Jurupa Valley Municipal Code Ch. 3.86 Cannabis Business Tax

A. Every person engaged in operating or otherwise conducting a cannabis business within the City shall pay the following tax:

(1) Up to a maximum of three dollars ($3) per square foot of space utilized in connection with the commercial cannabis activity; subject to adjustment by the City Council pursuant to Section 3.86.050 of this chapter; and

(2) Up to a maximum of twenty-five dollars ($25) per square foot of space utilized in connection with retail cannabis sales; subject to adjustment by the City Council pursuant to Section 3.86.050 of this chapter.

(Ord. No. 2018-14, § 3(4.05.010), 11-6-2018; Measure L, 11-6-2018)

The purpose of this tax is to raise revenue to fund general governmental services.

(Ord. No. 2018-14, § 3(4.05.020), 11-6-2018; Measure L, 11-6-2018)

"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" does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. For the purpose of this chapter, "cannabis" does not mean "industrial hemp" as defined by California Health and Safety Code Section 11018.5.

"Cannabis business" means any business, organization, or group, regardless of form, whether operating for profit or not for profit that conducts commercial cannabis activity.

"Commercial cannabis activity" means any cannabis-related activity that requires a state license pursuant to California's Medicinal and Adult-Use Cannabis Regulation and Safety Act, as set forth in California Business and Professions Code Division 10, Section 26000, et seq., including the commercial cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, and delivery or sale of cannabis and cannabis goods, and/or any other later enacted state law regulating commercial cannabis activity.

"Cannabis goods" means cannabis and products containing cannabis.

"Person" includes any individual, firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or any other group or combination acting as a unit, and the plural as well as the singular, which is conducting itself as a cannabis business.

"Retail cannabis sales" means the sale of cannabis goods to consumers other than a person holding a valid state license for commercial cannabis activity.

"Retail cannabis area" means a room or other contiguous area where retail cannabis sales take place.

"Space utilized in connection with retail cannabis sales" means any space or ground, floor or other surface area (whether horizontal or vertical) of the retail cannabis area occupied by a cannabis business.

"Space utilized in connection with commercial cannabis activity" means any space or ground, floor or other surface area (whether horizontal or vertical) of the structure, or structures, occupied by a cannabis business, excluding any space or ground, floor or other surface area (whether horizontal or vertical) that is exclusively designated and used as: a retail cannabis area; office/clerical space; employee lunch/meal space; restroom space; visitor waiting space; and storage space for storing of tools and supplies that do not contain any amount of cannabis.

(Ord. No. 2018-14, § 3(4.05.030), 11-6-2018; Measure L, 11-6-2018)

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

(Ord. No. 2018-14, § 3(4.05.040), 11-6-2018; Measure L, 11-6-2018)

The City Council may impose the tax authorized by this chapter at a lower rate and may otherwise amend this chapter without a vote of the people. However, voter approval is required for any amendment that would increase the maximum rate or methodology of any tax levied pursuant to this chapter. The people of the City affirm that the following actions shall not constitute an increase of the maximum rate or methodology of the tax requiring subsequent voter approval:

(1) The restoration of the rate of the tax to a rate that is no higher than the maximum set by this voter-approved chapter, if the City Council has previously acted to reduce the rate of the tax;

(2) An action that interprets or clarities 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;

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

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

(Ord. No. 2018-14, § 3(4.05.050), 11-6-2018; Measure L, 11-6-2018)

The payment of the tax required pursuant to this chapter shall not be construed as authorizing the conduct or continuance of any illegal business or of a legal business in an illegal manner. Nothing in this chapter implies or authorizes that any activity connected with cannabis is legal.

(Ord. No. 2018-14, § 3(4.05.060), 11-6-2018; Measure L, 11-6-2018)

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

(Ord. No. 2018-14, § 3(4.05.070), 11-6-2018; Measure L, 11-6-2018)

A. This chapter was submitted to the voters for approval. Any amendment to this chapter to increase the tax above the maximum rate expressly provided in Section 3.86.010 of this chapter shall not become effective until such amendment is approved by the voters. The voters expressly authorize the City Council to amend, modify, change, or revise any other provision of this chapter as the City Council deems in the best interest of the City, as set forth in Section 3.86.050. of this chapter.

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

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

D. The appropriation limit for the City is increased to the maximum extent over the maximum period of time allowed under law consistent with the revenues generated by the tax established by this chapter.

(Ord. No. 2018-14, § 3(4.05.080), 11-6-2018; Measure L, 11-6-2018)

The tax shall be due and payable as follows:

(1) The tax established by this chapter shall be collected annually. Each person owing tax shall prepare and file a tax return to the City Manager setting out the total amount of tax owed for the preceding calendar year during which the tax was in effect. The return shall be filed not later than sixty (60) calendar days following the last day of each preceding calendar year. At the time the tax return is filed, the full amount of the tax owed for the preceding calendar year shall be remitted to the City Manager.

(2) All tax returns shall be completed on forms provided by the City Manager or the City Manager's designee.

(3) Tax returns and payments for all outstanding taxes owed the City are immediately due to the City Manager upon cessation of business for any reason.

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

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

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

(Ord. No. 2018-14, § 3(4.05.090), 11-6-2018; Measure L, 11-6-2018)

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

(1) A penalty equal to twenty-five (25) percent 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 a rate established by resolution of the City Council; and

(2) An additional penalty equal to twenty-five (25) percent of the amount of the tax if the tax remains unpaid for a period exceeding six (6) calendar months beyond the due date, plus interest on the unpaid tax and interest on the unpaid penalties calculated at the rate established by resolution of the City Council.

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

C. The tax due shall be that amount due and payable from January 1, 2018, or the first date on which the cannabis business first operated in the City, whichever date occurred last, together with applicable penalties and interest calculated in accordance with subsection A. of this section.

D. The City Manager may waive the first and second penalties of twenty-five (25) percent each imposed upon any person if:

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

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

(Ord. No. 2018-14, § 3(4.05.100), 11-6-2018; Measure L, 11-6-2018)

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

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

C. Whenever the amount of any tax, penalty, or interest has been overpaid, paid more than once, or has been erroneously or illegally collected or received by the City under this chapter, such amount may be refunded to the person who paid the tax provided that a written claim for refund is timely filed with the City Manager. The period for filing a claim for refund shall be one (1) year from the time the tax was paid or erroneously or illegally collected; provided, however, that in no event shall the period to file such claim expire prior to the shortest period allowable for filing a tax refund claim under California Government Code Section 911.2. Such claim must clearly establish claimant's right to the refund by written records showing entitlement thereto, and must clearly set forth the facts and legal theories under which the claimant believes he or she has a right to a refund. Where the amount of any individual refund claim is in excess of the amount set by ordinance or resolution of the City Council relating to the settlement of general liability claims against the City by the City Manager, City Council approval shall be required.

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

E. The City Manager shall have the right to examine and audit all the 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 business records after request by the City Manager to do so.

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

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

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

(Ord. No. 2018-14, § 3(4.05.110), 11-6-2018; Measure L, 11-6-2018)

A. It shall be the duty of the City Manager to enforce each and all of the provisions of this chapter.

B. For purposes of administration and enforcement of this chapter generally, the City Manager, with the concurrence of the City Attorney, may from time to time promulgate administrative rules and regulations.

C. The City Manager shall have the power to audit and examine all records of cannabis businesses as well as persons engaged in the operation of cannabis businesses, including applications for state commercial cannabis licensure, both state and federal tax and business filings, or any evidence documenting or demonstrating the space utilized in connection with commercial cannabis activity, or retail cannabis sales, or persons engaged in commercial cannabis activity, for the purpose of ascertaining the amount of tax, if any, required to be paid by the provisions of this chapter and for the purpose of verifying any statements or any item thereof when filed by any person pursuant to the provisions of this chapter. If such cannabis business or person, after written demand by the City Manager, refuses to make available for audit, examination, or verification such, records, facility, or equipment as the City Manager requests, the City Manager may, after full consideration of all information within the City Manager's knowledge concerning the cannabis business and its business and activities of the person so refusing, make an assessment in the manner provided in Section 5.05.130 of this chapter.

D. 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.

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

(Ord. No. 2018-14, § 3(4.05.120), 11-6-2018; Measure L, 11-6-2018)

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

B. If the City Manager is not satisfied that any statement filed as required under the provisions of this chapter is correct, or that the amount of tax is correctly computed, the City Manager may compute and determine the amount to be paid and make a deficiency determination upon the basis of the facts contained in the statement or upon the basis of any information in his or her possession or that may come into his or her possession one or more deficiency determinations of the amount of tax due for a period or periods may be made. When a person discontinues engaging in commercial cannabis activity, a deficiency determination may be made at any time within three (3) years thereafter as to any liability arising from engaging in such commercial cannabis activity whether or not a deficiency determination is issued prior to the date the tax would otherwise be due. Whenever a deficiency determination is made, notice shall be given to the person concerned in the same manner as notices of assessment are given under Subsections C., D., and E. of this section.

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

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

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

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

(4) If the City Manager 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 shall be added thereto in addition to penalties and interest otherwise stated in this chapter.

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

D. The notice of assessment shall be served upon the person either by handing it to him or her personally, or by a deposit of the notice in the United States mail, postage prepaid thereon, addressed to the person at the address of the location of the cannabis business appearing on the face of the business license issued by the City, or to such other address as he or she shall register with the City Manager for the purpose of receiving notices provided under this chapter; or, should the person have no business license issued and should the person have no address registered with the City Manager 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.

E. Within ten (10) days after the date of service, the person may apply in writing to the City Manager 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 City Manager shall become final and conclusive. Upon receipt of any such application for hearing, the City Manager shall cause the matter to be set for hearing before a hearing officer pursuant to the provisions of this Code that set forth the City's administrative hearing/appeal procedures. At such hearing said applicant may appear and offer evidence why the assessment as made by the City Manager should not be confirmed and fixed as the tax due. Based upon the submission of such evidence and the review of the City's files, the hearing officer shall issue a written notice and order upholding, modifying, or reversing the determination from which the appeal is taken. The notice shall be given within fourteen (14) calendar days after the conclusion of the hearing and shall state the reasons for the decision. The notice shall specify that the decision is final and that any petition for judicial review shall be filed within ninety (90) days from the date of the decision in accordance with California Code of Civil Procedure Section 1094.6. If the hearing officer fails or refuses to act on an appeal within the fourteen (14) day period, the appeal shall be deemed to have been denied by the hearing officer on the fifteenth calendar day.

(Ord. No. 2018-14, § 3(4.05.130), 11-6-2018; Measure L, 11-6-2018)

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

B. Should any state law regarding commercial cannabis activity be passed in the future, or should the Jurupa Valley Municipal Code be amended to authorize the operation of additional cannabis businesses within the City, whether to provide recreational or medical cannabis, at wholesale or retail, the people of the City expressly intend for the tax imposed herein to apply to such operations, on the same terms and conditions as set forth in this chapter.

C. No provision of this chapter shall be construed to authorize the operation of any cannabis business within the City unless mandated by state law or the City's Municipal Code.

(Ord. No. 2018-14, § 3(4.05.140), 11-6-2018; Measure L, 11-6-2018)