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HomeMy WebLinkAboutR-10895 Resolution calling for election, placing cannabis tax measure on ballotRESOLUTION NO. 10895 (2018 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, CALLING FOR THE HOLDING OF A GENERAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, NOVEMBER 6, 2018, FOR THE ELECTION OF CERTAIN OFFICERS AS REQUIRED BY THE PROVISIONS OF THE CHARTER, ADOPTING REGULATIONS FOR CANDIDATE STATEMENTS, FOR THE SUBMISSION TO THE VOTERS OF A QUESTION WHETHER TO ESTABLISH A CANNABIS BUSINESS TAX AND REQUESTING THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN LUIS OBISPO TO CONSOLIDATE A GENERAL MUNICIPAL ELECTION WITH THE STATEWIDE GENERAL ELECTION TO BE HELD ON NOVEMBER 6, 2018, PURSUANT TO § 10403 OF THE ELECTIONS CODE. WHEREAS, under the provisions of the Charter, a General Municipal Election shall be held on November 6,2018, for the election of Municipal Officers; and WHEREAS, it is desirable that the general municipal election be consolidated with the Statewide General election to be held on the same date and that, within the city, the precincts, polling places and election officers of the two elections be the same, and that the county election department of the County of San Luis Obispo canvass the returns of the General Municipal Election and that the election be held in all respects as if there were only one election; WHEREAS, Sections 37101 and 37100.5 of the California Government Code authorize the City to levy a license tax, for revenue purposes, upon business transacted in the City; and WHEREAS, as a result of recent voter -approved changes to statc law, there has been strong interest by cannabis businesses to open in the City; and WHEREAS, cannabis businesses are likely to create demands upon City services, and the City does not currently impose any taxes upon cannabis businesses, aside from generally applicable municipal taxes; WHEREAS, the City Council desires to seek to impose a tax upon cannabis businesses, in -lieu of the City's business tax set forth in Chapter 3.01 of the Municipal Code, to be known as the "Cannabis Business Tax"; and WHEREAS, the Cannabis Business Tax cannot be imposed without voter approval; and WHEREAS, the City Council desires to submit a Cannabis Business Tax measure to the voters of the City at the General Municipal Election to be held on Tuesday, November 6, 2018, and to be consolidated with any other election to be held on that date; and NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo, as follows: R 10895 Resolution No. 10895 (2018 Series) Page 2 SECTION 1. Recitals. The City Council hereby finds and determines that the foregoing recitals are true and correct. SECTION 2. Elections. That pursuant to the requirements of the Charter, there is called and ordered to be held in the City of San Luis Obispo, California, on Tuesday, November 6, 2018, a General Municipal Election for the purpose of electing a Mayor for the full term of two years; and two Members of the City Council for the full term of four years. a) That pursuant to Section 9222 of the Elections Code, the Council orders that the Cannabis Business Tax Ordinance be submitted to the voters at that election. b) That notice of the time and place of holding the election is given and the City Clerk is authorized, instructed and directed to give further or additional notice of the election, in time, form and manner as required by law. SECTION 3. Candidate Statement. That pursuant to Elections Code Sections 13307 and 13308, each candidate for elective office may prepare a Candidate Statement of Qualification on an appropriate form provided by the City Clerk. a) The statement may include the name, age and occupation of the candidate and a brief description of no more than 250 words of the candidate's education and qualifications expressed by the candidate himself or herself. b) The statement shall not include party affiliation of the candidate, membership or activity in partisan political organizations, and shall not in any way make reference to other candidates for the same office or to another candidate's qualifications, character, or activities. c) The statement shall be filed in typewritten forin in the Office of the City Clerk at the time the candidate's nomination papers are filed. d) The statement may be withdrawn, but not changed, during the period for filing nomination papers and until 5:00 p.m. of the next working day after the close of the nomination period. e) Pursuant to Elections Code Section 13313, the statement shall remain confidential until after the close of the nomination period and will be available for public examination for no less than 10 days after the close of nominations. Any challenges to a statement must be made during this 10 -day period. f) Pursuant to the Federal Voting Rights Act, candidate statements will be translated into all languages required by the County of San Luis Obispo. The County will print and mail sample ballots and candidates' statements to all voters in English and in Spanish. g) Each candidate who files a Candidate Statement of Qualifications will be required to pay an estimated deposit at the time the statement is filed to cover the cost of the printing and handling. The estimated deposit amount is an approximation of the actual cost and may be significantly more or less than the estimate, depending on the actual number of candidates filing statements. Accordingly, the City Clerk is not bound by the estimate and will bill the candidate for additional actual expense or refund any excess amount paid depending on the final actual cost. R 10895 Resolution No. 10895 (2018 Series) Page 3 h) That the City Clerk shall provide each candidate or the candidate's representative a copy of this resolution at the time nomination papers are issued. SECTION 4. Proposal The City Council hereby proposes the Cannabis Business Tax. SECTION 5. Ballot Question. The question submitted by Section 2 of this Resolution shall appear on the ballot as follows: "Shall the measure to maintain and improve essential City services, including without limitation: police/fire services; senior, youth and YES park services; programs to retain/attract local jobs; addressing homelessness; and other general revenue purposes; by establishing a cannabis business tax up to 10% of gross receipts for retail and businesses and up to $10.00 per canopy square foot for cultivation, NO raising approximately $1,500,000 annually, until ended by voters, with all funds used locally, be adopted. " a) That the proposed complete text of the Ordinance submitted to the voters is attached as Exhibit A. SECTION 6. Approval Pursuant to Section 2(b) of Article XIII B of the Constitution, this measure requires approval by a majority of those casting ballots on the measure. SECTION 7. Consolidation. That the Board of Supervisors is requested to issue instructions to the county election department to take any and all steps necessary for the holding of the consolidated election. a) That the county election department is authorized to canvass the returns of the General Municipal Election. The election shall be held in all respects as if there were only one election, and only one form of ballot shall be used. The election will be held and conducted in accordance with the provisions of law regulating the statewide or special election. b) That the City of San Luis Obispo recognizes that additional costs will be incurred by the County by reason of this consolidation and agrees to reimburse the County for any costs. i) The City Council authorizes the City Clerk to administer said election and all reasonable and actual election expenses shall be paid by the City upon presentation of a properly submitted bill. c) That the ballots to be used at the election shall be in form and content as required by law. d) That the City Clerk is authorized, instructed and directed to coordinate with the County of San Luis Obispo Registrar-Recorder/County Clerk to procure and furnish any and all official ballots, notices, printed matter and all supplies, equipment and paraphernalia that may be necessary in order to properly and lawfully conduct the election. e) That the polls for the election shall be open at seven o'clock a.m. of the day of the election and shall remain open continuously from that time until eight o'clock p.m. of R 10895 Resolution No. 10895 (2018 Series) Page 4 the same day when the polls shall be closed, pursuant to Election Code § 10242, except as provided in § 14401 of the Elections Code of the State of California. SECTION 8. That in all particulars not recited in this resolution, the election shall be held and conducted as provided by law for holding municipal elections. SECTION 9. That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. a) The City Clerk is hereby directed to file a certified copy of this resolution with the Board of Supervisors and the county election department of the County of San Luis Obispo. Upon motion of Council Member Rivoire, seconded by Council Member Pease, and on the following roll call vote: AYES: Council Members Gomez, Pease and Rivoire, Vice Mayor Christianson and Mayor Harmon NOES: None ABSENT: None The foregoing resolution was adopted this 5th day of June, 2018. Mayo.Heidi Harm n ATTEST: Teresa Purrington, City i k %.ILy i-ILUJIIX ,, IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this 14 day of uin 2U 1 Teresa Purrington, City Cler Resolution No. 10895 (2018 Series) EXHIBIT A ORDINANCE NO. (2018 SERIES) AN ORDINANCE OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA ADDING CHAPTER 5.10 (CANNABIS BUSINESS TAX) TO TITLE 5 OF THE SAN LUIS OBISPO MUNICIPAL CODE BE IT ORDAINED BY THE PEOPLE OF THE CITY OF SAN LUIS OBISPO AS FOLLOWS: SECTION 1. CODE AMENDMENT. Chapter 5.10 of Title 5 of the San Luis Obispo Municipal Code is hereby added to read as follows: CHAPTER 5.10 CANNABIS BUSINESS TAX Sections: 5.10.010 Title. 5.10.020 Authority and Purpose. 5.10.030 Intent. 5.10.040 Definitions. 5.10.045 Registration of Cannabis Business 5.10.050 Tax imposed. 5.10.060 Reporting and remittance of tax. 5.10.070 Payments and communications —timely remittance. 5.10.080 Payment — when taxes deemed delinquent. 5.10.090 Notice not required by City. 5.10.100 Penalties and interest. 5.10.110 Refunds and credits. 5.10.120 Refunds and procedures. 5.10.130 Personal cultivation not taxed. 5.10.140 Administration of the tax. 5.10.150 Appeal procedure. 5.10.160 Enforcement —action to collect. 5.10.170 Apportionment. 5.10.180 Constitutionality and legality. 5.10.190 Audit and examination of premises and records. 5.10.200 Other licenses, permits, taxes or charges. 5.10.210 Payment of tax does not authorize unlawful business. 5.10.220 Deficiency determinations. 5.10.230 Failure to report — nonpayment, fraud. 5.10.240 Tax assessment —notice requirements. 5.10.250 Tax assessment — hearing, application, and determination. 5.10.260 Relief from taxes -disaster relief. 5.10.270 Conviction for violation — taxes not waived. 1 Resolution No. 10895 (2018 Series) EXHIBIT A 5.10.280 Violation deemed misdemeanor. 5.10.290 Severability. 5.10.300 Remedies cumulative. 5.10.310 Amendment or repeal. 5.10.010 Title. This ordinance shall be known as the Cannabis Business Tax Ordinance. 5.10.020 Authority and Purpose. The purpose of this Ordinance is to impose a tax, for revenue purposes, pursuant to section 203 of the City charter and sections 37101 and 37100.5 of the California Government Code, upon persons who engage in cannabis business in the City. The Cannabis Business Tax is a general tax enacted solely to raise revenue for general governmental purposes of the City and not for regulation. 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 in the discretion of the City. 5.10.030 Intent. The intent of this Ordinance is to levy a tax on all Cannabis Businesses that operate in the City, regardless of whether such business would have been legal at the time this Ordinance was adopted. Nothing in this Ordinance 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. 5.10.040 Definitions. The following words and phrases shall have the meanings set forth below when used in this Chapter: A. "Business" 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, 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. B. "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 cannabis as defined by Section 11018.5 of the California Health and Safety Code, by Section 26001, subdivision (f) of the Business and Professions Code, and by other State law. 1 W Resolution No. 10895 (2018 Series) EXHIBIT A C. "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 marijuana products as defined by Section 11018.1 of the California Health and Safety Code and by other State law. D. "Canopy" 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. E. "Cannabis business" means any business 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, of cannabis products or of ancillary products and accessories, whether or not carried on for gain or profit, whether for medical or recreational use, and whether or not such business is licensed by the State. F. "Cannabis business tax" or "business tax," means the tax due pursuant to this Chapter for engaging in cannabis business in the City. G. "City Manager" means the City Manager of the City under section 703 of the charter or his or her designee under section 1.08.070 of this Code. H. "Commercial cannabis cultivation" means cultivation in the course of conducting a cannabis business. Commercial cannabis cultivation does not include personal medical cannabis cultivation, or cultivation for personal recreational use as authorized by the Medicinal and Adult - Use Cannabis Regulation and Safety Act (MAUCRSA) for which the individual receives no compensation whatsoever. 1. "City permit" means a permit issued by the City to a person to authorize that person to operate or engage in a cannabis business. J. "Cultivation" means any 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. K. "Delivery" means the transfer for any form of compensation of cannabis or cannabis products to a customer or caregiver at a location that is not a dispensary. L. "Dispensary" means a place at which cannabis, cannabis products, or accessories for the use of cannabis or cannabis products are offered, either individually or in combination, for retail sale, including an establishment that engages in delivery, whether or not from a fixed place of business. M. "Distributor" means a person engaged in procuring cannabis and/or cannabis products for sale to a dispensary or other point of retail sale. "Distribution" means engaging in that conduct. 0 Resolution No. 10895 (2018 Series) EXHIBIT A N. "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. O. "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." P. "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. Q. "Calendar year" means January 1 through December 31 of the following calendar year. R. "Gross Receipts," except as otherwise specifically provided, means, whether designated a sales price, royalty, rent, commission, dividend, or other designation, the total amount (including all receipts, cash, credits 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 the definition of Gross Receipts: O 4 Resolution No. 10895 (2018 Series) EXHIBIT A 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; 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 when in excess of one dollar; 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 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. Retail sales of t -shirts, sweaters, hats, stickers, key chains, bags, books, posters, rolling papers, cannabis accessories such pipes, pipe screen, vape pen batteries (without cannabis) or other personal tangible property which the Tax Administrator has excluded in writing by issuing an administrative ruling per Section 5.10.140 shall not be subject to the cannabis business tax under this chapter. However, any retail sales not subject to this Chapter as a result of the administrative ruling shall be subject to the appropriate business tax under Chapter 5.01 or any other Chapter or Title as determined by the Tax Administrator. S. "Manufacturer" means a person who engages in the production, preparation, propagation, or compounding of cannabis or cannabis products either directly or indirectly or by extraction methods, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis. 0 Resolution No. 10895 (2018 Series) EXHIBIT A T. "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. U. "Person" means an individual, firm, partnership, joint venture, association, collective, 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. V. "Sale" means and includes any sale, exchange, or barter. W. "State" means the State of California. X. "Tax Administrator" means the Finance Director of the City of San Luis Obispo or his or her designee. Y. "Testing Laboratory" means a cannabis business that (i) offers or performs tests of cannabis or cannabis products, (ii) offers no service other than such tests, (iii) sells no products, excepting only testing supplies and materials, (iv) is accredited by an accrediting body that is independent from all other persons involved in the cannabis industry in the state and (v) is licensed by the Bureau of Cannabis Control. 5.10.045 Registration of Cannabis Business. A. All persons engaging in a cannabis business, whether an existing, newly -established or acquired business, shall register with the Tax Administrator's office by the later of: 1. 30 days after commencing operation or 2. January 1, 2019 and shall annually renew such registration on or before the anniversary of the initial registration for that business. B. Registrants shall furnish to the Tax Administrator a statement sworn under penalty of perjury, upon a form provided by the Tax Administrator, setting forth: 1. Every name under which the business engages in commercial cannabis activity in the City; 2. The names and addresses of every person who is an owner, principal or manager of the business; 3. The nature or kind of all business activity to be conducted; 4. The place or places, whether or not in the City, where such business is to be conducted; and 5. Any further information which the Tax Administrator may require to administer the tax under this Chapter. X 9 Resolution No. 10895 (2018 Series) EXHIBIT A C. Registrants shall pay an annual registration fee in an amount established from time to time by resolution of the City to recover the City's costs to implement the registration requirement of this section, and the other provisions of this chapter, other than the duty to pay tax when due. As a regulatory fee, such fee shall be limited to the City's reasonable costs for those activities. 5.10.50 Tax imposed. A. Beginning January 1, 2019, there is imposed upon each person who is engaged in business as a cannabis business a cannabis business tax, whether the business has been issued a permit to operate lawfully in the City or is operating unlawfully. B. The initial rate of the cannabis business tax shall be as follows, unless adjusted: 1. For every person who is engaged in commercial cannabis cultivation in the City: a. Seven dollars ($7.00) annually per square foot of canopy space in a facility. For purposes of this chapter, the square feet of canopy space for a business shall be rebuttably presumed to be the maximum square footage of canopy allowed by the business's City permit for commercial cannabis cultivation, or, in the absence of a City permit, the square footage shall be the maximum square footage of canopy for commercial cannabis cultivation allowed by the business' state license. Should a City permit be issued to a business which cultivates only for certain months of the year, the City shall prorate the tax as to sufficiently reflect the period in which cultivation is occurring at the business. In no case shall canopy square footage which is authorized by the City commercial cannabis permit, but not utilized for cultivation, be deducted for the purpose of determining the tax for cultivation, unless the Tax Administrator is informed in writing that such space will not be used and authorizes such reduction for the purpose of relief from the tax prior to the period for which the space will not be used.. 2. For every person who engages in the operation of a testing laboratory: one percent (1%) of gross receipts. 3. For every person who engages in the retail sales of cannabis as a retailer (dispensary) or non -store front retailer (delivery) or microbusiness (retail sales): Six percent (6%) of gross receipts. 4. For every person who engages in a cannabis distribution business: two percent (2%) of gross receipts. For every person who engages in a cannabis manufacturing, processing, or microbusiness (non -retail), or any other type of cannabis business not described in Section (B) (1), (2), (3) or (4): Two and half percent (2.5%) of gross receipts. C 7 Resolution No. 10895 (2018 Series) EXHIBIT A C. The City Council may, by resolution or ordinance, adjust the rate of the cannabis business tax. However, in no event may the City Council set any adjusted rate that exceeds the maximum rate calculated pursuant to Subdivision (D) of this Section for the date on which the adjusted rate will commence. D. The maximum rate shall be calculated as follows: 1. For every person who is engaged in commercial cannabis cultivation in the City: a. Through January 1, 2021, the maximum rate shall be: i. Ten dollars ($10.00) annually per square foot of canopy space in a facility. b. On January 1, 2022 and on each January I thereafter, the maximum annual tax rate per square foot of each type of canopy space shall increase by the percentage change between January of the calendar year prior to such increase and January of the calendar year of the increase in the Consumer Price Index ("CPT") for all urban consumers in the Los Angeles -Long Beach -Anaheim area as published by the United States Government Bureau of Labor Statistics. However, no CPI adjustment resulting in a decrease of any tax imposed by this subsection shall be made. 2. For every person who engages in the operation of a testing laboratory, the maximum tax rate shall not exceed two and a half percent (2.5%) of gross receipts. 3. For every person who engages in the retail sales of cannabis as a retailer (dispensary) or non -store front retailer (delivery business), or microbusiness (retail sales activity) the maximum tax rate shall not exceed ten percent (10%) of gross receipts. 4. For every person who engages in a cannabis distribution business, the maximum tax rate shall not exceed three percent (3%) of gross receipts. 5. For every person who engages in a cannabis manufacturing, processing, or microbusiness (non -retail activity) or any other type of cannabis business not described in Section (D) (1), (2), (3) or (4), the maximum tax rate shall not exceed four percent (4%) of gross receipts. 5.10.060 Reporting and remittance of tax. A. The cannabis business tax imposed by this Chapter shall be paid, in arrears, on a monthly basis. For commercial cannabis cultivation, the tax due for each month shall be based on the square footage of the business's canopy space during the month and the rate shall be 12% of the applicable annual rate. For all other cannabis businesses activities, the tax due for each month shall be based on the gross receipts for the month. 361 Resolution No. 10895 (2018 Series) EXHIBIT A B. Each person owing cannabis business tax for a month shall, no later than the last day of the following month, file with the tax administrator a statement of the tax owed for that month and the basis for calculating that tax. The Tax Administrator may require that the statement be submitted on a form prescribed by the Tax Administrator. The tax for each month shall be due and payable on that same date as the statement for the month is due. C. Upon cessation of a cannabis business, tax statements and payments shall be immediately due for all months up to the month during which cessation occurred. D. The Tax Administrator may, at his or her discretion, establish shorter report and payment periods for any taxpayer as the Tax Administrator deems necessary to ensure collection of the tax. The Tax Administrator may also require that a deposit, to be applied against the taxes for a month, be made by a taxpayer at the beginning of that month. In no event shall the deposit required by the Tax Administrator exceed the tax amount he or she projects will be owed by the taxpayer for the month. The Tax Administrator may require that a taxpayer make payments via a cashier's check, money order, wire transfer, or similar instrument. 5.10.070 Payments and communications — timely remittance. 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, the due date shall be the next regular business day on which the City is open to the public. 5.10.080 Payment - when taxes deemed delinquent. 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 rece1 reed by the Tax Administrator on or before the due data: as specified in Sections 5.10.060 and 5.10.070. 5.10.090 Notice not required by the City. Failure of the Tax Administrator to send a notice or bill shall not affect the validity of any tax or penalty due under the provisions of this Chapter. 5.10.100 Penalties and interest. 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 and interest as follows: 1. A penalty equal to ten percent (10%) of the amount of the tax, in addition to the amount of the tax, plus interest on the unpaid tax calculated from the due date of the tax at the rate of one percent (1.0%) per month. M 0 Resolution No. 10895 (2018 Series) EXHIBIT A 2. If the tax remains unpaid for a period exceeding one calendar month beyond the due date, an additional penalty equal to twenty-five percent (25%) of the amount of the tax, plus interest at the rate of one percent (1.0%) per month on the unpaid tax and on the unpaid penalties. 3. Interest shall be applied at the rate of one percent (1.0%) per month on the first day of the month for the full month and will continue to accrue monthly on the tax and penalty until the balance is paid in full. B. 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 for any reason, the taxpayer will be liable for the tax amount due plus any fees, penalties and interest as provided for in this Section, and any other amount allowed under state law. 5.10.110 Refunds and credits. A. No refund shall be made of any tax collected pursuant to this Chapter, except as provided in Section 5.10.120. B. No refund of any tax collected pursuant to this Chapter shall be made because of the discontinuation, dissolution, or other termination of a business. 5.10.120 Refunds and procedures. A. Whenever the amount of any cannabis business tax, penalty or interest has been overpaid, paid more than once, or has been erroneously 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 Tax Administrator within one (1) year of the date the tax was originally due and payable. B. The Tax Administrator, his or her designee or any other City officer charged with the administration of this Chapter shall have the right to examine and audit all 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. C. In the event that the cannabis business tax was erroneously paid, and the error is attributable to the City, upon a timely claim the City shall refund the amount of tax erroneously paid in the year preceding the date the claim was received. O 10 Resolution No. 10895 (2018 Series) EXHIBIT A 5.10.130 Personal Cultivation Not Taxed. 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 the City 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. 5.10.140 Administration of the tax. A. It shall be the duty of the Tax Administrator to collect the taxes, penalties, fees, and perform the duties required by this Chapter. B. For purposes of administration and enforcement of this Chapter generally, the Tax Administrator 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 necessary to implement or clarify such provisions or aid in enforcement. He or she shall give notice of those regulations in the manner required by law for publication of ordinances of the City Council and the regulations shall take effect 30 days after such notice unless otherwise provided in a particular regulation. C. The Tax Administrator may take such administrative actions as needed to administer the tax, including but not limited to: 1. Provide 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. 5.10.150 Appeal procedure. 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 Manager by filing a notice of appeal with the City Clerk within thirty (30) days of the serving or mailing of the determination of tax due. The City Clerk, or his or her designee, shall fix a time and place for hearing such appeal, and the City Clerk, or his or her designee, shall give notice in writing to such operator at the last known place of address. The finding of the City Manager shall be final and conclusive as to the City, but subject to judicial review under Code of Civil Procedure section 1094.5 and shall be served upon the appellant in the manner prescribed by this Chapter for service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of the notice. O 11 Resolution No. 10895 (2018 Series) EXHIBIT A 5.10.160 Enforcement - action to collect. 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. 5.10.170 Apportionment. 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 propose an apportionment on his or her tax return. The Tax Administrator may accept or reject that apportionment and, if the latter, shall establish an appropriate apportionment on such evidence as is provided by the taxpayer or otherwise available to the Tax Administrator. The Tax Administrator may promulgate administrative procedures for apportionment as he or she finds useful or necessary. 5.10.180 Constitutionality and legality. A. This tax is intended to be applied consistently with the United States and California Constitutions, state law and the City Charter. The tax shall not be applied so as to cause an undue burden upon interstate commerce, a violation of the equal protection and due process clauses of the Constitutions of the United States or the State of California, to constitute a special tax, or to cause a violation of any other provision of applicable law. B. The taxes imposed under this chapter are excises on the privilege of engaging in commercial cannabis activity in the City. They are not sales or use taxes and shall not be calculated or assessed as such. Nevertheless, at the option of a cannabis business, the tax may be separately identified on invoices, receipts and other evidences of transactions. 5.10.190 Audit and examination of premises and records. 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 Tax Administrator shall have the power to inspect any location where commercial cannabis cultivation or commercial business activity occurs, whether or not located in the City, 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 cannabis businesses. In conducting such investigation, the tax administrator shall have the power to inspect any equipment, such as computers or point of sale machines, that may contain such records. 12 Resolution No. 10895 (2018 Series) EXHIBIT A 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 three (3) years, all records as may be necessary to determine the amount of such tax as he or she may have been liable to or pay to the City, which records the Tax Administrator or his/her designee shall have the right to inspect at all reasonable times. 5.10.200 Other licenses, permits, taxes, fees or charges. 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 provision of any other Chapter of this code or any other ordinance or resolution of the City, 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 Chapter of this code or any other ordinance or resolution of the City. 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 other Chapter of this Code unless the context is plain that another meaning is attended. B. Notwithstanding subdivision (A) of this Section, a cannabis business shall not be required to pay the license fee required by Chapter 5.01 of Title 5 of this Code so long as all of business' activities within the City that would require payment of a license fee are subject to the cannabis business tax. C. The Tax Administrator may revoke or refuse to renew the license required by Chapter 5.01 of this Code for any business that is delinquent in the payment of any tax due pursuant to this Chapter or that fails to make a deposit required by the tax administrator pursuant to Scction 5.10.060. 5.10.210 Payment of tax does not authorize unlawful business. 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 and local 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 although businesses illegal under other law are nevertheless subject to tax under this Chapter according to its terms. O 13 Resolution No. 10895 (2018 Series) EXHIBIT A 5.10.220 Deficiency determinations. 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 (3) 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 business, a deficiency determination may be made at any time within three (3) 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, a notice shall be given to the person concerned in the same manner as notices of assessment are given under Section 5.10.240. 5.10.230 Failure to report—nonpayment, fraud. A. 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 at any time: 1. If the person has not filed a complete statement required under the provisions of this Chapter; 2. If the person has not paid the tax due under the provisions of this Chapter; 3. If the person has not, after demand by the Tax Administrator, filed a corrected statement, or furnished to the Tax Administrator 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 Tax Administrator determines that the nonpayment of any business tax due under this Chapter is due to fraud, a penalty of twenty-five percent (25%) of the amount of the tax shall be added thereto in addition to penalties and interest otherwise stated in this Chapter and any other penalties allowed by law. B. 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. O 14 Resolution No. 10895 (2018 Series) EXHIBIT A 5.10.240 Tax assessment - notice requirements. The notice of assessment 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 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 purposes of this Section, a service by mail is complete at the time of deposit in the United States mail. 5.10.250 Tax assessment - hearing, application and determination. Within thirty (30) 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 assessed by the Tax Administrator shall become final and conclusive. Within thirty (30) 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 (30) 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 (5) 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 the proper tax to be charged and shall give written notice to the person in the manner prescribed in Section 5.10.240 for giving notice of assessment. 5.10.260 Relief from taxes -disaster relief. A. If a business is unable to comply with any tax requirement due to a disaster, the business may notify the Tax Administrator of this inability to comply and request relief from the tax requirement; B. The Tax Administrator, in its sole discretion, may provide relief from the cannabis business tax requirement for businesses whose operations have been impacted by a disaster of such tax liability does not exceed five thousand ($5,000) dollars. If such tax liability is five thousand one ($5,001) dollars or more than such relief shall only be approved by the City Manager; C. Temporary relief from the cannabis tax may be relieved for a reasonable amount of time as determined by the Tax Administrator in order to allow the cannabis business time to recover from the disaster; D. The Tax Administrator may require that certain conditions be followed in order for a cannabis business to receive temporary relief from the cannabis business tax requirement; O 15 Resolution No. 10895 (2018 Series) EXHIBIT A E. A cannabis business shall not be subject to an enforcement action for a violation of a cannabis business requirement in which the licensee has received temporary relief from the tax administrator; F. For purposes of this section, "disaster" means fire, flood, storm, tidal wave, earthquake, or similar public calamity, whether or not resulting from natural causes. The cannabis business must notify the Tax Administrator in writing a request for temporary relief from imposition of the tax requirement pursuant to subsection (a) of this section of such disaster clearly indicates why relief is requested from, the time period for which the relief is requested, and the reasons relief is needed for the specified amount of time; 2. The cannabis business agrees to grant the tax collector or his/her designee access to the location where the cannabis business has been impacted due to a disaster. 5.10.270 Conviction for violation - taxes not waived. 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. 5.10.280 Violation deemed misdemeanor. Any person violating any of the provisions of this Chapter shall be guilty of a misdemeanor punishable under Chapter 1.12 of this Code unless the Tax Administrator provides by regulation that violation of a particular provision of this Chapter ought to be enforced as an infraction or if the City Attorney determines in his or her discretion that a particular violation ought to be enforced as an infraction in the interests of justice. 5.10.290 Severability. 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. L 16 Resolution No. 10895 (2018 Series) EXHIBIT A 5.10.300 Remedies cumulative. All remedies and penalties prescribed by this Chapter or which are available under any other provision of the San Luis Obispo 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 provided only that the City not recover any sum due under this Chapter, including penalties and interest, more than once. 5.10.310 Amendment or repeal. This Chapter may be repealed or amended by the City Council without a vote of the people to the extent allowed by law. However, as required by Article XIII C of the California Constitution, voter approval is required for any amendment that would increase the maximum rates of any tax established pursuant to this Chapter. The people of the City of San Luis Obispo affirm that the following actions shall not constitute an increase of the rate of a tax: A. - The restoration of a tax to a rate or amount that is no higher than that set by this Chapter; B. 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; 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. 5.10.320 Enforcement consistently with business license tax Except as otherwise provided in this Chapter, the taxes due under this Chapter may be enforced in the manner provided by Chapter 5.01 of this case and any policy or regulation adopted or implement pursuant to that Chapter. SECTION 2. SEVERABILITY. If any section, subsection, sentence, clause or phrase of this ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portions of this ordinance. The People of the City of San Luis Obispo hereby declare that they would have passed this ordinance and each section, subsection, sentence, clause and phrase thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses, or phrases be declared invalid. W 17 Resolution No. 10895 (2018 Series) EXHIBIT A SECTION 3. CALIFORNIA ENVIRONMENTAL QUALITY ACT REQUIREMENTS. This Ordinance is exempt from the California Environmental Quality Act (CEQA), Public Resources Code Section 21000 et seq., because it can be seen with certainty that there is no possibility that the enactment of this Ordinance would have a significant effect on the environment (Pub. Resources Code § 21065; CEQA Guidelines §§ 15378(b)(4), 15061(b)(3)) and because the Ordinance involves the approval of government revenues to fund existing services (Pub. Resources Code § 21080, subd. (b)(8); CEQA Guidelines § 15273(a)(4)). It does not make any commercial activity lawful and does not commit the City to fund any particular activity. SECTION 4. EFFECTIVE DATE. This Ordinance shall take effect 10 days after the certification of its approval by the voters at the Election pursuant to article III of the City Charter and Elections Code section 9217. SECTION 5. CERTIFICATION; PUBLICATION. Upon approval by the voters, the City Clerk shall certify to the passage and adoption of this Ordinance and shall cause it to be published according to law. It is hereby certified that this Ordinance was duly adopted by the voters at the November 6, 2018 Election and took effect 10 days following adoption of a resolution declaring the results of the election at a regular meeting of the City Council held on by the following vote: AYES: NOES: ABSENT: Mayor Heidi Harmon ATTEST: Teresa Purrington, City Clerk APPROVED AS TO FORM: J. Christine Dietrick, City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this day of , Teresa Purrington, City Clerk O 18