4-36
CANNABIS RETAILER TAX
4-36.1 Authority And Purpose:
a. The purpose of this section is to adopt a tax, for revenue purposes, pursuant to sections 37101 and 37100.5 of the state Government Code, upon cannabis retailers that engage in business in the city. This cannabis retailer tax is levied based upon business gross receipts. It is not a sales and use tax, a tax upon income, or a tax upon real property.
b. The cannabis retailer tax is a general tax enacted solely for general governmental purposes of the city and not for specific purposes. All of the proceeds from the tax imposed by this section 4-36 shall be placed in the city’s general fund and be available for any lawful city expenditure.
c. To the extent that any other provision of the Lynwood Municipal Code is inconsistent with the provisions of this section 4-36, the provisions of this section 4-36 shall prevail. (Ord. #1752, §1)
4-36.2 Intent:
The intent of this section 4-36 is to impose a general tax applicable to cannabis retailers for the purpose of funding any and all governmental purposes, including but not limited to senior citizen programs, city beautification efforts, enforcement of illegal cannabis operations, public safety, housing programs, recreation services, infrastructure, homeless reduction and other city efforts. (Ord. #1752, §1)
4-36.3 Definitions.
When used in this section 4-36, the following words shall have the meanings ascribed to them as set forth herein. Words and phrases not specifically defined below shall have the meanings ascribed to them elsewhere in this code or shall otherwise be defined by common usage. For definitions of nouns, the singular shall also include the plural; for definitions of verbs, all verb conjugations shall be included. Any reference to state statutes includes any regulations promulgated thereunder and is deemed to include any successor or amended version of the referenced statute or regulatory provision.
Adult-use cannabis or adult-use cannabis product means cannabis or cannabis products for individuals twenty-one (21) years of age and over without the need for a physician’s recommendation.
Business means all activities engaged in or caused to be engaged in within the city, including any commercial or industrial enterprise, trade, profession, occupation, vocation, calling, or livelihood, whether or not carried on for gain or profit, but shall not include the services rendered by an employee to that employee’s employer.
Cannabis has the same meaning as defined in section 4-35.
Cannabis product has the same meaning as defined in section 4-35.
Cannabis retailer tax or tax means the tax due pursuant to this section 4-36 for engaging in dispensing within in the city.
City means the city of Lynwood, state of California.
City council means the city council of the city of Lynwood.
Commercial cannabis activity has the same meaning as defined in section 4-35.
Code means the city municipal code.
Customer has the same meaning as defined in section 4-35.
Delivery has the same meaning as defined in section 4-35.
Dispensary or retailer or cannabis retailer has the same meaning as defined in section 4-35.
Dispensing or retail sale(s) has the same meaning as defined in section 4-35.
Employee has the same meaning as defined in section 4-35.
Engaged(s) in business means the commencing, conducting, operating, managing, or carrying on of a cannabis retailer and the exercise of corporate or franchise powers, whether done as an owner, or by means of an officer, agent, manager, employee, or otherwise, whether operating from a fixed location in the city or coming into the city from an outside location to engage in such activities. A person shall be deemed engaged in business if any of the following apply:
a. Such person or person’s employee maintains a fixed place of business within the city for the benefit or partial benefit of such person;
b. Such person or person’s employee owns or leases real property within the city for business purposes;
c. Such person or person’s employee regularly maintains a stock of tangible personal property in the city for sale in the ordinary course of business;
d. Such person or person’s employee regularly conducts solicitation of business within the city; or
e. Such person or person’s employee performs work or renders services in the city.
The foregoing specified activities shall not be a limitation on the meaning of “engaged in business.”
Evidence of doing business means evidence such as, without limitation, use of signs, circulars, cards or any other advertising media, including the use of internet or telephone solicitation, or representation to a government agency or to the public that such person is engaged as a cannabis retailer in the city.
Fiscal year means July 1 through June 30 of the following calendar year.
Gross receipts has the same meaning as defined in section 4-35.
Manager has the same meaning as defined in section 4-35.
Marijuana means “cannabis” as that term is defined in this section 4-36.
MAUCRSA has the same meaning as defined in section 4-35.
Medicinal cannabis or medicinal cannabis product means cannabis or a cannabis product for use by a qualified patient.
Owner has the same meaning as defined in section 4-35.
Patient or qualified patient has the same meaning as defined in section 4-35.
Person has the same meaning as defined in section 4-35.
Person with an identification card has the same meaning as defined in section 4-35.
Sale means any sale, exchange, or barter or other transaction for any consideration.
State means the state of California.
Tax administrator means the city manager of the city of Lynwood or his/her designee(s). (Ord. #1752, §1)
4-36.4 Tax Imposed:
a. There is established and imposed upon each person who is engaged in business as a cannabis retailer an annual cannabis retailer tax, at the rates set forth in this section 4-36. Such tax is payable regardless of whether the business is operating lawfully in the city or unlawfully. The city’s acceptance of a cannabis retailer tax payment, from a cannabis retailer operating illegally, shall not constitute the city’s approval or consent to such illegal operations.
b. Medicinal Retailers And Adult-use Retailers. The cannabis retailer tax upon every person who engages in business as a retailer of medicinal cannabis, medicinal cannabis products, or adult-use cannabis or adult use cannabis products shall be at the following annual rates:
1. The tax rate upon the effective date of this section 4-36 shall be five percent (5%) of the gross receipts derived from the retail sale of medicinal cannabis or medicinal cannabis products or adult-use cannabis or adult-use cannabis products. Such tax rate may increase or decrease by resolution adopted by the city council but shall not exceed the maximum tax rate of ten percent (10%) without voter approval. (Ord. #1752, §1)
4-36.5 Exemptions From The Tax:
This section 4-36 shall not apply to personal use of cannabis that is specifically exempted from state licensing requirements and that meets the definition of personal use or equivalent terminology under state law. (Ord. #1752, §1)
4-36.6 Reporting And Remittance Of Tax:
The cannabis retailer tax imposed by this section 4-36 shall be imposed on a fiscal year basis and shall be due and payable in quarterly installments as follows:
a. The owner(s) or manager(s) of each cannabis retailer shall, on or before the last day of the month following the close of each fiscal year quarter, prepare and submit a tax statement on the form prescribed by the tax administrator and remit to the tax administrator the tax due. The tax due shall be no less than the quarterly installment due, but the taxpayer may prepay any amount of tax at any time.
b. Tax statements and payments for all outstanding taxes owed the city are immediately due to the tax administrator upon cessation of a cannabis retailer for any reason. (Ord. #1752, §1)
4-36.7 Nonpayment Of Tax; Penalties And Interest Established By Ordinance:
a. Any person who fails or refuses to pay any cannabis retailer tax required to be paid pursuant to this section 4-36 on or before the due date shall pay penalties and interest as follows:
1. A penalty equal to ten percent (10%) 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 the rate of one percent (1%) per month.
2. If the tax remains unpaid for a period exceeding three (3) calendar months beyond the due date, an additional penalty equal to twenty-five percent (25%) of the amount of the tax, plus interest at the rate of one percent (1%) per month on the unpaid tax and on the unpaid penalties.
b. These penalty provisions shall not be construed to preclude or limit the enforcement of the penal provisions of this section 4-36 or this code.
c. Whenever a check or electronic payment is submitted in payment of a cannabis retailer tax and the payment is subsequently returned unpaid by the bank, the taxpayer will be liable for the tax amount due plus any fees, penalties, and interest as provided for in this section 4-36, and any other amount allowed under state law. (Ord. #1752, §1)
4-36.8 Administration Of The Tax:
a. It shall be the duty of the tax administrator to collect the taxes, penalties, fees, and perform the duties required by this section 4-36.
b. For purposes of administration and enforcement of this section 4-36 generally, the tax administrator may from time to time promulgate such administrative interpretations, rules, and procedures consistent with the purpose, intent, and express terms of this section 4-36 as he/she deems reasonably necessary to implement or clarify such provisions or aid in enforcement, including but not limited to:
1. Provide forms to all taxpayers for the reporting of the tax;
2. Provide information to any taxpayer concerning the provisions of this section 4-36;
3. Receive and record all taxes remitted to the city as provided in this section 4-36;
4. Maintain records of taxpayer reports and taxes collected pursuant to this section 4-36;
5. Assess penalties and interest to taxpayers pursuant to this section 4-36; and
6. Determine amounts owed and enforce collection pursuant to this section 4-36. (Ord. #1752, §1)
4-36.9 Appeal Procedure:
Any taxpayer aggrieved by any decision of the tax administrator with respect to the amount of tax, interest, penalties, and fees, if any, due under this section 4-36 may appeal to the city council by filing a notice of appeal with the city clerk within forty-five (45) calendar days of the serving or mailing of the determination of tax due. The city clerk, or his or her designee, shall fix a time and place for hearing such appeal, and the city clerk, or his/her designee, shall give notice in writing to such cannabis retailer at the last known place of address. The finding of the city council shall be a final administrative decision, subject to judicial review and remedies, and shall be served upon the appellant in the manner prescribed by this section 4-36 for service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of the notice. (Ord. #1752, §1)
4-36.10 Constitutionality And Legality:
This tax is intended to be applied in a manner consistent with the United States and state Constitutions and state law. None of the tax provided for by this section 4-36 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, or a violation of any other provision of the state Constitution or state law. If a person believes that the tax, as applied to him or her, is impermissible under applicable law, he or she may request that the tax administrator release him or her from the obligation to pay the impermissible portion of the tax. (Ord. #1752, §1)
4-36.11 Apportionment:
If a cannabis retailer subject to the tax is operating both within and outside the city, it is the intent of the city to apply the cannabis retailer tax so that the measure of the tax fairly reflects the proportion of the taxed activity actually carried on in the city. To the extent federal or state law requires that any tax due from any taxpayer be apportioned, the taxpayer may indicate said apportionment on his or her tax return. The tax administrator may promulgate administrative procedures for apportionment as he or she finds reasonably useful or necessary. (Ord. #1752, §1)
4-36.12 Audit And Examination Of Records And Equipment:
a. For the purpose of ascertaining the amount of cannabis retailer tax owed or verifying any representations made by any taxpayer to the city in support of his or her tax calculation, the tax administrator shall have the power to inspect any location where commercial cannabis activity occurs and to audit and examine all books and records (including, but not limited to, bookkeeping records, state and federal income tax returns, and other records relating to the gross receipts of the business) of owners and managers of a cannabis retailer. In conducting such investigation, the tax administrator shall have the power to inspect any equipment, such as computers or point of sale machines, that may contain such records.
b. It shall be the duty of every person liable for the collection and payment to the city of any tax imposed by this section 4-36 to keep and preserve, for a period of at least seven (7) 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 tax administrator shall have the right to inspect at all reasonable times. (Ord. #1752, §1)
4-36.13 Payment Of Tax Does Not Authorize Unlawful Conduct:
a. The payment of a cannabis retailer tax required by this section 4-36, and its acceptance by the city, shall not entitle any person to operate as a cannabis retailer unless the person has complied with all of the requirements of this code, MAUCRSA, and all other applicable state laws.
b. No tax paid under the provisions of this section 4-36 shall 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.
c. Nothing in this section 4-36 shall be construed as in conflict with state or federal law.
d. It shall be the responsibility of the owners and managers of a cannabis retailer to ensure that the cannabis retailer is, at all times, operating in a manner compliant with the protection of public health, safety, and community standards, including all applicable state and local laws and regulations, including any subsequently enacted state or local law or regulatory, licensing, or certification standards or requirements, and any specific, additional operating procedures or requirements, which may be imposed as conditions of approval of any state or city license or permit. (Ord. #1752, §1)
4-36.14 Other Licenses, Permits, Taxes, Fees, Or Charges:
Nothing contained in this section 4-36 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 other provision of this code or any other ordinance or resolution of the city 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 provision of this code or any other ordinance or resolution of the city council. Any references made or contained in any other provision 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 provisions of this code. (Ord. #1752, §1)
4-36.15 Deficiency Determinations:
If the tax administrator is not reasonably satisfied that any statement filed as required under the provisions of this section 4-36 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 basis of the facts contained in the statement or upon the basis of any information in his or her possession or that may come into his or her possession within two (2) 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 engaging in a business, a deficiency determination may be made at any time within two (2) years thereafter as to any liability arising from engaging in such business whether or not a deficiency determination is issued prior to the date the tax would otherwise be due. 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 this section 4-36. (Ord. #1752, §1)
4-36.16 Failure To Report; Nonpayment; Fraud:
a. Under any of the following circumstances, the tax administrator may make and give notice of an assessment of the amount of tax owed by a person under this section 4-36 at any time:
1. If the person has not filed a complete statement required under the provisions of this section 4-36;
2. If the person has not paid the tax due under the provisions of this section 4-36;
3. If the person has not, after demand by the tax administrator, filed a corrected statement, or furnished to the tax administrator adequate substantiation of the information contained in a statement already filed, or paid any additional amount of tax due under the provisions of this section 4-36; or
4. If the tax administrator determines that the nonpayment of any cannabis retailer tax is due to fraud, a penalty of twenty-five percent (25%) of the amount of the tax shall be added thereto in addition to penalties and interest otherwise stated in this section 4-36 and any other penalties permitted by law.
b. The notice of assessment shall separately set forth the amount of any tax known by the tax administrator to be due or estimated by the tax administrator, after consideration of all information within the tax administrator’s knowledge concerning the business and activities of the person assessed, to be due under each applicable section of this section 4-36 and shall include the amount of any penalties or interest accrued on each amount to the date of the notice of assessment. (Ord. #1752, §1)
4-36.17 Tax Assessment; Notice Requirements:
The notice of assessment shall be served upon the person either (a) by personal delivery; (b) by overnight delivery by a nationally recognized courier service, or by a deposit of the notice via United States Postal Service Priority Mail Express (or a comparable service with another carrier or with the United States Postal Service, should Priority Mail Express no longer be provided) with proof of delivery, 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 tax administrator for the purpose of receiving notices provided under this section 4-36; or (c) should the person have no address registered with the tax administrator for such purpose, then to such person’s last known address. For the purposes of this subsection 4-36.17, a service by overnight delivery shall be deemed to have occurred one calendar day following deposit with a courier and service by United States Postal Service Priority Mail Express shall be deemed to have occurred three (3) calendar days following deposit of the notice. (Ord. #1752, §1)
4-36.18 Tax Assessment; Hearing, Application, And Determination:
Within forty-five (45) calendar days after the date of service, the person may apply in writing to the tax administrator for a hearing on the assessment. If application for a hearing before the city is not made within the time herein prescribed, the tax assessed by the tax administrator shall be a final administrative decision, subject to judicial review. Within thirty (30) calendar days of the receipt of any such application for hearing, the tax administrator shall cause the matter to be set for hearing before him or her no later than thirty (30) calendar days after the receipt of the application, unless a later date is agreed to by the tax administrator and the person requesting the hearing. Notice of such hearing shall be given by the tax administrator to the person requesting such hearing not later than fifteen (15) calendar days prior to such hearing. At such hearing said applicant may appear and offer evidence why the assessment as made by the tax administrator should not be confirmed and fixed as the tax due. After such hearing the tax administrator shall determine and reassess the proper tax to be charged and shall give written notice to the person in the manner prescribed in this section 4-36 for giving notice of assessment. (Ord. #1752, §1)
4-36.19 Relief From The Tax; Disaster Relief:
a. If a cannabis retailer is unable to comply with any tax requirement due to a disaster, the cannabis retailer may notify the tax administrator of this inability to comply and request relief from the tax requirement. A request for relief must clearly indicate why relief is requested, the time period for which the relief is requested, and the reason relief is needed for the specific amount of time.
b. To obtain relief, the cannabis retailer agrees to grant the tax administrator access to the location where the cannabis retailer has been impacted due to a disaster.
c. The tax administrator, in his or her reasonable discretion, may provide relief from the cannabis retailer tax requirement for cannabis retailer whose operations have been impacted by a disaster if such tax liability does not exceed one hundred thousand dollars ($100,000.00). If such tax liability is one hundred thousand one dollars ($100,001.00) or more, then such relief shall only be approved by the city council.
d. Temporary relief from the cannabis retailer tax may be granted for a reasonable amount of time as determined by the tax administrator or the city council, as applicable in order to allow the cannabis retailer time to recover from the disaster.
e. The tax administrator or city council, as applicable, may require that certain conditions be followed in order for a cannabis retailer to receive temporary relief from the cannabis retailer tax requirement.
f. For purposes of this subsection 4-36.19, “disaster” means, including, but not limited to, natural disasters (such as, but not limited to, fires, explosions, earthquakes, drought, tidal waves, and floods); war, hostilities, invasion, act of foreign enemies, mobilization, requisition, or embargo; rebellion, revolution, insurrection, military or usurped power, or civil war; riot, commotion, strikes, go slows, lock outs, or disorder; a pandemic; or acts or threats of terrorism. (Ord. #1752, §1)
4-36.20 Conviction For Violation; Tax Not Waived:
The conviction and punishment of any person for failure to pay the required cannabis retailer tax shall not excuse or exempt such person from any civil action for the tax debt unpaid at the time of such conviction. No civil action shall prevent a criminal prosecution for any violation of the provisions of this section 4-36 or of any state law requiring the payment of all taxes. (Ord. #1752, §1)
4-36.21 Violation Deemed Misdemeanor, Infraction Or Administrative Violation:
Each and every material violation of the provisions of this section 4-36 may be prosecuted as a misdemeanor, infraction, or administrative violation at the discretion of the city manager. Each day a material violation is committed or permitted to continue shall constitute a separate offense. (Ord. #1752, §1)
4-36.22 Remedies Cumulative And Not Exclusive:
The remedies provided herein are not to be construed as exclusive remedies. The city is authorized to pursue any proceedings or remedies provided by law. (Ord. #1752, §1)