San Jose Municipal Code Part 2 General Tax Provisions

Nothing contained in this Chapter 4.66 shall be deemed to repeal, amend, be in lieu of, replace or in any way affect any requirements for any license or permit 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 or of its council, 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, including, but not limited to, the business tax imposed by and the requirements set forth in Chapter 4.76, or any other ordinance or resolution of the city or of its council. Any references made or contained in any other title or chapter of this code to any licenses, license taxes, fees or charges, or to any schedule of license fees, shall be deemed to refer to the licenses, license taxes, fees or charges, or schedule of license fees, provided for in other titles or chapters of this code.

(Measure U (Ord. 2010.2), adopted by electorate, 11-2-10)

A. There are imposed upon all persons engaged in cannabis business in the city taxes in the amounts prescribed in this chapter and Chapter 4.76. It shall be unlawful for any person, either for him or herself or for any other person, to commence, transact or carry on any cannabis business in the city without first having procured a business tax certificate from the city under Chapter 4.76 and having paid the tax set forth therein, and without complying with any and all provisions contained in this chapter. The carrying on of any cannabis business without complying with any and all provisions of this chapter and Chapter 4.76, shall constitute a separate violation of this chapter and Chapter 4.76 for each and every day that such cannabis business is so carried on.

B. The business tax certificate required to be obtained under Chapter 4.76 and the taxes required to be paid under this chapter and Chapter 4.76 are declared to be required pursuant to the taxing power of the City of San José solely for the purpose of obtaining revenue and are not regulatory permit fees.

(Measure U (Ord. 2010.2), adopted by electorate, 11-2-10; Ord. 30273)

A. The payment of a business tax required by this chapter, and its acceptance by the city, shall not entitle any person to carry on any cannabis business unless the person has complied with all of the requirements of this code and all other applicable laws, nor to carry on any cannabis business in any building or on any premises in the event that such building or premises are situated in a zone or locality in which the conduct of such cannabis business is in violation of any law.

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

(Measure U (Ord. 2010.2), adopted by electorate, 11-2-10; Ord. 30273)

Every person required to have a business tax certificate under the provisions of Chapter 4.76 shall make application for the same, or for renewal of the same, to the director of the city. Such application shall be a written statement upon a form or forms provided by the director and shall be signed by the applicant under penalty of perjury. The application shall set forth such information as may be required and as may be reasonably necessary to properly determine the amount of the tax to be paid by the applicant under Chapter 4.76, together with such other information as is required by the director to enable the director to administer the provisions of this chapter.

(Measure U (Ord. 2010.2), adopted by electorate, 11-2-10)

The tax imposed under this chapter shall be paid to the director in lawful money of the United States, at City Hall, San José, California. Lawful money shall mean any coin, currency or negotiable instrument, exchangeable for said coin or currency, which the United States Congress has declared to be a national legal tender.

(Measure U (Ord. 2010.2), adopted by electorate, 11-2-10)

A. In addition to the business tax imposed under Chapter 4.76 of this Code and the requirements set forth therein, every person engaged in cannabis business in the City shall pay a business tax at a rate of up to ten percent (10%) of gross receipts. The tax under this Chapter shall not be imposed on cannabis businesses unless and until the City Council, by ordinance, takes action to set a tax rate not to exceed ten percent (10%) of gross receipts.

B. Notwithstanding the maximum tax rate of ten percent (10%) of gross receipts imposed under Subsection A, the City Council may, in its discretion, at any time by ordinance, implement a lower tax rate for all cannabis businesses or establish differing tax rates for different categories of cannabis businesses, as defined in such ordinance, subject to the maximum rate of ten percent (10%) of gross receipts. The City Council may, by ordinance, also increase any such tax rate from time to time, not to exceed the maximum tax rate of ten percent (10%) of gross receipts established under Subsection A.

C. Pursuant to Subsection A, the City Council adopted Ordinance No. 28867 setting the cannabis business tax at seven percent (7%) of gross receipts. Commencing on the operative date of this Chapter, every person engaged in cannabis business in the City shall pay a cannabis business tax at the rate of seven percent (7%) of gross receipts.

D. Pursuant to Subsection A, the City Council adopted Ordinance No. 29262 increasing the cannabis business tax rate to ten percent (10%) of gross receipts. Commencing on July 1, 2013, every person engaged in cannabis business in the City shall pay a cannabis business tax at the rate of ten percent (10%) of gross receipts.

E. Pursuant to Subsection A, the City Council adopted Ordinance No. 30273, reducing the cannabis business tax rate for businesses engaged in certain activities from ten percent (10%) of gross receipts to the rates set forth below.

1. Commencing on July 1, 2019, every person engaged in the cultivation of cannabis in the City shall pay a cannabis business tax at the rate of four percent (4%) of the gross receipts derived from the cultivation of cannabis in the City.

2. Commencing on July 1, 2019, every person engaged in the manufacturing of cannabis in the City shall pay a cannabis business tax at the rate of three percent (3%) of the gross receipts derived from the manufacturing of cannabis in the City.

3. Commencing on July 1, 2019, every person engaged in the distribution of cannabis in the City shall pay a cannabis business tax at the rate of two percent (2%) of the gross receipts derived from the distribution of cannabis in the City.

4. Commencing on July 1, 2019, every person engaged in the laboratory testing of cannabis in the City shall pay a cannabis business tax at the rate of zero percent (0%) of the gross receipts derived from the laboratory testing of cannabis in the City.

(Measure U (Ord. 2010.2), adopted by electorate, 11-2-10); Ords. 28867, 29262, 30273.)

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

A. Each person owing a tax under this chapter shall, on or before the last day of each calendar month, prepare a tax return to the director of the total gross receipts and the amount of tax owed for the preceding calendar month. At the time the tax return is filed, the full amount of the tax owed for the preceding calendar month shall be remitted to the director.

B. All tax returns shall be completed on forms provided by the director.

C. Tax returns and payments for all outstanding taxes owed the city are immediately due the director upon cessation of business for any reason.

(Measure U (Ord. 2010.2), adopted by electorate, 11-2-10)

Whenever any payment, statement, report, request or other communication received by the director 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 director 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 director may regard such payment, statement, report, request or other communication as having been timely received. If the due day falls on Saturday, Sunday or a holiday, the due day shall be the next regular business day on which the city hall is open to the public.

(Measure U (Ord. 2010.2), adopted by electorate, 11-2-10)

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 Section 4.66.260.

(Measure U (Ord. 2010.2), adopted by electorate, 11-2-10)

The director 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.

(Measure U (Ord. 2010.2), adopted by electorate, 11-2-10)

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

1. A penalty equal to twenty-five 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 percent of the amount of the tax if the tax remains unpaid for a period exceeding one calendar month 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 business 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 business tax due shall be that amount due and payable from the first date on which the person was engaged in cannabis business in the city, together with applicable penalties and interest calculated in accordance with Subsection A. above.

(Measure U (Ord. 2010.2), adopted by electorate, 11-2-10; Ord. 30273)

The director may waive the first and second penalties of twenty-five percent each imposed upon any person if:

A. The person provides evidence satisfactory to the director 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 business tax and accrued interest owed the city prior to applying to the director for a waiver.

B. 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.

(Measure U (Ord. 2010.2), adopted by electorate, 11-2-10)

A. No refund shall be made of any tax collected pursuant to this chapter, except as provided in Section 4.66.330.

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

C. 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 business taxes for the next calendar month.

(Measure U (Ord. 2010.2), adopted by electorate, 11-2-10)

A. Whenever the amount of any business 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, it may be refunded to the claimant who paid the tax provided that a written claim for refund is filed with the director, and the provisions of Chapter 4.82 are satisfied.

B. The director or the director's authorized agent 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 therefor refuses to allow such examination of claimant's books and business records after request by the director to do so.

C. In the event that the business tax was erroneously paid and the error is attributable to the city, the entire 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 the schedule of fees and charges established by resolution of the city council from the amount to be refunded to cover expenses.

D. The director shall initiate a refund of any business tax which has been overpaid or erroneously collected whenever the overpayment or erroneous collection is uncovered by a city audit of business tax receipts. In the event that the business tax was erroneously paid and the error is attributable to the city, the entire 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 the schedule of fees and charges established by resolution of the city council from the amount to be refunded to cover expenses.

(Measure U (Ord. 2010.2), adopted by electorate, 11-2-10)