Porterville Municipal Code Art. VI Cannabis Business Tax

The cannabis business tax is an excise tax on the privilege of engaging in cannabis business activity in the City; it is not a sales or use tax. All of the proceeds from the tax imposed by this Chapter shall be placed in the City’s general fund and used for general governmental purposes. (Ord. 1875, 7-21-2020)

Beginning January 1, 2021, a cannabis business tax is hereby imposed on every person who is engaged in cannabis business in the City as prescribed herein. It is unlawful for any person to transact or carry on any cannabis business in the City without paying, in accordance with this Chapter, the cannabis industry tax imposed by this section. The intent of this Article is to levy a tax on all cannabis businesses that operate in the City, regardless of whether such business would have been legal at the time the ordinance codified in this chapter was adopted. Nothing in this chapter or article shall be interpreted to authorize or permit any business activity that would not otherwise be legal or permissible under laws applicable to the activity at the time the activity is undertaken, including but not limited to the City’s municipal code regulations. Nothing in this chapter or article shall be construed as to alter the City’s regulatory requirements or conditions under which a cannabis business may operate in accordance with Article 7 of Chapter 15 and/or Article 11 of Chapter 18 of the Porterville Municipal Code, or the land use requirements and conditions set forth in the Porterville Development Code.(Ord. 1875, 7-21-2020)

A. Tax on Commercial Cannabis Businesses:

1. Every Person who is engaged in a Commercial Cannabis Business in the City shall pay an annual Commercial Cannabis Business tax at a rate established by resolution of the City Council which rate shall not exceed $25 per square foot (with a permitted annual adjustment by the applicable Consumer Price Index) of Commercial Cannabis Business area or ten percent (10%) of annual gross receipts per fiscal year. The exact amount of the tax and the methodology of calculation shall be set by the City Council by resolution but shall not exceed the maximums approved by the voters of $25 per square foot (with a permitted annual adjustment by the Consumer Price Index), or 10% of annual gross receipts. The City Council may lower and raise the tax rate without voter approval, subject to the maximum rates approved by the voters. Tax rates for various licenses may vary in rate and methodology between license types, but shall be consistent for all Persons who hold a particular type of license.

2. The taxable square footage calculation shall be determined by including all portions of the premises where the Commercial Cannabis Business operates deducting therefrom driveways, sidewalks, landscaping, vacant unused space, areas used exclusively for office space, employee break rooms, restrooms, and storage space unrelated to the Commercial Cannabis Businesses.

3. If more than one cannabis business operates on the premises, each Person shall be responsible for paying the tax. This section shall not be construed to authorize the operation of more than one cannabis business on the premises, if otherwise prohibited by City regulation(s).

4. Persons subject to the tax imposed by this Section shall also register and pay all fees required by the City Council.

B. No further voter approval shall be required for the adoption or increase of a tax under the authority granted by this Section of this Chapter, it being the intent of the People of the City of Porterville to authorize such a tax up to and including the maximum rates set forth above whenever implemented by the City Council hereafter. (Ord. 1875, 7-21-2020)

All persons engaging in a cannabis business, whether an existing, newly established or acquired business, shall, in addition to any other requirements prescribed by this Code, register with the Collector by the later of 30 days after commencing operation or January 1, 2021, and shall annually renew such registration as required by the Collector. Each Person shall be required to submit any information as deemed necessary by the Collector. (Ord. 1875, 7-21-2020)

The cannabis business tax imposed by this Chapter shall be due and payable as follows:

A. Each person subject to tax under this chapter, except a cannabis tax based on a square footage, shall, on or before the last day of the month following the close of each calendar quarter, prepare and submit a tax return and remit to the Collector the tax due for that quarter. At the time the return is filed, the full amount of the tax due for the prior quarter shall be remitted to the Collector. At any time, a business may apply in writing to the Collector to have these tax returns and payments made less frequently or on a different schedule. Any determination resulting from this application will be at the sole discretion of the Collector and shall be provided in writing.

B. Each person subject to a cannabis tax based upon square footage shall, on or before the last day of the month following the close of each calendar quarter, prepare and submit a tax return and remit to the Collector the tax due for that quarter. The tax shall be calculated in accordance with rules and regulations established by the Collector pursuant to 22-72. The tax return may include a request for adjustment of the tax due to crop loss or periods without cultivation, along with evidence substantiating the crop loss or fallow periods. If the cultivation begins significantly after January 1 or terminates significantly before December 31 of the calendar year, a request to prorate the tax may be submitted with clear and convincing evidence supporting the timing of the cultivation. The decision to prorate or adjust the tax will be made at the sole discretion of the Collector. At the time the return is filed, the full amount of the tax due for the prior quarter shall be remitted to the Collector. At any time, a business may apply in writing to the Collector to have these tax returns and payments made less frequently or on a different schedule. Any determination resulting from this application will be at the sole discretion of the Collector and shall be provided in writing.

C. All tax returns shall be completed on forms prescribed by the Collector.

D. Tax returns and payments for all outstanding taxes owed to the City under this Chapter are immediately due and payable to the City of Porterville upon cessation of business for any reason.

E. The Collector may, as part of administering the tax and in his or her discretion, modify the form of payment and take such other administrative actions as needed to facilitate the collection of the tax. (Ord. 1875, 7-21-2020)

Whenever any payment, return, report, request or other communication is due under this Chapter, it must be received by the Collector on or before the due date. A carrier postmark will not be accepted as timely remittance. If the due date falls on Saturday, Sunday or a City holiday, the due date shall be the next regular business day on which the City is open to the public. (Ord. 1875, 7-21-2020)

Unless otherwise specifically provided under other provisions of this Chapter, the taxes required to be paid pursuant to this Chapter shall be deemed delinquent if not received by the City of Porterville on or before the due date as specified in Section 22-65. (Ord. 1875, 7-21-2020)

The City of Porterville is not required to send a delinquency or other notice or bill to any person subject to this Chapter. Failure to send such notice or bill shall not affect the validity of any tax or penalty or interest due under this Chapter. (Ord. 1875, 7-21-2020)

The Collector may waive the penalties imposed upon any person if:

A. The person provides evidence satisfactory to the Collector 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 cannabis industry tax and accrued interest owed the City before applying to the Collector for a waiver.

B. The waiver provisions specified in this subsection shall be granted only once during any twenty-four (24) month period. (Ord. 1875, 7-21-2020)

A. Whenever the amount of any Commercial Cannabis Business Tax, penalty or interest has been overpaid, paid more than once, or has been erroneously collected or received by the City under this Chapter, it may be refunded to the claimant who paid the tax provided that a written claim for refund is filed with the Collector within one (1) year of the date the tax was originally due and payable. Prior to seeking judicial relief with respect to a dispute regarding the amount of any tax, penalty, or interest collected or received by the city under this article, an aggrieved taxpayer, fee payer, or any other person must comply with the provisions of Section 1-19 of this code.

B. The Collector, his or her deputies, or any other City officer charged with the administration of this Chapter shall have the right to examine and audit all the books and business records of the claimant in order to determine the eligibility of the claimant to the claimed refund. No claim for refund shall be allowed if the claimant refuses to allow such examination of claimant’s books and business records after request by the Collector to do so. The Collector may collect a fee adopted by the City Council to pay for the cost of examination and audit should the books and records be provided in a form insufficient to allow the Collector to make a determination on the claim for refund.

C. In the event that the Commercial Cannabis Business Tax was erroneously paid and the error is attributable to the City, the City shall refund the amount of tax erroneously paid up to one (1) year from when the error was identified. (Ord. 1875, 7-21-2020)

A. The provisions of this Chapter shall not apply to Personal Cannabis Cultivation.

B. The provisions of this Chapter shall not apply to Personal use of Cannabis that is specifically exempted from state licensing requirements, that meets the definition of Personal use or equivalent terminology under state law, and for which the individual receives no compensation whatsoever related to that Personal use. (Ord. 1875, 7-21-2020)

A. It shall be the duty of the Collector to collect the taxes, penalties and/or fees, and perform the duties required by this Chapter.

B. For purposes of administration and enforcement of this Chapter generally, the Collector may from time to time 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 Collector may take such administrative actions as needed to administer the tax, including but not limited to:

1. Provide to all Commercial Cannabis Business taxpayers forms for the reporting of the tax;

• 2. Increase tax rates in accordance with this Chapter;
• 3. Provide information to any taxpayer concerning the provisions of this Chapter;
• 4. Receive and record all taxes remitted to the City as provided in this Chapter;
• 5. Maintain records of taxpayer reports and taxes collected pursuant to this Chapter;
• 6. Assess penalties and interest to taxpayers pursuant to this Chapter;
• 7. Determine amounts owed and enforce collection pursuant to this Chapter; and

8. Adopt rules and regulations no inconsistent with the provisions of this Article as may be necessary or desirable to aid in the implementation and enforcement of the provisions of this Article. (Ord. 1875, 7-21-2020)

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 City. Any Person owing money to the City under the provisions of this Chapter shall be liable in an action brought in the name of the City for the recovery of such debt. The provisions of this Section shall not be deemed a limitation upon the right of the City to bring any other action including criminal, civil and equitable actions, based upon the failure to pay the tax, penalties and/or fees imposed by this Chapter or the failure to comply with any 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 Collector may, within three (3) 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 as it appears on the records of the Collector. The lien shall also specify that the Collector has complied with all provisions of this Chapter in the determination of the amount required to be paid. From the time of the filing of the 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. 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. A fee may be adopted by the City Council and collected by the Collector to pay for the cost of recording and administering the lien.

C. At any time within three (3) years after any Person is delinquent in the payment of any amount herein required to be paid or within three (3) years after the last recording of a certificate of lien under Subsection B of this Section, the Collector may issue a warrant for the enforcement of any liens and for the collection of any amount required to be paid to the City under this Chapter. The warrant shall be directed to the Chief of Police and shall have the same effect as a writ of execution. The warrant shall be levied and sale made pursuant to it in the same manner and with the same effect as a levy and sale pursuant to a writ of execution. The Collector may pay or advance to the Chief of Police, the same fees, commissions and expenses for service provided by law for similar services pursuant to a writ of execution. The Collector may approve the fees for publication in the newspaper.

D. At any time within three (3) years after recording a lien against any Person, if the lien is not discharged and released in full, the Collector may forthwith seize any asset or property, real or Personal (including but not limited to, bank account), of the Person and sell at public auction the asset or property, or a sufficient part of it 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 of the Person subject to seizure and sale subject to this Chapter shall not include any assets or property which is exempt from execution under the provisions of the California Code of Civil Procedure. (Ord. 1875, 7-21-2020)

If a cannabis business subject to a cannabis industry tax is operating both within and outside the City, it is the intent of the City to apply the cannabis industry tax so that the 7 measure of the tax fairly reflects the proportion of the taxed activity actually carried on within the City. (Ord. 1875, 7-21-2020)

This tax is intended to be applied in a manner consistent with the~ United States and California Constitutions, State and local law. None of the tax provided for by this Chapter shall be applied in a manner that causes an undue burden upon interstate commerce, a violation of the equal protection or due process clauses of the Constitutions of the United States or the State of California or a violation of any other provision of the California Constitution, State or local law. (Ord. 1875, 7-21-2020)

A. The Collector shall have the power to audit and examine all books and records of any person engaged in cannabis business in the City, including both State and federal income tax returns, California sales tax returns, or other evidence documenting the gross receipts of persons engaged in cannabis business, and, where necessary, all equipment of any person engaged in cannabis business in the City, for the purpose of ascertaining the amount of cannabis business tax, if any, required to be paid under this Chapter, and for the purpose of verifying any statements or any item thereof when filed by any person pursuant to this Chapter. If such person, after written demand by the Collector, refuses to make available for audit, examination or verification such books, records or equipment as the Collector requests, the Collector may, after full consideration of all information within his or her knowledge concerning the cannabis business and activities of the person so refusing, make an assessment against the cannabis business of the taxes estimated to be due under this Chapter.

B. It shall be the duty of every person liable for the collection and payment to the City of any tax imposed by this Chapter to keep and preserve, for a period of at least five (5) years, all records as may be necessary to determine the amount of such tax as he or she may have been liable for the collection of and payment to the City, which records the Collector shall have the right to inspect at all reasonable times. (Ord. 1875, 7-21-2020)

Except as expressly provided in this Chapter, nothing contained in this Chapter shall be deemed to repeal, amend, be in lieu of, replace or in any way affect any requirements for any permit or license required by, under or by virtue of any provision of any other title or Chapter of this Code or any other ordinance or resolution of the City, nor be deemed to repeal, amend, be in lieu of, replace or in any way affect any tax, fee or other charge imposed, assessed or required by, under or by virtue of any other title or Chapter of this Code or any other ordinance or resolution of the City. Any references made or contained in any other title or Chapter of this Code to any permits, licenses, taxes, fees, or charges, or to any schedule of license fees, shall be deemed to refer to the permits, licenses, taxes, fees or charges, or schedule of license fees, provided for in other titles or Chapters of the Porterville City Code unless otherwise expressly provided. (Ord. 1875, 7-21-2020)

A. If any Person, while liable for any amount under this Chapter, sells, assigns or otherwise transfers the Commercial Cannabis Business, whether voluntarily or involuntarily, the Person’s successor, assignee or other transferee, or other Person or entity obtaining ownership or control of the business (“Transferee”), shall satisfy any tax liability owed to the City associated with the business when due hereunder. Failure to do so for the benefit of the City will result in being personally liable to the City for the full amount of the unpaid tax liability, interest and penalties. The Transferee shall notify the Collector of the date of transfer at least 30 days before the transfer date; or if the agreement to sell, transfer, or otherwise dispose of the business was made less than 30 days before the date of transfer, notice shall be provided immediately upon the existence of the agreement. All Transferees are required to meet each and every condition outlined in this chapter and have prior written approval of the City prior to the transfer.

B. The Transferee shall be deemed to have complied with the requirement of this section to satisfy the unpaid tax liability if the Transferee complied with the requirements of California Revenue and Taxation Code Section § 7283.5 by withholding from the purchase price, for the benefit of the City, an amount sufficient to cover the tax liability, or by otherwise paying the tax liability and obtaining from the Collector a “Tax Clearance Certificate” showing that all outstanding tax liability has been paid and stating that no amount is due through the date of transfer.

C. The Collector, within 90 days of receiving a written request from the Transferee, may issue a “Tax Clearance Certificate” stating either the amount of tax liability due and owing for the business, or stating that there is no tax liability due and owing for the business through a stated date. The Collector may also request financial records from the current or former owner or operator of a Commercial Cannabis Business to audit the tax that may be due and owing. The Collector shall issue a “Tax Clearance Certificate” within 30 days of completing the audit, state the amount of the tax liability owed, if any, unless the Collector determines that the records provided in connection with the audit are insufficient to determine whether taxes are due and owed or in what amount. If the Collector determines that the records are insufficient, the Collector may rely on the facts and information available to estimate any tax liability. The Collector may issue a “Tax Clearance Certificate” stating the amount of the tax liability, if any, based on such facts and information available. Unless an appeal is filed in accordance with Section 22-84, the “Tax Clearance Certificate” shall serve as conclusive evidence of the tax liability associated with the property through the date stated on the “Tax Clearance Certificate.” (Ord. 1875, 7-21-2020)

A. The payment of a tax required by this Chapter, and its acceptance by the City, shall not entitle any person to engage in any cannabis business unless the person has complied with all of the requirements of this Code and all other applicable State or local laws.

B. No tax paid under this Chapter shall be construed as authorizing the conduct or continuance of any illegal or unlawful business, or any business in violation of any State or local laws. (Ord. 1875, 7-21-2020)

If the Collector is not satisfied that any tax return or other statement filed as required under this Chapter is correct, or that the amount of tax is correctly computed, he or she may compute and determine the amount to be paid and make a deficiency determination upon the facts contained in the tax return or statement or any information in his or her possession or that may come into his or her possession within three (3) years of the date the tax was originally due and payable, or such later date as allowable by law. One or more deficiency determinations of the amount of tax due for a period or periods may be made. When a person discontinues engaging in a business, a deficiency determination may be made at any time within three (3) years thereafter, or such later date as allowable by law, as to any liability arising from engaging in such business whether or not a deficiency determination is issued prior to the date the tax would otherwise be due. Whenever a deficiency determination is made, a notice shall be given to the person concerned in the same manner as notices of assessment are given in accordance with this Code. (Ord. 1875, 7-21-2020)

A. Under any of the following circumstances and at any time, the Collector may make and give notice of an assessment of the amount of tax owed by a person under this Article:

1. If the person has not filed a complete return or statement required under this Chapter;

2. If the person has not timely paid any tax, fee, interest and/or penalties due under of this Chapter; or

3. If the person has not, after demand by the Collector, filed a corrected return or statement, or furnished to the Collector adequate substantiation of the information contained in a return or statement filed previously.

B. The notice of assessment shall separately set forth the amount of any tax, fee, interest and/or penalties known by the Collector to be due or estimated by the Collector, after consideration of all information within the Collector’s knowledge concerning the business and activities of the person assessed, to be due under each applicable section of this Chapter. (Ord. 1875, 7-21-2020)

The notice of assessment shall be served upon the person liable for the tax under this Chapter 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 Collector for the purpose of receiving notices provided under this Chapter; or, should the person have no address registered with the Collector 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. (Ord. 1875, 7-21-2020)

Within ten (10) calendar days from the date of service, the Person may apply in writing to the Collector for a hearing on the assessment. If application for a hearing before the City is not made within the time here prescribed, the tax assessed by the Collector shall become final and conclusive. Within thirty (30) business days of the receipt of any such application for hearing, the Collector shall cause the matter to be set for hearing before him or her not later than thirty-five (35) business days after the receipt of the application, unless a later date is agreed to by the Collector and the Person requesting the hearing. Notice of such hearing shall be given by the Collector to the Person requesting such hearing not later than five (5) business days prior to such hearing. At such hearing said applicant may appear and offer evidence why the assessment as made by the Collector should not be confirmed and fixed as the tax due. After such hearing, the 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 22-82 for giving notice of assessment. The amount determined to be due shall be payable after thirty (30) calendar days of written notice unless it is appealed pursuant to the Appeal Procedure set forth in this Article. (Ord. 1875, 7-21-2020)

Any taxpayer aggrieved by any decision of the Collector with respect to the amount of tax, fee, interest and penalties, if any, due under this Chapter may appeal to the City Manager by filing a written appeal with the Clerk of the Porterville City Council within fifteen (15) calendar days of the mailing of the decision or determination. The Clerk shall schedule the appeal and give fifteen (15) business days’ written notice to the appellant of the time and place of hearing by serving the notice personally or by depositing in the United States Post Office in the City, postage prepaid, addressed as shown on the appeal papers or, if none, such other address as is known to the City or, absent any address, by publication in a newspaper of general circulation in the City. The City Manager or designee shall have authority to determine all questions rose on such appeal. No such determination shall conflict with any substantive provision of this Chapter. The finding of the City Manager shall be final and conclusive as to the City, but subject to judicial review under California Code of Procedure Section 1094.5 and shall be served upon appellant in the manner prescribed by this Article for service of notice of tax assessment hearing. Any amount found to be due shall be immediately due and payable upon service of the notice. (Ord. 1875, 7-21-2020)

The conviction and punishment of any person for failure to pay a required tax, fee, penalty and/or interest under this Chapter shall not excuse or exempt such person from any civil action for the amounts due under this Chapter. 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. 1875, 7-21-2020)

Any person who violates any provision of this Article or who other than by a sworn statement, knowingly or intentionally misrepresents to any officer or employee of the City any material fact herein required to be provided is guilty of a misdemeanor punishable as provided in this Code. A person who on a sworn statement states as true a material fact that he or she knows to be false is guilty of perjury. (Ord. 1875, 7-21-2020)

The City Council shall have authority to temporarily suspend collection of the tax imposed by this chapter by resolution unanimously approved by all members of the entire City Council. However, the authority to levy the tax imposed by this chapter shall not expire or otherwise terminate, unless terminated by a duly enacted Ordinance which is approved at a regular meeting of, and by unanimous vote of all of the seats on, the City Council. (Ord. 1875, 7-21-2020)

If any provision of this Chapter, or its application to any person or circumstance, is determined by a court of competent jurisdiction to be unlawful, unenforceable or otherwise void, that determination shall have no effect on any other provision of this Chapter or the application of this Chapter to any other person or circumstance and, to that end, the provisions hereof are severable. (Ord. 1875, 7-21-2020)

All remedies prescribed under this Chapter shall be cumulative and the use of one or more remedies by the City shall not bar the use of any other remedy for the purpose of enforcing the provisions hereof. (Ord. 1875, 7-21-2020)

As provided in California Elections Code Section 9217, this Chapter may be repealed or amended by Ordinance of the Porterville City Council without a vote of the People except that, as required by Article XIIIC of the California Constitution, voter approval is required for any amendment that would increase the rate of any tax levied pursuant to this Chapter above the maximum rates established by this Chapter. The people of the City of Porterville additionally affirm that the following actions shall not constitute an increase of the rate of a tax:

A. The restoration of the rate of the tax to a rate that is no higher than that set by this Chapter, if the City Council 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; or

C. The collection of the tax imposed by this Chapter, even if the City had, for some period of time, failed to collect the tax; or

D. The establishment of a class of Persons 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

E. The City Council’s adoption of an Ordinance, as authorized by this Article, to raise the tax rate provided that the rate is not increased to a rate higher than the maximums established herein. (Ord. 1875, 7-21-2020)

Any entity that fails to pay the taxes or fees required by this chapter within fifteen (15) days after the due date shall pay in addition to the taxes a penalty for nonpayment in the sum equal to twenty-five percent (25%) of the total amount due. Additional penalties will be assessed in the following manner: ten percent (10%) shall be added on the first day of each calendar month following the month of the imposition of the twenty-five percent (25%) penalty if the tax remains unpaid - up to a maximum of one hundred percent (100%) of the tax payable on the due date. Receipt of the tax payment by the City shall govern the determination of whether the tax is delinquent. Postmarks will not be accepted as adequate proof of a timely payment. (Ord. 1875, 7-21-2020)