Los Angeles County Municipal Code Ch. 4.71 Cannabis Business Tax

This Chapter will be known as the "Cannabis Business Tax Ordinance" and is enacted to raise revenue, pursuant to sections 7284, 7284.4, and 34021.5 of the California Revenue and Taxation Code, for general governmental purposes of the County. All of the proceeds from the Tax imposed by this Chapter must be deposited to the County's general fund.

The Cannabis Business Tax is levied based upon a Business's Gross Receipts except for Commercial Cannabis Cultivation, which will be taxed based on square footage, as specified in this Chapter. The Cannabis Business Tax is not a sales and use tax, a tax upon income, or a tax upon real property and must not be calculated or assessed as such. The Cannabis Business Tax must not be separately identified or otherwise specifically assessed or charged by any person to a customer, patient, or caretaker.

(Ord. 2022-0067 § 1, 2022.)

The intent of this Chapter is to levy a Tax on all Cannabis Businesses in the unincorporated areas of the County, regardless of whether such Cannabis Business would have been legal at the time this Chapter was adopted. Nothing in this Chapter will be interpreted to authorize or permit any Cannabis Business that would not otherwise be legal or permissible under State and local laws applicable to Cannabis Business.

(Ord. 2022-0067 § 1, 2022.)

The provisions of this Chapter apply to the unincorporated areas of the County.

(Ord. 2022-0067 § 1, 2022.)

The terms below have the following meanings:

A.

"Arm's Length Transaction" means a Sale entered into in good faith and for valuable consideration at a sales price that reflects the fair market value in the open market between informed and willing parties, neither under any compulsion to participate in the transaction.

B.

"Board of Supervisors" means the County of Los Angeles Board of Supervisors.

C.

"Business" means all activities engaged in or caused to be engaged in within the County, including any commercial or industrial enterprise, trade, profession, occupation, vocation, calling, or livelihood, whether or not carried on for gain or profit,

excluding services rendered by an employee to their employer.

D.

"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; and

The separated resin, whether crude or purified, obtained from cannabis.

Cannabis does not include Industrial Hemp, unless otherwise specified.

E.

"Cannabis Business" means any Business requiring a Commercial Cannabis Permit, including but not limited to cultivating, transporting, distributing, Manufacturing, compounding, converting, Processing, preparing, storing, packaging, transporting, delivering, testing, dispensing, retailing, or any other Business requiring a Commercial Cannabis Permit, and wholesaling of Cannabis, Cannabis Products, or of ancillary products and accessories, whether or not carried on for gain or profit.

F.

"Cannabis Business Tax" means the Tax due pursuant to this Chapter for a Cannabis Business in the unincorporated areas of the County.

G.

"Cannabis Product" means the same as the definition in section 11018.1 of the California Health and Safety Code, and is not limited to medicinal Cannabis Products.

H.

"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 must be counted as a separate Canopy area.

I.

"Chapter" means a Chapter of this Title.

J.

"Code" means the Los Angeles County Code.

K.

"Commercial Cannabis Cultivation" means cultivation of Cannabis undertaken in the course of conducting a Cannabis Business.

L.

"Commercial Cannabis Permit" means a permit, certificate, or other approval issued by the County to a Person authorizing that Person to operate a Cannabis Business or engage in Business as a Cannabis Business within the unincorporated areas of the County.

M.

"County" means the County of Los Angeles.

N.

"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.

O.

"Days" means calendar days, which is all days including Saturdays, Sundays, and County holidays, unless otherwise specified.

P.

"Distribution" means the procurement, Sale, transport, or delivery of Cannabis and Cannabis Products between Businesses or Persons in the unincorporated areas of the County in accordance with Section 4.71.210.

Q.

"Gross Receipts," except as otherwise specifically provided, means:

The total amount (including all receipts, cash, credits, services and property of any kind or nature) received or payable for the Sale of goods, 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 for employment done as part of or in connection with the Sale of goods, wares, merchandise or not) related to Cannabis Business, 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.

Gross Receipts include the total amount received or payable related to Cannabis Business whether designated as a sales price, royalty, rent, membership fee, automated teller machine (ATM) service fee, delivery fee, slotting fee, any other fee, vaping room service charge, commission, dividend, or other designation.

In the event the Business is involved in a Non-Arm's Length Transaction, the Gross Receipts will be the fair market value using a methodology approved by the Tax Administrator.

The following are excluded from Gross Receipts:

a.

Cash discounts where allowed and taken on Sales.

b.

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

c.

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.

d.

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.

e.

Cash value of Sales, trades or transactions between departments or units of the same Business located in the unincorporated areas of the County if authorized by the Tax Administrator in writing in accordance with Section 4.71.210.

f.

Receipts of refundable deposits, except forfeited deposits calculated as income for the Business.

g.

Retail Sales of non-Cannabis Products, such as t-shirts, sweaters, hats, stickers, key chains, bags, books, posters, rolling papers, Cannabis accessories such as pipes, pipe screens, vape pen batteries (without Cannabis) or other personal tangible property.

h.

Payments made by the Tax-reporting Cannabis Business to a Cannabis customer for the difference in the original price and subsequent renegotiated or finalized price of products or services sold. This type of transaction is referred to as a "Billback." The Tax-reporting Cannabis Business must provide supporting documentation to the Tax Administrator to substantiate the transaction in order to be eligible for a Gross Receipts exclusion.

i.

Whenever there are included within the Gross Receipts amounts which reflect Sales for which credit was 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 must be included in the amount of Gross Receipts for the period when they are recovered.

R.

"Hearing Officer" means the person qualified to conduct a fair and impartial hearing, including but not limited to the Office of the County Hearing Officer if one has been created.

S.

"Industrial Hemp" means a fiber or oilseed crop, or both, that is limited to types of the plant Cannabis sativa L. having no more than three-tenths (3/10) of one percent (1%) tetrahydrocannabinol (THC) contained in the dried flowering tops, whether growing or not, the seeds of the plant, the resin extracted from any part of the plant, and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds or resin produced therefrom.

T.

"Lighting" means a source of light that is primarily used for promoting the biological process of plant growth. Lighting does not include sources of light that primarily exist for the safety or convenience of staff or visitors to the facility, such as emergency lighting, walkway lighting, or light admitted via small skylights, windows, or ventilation openings.

U.

"Manufacturing" means the Processing, production, preparation, propagation, or compounding of Cannabis or Cannabis Products either directly or indirectly or by extraction and/or infusion and chemical synthesis methods, at a fixed location that packages or repackages Cannabis or Cannabis Products, and includes the preparing, holding, or storing of components and ingredients of Cannabis and Cannabis Products.

V.

"May" means permissive.

W.

"Must" means mandatory.

X.

"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.

Y.

"Non-Arm's Length Transaction" means a Sale not entered in good faith or that does not reflect fair market value in the open market.

Z.

"Person" means an individual, firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, or Business trust, or any other entity or association conducting or representing a Business for purposes of this Chapter.

AA.

"Processing" means a cultivation site that conducts only trimming, drying, curing, grading, packaging, or labeling of Cannabis and non-manufactured Cannabis Products.

AB.

"Retailer" means a Person who Sells Cannabis or Cannabis Products at their place of business or by delivery to an end user or customer for use or consumption rather than to another Person or business for resale.

AC.

"Sale" or "Sell" means and includes any sale, exchange, or barter either as a retailer or wholesaler by a Person. "Sale" or "Sell" also means any transaction whereby, for any consideration, title to Cannabis or Cannabis Products are transferred from one Person to another and includes the delivery of Cannabis or Cannabis Products pursuant to an order placed for the purchase of the same, but does not include the return of Cannabis or Cannabis Products to the Commercial Cannabis permittee from whom the Cannabis or Cannabis Product was purchased.

AD.

"State" means the State of California.

AE.

"State License" means a license issued pursuant to California Business and Professions Code section 26050, and all other applicable State laws, required for operating a Cannabis Business.

AF.

"Tax" means the Cannabis Business Tax levied under this Chapter.

AG.

"Tax Administrator" means the Treasurer and Tax Collector of the County of Los Angeles or their designee(s).

AH.

"Testing Laboratory" means a Cannabis Business that: (i) offers or performs tests of Cannabis or Cannabis Products, (ii) Sells no products, excepting only testing supplies and materials, (iii) is accredited by an accrediting body that is independent from all other Persons involved in the Cannabis industry in the State, and (iv) is registered with the Department of Cannabis Control or other State agency.

(Ord. 2022-0067 § 1, 2022.)

A.

The Cannabis Business Tax is additional to all other taxes. This Chapter shall not 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 Title or Chapter of this Code, any other ordinance or resolution of the County or any city within the County, or as required by law.

B.

Nothing contained in this Chapter will be deemed to repeal, amend, be in lieu of, replace or in any way affect any requirements for any Commercial Cannabis Permit, or any other permit, license, or other certificate required by, under or by virtue of any provision of any other Title or Chapter of this Code, any other ordinance or resolution of the County or any city within the County, or as required by law.

C.

A Commercial Cannabis Permit issued by the County may be revoked, suspended, or not renewed in the event that the Person holding that permit has failed to:

Register or renew such Tax registration with the Tax Administrator; or

Timely pay all taxes, interest, penalties, and fees owed under this Chapter.

(Ord. 2022-0067 § 1, 2022.)

A.

The payment of the Cannabis Business Tax required by this Chapter, and its acceptance by the County, does 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 will 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.

(Ord. 2022-0067 § 1, 2022.)

A.

Beginning July 1, 2023, there will be a Cannabis Business Tax imposed upon each Person who is engaged in Business as a Cannabis Business in the unincorporated areas of the County. Such Tax is payable regardless of whether the Person has

been issued a Commercial Cannabis Permit to operate lawfully in the unincorporated areas of the County or is operating unlawfully. The County's acceptance of a Tax payment from a Cannabis Business operating illegally does not constitute the County's approval or consent to such illegal operations.

B.

The rate of the Tax will be as follows:

Every Person engaged in retail Sales of Cannabis and Cannabis Products, including as a retailer, dispensary, non-storefront retailer, retail delivery, or microbusiness, as defined in Government Code section 14837, must pay a Tax at the rates specified below:

a.

Beginning July 1, 2023 through June 30, 2026, the Tax rate on retail Sales of Cannabis and Cannabis Products will be four percent (4%) of Gross Receipts. After June 30, 2026, the Tax rate will remain at four percent (4%) of Gross Receipts, unless the Board of Supervisors adjusts the rate.

b.

Beginning July 1, 2026, the Tax rate of the Cannabis Business Tax on retail Sales of Cannabis and Cannabis Products may be adjusted by resolution of the Board of Supervisors to a rate less than or equal to the maximum rate, which is six percent (6%) of Gross Receipts.

Every Person engaged in Manufacturing or Processing of Cannabis and Cannabis Products must pay a Tax at the rates specified below:

a.

Beginning July 1, 2023 through June 30, 2026, the Tax rate on Manufacturing or Processing of Cannabis and Cannabis Products will be three percent (3%) of Gross Receipts. After June 30, 2026, the Tax rate will remain at three percent (3%) of Gross Receipts, unless the Board of Supervisors adjusts the rate.

b.

Beginning July 1, 2026, the Tax rate of the Cannabis Business Tax on Manufacturing or Processing of Cannabis and Cannabis Products may be adjusted by resolution of the Board of Supervisors to a rate less than or equal to the maximum rate, which is four percent (4%) of Gross Receipts.

Every Person engaged in Distribution of Cannabis and Cannabis Products must pay a Tax at the rate specified below:

a.

Beginning July 1, 2023 through June 30, 2026, the Tax rate on Distribution of Cannabis and Cannabis Products will be three percent (3%) of Gross Receipts. After June 30, 2026, the Tax rate will remain at three percent (3%) of Gross Receipts, unless the Board of Supervisors adjusts the rate.

b.

Beginning July 1, 2026, the Tax rate of the Cannabis Business Tax on Distribution of Cannabis and Cannabis Products may be adjusted by resolution of the Board of Supervisors to a rate less than or equal to the maximum rate, which is three percent (3%) of Gross Receipts.

Every Person engaged in operating a Testing Laboratory for Cannabis and Cannabis Products must pay a Tax at the rates specified below:

a.

Beginning July 1, 2023 through June 30, 2026, the Tax rate on operating a Testing Laboratory for Cannabis and Cannabis Products will be one percent (1%) of Gross Receipts. After June 30, 2026, the Tax rate will remain at one percent (1%) of Gross Receipts, unless the Board of Supervisors adjusts the rate.

b.

Beginning July 1, 2026, the Tax rate of the Cannabis Business Tax on operating a Testing Laboratory for Cannabis and Cannabis Products may be adjusted by resolution of the Board of Supervisors to a rate less than or equal to the maximum rate, which is two percent (2%) of Gross Receipts.

Every Person engaged in Commercial Cannabis Cultivation must pay a Tax at the annual rates specified below:

a.

Beginning July 1, 2023 through June 30, 2026, the Tax rate for Commercial Cannabis Cultivation will be:

i.

Seven dollars ($7) per square foot of Canopy space in a facility that uses exclusively artificial Lighting.

ii.

Four dollars ($4) per square foot of Canopy space in a facility that uses a combination of natural and artificial Lighting.

iii.

Four dollars ($4) per square foot of Canopy space in a facility that uses no artificial Lighting.

iv.

Two dollars ($2) per square foot of Canopy space for any Nursery.

b.

After June 30, 2026, the Tax rates for Commercial Cannabis Cultivation will remain as specified in Section 4.71.070(B)(5)(a), unless the Board of Supervisors adjusts the rates.

c.

Beginning July 1, 2026, the Tax rates of the Cannabis Business Tax on Commercial Cannabis Cultivation may be adjusted by resolution of the Board of Supervisors to rates less than or equal to the maximum annual rates, which are:

i.

Ten dollars ($10) per square foot of Canopy space in a facility that uses exclusively artificial Lighting.

ii.

Seven dollars ($7) per square foot of Canopy space in a facility that uses a combination of natural and artificial Lighting.

iii.

Four dollars ($4) per square foot of Canopy space in a facility that uses no artificial Lighting.

iv.

Two dollars ($2) per square foot of Canopy space for any Nursery.

d.

Beginning July 1, 2027 and on each July 1 thereafter, the maximum annual Tax rates for Commercial Cannabis Cultivation specified in Section 4.71.070(B)(5)(c) will increase annually for inflation based on the average Consumer Price Index ("CPI") for the Los Angeles County area for the preceding year as published by the United States Government Bureau of Labor Statistics. However, no CPI adjustment resulting in a decrease of any Tax imposed may be made.

e.

For purposes of determining the Tax imposed under this Section, the square footage of Canopy space is the maximum square footage of Canopy space allowed by the Commercial Cannabis Permit authorizing the Commercial Cannabis Cultivation. If a Person engaged in Commercial Cannabis Cultivation does not have a Commercial Cannabis Permit issued by the County, then the square footage of Canopy space is determined by the Tax Administrator.

Every Person engaged in any type of Cannabis Business not described in Sections 4.71.070(B)(1) through 4.71.070(B)(5) must pay a Tax at the rates specified below:

a.

Beginning July 1, 2023 through June 30, 2026, the Tax rate on any type of Cannabis Business not described in Sections 4.71.070(B)(1) through 4.71.070(B)(5) will be four percent (4%) of Gross Receipts. After June 30, 2026, the Tax rate will remain at four percent (4%) of Gross Receipts, unless the Board of Supervisors adjusts the rate.

b.

Beginning July 1, 2026, the Tax rate of the Cannabis Business Tax on any type of Cannabis Business not described in Sections 4.71.070(B)(1) through 4.71.070(B)(5) may be adjusted by resolution of the Board of Supervisors to a rate less than or equal to the maximum rate, which is four percent (4%) of Gross Receipts.

(Ord. 2022-0067 § 1, 2022.)

Any Person who engages in Business as a Cannabis Business, whether an existing, newly established, or acquired Business, must register with the Tax Administrator within thirty (30) Days of commencing operation or within thirty (30) Days after the effective date of the ordinance codified in this Chapter, and must annually renew such tax registration within thirty (30) Days of the Cannabis Business Tax registration anniversary date of each year thereafter. Registration requires each Person to furnish to the Tax Administrator affirmation under penalty of perjury, on a form or electronic submission determined by the Tax Administrator that may set forth the following information:

A.

General Information.

The name of the Business, the street address where such Business is to be carried on, and a telephone number and email address for the Business;

The registrant's name, address, telephone number and email address;

A description of the exact nature or kind of Business;

If a Business is conducted at a specific location, information for the property owner or lessor of record, including but not limited to, the name, address, telephone number, and email address of the property owner or lessor of record; and

Any additional information that the Tax Administrator may require.

B.

Business Entity Information.

The registrant must provide the name, address, telephone number, and email address of each owner of the Business. If applicable, the registrant must also provide the following information:

a.

Proof of the Business' active status and the entity number assigned by the California Secretary of State;

b.

An email address, telephone number, address of corporate headquarters, and website address for the Business;

c.

For a partnership, the name, address, telephone number, website address and email address of each partner of the Business. If one or more of the partners is a corporation, the provisions of this Chapter as to a corporate registrant apply;

d.

For a corporation, the name that appears in the articles of incorporation as filed with the California Secretary of State; the name, address, telephone number, website address, and email address of each officer; the name, address, telephone number, and email address of each shareholder owning shares equal to or greater than ten percent (10%) of the total shares issued by the corporation; and the name and address of an officer duly authorized to accept legal service of process;

e.

For a limited liability company, the name, address, telephone number, and email address of each member and every Person having any right, title, or interest in the premises. If applicable, the name of each managing member, or the name, address, telephone number, website address, and email address of the manager if the limited liability company is not managed by any of its members;

f.

For an estate, trust, or business trust, the name, address, telephone number, website address, and email address of the trustee(s); or

g.

For any Business organizational structure not referenced in Subsections c through f above, the Tax Administrator may require additional ownership information as needed.

If the Business is advertised to the public and known by a name or designation other than the name on the Tax registration, the registrant must provide the other name(s) or designation(s) for the Business, also referred to as a "Fictitious Business Name Statement."

C.

The Business must notify the Tax Administrator in writing or by an electronic submission method determined by the Tax Administrator within thirty (30) Days of any changed information provided in a Tax registration. Following review of the notice of change, the Tax Administrator will determine whether a new Tax registration is required and will notify the Business. Failure to provide the required notice of change constitutes a violation of this Chapter.

D.

In the event there is a change in ownership of any Cannabis Business:

The new owner is required to submit an updated Tax registration to the Tax Administrator with thirty (30) Days; and

Unless otherwise provided by law, it is the joint and several liability of both the seller and buyer to remit any taxes, interest, penalties, and fees due up until the date of Sale; otherwise, a certificate of lien may be recorded against both the seller and/or buyer in an amount determined by the Tax Administrator.

(Ord. 2022-0067 § 1, 2022.)

The Tax imposed by this Chapter will be due and payable as follows:

A.

On or before the last day of each calendar month, every Person owing a Tax under this Chapter must provide a tax statement to the Tax Administrator of the amount of Tax owed for the preceding calendar month. Payment for the full amount of Tax owed for the preceding calendar month must be remitted to the Tax Administrator with the tax statement each calendar month.

B.

All tax statements must be completed on forms or a website determined by the Tax Administrator.

C.

Tax statements and payments for all outstanding taxes owed to the County are immediately due to the Tax Administrator upon cessation of a Cannabis Business for any reason.

D.

The Tax Administrator may, at their discretion, establish alternative reporting and payment periods for any taxpayer as the Tax Administrator deems necessary to ensure effective collection of the Cannabis Business Tax. The Tax Administrator may require that a taxpayer make payments via a cashier's check, money order, wire transfer, or similar instrument.

(Ord. 2022-0067 § 1, 2022.)

Whenever any payment, statement, report, request, or other communication received by the Tax Administrator 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 Tax Administrator is furnished substantial proof, as determined by the Tax Administrator, that the payment, statement, report, request, or other communication was in fact deposited in the United States mail on or prior to the date prescribed for receipt thereof, the Tax Administrator may regard such payment, statement, report, request, or other communication as having been timely received. If the due date is a Saturday, Sunday, or a County holiday, the due date will be the next regular business day.

(Ord. 2022-0067 § 1, 2022.)

Unless otherwise specifically provided under other provisions of this Chapter, any Tax, interest, or penalty due under the provisions of this Chapter must be deemed delinquent if not paid on or before the due date specified in Section 4.71.090.

(Ord. 2022-0067 § 1, 2022.)

The Tax Administrator is not required to send a delinquency or other notice or bill to any Person subject to the provisions of this Chapter and failure to send such notice or bill will not affect the validity of any Tax, interest, or penalty due under the provisions of this Chapter.

(Ord. 2022-0067 § 1, 2022.)

A.

Any Person who fails to pay any Tax required to be paid pursuant to this Chapter on or before the due date must pay penalties and interest as follows:

A penalty equal to ten percent (10%) of the unpaid Tax.

An additional penalty equal to ten percent (10%) of the unpaid Tax if the Tax remains unpaid for a period exceeding one (1) calendar month beyond the due date.

Interest at the rate of one and one-half percent (1.5%) per month on the amount of the unpaid Tax. Interest will be applied at the monthly rate from the date on which the remittance first became delinquent and will continue to accrue monthly on the Tax, exclusive of penalties, until the balance is paid in full.

Whenever a check, whether paper or electronic, is submitted to the Tax Administrator as payment of the Tax and the check is subsequently returned unpaid by the bank upon which the check is drawn, the taxpayer is responsible for the Tax amount due plus the returned check fee, penalties, interest as provided for in this Section, and any amount allowed under State law.

(Ord. 2022-0067 § 1, 2022.)

The Tax Administrator may cancel the penalties and interest imposed upon any Person pursuant to Section 4.71.130 if the Person provides evidence satisfactory to the Tax Administrator that the delinquency 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 owed the County, prior to applying to the Tax Administrator for a cancellation.

(Ord. 2022-0067 § 1, 2022.)

A.

Whenever the amount of any 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 claimant who paid the Tax, provided that a written or electronic submission claim for Tax refund is signed under penalty of perjury and filed with the Tax Administrator within three (3) years of the date the Tax was originally due and payable.

B.

The Tax Administrator or the Tax Administrator's authorized agent has the right to examine and audit all the books and business records of the claimant and any other information deemed necessary by the Tax Administrator in order to determine the eligibility of the claimant to the claimed refund. A claim for refund may not be granted if the claimant refuses to allow such examination of claimant's books, business records, and other information after a request by the Tax Administrator.

C.

In the event that the Tax was erroneously paid and it is determined by the Tax Administrator to be an error on its part, the entire amount of the Tax erroneously paid will be refunded to the claimant.

D.

No refund will be made of any Tax collected pursuant to this Chapter, except as provided in Section 4.71.160.

E.

No refund of any Tax collected pursuant to this Chapter will be made because of the discontinuation, dissolution, or other termination of a Business.

(Ord. 2022-0067 § 1, 2022.)

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 such Person's subsequent Taxes.

(Ord. 2022-0067 § 1, 2022.)

The provisions of this Chapter do not apply to personal Cannabis cultivation or personal use of Cannabis, to the extent those activities are authorized in the "Medicinal and Adult Use Cannabis Regulation and Safety Act," as may be amended. This Chapter does not apply to personal use of Cannabis that is specifically exempted from State licensing requirements, that meets the definition of personal use or equivalent terminology under State law, and provided that the individual receives no compensation whatsoever related to that personal cultivation or use.

(Ord. 2022-0067 § 1, 2022.)

A.

The Tax Administrator has the power and duty to enforce each and all of the provisions of this Chapter.

B.

The Tax Administrator may adopt administrative rules and regulations consistent with provisions of this Chapter for the purpose of interpreting, clarifying, carrying out, and enforcing the payment, collection, and remittance of the Tax imposed by this Chapter, as well as developing rules and procedures for appeals and selecting the appropriate administrative hearing process that provides a fair and impartial hearing. A copy of such administrative rules and regulations may be on file in the Tax Administrator's office. To the extent the Tax Administrator determines that the Tax imposed under this Chapter may not be collected in full for any period of time from any particular Business, such determination is an exercise of the Tax Administrator's discretion to settle disputes and must not constitute a change in taxing methodology, nor is such determination a waiver of the County's ability to impose the Tax in full.

C.

Upon a proper showing of good cause, the Tax Administrator may make administrative agreements, with appropriate conditions, to vary from the strict requirements of this Chapter and thereby (1) conform to the billing procedures of a particular Cannabis Business so long as said agreements result in the collection of the Tax in conformance with the general purpose and scope of this Chapter; or (2) to avoid a hardship where the administrative costs of collection and remittance greatly outweigh the Tax benefit. A copy of each such agreement must be on file in the Tax Administrator's office and is voidable by the Tax Administrator at any time.

D.

Upon receipt of a written or electronic submission request of a Cannabis Business, and for good cause, the Tax Administrator may extend the time for filing any Tax statement required pursuant Section 4.71.090 for a period of not to exceed forty-five (45) Days, provided that the time for filing the required Tax statement has not already passed when the request is received. No penalty for delinquent payment will accrue by reason of such extension. Interest will accrue during said extension at the rate of one and one-half percent (1.5%) per month, prorated for any portion thereof.

(Ord. 2022-0067 § 1, 2022.)

It is the duty of the Tax Administrator to enforce each and every provision of this Chapter, and the Sheriff must render such assistance in the enforcement of this Chapter as may from time to time be required by the Tax Administrator. The Tax Administrator may also request assistance from other County departments, or from local, State, or federal authorities, for the civil or criminal enforcement of the Chapter.

(Ord. 2022-0067 § 1, 2022.)

The terms of this Chapter must not be deemed or construed to apply to any Person when imposition of the Tax upon that Person would violate the Constitution of the United States or that of the State of California or preemptive State or federal law. The Tax provided for by this Chapter must not be applied so as to cause an undue burden upon interstate commerce or be violative of the Equal Protection and Due Process Clauses of the Constitutions of the United States or the State of California. If a Person believes that the Tax, as applied to them, is impermissible under applicable law, that Person may request that the Tax Administrator release them from the obligation to pay the impermissible portion of the Tax.

(Ord. 2022-0067 § 1, 2022.)

A.

If a Person subject to the Tax is operating both within the unincorporated areas of the County and outside the unincorporated areas of the County, it is the intent of the County to apply the Cannabis Business Tax so that the measure of the Tax fairly reflects the proportion of the taxed activity carried on in the unincorporated areas of the County.

B.

To the extent a Person subject to the Tax seeks an apportionment that Person may apply to the Tax Administrator for an adjustment of the Tax. It is that Person's burden to provide the Tax Administrator a written or electronic request under penalty of perjury for an adjustment within one (1) year after the date of payment of the Tax. If that Person does not request an adjustment in writing or by an electronic submission, within one (1) year from the date of payment, then that Person must be conclusively deemed to have waived any adjustment for that Tax year and all prior Tax years.

C.

The Person seeking the adjustment must, by sworn statement and supporting testimony, show the method and volume of Business, the Gross Receipts, and such other information as the Tax Administrator may deem necessary. The Tax Administrator may conduct an investigation, and may adjust the Tax for that Person to an amount that is reasonable and nondiscriminatory, or if the Tax has already been paid, may order a refund of the amount over and above the Tax adjustment. The Tax Administrator has the authority to base the Tax on a percentage of Gross Receipts or any other measure which will assure that the Tax assessed is uniform with Businesses of like nature, so long as the amount assessed does not exceed the Tax as prescribed by this Chapter.

D.

The Tax Administrator may promulgate administrative procedures for apportionment as deemed useful or necessary.

(Ord. 2022-0067 § 1, 2022.)

A.

For purpose of ascertaining the amount of Cannabis Business Tax owed or verifying the representations made by any Person engaged in a Cannabis Business in support of their tax calculation, the Tax Administrator or the Tax Administrator's authorized agent has the power to inspect any location where Cannabis Business occurs. The Tax Administrator or the Tax Administrator's authorized agent has the authority to audit and examine, or cause to be audited and examined, all books and records of Persons engaged in a Cannabis Business including both State and federal income tax returns, to the extent not preempted by State and federal privacy laws, California sales tax returns, other evidence documenting the Gross Receipts, all equipment of any Person engaged in Cannabis Business in the unincorporated areas of the County, and such other information the Tax Administrator deems necessary 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 Person, after written demand by the Tax Administrator, refuses to make available for audit, examination or verification such books, records, equipment, or other information as the Tax Administrator requests, the Tax Administrator may, after full consideration of all information within their knowledge concerning the Cannabis Business and activities of the Person so refusing, make an assessment in the manner provided in Sections 4.71.230 through 4.71.250 of any Taxes, penalties, and interest estimated to be due.

B.

It is the duty of every Person liable for the collection and payment to the County of any Tax imposed by this Chapter to keep and preserve, for a period of at least four (4) years, all records as may be necessary to determine the amount of such Tax as they may have been liable for the collection of and payment to the County, of which records the Tax Administrator has the authority to inspect.

(Ord. 2022-0067 § 1, 2022.)

A.

The amount of any Tax, penalties, and interest imposed by the provisions of this Chapter on any Person engaged in any Business will be deemed a debt to the County. The Tax Administrator, in the name of the County, may bring suit for the recovery of any Tax, penalties, interest, and fees due to the County pursuant to this Chapter.

B.

In addition to any other method of collection authorized by law, the County may collect the Tax imposed pursuant to this Chapter by way of a lien in the same manner as other liens as prescribed in sections 2191.3 through 2191.6 of the California Revenue and Taxation Code.

(Ord. 2022-0067 § 1, 2022.)

If the Tax Administrator is not satisfied that a Tax statement as required under Section 4.71.090 is correct, or that the Tax payment remitted to the Tax Administrator is correctly computed, the Tax Administrator may compute and determine the amount to be paid and make a deficiency determination upon the basis of the facts contained in the Tax statement or upon the basis of any information in their possession or that may come into their 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, dissolves, or terminates a Business, a deficiency determination may be made by the Tax Administrator at any time within three (3) years thereafter as to any Tax liability of such Business whether or not a deficiency determination is issued prior to the date the Tax would otherwise be due. Notice of a deficiency determination by the Tax Administrator will be given to the Person in the same manner as notices of assessment are given under Section 4.71.260.

(Ord. 2022-0067 § 1, 2022.)

A.

At any time under one or more of the following circumstances, the Tax Administrator may make and give notice to a Person of a Tax assessment amount due under this Chapter:

If the Person has not filed any Tax statement required under the provisions of this Chapter including Section 4.71.090;

If the Person has not paid any Tax due under the provisions of this Chapter; or

If the Person has not, after demand by the Tax Administrator, filed a corrected Tax statement, or furnished to the Tax Administrator adequate substantiation of the information contained in a Tax statement already filed, or paid any additional amount of Tax due under the provisions of this Chapter.

B.

If the Tax Administrator determines that the nonpayment of any Tax due under this Chapter is due to fraud, a penalty of twenty-five percent (25%) of the Tax amount due may be added to the assessment, in addition to penalties and interest otherwise stated in this Chapter.

C.

The notice of assessment must separately set forth the amount of any Tax known by the Tax Administrator to be due or estimated to be due under this Chapter, after consideration of all information within the Tax Administrator's knowledge concerning the assessment, and must include the amount of any penalties and interest accrued on each amount due or estimated to be due under this Chapter.

(Ord. 2022-0067 § 1, 2022.)

The notice of assessment may be served upon the Person either by serving such notice personally, or by a deposit of the notice in the United States mail addressed to the Person, the Business address, or to such other address as they may file with the Tax Administrator for the purpose of receiving notices provided under this Chapter; or, should the Person have no current address registered with the Tax Administrator for such purpose, then to such Person's last known address. For the purposes of this Section, service by mail is complete on the date of deposit in the United States mail.

(Ord. 2022-0067 § 1, 2022.)

A.

The Tax Administrator will advise in the notice of assessment that a Person or Business may appeal a Tax assessment. An appeal may be requested by a notice of appeal in writing, by an electronic submission, or other method established by the Tax Administrator, for an appeal hearing on the Tax assessment. A notice of appeal must be received by the Tax Administrator within thirty (30) Days following the date of service of the notice of assessment.

B.

A notice of appeal must state all bases for an appeal, including a detailed statement of defense to the Tax assessment, any supporting evidence, and the appellant's signature under penalty of perjury.

C.

If a timely notice of appeal is not received by the Tax Administrator within thirty (30) Days from the date of service of the notice of assessment, the Tax assessment by the Tax Administrator will be a final decision of the County, and any Tax, penalties, and interest imposed will be due.

D.

Within thirty (30) Days of receipt of a timely and complete notice of appeal a Hearing Officer will be appointed, and once appointed the Tax Administrator will forward the notice of appeal and all relevant Tax documents to the Hearing Officer.

E.

Within thirty (30) Days of receipt of an appellant's notice of appeal, the Hearing Officer may schedule the matter for hearing. The Hearing Officer must send notice of the hearing to the appellant, Tax Administrator, and any applicable County department fifteen (15) Days prior to the hearing by registered or certified mail, or by email if requested by the appellant on the notice of appeal.

F.

The Hearing Officer notice will be entitled, "Hearing Officer Notice of Cannabis Business Tax Appeal Hearing" and must include, at a minimum: the name and address of the Person or Business assessed by the Tax Administrator; the date, time and place of the hearing; and the following statement:

"Any interested individual may at any time prior to the date above named, file with the Hearing Officer written testimony and/or documentary evidence, and may appear at the time and place of the hearing to offer their testimony."

G.

The Hearing Officer may consider all competent evidence if such evidence is relevant to the Tax assessment being appealed. The Hearing Officer may at their option hear and consider additional argument and points and authorities of law. At such hearing an appellant may appear, which may include a remote appearance at the discretion of the Hearing Officer, and offer oral evidence under oath to explain why the assessment by the Tax Administrator should not be confirmed and fixed as the Tax, penalties, and interest due. The burden of proof rests with the appellant to show why an amount assessed by the Tax Administrator is not due.

H.

Applicable rules of evidence may be applied by the Hearing Officer to the same extent that they are now or hereafter recognized in civil actions; such as witness testimony may be subject to cross-examination, privileged information or privileged documents may be protected from disclosure, and irrelevant and unduly repetitious evidence may be excluded.

I.

At any time prior to a final decision by the Hearing Officer, a notice of assessment may be amended or supplemented by the Tax Administrator. Notice must be given by the Tax Administrator of all amended Tax assessments in the manner prescribed in Section 4.71.260 for giving notice of assessment, and the notice must disclose how to file an appeal or amend a notice of appeal previously filed.

J.

The Hearing Officer will issue a notice of order containing the final decision of the County on the appeal, and send such notice to the appellant, Tax Administrator, and any applicable County department in the manner prescribed in Section 4.71.260 for giving notice of assessment. The notice of order from the Hearing Officer must contain the amount of Tax, interest, and penalties, if any, due to the County by the appellant. This order will be final and conclusive. Any amount due is immediately payable upon the service of the said notice of order.

(Ord. 2022-0067 § 1, 2022.)

A.

Misdemeanor. Any Person violating any of the provisions of this Chapter may be guilty of a misdemeanor in Superior Court, and upon conviction thereof may be punished by a fine of not more than five hundred dollars ($500), imprisonment for a period of not more than six (6) months, or by both fine and imprisonment.

B.

Civil Penalty. The Tax Administrator in the name of the County may bring a civil action to seek imposition of civil penalties of up to one thousand dollars ($1,000) per violation, including the recovery of any Tax, interest, or penalty due to the County pursuant to the provisions of this Chapter, and any other appropriate legal or equitable relief in any court of competent jurisdiction for violations of this Chapter.

C.

Administrative Fine. Any Person violating any of the provisions of this Chapter will be subject to an administrative fine, issued by the Tax Administrator pursuant to Chapter 1.25 of this Code, not to exceed one thousand dollars ($1,000) per violation.

(Ord. 2022-0067 § 1, 2022.)

The conviction and punishment or civil judgment against any Person for failure to pay the required Tax will not excuse or exempt such Person from any civil action for the Tax, penalty, and interest debt unpaid at the time of such conviction. No civil action will 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. 2022-0067 § 1, 2022.)

Should any provision of this Chapter, or its application to any Person or circumstance, be determined by a court of competent jurisdiction to be unlawful, unenforceable, or otherwise void, that determination will not affect 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. 2022-0067 § 1, 2022.)

A.

Any reference to a State or federal statute in this Chapter means such statute as it may be amended from time to time; provided, that such reference to a statute herein may not include any amendment thereto, or to any change of interpretation thereto by a State or federal agency or court of law with the duty to interpret such law, to the extent that such amendment or change of interpretation would, under California law, require voter approval of such amendment or interpretation, or to the extent that such change would result in a Tax decrease. To the extent voter approval would otherwise be required or a Tax decrease would result, the prior version of the statute (or interpretation) will remain applicable; for any application or situation that would not require voter approval or result in a decrease of a Tax, provisions of the amended statute (or new interpretation) will be applicable to the maximum extent possible.

B.

To the extent that the County's authorization to collect or impose any Tax imposed under this Chapter is expanded as a result of changes in State or federal law, no amendment or modification of this Chapter may be required to conform the Tax to those changes, and the Tax must be imposed and collected to the full extent of the authorization up to the full amount of the Tax imposed under this Chapter.

(Ord. 2022-0067 § 1, 2022.)

All remedies and penalties prescribed by this Chapter or which are available under any other provision of law or equity, including but not limited to the California False Claims Act (California Government Code section 12650 et seq.) and the California Unfair Practices Act (California Business and Professions Code section 17070 et seq.), are cumulative. The use of one or more remedies by the County will not bar the use of any other remedy for the purpose of enforcing the provisions of this Chapter.

(Ord. 2022-0067 § 1, 2022.)

This Chapter of the Los Angeles County Code may be repealed or amended, by resolution or ordinance, by a majority vote of the members of the Board of Supervisors and without a vote of the people. However, pursuant to California Constitution, Article XIII C, voter approval is required for any amendment provision that would expand, extend, or increase the rate of any Tax levied pursuant to this Chapter. The people of the County of Los Angeles affirm that the following actions will not constitute an increase of the rate of a Tax:

A.

The restoration of the rate of the Tax to the maximum rate that is no higher than that set by this Chapter, if the Board of Supervisors has acted to reduce the rate of the Tax;

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;

C.

The establishment of a class of Person that is exempt or excepted from the Tax or the discontinuation of any such exemption or exception (other than the discontinuation of an exemption or exception specifically set forth in this Chapter); or

D.

The collection of the Tax imposed by this Chapter, even if the County had, for some period of time, failed to collect the Tax.

(Ord. 2022-0067 § 1, 2022.)

The Chair of the Board of Supervisors is authorized to attest to the adoption of this ordinance by the voters of the County at the Election.

(Ord. 2022-0067 § 1, 2022.)