(Ord. 457 § 1, 2020)
Any taxpayer aggrieved by any decision of the tax administrator with respect to the amount of tax, interest, penalties and fees, if any, due under this chapter may appeal to the city council by filing a notice of appeal with the city clerk within thirty calendar days of the serving or mailing of the tax administrator's determination of the amount due. The city clerk, or designee, shall fix a time and place for hearing such appeal, and the city clerk, or designee, shall give notice in writing to such operator at the last known place of address. The finding of the city council shall be final and conclusive and shall be served upon the appellant in the manner prescribed by Section
5.46.150 for service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of the notice.
(Ord. 457 § 1, 2020)
Any taxes, penalties and/or fees required to be paid under the
provisions of this chapter shall be deemed a debt owed to the city.
Any person owing money to the city under the provisions of this chapter
shall be liable in an action brought in the name of the city for the
recovery of such debt. The provisions of this chapter shall not be
deemed a limitation upon the right of the city to bring any other
action including criminal, civil and equitable actions, based upon
the failure to pay the tax, penalties and/or fees imposed by this
chapter or the failure to comply with any of the provisions of this
chapter.
(Ord. 457 § 1, 2020)
If a business subject to the tax 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 tax administrator may promulgate administrative
procedures for apportionment as he or she finds useful or necessary.
(Ord. 457 § 1, 2020)
This tax is intended to be applied in a manner consistent with
the United States and California Constitutions and state 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 due process clauses of the Constitutions
of the United States or the state of California or a violation of
any other provision of the California Constitution or state law. If
a person believes that the tax, as applied to him or her, is impermissible
under applicable law, he or she may request that the tax administrator
release him or her from the obligation to pay the impermissible portion
of the tax.
(Ord. 457 § 1, 2020)
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, he or she 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 within three years of the date the tax was originally due and payable. 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 cannabis 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, a notice shall be given to the person concerned in the same manner as notices of assessment are given under Section
5.46.240.
(Ord. 457 § 1, 2020)
The notice of assessment shall be served upon the person either by personal delivery, by overnight delivery by a nationally-recognized courier service, 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 tax administrator for the purpose of receiving notices provided under this chapter; or, should the person have no address registered with the tax administrator for such purpose, then to such person's last known address. For the purpose of Section
5.46.240, a service by overnight delivery shall be deemed to have occurred one calendar day following deposit with a courier and service by mail shall be deemed to have occurred three days following deposit in the United States mail.
(Ord. 457 § 1, 2020)
Within thirty calendar days after the date of service of the notice of assessment 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 assessed by the tax administrator shall become final and conclusive. Within thirty calendar days of the receipt of any such application for hearing, the tax administrator shall cause the matter to be set for hearing before him or her no later than thirty calendar days after the receipt of the application, unless a later date is agreed to by the tax administrator and the person requesting the hearing. Notice of such hearing shall be given by the tax administrator to the person requesting such hearing not later than five calendar days prior to such hearing. 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. After such hearing the tax administrator shall determine and reassess (if necessary) the proper tax to be charged and shall give written notice to the person in the manner prescribed in Section
5.46.240 for giving notice of assessment.
(Ord. 457 § 1, 2020)
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.
(Ord. 457 § 1, 2020)
Any person violating any of the provisions of this chapter shall
be guilty of a misdemeanor.
(Ord. 457 § 1, 2020)
If any provision of this chapter, or its application to any
person or circumstance, is determined by a court of competent jurisdiction
to be unlawful, unenforceable or otherwise void, that determination
shall have no effect on any other provision of this chapter or the
application of this chapter to any other person or circumstance and,
to that end, the provisions hereof are severable.
(Ord. 457 § 1, 2020)
All remedies and penalties prescribed by this chapter or which
are available under any other provision of this 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.
(Ord. 457 § 1, 2020)
Except as set forth in Section 5.46.310, this chapter may be
amended or modified but not repealed by the city council without a
vote of the people. However, as required by Article XIII C of the
California Constitution, voter approval is required for any amendment
that would expand, extend, or increase the rate of any tax levied
pursuant to this section. The people of the city of Lemon Grove affirm
that the following actions shall not constitute an increase of the
rate of a tax:
A. The
restoration or adjustment of the rate of the tax to a rate that is
no higher than that allowed by this chapter, in those circumstances
where, among others, the city council has previously acted to reduce
the rate of the tax or is incrementally implementing an increase authorized
by this chapter;
B. An action that interprets or clarifies: (1) the methodology of applying or calculating the tax; or (2) any definition applicable to the tax, so long as the interpretation or clarification (even if contrary to some prior interpretation or clarification) is not inconsistent with the provisions of this chapter
5.46; or
C. The
collection of the tax imposed by this chapter even if the city had,
for some period of time, failed to collect the tax.
(Ord. 457 § 1, 2020)