Imperial County Municipal Code Ch. 4.22 Commercial Cannabis Activity Taxes

This chapter shall be known as the "Imperial County Commercial Cannabis Activity Tax Law."

(Ord. No. 1552, § 1, 2-27-18)

This chapter is adopted to achieve the following purposes, among others, and directs that the provisions hereof be interpreted in order to accomplish these purposes:

A. To impose a general tax on the privilege of selling cannabis and cannabis products in the unincorporated area of the county, pursuant to §§ 7284 and 34021.5 of the California Revenue and Taxation Code, or other enabling legislation;

B. To impose a general tax on the privilege of manufacturing cannabis and cannabis products in the unincorporated area of the county, pursuant to §§ 7284 and 34021.5 of the California Revenue and Taxation Code, or other enabling legislation;

C. To impose a general excise tax on the privilege of commercially cultivating cannabis in the unincorporated area of the county, pursuant to §§ 7284 and 34021.5 of the California Revenue and Taxation Code, or other enabling legislation;

D. To specify the rates of the taxes to be levied and the method of collection; and

E. To comply with all requirements for the imposition of general taxes, to become operative only if submitted to the electorate and approved by a majority vote of the voters in an election on the issue.

(Ord. No. 1552, § 1, 2-27-18)

The taxes specified in this chapter are enacted solely for general governmental purposes for the county, and not for specific purposes. All of the proceeds from the taxes imposed by this chapter shall be placed in the county's general fund and can be spent for unrestricted general revenue purposes.

(Ord. No. 1552, § 1, 2-27-18)

Unless as otherwise specified in this chapter, the terms used in this chapter shall be as defined in the Medicinal and Adult-Use Cannabis Regulation and Safety Act, and Titles 9 and 14 of the County of Imperial Codified Ordinances.

A. "Board" means the board of supervisors of the county of Imperial.

B. "Business."

1. Except as otherwise specifically provided business means all activities engaged in or caused to be engaged in within the unincorporated area of the county, including any commercial or industrial enterprise, trade, profession, occupation, vocation, calling, or livelihood, whether or not carried on for gain or profit.

2. Business shall not include the services rendered by an employee to his or her employer.

C. "Clerk of the board" means clerk of the board of supervisors of the county of Imperial, or his or her designees.

D. "Commercial cannabis activity tax" or "tax" means the taxes due pursuant to this chapter for engaging in the retail sale of cannabis and cannabis products, the manufacture of cannabis and cannabis products, and/or the commercial cultivation of cannabis in the unincorporated area of the county.

E. "Commercial cultivation" means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of cannabis for commercial purposes, regardless of whether the person has obtained the required licenses and permits.

F. "County" means the county of Imperial.

G. "Gross receipts."

1. Except as otherwise specifically provided, gross receipts means:

a. The total amount actually received or receivable from all sales;

b. The total amount or compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials, goods, wares or merchandise; and

c. Discounts, rents, royalties, fees, commissions, dividends, and gains realized from trading in stocks or bonds, however designated.

2. Gross receipts shall include all receipts, cash, credits, and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever, except as otherwise stated in this section.

3. Gross receipts shall not include the following:

a. Cash discounts where allowed and taken on sales;

b. Credit allowed on property accepted as part of the purchase price. Should the property later be sold, the sales price of the property shall be included as gross receipts;

c. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;

d. Any part of the sales price of any property returned by purchasers to the seller, and refunded by the seller by way of cash or credit allowances, or the return of refundable deposits previously included in gross receipts;

e. Receipts from investments where the holder of the investment receives only interest and/or dividends, royalties, annuities, and gains from the sale or exchange of stock or securities solely for a person's own account, not derived in the ordinary course of a business;

f. Receipts derived from the occasional sale of used, obsolete, or surplus trade fixtures, machinery, or other equipment used by the person in the regular course of the person's business;

g. Cash value of sales, trades, or transactions between departments or units of the same business;

h. Transactions between a partnership and its partners;

i. Transactions between a limited liability company and its member(s), provided that the limited liability company has elected to file as a Subchapter K entity under the Internal Revenue Code, and that such transaction(s) shall be treated the same as between a partnership and its partner(s);

j. Receipts from services or sales in transactions between affiliated corporations. An affiliated corporation is:

i. A corporation that owns at least eighty percent (80%) of the voting and non-voting stock of the other corporation with which such transaction is had; or

ii. A corporation that is owned by a parent corporation, when such parent corporation also owns at least eighty percent (80%) of the voting and non-voting stock of the other corporation with which such transaction is had.

k. Receipt of refundable deposits. Should any refundable deposit greater than one dollar ($1.00) be forfeited and become income for the business, then such income shall be included in gross receipts;

l. 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 the amounts were collected. The business must provide the treasurer-tax collector with the names and the addresses of the payees, and the amounts paid to them. This exclusion shall not apply to any fees, percentages, or other payments retained by the business for providing such services.

4. When gross receipts includes amounts that reflect sales for which credit is extended, and such amounts prove uncollectible in a subsequent year, those amounts may be excluded from the gross receipts in the year they prove to be uncollectible. Should the whole or portion of such amounts excluded as uncollectible be subsequently collected, they shall be included in the amount of gross receipts for the period when they are recovered.

H. "Person" means an individual, firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, tribe or any other group or combination acting as a unit and includes the plural as well as the singular number.

I. "Personal cultivation" means the cultivation, drying, and storing of cannabis for personal, non-commercial purposes.

J. "Sale" means and includes any sale, exchange, or barter.

K. "Sheriff" means the sheriff of the county of Imperial, or his or her designee.

L. "Space utilized" means any ground, floor, space, or other surface area (whether horizontal or vertical, including any shelving, lattice, trellis, or other suspension systems) which is used for cannabis germination, seeding, vegetation, pre-flowering, 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.

M. "Treasurer-tax collector" means the treasurer-tax collector of the county of Imperial, his or her designees, or any other county officer charged with the administration of the provisions of this chapter.

(Ord. No. 1552, § 1, 2-27-18)

The commercial cannabis activity taxes enacted under this chapter shall be imposed on an annual basis as follows:

A. Every person engaged in the retail sale of cannabis and cannabis products shall pay a maximum general tax of eight percent (8%) on the gross receipts received by said retailers.

B. Every person engaged in the manufacture of cannabis and cannabis products shall pay a maximum general tax of five percent (5%) on the gross receipts received by said manufacturers.

C. Every person engaged in the commercial cultivation of cannabis shall pay a maximum general tax of fifteen dollars ($15.00) per square foot on the space utilized for the commercial cultivation of cannabis. On July 1, 2020, the maximum amount of this tax shall increase to twenty dollars ($20.00) per square foot. On July 1, 2022, the maximum amount of this tax shall increase again to twenty-five dollars ($25.00) per square foot.

(Ord. No. 1552, § 1, 2-27-18)

The board of supervisors may impose the commercial cannabis activity taxes authorized by this chapter at a rate lower than specified in Section 4.22.050, and may otherwise repeal or amend this chapter without a vote of the electorate. However, as required by California Constitution Article XIIIC, voter approval shall be required for any amendment that would increase the maximum rate or methodology of any tax levied pursuant to this chapter. The following actions shall not constitute an increase of the maximum rate or methodology of a tax:

A. The restoration of the rate of a tax to a rate that is no higher than the maximum set by this voter-approved chapter, if the board of supervisors has previously acted to reduce the rate of the tax;

B. An action that interprets or clarifies the methodology of a tax, or 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 language of this chapter;

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

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

(Ord. No. 1552, § 1, 2-27-18)

The commercial cannabis activity taxes enacted by this chapter shall be payable in quarterly installments as follows:

A. Each person owing a commercial cannabis activity tax shall, no later than thirty (30) calendar days following the last day of the preceding calendar quarter, prepare and submit a tax statement and remit to the treasurer-tax collector the amount of tax due for the preceding calendar quarter. The amount of tax remitted shall be no less than the quarterly installment due, but may include any additional amount to be applied to the tax due for the entire fiscal year.

B. All tax returns made pursuant to this chapter shall be completed on forms provided by the treasurer-tax collector.

C. Tax statements and payments for all outstanding taxes owed to the county are immediately due to the treasurer-tax collector upon cessation of business for any reason.

D. The treasurer-tax collector may, in his or her discretion, establish shorter or longer report and payment periods for any person, as the treasurer-tax collector deems necessary, to ensure collection of the commercial cannabis activity taxes specified in this chapter.

E. The treasurer-tax collector may, as part of administering the commercial cannabis activity taxes, modify the form of payment and take such other administrative actions as needed to facilitate collection of the commercial cannabis activity taxes specified in this chapter.

(Ord. No. 1552, § 1, 2-27-18)

Prior to commencing business, each person engaged in the retail sale, manufacture, and/or commercial cultivation of cannabis and/or cannabis products shall register such commercial cannabis activity with the treasurer-tax collector, and submit any information deemed necessary by the treasurer-tax collector. Such registration shall be in addition to all other licenses and permits required under the county of Imperial Codified Ordinances.

(Ord. No. 1552, § 1, 2-27-18)

Whenever any payment, statement, report, request, or other communication is due, it must be received by the treasurer-tax collector on or before the final due date. A postmark will not be accepted as timely remittance. If the due date falls on Saturday, Sunday or a holiday, the due date shall be the next regular business day on which the county is open to the public.

(Ord. No. 1552, § 1, 2-27-18)

Unless otherwise specifically provided under other provisions of this chapter, the commercial cannabis activity taxes required to be paid shall be deemed delinquent if not received by the treasurer-tax collector on or before the due dates specified in this chapter.

(Ord. No. 1552, § 1, 2-27-18)

The treasurer-tax collector 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. No. 1552, § 1, 2-27-18)

A. Any person who fails or refuses to pay in full any commercial cannabis activity tax required to be paid pursuant to this chapter, on or before the due date, shall, in addition to be liable for the amount of tax due, be subject to the following penalties:

1. Twenty-five percent (25%) of the amount of the tax due for the quarter, plus interest on the unpaid portion of the overdue tax, calculated from the due date of the tax, at a rate of one and one-half percent (1.5%) per month. Interest shall continue to accrue on a monthly basis until the balance of the overdue tax, including all penalties, is paid in full.

2. If the commercial cannabis activity tax remains delinquent for more than thirty (30) calendar days, then the interest rate of one and one-half percent (1.5%) shall be applied to the balance of the unpaid portion of the overdue tax and the twenty-five percent (25%) penalty. Interest shall continue to accrue on a monthly basis until the balance of overdue tax, including all penalties, is paid in full.

3. If the commercial cannabis activity tax remains delinquent for more than sixty (60) calendar days, then, in addition to penalties of Section 4.22.120(A)(1) and (2), the county may, in its sole discretion, take action to revoke the person's business license, commercial cannabis activity license, and/or conditional use permit.

B. If the treasurer-tax collector determines that the nonpayment of any tax due under this chapter is due to fraud, a penalty of twenty-five (25) percent of the amount of the tax due shall be assessed in addition to penalties and interest stated in Section 4.22.120(A)(1)—(3), and any other penalties allowed by law.

C. Whenever a check or electronic payment is submitted for payment of a commercial cannabis activity tax, and the payment is subsequently returned unpaid by the bank for any reason, the person required to pay the tax shall be liable for the tax amount due plus the return check fee, penalties and interest as provided for in this section, and any other amount allowed under state law.

(Ord. No. 1552, § 1, 2-27-18)

A. No refund shall be made of any tax collected pursuant to this chapter, except as provided in Section 4.22.140.

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.

(Ord. No. 1552, § 1, 2-27-18)

A. Whenever the amount of any commercial cannabis activity tax, penalty or interest has been overpaid, paid more than once, or has been erroneously collected or received by the county under this chapter, it may be refunded to the person who paid the tax, provided that a written claim for refund is filed with the treasurer-tax collector within one year of the date the tax was originally due and payable.

B. The treasurer-tax collector, or any other county officer charged with the administration of this chapter, shall have the right to examine and audit all the books and business records of the person requesting a refund in order to determine eligibility of a refund. No claim for refund shall be allowed if the person refuses to allow such examination of its books and business records.

C. In the event that the commercial cannabis activity tax was erroneously paid, and the error is attributable to the county, the county shall refund the amount of tax erroneously paid up to one year from when the error was identified.

(Ord. No. 1552, § 1, 2-27-18)

The provisions of this chapter shall not apply to the personal cultivation of cannabis, nor shall they apply to the medical or recreational use of cannabis and cannabis products.

(Ord. No. 1552, § 1, 2-27-18)

A. It shall be the duty of the treasurer-tax collector to collect taxes, penalties, interest, fees, and perform all other duties required by this chapter.

B. The treasurer-tax collector may promulgate such administrative 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.

C. The treasurer-tax collector may, in accordance with this chapter, take such administrative actions as needed to administer the commercial cannabis activity taxes, including, but not limited to:

1. Provide forms for-the reporting of the taxes;

2. Provide information to any person concerning the provisions of this chapter;

3. Receive and record all taxes remitted to the county;

4. Maintain records of taxpayer reports and taxes collected;

5. Assess penalties and interest pursuant;

6. Determine amounts owed and enforce collection.

(Ord. No. 1552, § 1, 2-27-18)

A. Any person required to pay a commercial cannabis activity tax in accordance with this chapter may appeal any decision of the treasure-tax collector to the board by filing a notice of appeal with the clerk of the board.

B. A notice of appeal must be filed within fifteen (15) calendar days of receipt of a determination of the treasurer-tax collector, and must contain a statement informing the board of the factual elements of the dispute, and the legal theory forming the basis of the appeal.

C. The clerk of the board shall fix a time and place for hearing an appeal, and the clerk shall give notice in writing to the person filing the appeal at its last known place of address.

D. The findings of the board shall be final and conclusive, and shall be served upon the person whom filed the appeal in the manner prescribed by Section 4.22.260 for service of notice of hearing. Any tax, penalty, interest, or other amount determined to be the responsibly of the person filing the appeal shall be immediately due and payable upon the service of the board's findings.

(Ord. No. 1552, § 1, 2-27-18)

A. Any taxes, penalties and/or fees required to be paid under the provisions of this chapter shall be deemed a debt owed to the county. Any person owing money to the county under the provisions of this chapter shall be liable in an action brought in the name of the county for the recovery of such debt. The provisions of this section shall not be deemed a limitation upon the right of the county to bring any other action including criminal, civil and equitable actions, based upon a person's 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.

B. In addition to any other remedies available under federal, state, or local law, if any amount required to be paid to the county under this chapter is not paid when due, the treasurer-tax collector may, within three years after the amount is due, record a certificate of lien specifying the amount of taxes, fees, and penalties due, and the name and address of the person liable for such amounts as it appears on the records of treasurer-tax collector.

1. The lien shall specify that the treasurer-tax collector has complied with all provisions of this chapter in the determination of the amount required to be paid.

2. From the time of the filing for record, the amount required to be paid, together with penalties thereon, constitutes a lien upon all real property in the county owned by the person, or subsequently acquired by the person before the lien expires.

3. The lien has the force, effect, and priority of a judgment lien and shall continue for ten (10) years from the filing of the certificate, unless sooner released or otherwise discharged.

C. At any time within three years after any individual or business is delinquent in the payment of any amount herein required to be paid, or within three years after the last recording of a certificate of lien under Section 4.22.180(B), the treasurer-tax collector may issue a warrant for the enforcement of any liens and for the collection of any amount required to be paid to the county under this chapter.

1. The warrant shall be directed to the sheriff, and shall have the same effect as a writ of execution.

2. The warrant shall be levied, and sale made pursuant to it, in the same manner and with the same effect as a levy of, and a sale pursuant to, a writ of execution.

3. The treasurer-tax collector may pay or advance to the sheriff, the same fees, commissions, and expenses for service provided by law for similar services pursuant to a writ of execution.

4. The treasurer-tax collector shall approve the fees for publication in the newspaper.

D. At any time within three years after recording a lien against a person, if the lien is not discharged and released in full, the treasurer-tax collector may seize any asset or property, real or personal (including bank accounts), of the person, and sell such assets or property at public auction to pay the amount due, together with any penalties and interest imposed for the delinquency, and any cost incurred on account of the seizure and sale. Assets or property that are subject to seizure and sale in accordance with this chapter shall not include any asset or property deemed exemption from seizure and sale as identified in California Code of Civil Procedure or any other applicable law.

(Ord. No. 1552, § 1, 2-27-18)

If a person subject to a commercial cannabis activity tax is operating a business both within and outside the unincorporated county, it is the intent of the county to apply the tax so that the measure of the tax fairly reflects the proportion of the taxed activity actually carried on in the county. For purposes of apportionment as may be required by law, the treasurer-tax collector may promulgate administrative procedures for apportionment in accordance with state law.

(Ord. No. 1552, § 1, 2-27-18)

The commercial cannabis activity taxes are intended to be applied in a manner consistent with the United States and California Constitutions and state law. None of the taxes 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 and 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.

(Ord. No. 1552, § 1, 2-27-18)

A. The treasurer-tax collector shall have the power to audit and examine all books and records of persons engaged in retail sale, manufacture, and/or commercial cultivation of cannabis and cannabis products, including both state and federal income tax returns, California sales tax returns, or other evidence documenting gross receipts, and where necessary, all equipment utilized in the retail sale, manufacture, and/or commercial cultivation of cannabis and cannabis products, for the purpose of ascertaining the amount of commercial cannabis activity taxes required to be paid, and for the purpose of verifying any statements filed by any person pursuant to this chapter.

B. Every person liable for the collection and payment to the county of any tax imposed by this chapter shall preserve, for a period of at least three years, all records as may be necessary to determine the amount of such tax. The treasurer-tax collector shall have the right to inspect such records during normal business hours.

(Ord. No. 1552, § 1, 2-27-18)

A. The payment of a commercial cannabis activity tax required by this chapter, and its acceptance by the county, shall not entitle any person to carry on any commercial cannabis activity unless the person has complied with all of the requirements of the county of Imperial Codified Ordinances and all other applicable state laws.

B. No tax paid under the provisions of this chapter shall be construed as authorizing the conduct or continuance of any illegal or unlawful business, or any business in violation of any local, state, or federal law.

(Ord. No. 1552, § 1, 2-27-18)

A. If the treasurer-tax collector determines that a statement filed as required under the provisions of this chapter is incorrect, or that the amount of tax is incorrectly computed, he or she may compute and determine the amount of tax 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.

B. The treasurer-tax collector may make multiple deficiency determinations of the amount of tax due for one or more quarters.

C. When a person discontinues engaging in a business that is subject to the taxation requirements of this chapter, 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.

D. 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 4.22.250.

(Ord. No. 1552, § 1, 2-27-18)

A. The treasure-tax collector may make and give notice of an assessment of the amount of tax owed by a person under this chapter if:

1. The person has not filed a complete tax statement as required;

2. The person has not paid a tax that is due;

3. The person has not, after demand by the treasurer-tax collector, filed a corrected tax statement, or furnished to the treasurer-tax collector adequate substantiation of the information contained in a tax statement already filed, or paid any additional amount of tax due.

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

(Ord. No. 1552, § 1, 2-27-18)

A. 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 treasurer-tax collector for the purpose of receiving notices provided under this chapter.

B. Should the person have no address registered with the treasurer-tax collector for such purpose, then the notice of assessment shall be mailed to the person's last known address.

C. For the purposes of this section, a service by mail is complete at the time of deposit in the united states mail.

(Ord. No. 1552, § 1, 2-27-18)

A. Within ten (10) days after the date of service of a notice of assessment, the person being assessed may apply in writing to the treasurer-tax collector for a hearing on the assessment.

B. If application for a hearing before the county is not made within the time herein prescribed, the tax assessed by the treasurer-tax collector shall become final and conclusive.

C. Within thirty (30) days of the receipt of any an application for hearing, the treasurer-tax collector shall cause the matter to be set for hearing before him or her no later than thirty-five (35) days after the receipt of the application, unless a later date is mutually agreed to by the treasurer-tax collector and the person requesting the hearing.

D. Notice of the hearing shall be given by the treasurer-tax collector to the person requesting the hearing not later than five days prior to such hearing.

E. At the hearing, the person being assessed may appear and offer evidence why the assessment, as made by the treasurer-tax collector, should be dismissed or otherwise amended.

F. After the hearing, the treasurer-tax collector shall determine and reassess the proper tax to be charged, and shall give written notice to the person in the manner prescribed in Section 4.22.250 for giving notice of assessment.

(Ord. No. 1552, § 1, 2-27-18)

A. The conviction and punishment of any person for failure to pay the taxes required under this chapter shall not excuse or exempt such person from any civil action for the tax debt unpaid at the time of such conviction.

B. 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. No. 1552, § 1, 2-27-18)

Any person violating any of the provisions of this chapter shall be deemed guilty of a misdemeanor, and shall be punishable therefore in accordance with Chapter 1.16 of the county of Imperial Codified Ordinances.

(Ord. No. 1552, § 1, 2-27-18)

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. No. 1552, § 1, 2-27-18)

All remedies and penalties prescribed by this chapter, or which are available under Title 1 of the county of Imperial Codified Ordinances, or any other provision of law or equity, are cumulative. The use of one or more remedies by the county shall not bar the use of any other remedy for the purpose of enforcing the provisions of this chapter.

(Ord. No. 1552, § 1, 2-27-18)