Chapter 3.80
CANNABIS BUSINESS TAX
Sections:
3.80.050 Declaration statement required.
3.80.070 Audit of declaration statement and payment.
3.80.080 Notice not required by city.
3.80.090 Tax deemed debt to city.
3.80.100 Deficiency determinations.
3.80.110 Tax assessment – Nonpayment – Fraud.
3.80.120 Tax assessment – Notice requirements.
3.80.130 Tax assessment – Hearing.
3.80.140 Remedies for chapter violation – Taxes not waived.
3.80.010 Short title.
This chapter shall be known as the Rancho Cordova cannabis business tax ordinance. [Ord. 18-2010 § 1].
3.80.020 Purpose and intent.
This chapter is enacted solely to raise revenue for municipal purposes and is not intended for regulation. This chapter shall only take effect if Proposition 19, also known as the “The Regulate, Control and Tax Cannabis Act of 2010,” is passed and adopted by the voters of the state of California, or upon the adoption of any other state or federal law allowing such businesses. No special business license for a cannabis business shall be issued until and unless the city council adopts or enacts regulations which specifically allow the establishment and operation of cannabis businesses, as defined by this chapter, within the city. [Ord. 18-2010 § 1].
3.80.030 Definitions.
A. “Annual gross receipts” shall mean the gross receipts produced by the cannabis business during the 12-month period between issuance and renewal of the special business license for the cannabis business.
B. “Building” shall mean any structure having a roof supported by a columns or by walls and designed for the shelter or housing of any person, chattel or property of any kind. The word “building” includes the word “structure.”
C. “Business improvements” shall mean square footage used, on a regular basis, for the operation of a nonprofit organization as defined in Article XIII, Section 26 of the California Constitution, regardless of whether it is owned or leased.
D. “Cannabis business” shall mean any business, nonprofit organization, or activity including, but not limited to, planting, cultivation, harvesting, transporting, manufacturing, compounding, converting, processing, preparing, storing, packaging, testing, or wholesale and/or retail sales of marijuana, any part of the plant Cannabis sativa L. or any of its derivatives, and specifically excludes the activity of cultivating Cannabis sativa L. or any of its derivatives on personal property for personal consumption by the owner, lawful occupant, or other lawful resident or guest of the private property owner, or lawful occupant.
E. “Discontinued, dissolved or otherwise terminated” shall mean the date the cannabis business is no longer in operation as described in the special business license for operation of a cannabis business issued to the cannabis business by the city pursuant to RCMC Title 4. The finance director, using all evidence, including evidence provided by the cannabis business licensee, shall make the determination as to whether a cannabis business has been discontinued, dissolved or otherwise terminated.
F. “Gross receipts” shall mean the total of the amounts actually received or receivable from sales and the total amounts actually received or receivable for the performance of any act or service for which a charge is made or credit allowed, whether or not such act or service is done as a part of or in conjunction with the sale of materials, goods, wares, or merchandise. Included in gross receipts shall be all receipts, cash, credits and property of any kind without deduction of the cost of the property sold, the cost of the materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever. Excluded from gross receipts are the following:
1. Cash discounts allowed and taken on sales;
2. Credit allowed on property accepted as part of the purchase price and which property may later be sold;
3. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;
4. Such part of the sale price of property returned by purchases upon rescission of the contract of sale as is refunded either in cash or by credit.
G. “Licensee” or “cannabis business licensee” shall mean a person who has been issued a special business license for operation of a cannabis business under RCMC Title 4.
H. “Nonprofit organization” shall mean any association, corporation or other entity that is exempt from taxation measured by income or gross receipts under Article XIII, Section 26 of the California Constitution, and that its purpose or involvement is with Cannabis sativa L. or its derivatives.
I. “Square foot” and “square footage” shall mean the horizontal areas of all floors, including usable basement and cellars, below the roof and within the outer surface of the main walls of buildings (or the center lines of party walls separating such building or portions thereof) or within lines drawn parallel to and two feet within the roof line of any building or portion thereof without walls (which includes square footage of all porches), and including pedestrian access walkways or corridors and shelf space if used or equipped for cultivation, but excluding the following:
1. Areas used for off-street parking spaces or loading berths and driveways and maneuvering aisles relating thereto.
2. Areas which are outdoor or semi-outdoor areas included as part of the building to provide a pleasant and healthy environment for the occupants thereof and the neighborhood in which the building is located. This exempted area is limited to stoops, balconies and to natural ground areas, terraces, pools and patios which are landscaped and developed for active or passive recreational use, and which are accessible for use by occupants of the building.
3. Arcades, porticoes, and similar open areas which are located at or near street level, which are accessible to the general public, and which are not designed or used as sales, display, storage, service or production areas.
J. “Structure” shall mean anything constructed or erected, the use of which requires location on the ground or attachment to something having location on the ground. [Ord. 18-2010 § 1].
3.80.040 Payment of tax.
In addition to any requirements imposed by RCMC Title 4, each licensee operating a cannabis business shall pay the following taxes:
A. Every for-profit cannabis business with annual gross receipts of $1,000,000 or less shall pay an annual tax of $120.00 for each $1,000 of gross receipts.
B. Every for-profit cannabis business with annual gross receipts of over $1,000,000 shall pay an annual tax of $120.00 for each $1,000 of gross receipts for the first $1,000,000, and then $150.00 for each $1,000 of gross receipts over $1,000,000. For example, if the annual gross receipts of a cannabis business are $2,000,000, then the tax owed the city will be $270,000, calculated as follows: $120.00 for each $1,000 of gross receipts for the first $1,000,000 equals $120,000, plus $150.00 for each $1,000 of gross receipts for the second $1,000,000, which equals $150,000, for a total of $270,000.
C. Every nonprofit organization cannabis business, including all of its ancillary locations regardless of the number of square feet it occupies, shall pay an annual tax of $100.00 per square foot on all business improvements occupied by the cannabis business. For purposes of this section, all of the square feet of business improvements owned, rented, leased or otherwise occupied or used by a cannabis business within the city shall be accumulated.
D. The city council may impose the tax authorized by this section at a lower rate. No action by the city council under this subsection shall prevent it from subsequently increasing the tax rate for cannabis business to the maximum rate specified in this section. [Ord. 18-2010 § 1].
3.80.050 Declaration statement required.
A. For-Profit. At the time of payment of the taxes imposed by this chapter, each for-profit cannabis business licensee shall file with the city finance department a statement, under oath, showing the true and correct amount of annual gross receipts derived from the cannabis business allowed by the special business license issued to the licensee. A signed declaration shall be attached to the statement included therein, which shall be in substantially the same form as: “I hereby declare under penalty of perjury that the foregoing is true and correct.” Pursuant to RCMC 3.80.070, the city shall have the right to audit the matters reported in the statement to determine the accuracy of the figures contained therein.
B. Nonprofit Organization. At the time of payment of the taxes imposed by this chapter, each nonprofit organization cannabis business licensee shall file with the city finance department a statement, under oath, setting forth the then-applicable factor or factors that constitute the measure of tax, including square footage calculations, together with such other information as is required by the finance director to enable it to administer the provisions of this chapter. A signed declaration shall be attached to the statement included therein, which shall be in substantially the same form as: “I hereby declare under penalty of perjury that the foregoing is true and correct.” Pursuant to RCMC 3.80.070, the city shall have the right to audit the matters reported in the statement to determine the accuracy of the information and calculations contained therein. [Ord. 18-2010 § 1].
3.80.060 Payment – Timing.
A. All taxes imposed by this chapter on a cannabis business whether it is a nonprofit organization or a for-profit business shall be paid to the city’s finance department on or before the fifteenth day after the close of the month for which the tax is due. Licensees or operators of cannabis businesses will file a monthly report with the city, even if there are no taxes currently due. The report will show their annual gross receipts to date as of the close of the prior month and will be used to calculate the amount of tax due. Payment will accompany the form. The form will be provided by the city and the city may revise the report from time to time. Payment of taxes imposed by this chapter shall be in the correct amount of taxes due and owing in accordance with RCMC 3.80.040. Such sums correctly reflecting taxes shall be accepted by the city, subject, however, to the city’s right to conduct an audit pursuant to RCMC 3.80.070.
B. If any licensee or operator of a cannabis business is liable for any amount of tax, interest or penalty under this chapter, sells or otherwise disposes of the business, his successors or assigns shall withhold from the purchase price a sum sufficient to cover such amount until the former licensee or operator produces from the city either a receipt reflecting full payment or a certificate stating that no amount is due.
C. If the purchaser of a cannabis business fails to withhold a sum from the purchase price as required in subsection (B) of this section, he/she shall be personally liable for the payment of the amount required to be withheld by him to the extent of the purchase price. [Ord. 18-2010 § 1].
3.80.070 Audit of declaration statement and payment.
A. The city shall have the right to audit the matters referred to in the declaration statement, and to determine the correctness of the figures set forth in such statement, and the amount payable to the city pursuant to the provisions of RCMC 3.80.040.
B. The books, records and accounts of any licensee may be inspected and audited by the city.
C. Such an inspection and audit may be performed by the finance director, a qualified accountant or city official who shall be selected by the finance director.
D. To facilitate such audits, the licensee shall keep complete records of all transactions related to the receipt or disbursement of funds arising out of or related to cannabis business operations during the preceding three-year period. All such records shall be made available to the city for audit at the licensee’s place of doing business during normal business hours after reasonable prior notice.
E. Any failure or refusal of any licensee to make and file a declaration statement within the required time period, or to pay such sums by way of taxes when the same are due and payable in accordance with the provisions of this chapter, or to permit such inspection of such books, records and accounts of such licensee shall be and constitute full and sufficient grounds for suspension or revocation of any special business license for operation of a cannabis business. [Ord. 18-2010 § 1].
3.80.080 Notice not required by city.
The city 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, interest or penalty due under the provisions of this chapter. [Ord. 18-2010 § 1].
3.80.090 Tax deemed debt to city.
The amount of any tax, penalties and interest imposed by the provisions of this chapter shall be deemed a debt to the city, and any licensee carrying on any business without having paid the tax under this chapter to the city shall be liable to an action in the name of the city in any court of competent jurisdiction for the amount of the tax, and penalties and interest imposed on such business. [Ord. 18-2010 § 1].
3.80.100 Deficiency determinations.
A. If the finance director is not satisfied that a declaration statement filed, as required under the provisions of this chapter, is correct, or that the amount of tax is correctly computed, the finance director may compute and determine the amount to be paid and make a deficiency determination upon the basis of the facts contained in the declaration statement or upon the basis of any information in the city’s possession or that may come into the city’s possession.
B. The city may make more than one deficiency determination of the amount of tax due for a period or periods.
C. In the case of a cannabis business which is discontinued, dissolved or otherwise terminated, a deficiency determination may be made at any time within three 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.
D. Whenever a deficiency determination is made, the city shall provide a notice to the licensee concerned in the same manner as notices of assessment are given under RCMC 3.80.120. [Ord. 18-2010 § 1].
3.80.110 Tax assessment – Nonpayment – Fraud.
A. Under any of the following circumstances, the finance director may make and give notice of an assessment of the amount of tax owed by a cannabis business under this chapter:
1. If the licensee has not filed any declaration statement required under the provisions of this chapter;
2. If the licensee has not paid any tax due under the provisions of this chapter;
3. If the licensee has not, after demand by the finance director, filed a corrected declaration statement or furnished to the finance director adequate substantiation of the information contained in a statement of revenue already filed, or paid any additional amount of tax due under the provisions of this chapter.
B. The notice of assessment shall separately set forth the amount of any tax known or estimated by the finance director to be due, after full consideration of all information within his or her knowledge concerning the cannabis business activities of the person or licensee assessed and shall include the amount of any penalties, costs or interest accrued on each amount to the date of the notice of assessment. [Ord. 18-2010 § 1].
3.80.120 Tax assessment – Notice requirements.
The notice of assessment shall be served upon the licensee either by personal service on the licensee, or by depositing the notice in the United States mail, postage prepaid thereon, addressed to the licensee at the address of the location of the business appearing on the face of the special business license(s) issued under RCMC Title 4 to the licensee, or to such other address as the licensee registers with the finance director for the purpose of receiving notices provided under this chapter. For the purposes of this section, service by mail is complete at the time of deposit in the United States mail. [Ord. 18-2010 § 1].
3.80.130 Tax assessment – Hearing.
A. Within 10 days after the date of service of a notice under RCMC 3.80.120, the licensee may apply in writing to the finance director for a hearing on the assessment.
B. If application for a hearing before the finance director is not made within the time herein prescribed, the tax assessed by the finance director shall become final and conclusive.
C. Within 30 days of the receipt of any such application for hearing, the finance director shall cause the matter to be set for hearing before him or her not later than 30 days after the date of application, unless a later date is agreed to by the finance director and the licensee requesting the hearing.
D. Notice of such hearing shall be given by the finance director to the licensee requesting such hearing not later than five days prior to such hearing. At such hearing, said licensee may appear and offer evidence why the assessment as made by the finance director should not be confirmed and fixed as a tax.
E. After such hearing, the finance director shall determine and reassess the proper tax to be charged and shall give written notice thereof to the licensee in the manner prescribed in RCMC 3.80.120 for giving notice of assessment. [Ord. 18-2010 § 1].
3.80.140 Remedies for chapter violation – Taxes not waived.
A. Nothing in this chapter shall limit the city from using any remedy legally available for violations of this chapter, including, but not limited to, the penalties under RCMC 16.18.205.
B. The conviction and punishment of any person for failure to pay the required tax shall not excuse or exempt such person from any civil action for the tax debt unpaid at the time of such conviction.
C. 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. 18-2010 § 1].