Chapter 5.40 CANNABIS BUSINESS TAX

Unless otherwise specified herein, the definitions set forth in this article shall govern the application and interpretation of this chapter. [Ord. 354 § 2, 2017.]

5.40.030 Business.

The term “business” shall include 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 his or her employer. [Ord. 354 § 2, 2017.]

5.40.040 Business license.

“Business license” means the license issued by the City to the taxpayer upon completion of the business license application and payment of the tax prescribed by Chapter 5.05 RDMC. [Ord. 354 § 2, 2017.]

5.40.050 Director.

“Director” means the Director of the Finance Department of the City or, if the Director of the Finance Department position is vacant or the Director is incapacitated or otherwise unavailable, such other person designated by the City Manager to administer this chapter. [Ord. 354 § 2, 2017.]

5.40.060 Employee.

“Employee” means each and every person engaged in the operation or conduct of any business, whether as owner, member of the owner’s family, partner, associate, agent, manager or solicitor, and each and every other person employed or working in such business for a wage, salary, commission or room and board or as a volunteer. [Ord. 354 § 2, 2017.]

5.40.070 Engaged in business.

(1) “Engaged in business” means the commencing, conducting, operating, managing or carrying on of commercial cannabis activity (as defined below) and the exercise of corporate or franchise powers, whether done as 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.

(2) A person shall be deemed engaged in business within the City if:

(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, rents, 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;

(e) Such person or person’s employee performs work or renders services in the City on a regular and continuous basis involving more than five working days per year; and

(f) Such person or person’s employee utilizes the streets within the City in connection with the operation of motor vehicles for business purposes.

The foregoing specified activities shall not be a limitation on the meaning of engaged in business. [Ord. 354 § 2, 2017.]

5.40.080 Evidence of doing business.

Whenever any person shall, by use of signs, circulars, cards or any other advertising media, including the use of internet or telephone solicitation, represent that such person is engaged in business in the City, then these facts may be used as evidence that such person is engaged in business in the City. [Ord. 354 § 2, 2017.]

5.40.090 Gross receipts.

“Gross receipts,” except as otherwise specifically provided, means the total amount actually received or receivable from all sales; the total amount or compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials, goods, wares or merchandise; discounts, rents, royalties, fees, commissions, dividends, and gains realized from trading in stocks or bonds, however designated. Included in “gross receipts” shall be all receipts, cash, credits and property of any kind or nature, 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, or losses or other expenses whatsoever, except that the following shall be excluded therefrom:

(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, at which time the sales price shall be included as gross receipts;

(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 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;

(5) Receipts from investments where the holder of the investment receives only interest and/or dividends, royalties, annuities and gains from the sale exchange of stock or securities solely for a person’s own account, not derived in the ordinary course of a business;

(6) 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;

(7) Cash value of sales, trades or transactions between departments or units of the same business;

(8) Whenever there are included within the gross receipts amounts which reflect sales for which credit is 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 shall be included in the amount of gross receipts for the period when they are recovered;

(9) Receipts of refundable deposits, except that such deposits when forfeited and taken into income of the business shall not be excluded when in excess of $1.00;

(10) Amounts collected for others where the business is acting as an agent or trustee and to the extent that such amounts are paid to those for whom collected. These agents or trustees must provide the Finance Department with the names and the addresses of the others and the amounts paid to them. This exclusion shall not apply to any fees, percentages, or other payments retained by the agent or trustees.

“Gross receipts” subject to the business tax shall be that portion of gross receipts relating to business conducted within the City. [Ord. 354 § 2, 2017.]

5.40.100 Square foot.

The term “square foot” means the maximum amount of allowable canopy area for cannabis cultivation authorized by a City permit or license issued by the City to a person engaged in business involving commercial cannabis cultivation activity, or by a State license in the absence of a City permit or license, not deducting for unutilized square footage. [Ord. 354 § 2, 2017.]

5.40.110 Cannabis.

The term “cannabis” shall have the same meaning as that term is defined in RDMC 17.30.090(6). [Ord. 354 § 2, 2017.]

5.40.120 Commercial cannabis activity.

The term “commercial cannabis activity” means commercial cannabis cultivation activity, as that term is defined in RDMC 5.40.130 and/or other commercial cannabis activity, as that term is defined in RDMC 5.40.140. [Ord. 354 § 2, 2017.]

5.40.130 Commercial cannabis cultivation activity.

The term “commercial cannabis cultivation activity” means activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of cannabis in the City, by a person engaged in business. Without limiting the foregoing, a person is engaged in business involving commercial cannabis cultivation activity if he, she, or it is operating pursuant to a Type 1, Type 1A, Type 1B, Type 2, Type 2A, Type 2B, Type 3, Type 3A, Type 3B, and/or Type 4 license, as those license types are defined in Section 19300.7 of the California Business and Professions Code and/or RDMC 17.30.090. [Ord. 354 § 2, 2017.]

5.40.140 Other commercial cannabis activity.

The term “other commercial cannabis activity” means activity, other than commercial cannabis cultivation activity, involving transporting, distributing, manufacturing, testing, dispensing, wholesale, retail sales of cannabis and any ancillary products in the City, or other commercial cannabis activity the Council may permit or authorize in the future, by a person engaged in business. Without limiting the foregoing, a person is engaged in business involving other commercial cannabis activity if he, she, or it is operating pursuant to a Type 6, Type 7, Type 8, Type 10, Type 10A, Type 11, and/or Type 12 license, as those license types are defined in Section 19300.7 of the California Business and Professions Code and/or RDMC 17.30.090. [Ord. 354 § 2, 2017.]

5.40.150 Cannabis business tax.

“Business tax” or “cannabis business tax” or “cannabis tax” shall mean the tax due for engaging in commercial cannabis activity in the City. [Ord. 354 § 2, 2017.]

5.40.160 Person.

“Person” means, without limitation, any natural individual, organization, firm, trust, common law trust, estate, partnership of any kind, association, syndicate, club, joint stock company, joint venture, limited liability company, corporation (including foreign, domestic, and nonprofit), collective, cooperative, receiver, trustee, guardian, or other representative appointed by order of any court. [Ord. 354 § 2, 2017.]

5.40.170 Sale.

“Sale” means and includes any sale, exchange, or barter. [Ord. 354 § 2, 2017.]

Article II. General Tax Provisions

5.40.200 Other licenses, permits, taxes, fees or charges.

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 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 of the City 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 title or chapter of this code or any other ordinance of the City or resolution of the City 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. [Ord. 354 § 2, 2017.]

5.40.210 Business tax certificate – Required.

(1) There are imposed upon all persons engaged in a business involving commercial cannabis activity in the City taxes in the amounts prescribed in this chapter and Chapter 5.05 RDMC. It shall be unlawful for any person, either for himself or herself or for any other person, to commence, transact or carry on any commercial cannabis activity in the City without first having procured a business license from the City under Chapter 5.05 RDMC 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 commercial cannabis activity without complying with any and all provisions of this chapter and Chapter 5.05 RDMC shall constitute a separate violation of this chapter and Chapter 5.05 RDMC for each and every day that such activity is so carried on.

(2) The business license required to be obtained under Chapter 5.05 RDMC and the taxes required to be paid under this chapter and Chapter 5.05 RDMC are declared to be required pursuant to the taxing power of the City solely for the purpose of obtaining revenue and are not regulatory permit fees. [Ord. 354 § 2, 2017.]

5.40.220 Payment of tax does not authorize unlawful business.

(1) The payment of a business license tax required by this chapter, and its acceptance by the City, shall not entitle any person to carry on any commercial cannabis activity unless the person has complied with all of the requirements of this code and all other applicable laws, nor to carry on any such activity 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 commercial cannabis activity is in violation of any law.

(2) 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. [Ord. 354 § 2, 2017.]

5.40.230 Application – Form and contents.

Every person required to have a business license under the provisions of Chapter 5.05 RDMC shall make application for the same, or for renewal of the same, to the Director. 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 5.05 RDMC, together with such other information as is required by the Director to enable the Director to administer the provisions of this chapter. [Ord. 354 § 2, 2017.]

5.40.240 Payment – Location.

The tax imposed under this chapter shall be paid to the Director in lawful money of the United States, at the office of the Director, or any other location designated by the Director. 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. [Ord. 354 § 2, 2017.]

5.40.250 Amount of business tax owed.

(1) Tax Rate for Commercial Cannabis Cultivation Activity.

(a) In addition to the business tax imposed under Chapter 5.05 RDMC and the requirements set forth therein, every person engaged in business involving commercial cannabis cultivation activity in the City shall pay a business tax at a rate of up to $2.00 per square foot or at a rate of up to two percent of gross receipts, as set and determined by the Council, in its discretion, by ordinance.

(b) Notwithstanding anything in this chapter to the contrary, the City Council shall not increase the applicable maximum tax rate set forth in subsection (1)(a) of this section for persons engaged in business involving commercial cannabis cultivation activity without submitting the proposed increase to the voters. Notwithstanding the maximum tax rate imposed under subsection (1)(a) of this section, the City Council may, in its discretion, at any time by ordinance, implement a lower tax rate for commercial cannabis cultivation activity or establish differing tax rates for different categories, including permit or license types, of commercial cannabis cultivation activity subject to the maximum rate.

(c) The initial tax rates imposed upon persons engaged in business involving commercial cannabis cultivation activity shall be as follows:

(i) Two dollars per square foot for persons issued a permit or license, other than a permit or license to operate a nursery, to engage in greenhouse, mixed-light, and/or indoor cultivation of cannabis within the City of Rio Dell.

(ii) Two percent of gross receipts for persons issued a permit or license to operate a nursery within the City of Rio Dell.

(2) Tax Rate for Other Commercial Cannabis Activity.

(a) In addition to the business tax imposed under Chapter 5.05 RDMC and the requirements set forth therein, every person engaged in business involving other commercial cannabis activity in the City shall pay a business tax at a rate of up to two percent of gross receipts, as set and determined by the Council, in its discretion, by ordinance.

(b) Notwithstanding anything in this chapter to the contrary, the City Council shall not increase the applicable maximum tax rate set forth in subsection (2)(a) of this section for persons engaged in business involving other commercial cannabis activity without submitting the proposed increase to the voters. Notwithstanding the maximum tax rate imposed under subsection (2)(a) of this section, the City Council may, in its discretion, at any time by ordinance, implement a lower tax rate for other commercial cannabis activity or establish differing tax rates for different categories, including permit or license types, of commercial cannabis activity subject to the maximum rate.

(c) The initial tax rate imposed upon persons engaged in business involving other commercial cannabis activity shall be two percent of gross receipts. [Ord. 373 §§ 2, 3, 2019; Ord. 354 § 2, 2017.]

5.40.260 Security for payment of taxes.

(1) Surety Bond for Cultivation Activity.

(a) The City at its sole discretion may require a guaranty for the payment of cultivation taxes, based on the annual cultivation declaration.

(b) Guarantee Required. To ensure that persons engaged in business involving commercial cannabis cultivation activity timely remit taxes levied by this chapter, such person shall provide a guarantee by one or more of the methods specified in this section in the amount of $2.00 per square foot of cultivation as identified in the annual cultivation declaration. The requirement for a guarantee shall remain in force at the sole discretion of the City.

(c) Persons to Provide Guarantee. The guarantee required under this section shall be provided before March 1st of each year by persons engaged in business involving commercial cannabis cultivation activity or by a personal guarantee from an owner(s), partner(s), member(s), officer(s), director(s), or responsible party(ies) of the cultivator, or any combination thereof.

(d) Methods. Persons engaged in business involving commercial cannabis cultivation activity shall provide one or more of the following methods to guarantee the performance of their obligations under this chapter.

(i) Surety Bond. Persons engaged in business involving commercial cannabis cultivation activity may elect to provide a surety bond, as defined by Section 995.120 of the Code of Civil Procedure, in an amount defined in subsection (1)(b) of this section, from a company authorized to do such business in the state. The bond shall be in a form acceptable to the City Attorney. The bond shall be payable to the City and shall be conditioned upon payment in full of the tax, including penalties and interest due, and to become due and owing to the City by said person engaged in business involving commercial cannabis cultivation activity during the effective period of the bond under the provisions of this chapter. The surety may terminate this bond, except as to any liability already incurred or accrued, and may do so upon giving the cultivator and the Finance Director written notice to that effect. The surety shall provide written notice to the Finance Director not less than 30 days before the expiration, nonrenewal, lapse, termination, or other similar event affecting such surety bond. Thirty days after receipt by the Finance Director of such notice or upon a later date specified in the notice, or upon the filing and acceptance of a new bond, the existing bond shall terminate and be of no more force and effect, except as to any liabilities or indebtedness incurred or accrued thereunder as of the date of termination.

(ii) Deposit in Escrow. The persons engaged in business involving commercial cannabis cultivation activity may elect to deposit a cash sum, in an amount defined in subsection (1)(b) of this section, either with the City or in escrow with a responsible financial institution authorized to do such business in the State. In the case of an escrow account, the cultivator shall file with the City an escrow agreement, which includes the following terms:

Funds of the escrow account shall be held in trust until released by the City and may not be used or pledged by the person engaged in business involving commercial cannabis cultivation activity as security in any matter during that period other than payment of the tax, penalties, and interest due and to become due and owing to the City under this chapter; and

In the case of a failure on the part of the person engaged in business involving commercial cannabis cultivation activity to remit taxes due under this chapter by the required due date, the institution shall immediately make all funds in such account available to the City for use in satisfying those taxes due, along with any related penalties and interest as provided for in this chapter.

(iii) Letter of Credit. The person engaged in business involving commercial cannabis cultivation activity may elect to provide, from a bank or other responsible financial institution authorized to do such business in the State, a letter of credit in a form acceptable to the City Attorney. Such letter shall be filed with the City and shall certify the following:

(A) The financial institution irrevocably guarantees funds in an amount defined in subsection (1)(b) of this section; and

(B) In the case of failure on the part of the person engaged in business involving commercial cannabis cultivation activity to remit taxes due under this chapter by the required due date, the financial institution shall pay to the City immediately and without further action such funds as are necessary to satisfy those taxes due, along with any related penalties and interest as provided for in this chapter, up to the limit of credit stated in the letter.

(2) Request for Waiver of Guarantee. A person engaged in business involving commercial cannabis cultivation activity may request a waiver of the requirement to provide a guarantee or a reduction of the amount of the guarantee to the City Manager. The request should include a detailed statement, along with documentation, supporting the request. In considering the request, the City Manager may consider all relevant information, including, without limitation, the person’s current and prior performance with this chapter. The decision of the City Manager shall be considered final. [Ord. 404 § 1, 2024.]

5.40.270 Payment – Time limits.

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

(1) Each person engaged in business involving commercial cannabis activity, other than outdoor, greenhouse or Tier 1 cannabis cultivation, as defined in subsection (2) of this section, 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 Director and remit to the Director the tax due. The tax due shall be no less than the quarterly installment due. Each person shall pay on or before the last day of the month following the close of each calendar quarter.

(2) Each person engaged in outdoor, greenhouse or Tier 1 cannabis cultivation shall on or before March 15th of each year prepare and submit a tax statement to the City on the form prescribed by the Director and remit to the Director the tax due for cannabis cultivated during the growing season for the immediately preceding calendar year. “Outdoor cultivation” is defined as cannabis cultivation outside without using any artificial lighting on mature plants. “Greenhouse cultivation” is defined as cannabis cultivation within greenhouses without using any artificial lighting. “Tier 1 cannabis cultivation” is defined as cannabis cultivation without the use of artificial light or the use of artificial light at a rate above zero, but no more than six watts per square foot.

(3) If the business tax owed is based on square foot, as defined in RDMC 5.40.100, the tax statement may include a request for adjustment of the tax due to square foot authorized but not utilized for cultivation, and/or crop loss, along with evidence substantiating the square footage utilized and/or crop loss. The decision to prorate or adjust the tax will be made at the sole discretion of the City. A fee may be adopted by the City Council and collected by the Director to pay for the cost of investigating, verifying, and opining on such request for adjustment of the tax.

(4) All tax statements shall be completed on forms prescribed by the Director.

(5) Tax statements and payments for all outstanding taxes owed the City are immediately due to the Director upon cessation of business for any reason. [Ord. 404 § 2, 2024; Ord. 397 § 1, 2023; Ord. 354 § 2, 2017. Formerly 5.40.260.]

5.40.280 Payment – When taxes deemed delinquent.

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 RDMC 5.40.260. [Ord. 404 § 2, 2024; Ord. 354 § 2, 2017. Formerly 5.40.270.]

5.40.290 Notice not required by City.

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. [Ord. 404 § 2, 2024; Ord. 354 § 2, 2017. Formerly 5.40.280.]

5.40.300 Payment – Penalty for delinquency.

(1) 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:

(a) Original Delinquency. A penalty equal to 25 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 the rate of one percent per month or fraction thereof on the amount of the tax, exclusive of penalties, from the date on which the remittance first became delinquent until paid; and

(b) Continued Delinquency. An additional penalty equal to 25 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 calculated at the rate of one percent per month or fraction thereof on the amount of the tax, exclusive of penalties, from the date on which the remittance first became delinquent until paid.

(c) Revocation of Permit. The City may, in the City’s sole discretion, revoke the permit for 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.

(2) 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.

(3) The business tax due shall be that amount due and payable from the first date on which the person was engaged in business involving commercial cannabis activity in the City, together with applicable penalties and interest calculated in accordance with subsection (1) of this section. [Ord. 404 § 2, 2024; Ord. 397 § 1, 2023; Ord. 354 § 2, 2017. Formerly 5.40.290.]

5.40.310 Waiver of penalties.

The Director may waive the first and second penalties of 25 percent each imposed upon any person if:

(1) 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.

(2) 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 24-month period. [Ord. 404 § 2, 2024; Ord. 354 § 2, 2017. Formerly 5.40.300.]

5.40.320 Refunds – Credits.

(1) No refund shall be made of any tax collected pursuant to this chapter except as provided in RDMC 5.40.320.

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

(3) 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. [Ord. 404 § 2, 2024; Ord. 354 § 2, 2017. Formerly 5.40.310.]

5.40.330 Refunds and procedures.

(1) 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 shall be presented to the Director within one year of the date of payment, and in the manner prescribed by Part 3 of Division 3.6 of Title 1 of the California Government Code (commencing with Section 900 thereof) for the claims to which that part applies by its own terms, as those provisions now exist or shall hereafter be amended, and as further provided by this section.

(2) All claims shall be made in writing and verified under the penalty of perjury by the claimant or by his or her guardian, conservator, executor or administrator. All tax refund claims shall be filed on the refund claim form prescribed by the Director. In the event that the Director has not prescribed a form of claim, the tax refund claim shall contain:

(a) The information required by California Government Code Section 910; and

(b) The specific amount claimed to have been overpaid, paid more than once, or erroneously or illegally collected or received by the City; and

(c) The grounds upon which the claim is founded, with specificity sufficient to enable the Director and other responsible City officials to understand and evaluate the claim; and

(d) Documentation supporting the amount of the refund sought.

The foregoing reference to Government Code Section 910 shall not be construed to authorize a class claim, and no claim may be filed on behalf of a class of persons unless verified by every member of that class.

(3) 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.

(4) 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 an administrative fee as set forth in a resolution of the City Council from the amount to be refunded to cover the City’s expenses.

(5) 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 an administrative fee as set forth in a resolution of the City Council from the amount to be refunded to cover the City’s expenses.

(6) In accordance with California Government Code Sections 935(b) and 945.6, all claims shall be presented as provided in this section and acted upon by the City prior to the filing of any action on such claims and no such action may be maintained by a person who has not complied with the requirements of this section.

(7) Any action brought against the City upon any claim or demand shall conform to the requirements of Sections 940 through 949 of the California Government Code. Any action brought against any employee of the City shall conform with the requirements of Sections 950 through 951 of the California Government Code. [Ord. 404 § 2, 2024; Ord. 354 § 2, 2017. Formerly 5.40.320.]

Article III. Exemptions

5.40.400 Exemptions – Application – Issuance condition.

Any person desiring to claim exemption from the payment of the tax set forth in this chapter shall make application therefor upon forms prescribed by the Director and shall furnish such information and make such affidavits as may be required by the Director. [Ord. 354 § 2, 2017.]

5.40.410 Exemptions – General.

Except as may be otherwise specifically provided in this chapter, the terms hereof shall 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 Federal or State law. [Ord. 354 § 2, 2017.]

5.40.420 Exemptions – Occasional transactions.

(1) The provisions of this chapter shall not apply to persons having no fixed place of business within the City who come into the City for the purpose of transacting a specific item of business at the request of a specific patient, client or customer; provided, that such person does not come into the City for the purpose of transacting business on more than five days during any calendar year.

(2) For any person not having a fixed place of business within the City who comes into the City for the purpose of transacting business and who is not exempt as provided in subsection (1) of this section, the business tax payable by such person may be apportioned by the Director in accordance with RDMC 5.40.520. [Ord. 354 § 2, 2017.]

Article IV. Administration and Enforcement

5.40.500 Enforcement – Duties of Director and Chief of Police.

It shall be the duty of the Director to enforce each and all of the provisions of this chapter, and the Chief of Police shall render such assistance in the enforcement of this chapter as may from time to time be required by the Director.

5.40.510 Rules and regulations.

For purposes of apportionment as may be required by law and for purposes of administration and enforcement of this chapter generally, the Director, with the concurrence of the City Attorney, may from time to time promulgate administrative rules and regulations. [Ord. 354 § 2, 2017.]

5.40.520 Apportionment.

(1) None of the tax provided for by this chapter shall be applied so as to occasion an undue burden upon interstate commerce or be violative of the equal protection and due process clauses of the Constitution of the United States or the State of California.

(2) If any case where a business tax is believed by a taxpayer to place an undue burden upon interstate commerce or be violative of such constitutional clauses, the taxpayer may apply to the Director for an adjustment of the tax. It shall be the taxpayer’s obligation to request in writing for an adjustment within one year after the date of payment of the tax. If the taxpayer does not request in writing within one year from the date of payment, then taxpayer shall be conclusively deemed to have waived any adjustment for that year.

(3) The taxpayer shall, by sworn statement and supporting testimony, show the method of business and the gross volume of business and such other information as the Director may deem necessary in order to determine the extent, if any, of such undue burden or violation. The Director shall then conduct an investigation, and shall fix as the tax for the taxpayer an amount that is reasonable and nondiscriminatory, or if the tax has already been paid, shall order a refund of the amount over and above the tax so fixed. In fixing the tax to be charged, the Director shall have the power to base the tax upon a percentage of gross receipts or any other measure which will assure that the tax assessed shall be uniform with that assessed on businesses of like nature, so long as the amount assessed does not exceed the tax as prescribed by this chapter.

(4) Should the Director determine that the gross receipt measure of tax to be the proper basis, the Director may require the taxpayer to submit a sworn statement of the gross receipts and pay the amount of tax as determined by the Director. [Ord. 354 § 2, 2017.]

5.40.530 Audit and examination of records and equipment.

The Director shall have the power to audit and examine all business property, books and records of persons engaged in business involving commercial cannabis activity including both State and Federal income tax returns, California sales tax returns, or other evidence documenting the square foot and/or gross receipts of persons engaged in business involving commercial cannabis activity, and, where necessary, all equipment, of any person engaged in such a business in the City, for the purpose of ascertaining the amount of business tax, if any, required to be paid by the provisions hereof, 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 Director, refuses to make available for audit, examination or verification such books, business property, records or equipment as the Director requests, the Director may, after full consideration of all information within his or her knowledge concerning the commercial cannabis activity and activities of the person so refusing, make an assessment in the manner provided in RDMC 5.40.560 through 5.40.580 of any taxes estimated to be due. [Ord. 354 § 2, 2017.]

5.40.540 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 person carrying on any commercial cannabis activity without first having procured a business license shall be liable in 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. 354 § 2, 2017.]

5.40.550 Deficiency determinations.

If the Director is not satisfied that any statement filed as required under the provisions of 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 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. 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 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 under RDMC 5.40.560 through 5.40.580. [Ord. 354 § 2, 2017.]

5.40.560 Tax assessment – Authorized when nonpayment – Fraud.

(1) Under any of the following circumstances, the Director may make and file a notice of assessment of the amount of tax owed by a person under this chapter:

(a) If the person has not filed any statement or return required under the provisions of this chapter;

(b) If the person has not paid any tax due under the provisions of this chapter;

(c) If the person has not, after demand by the Director, filed a corrected statement or return, or furnished to the Director adequate substantiation of the information contained in a statement or return already filed, or paid any additional amount of tax due under the provisions of this chapter;

(d) If the Director determines that the nonpayment of any business tax due under this chapter is due to fraud, a penalty of 50 percent of the amount of the tax shall be added thereto in addition to penalties and interest otherwise stated in this chapter.

(2) The notice of assessment shall separately set forth the amount of any tax known by the Director to be due or estimated by the Director, after consideration of all information within the Director’s knowledge concerning the business and activities of the person assessed, to be due under each applicable section of this chapter, and shall include the amount of any penalties or interest accrued on each amount to the date of the notice of assessment. [Ord. 354 § 2, 2017.]

5.40.570 Tax assessment – Notice requirements.

The notice of assessment shall be served upon the person either by handing it to him or her personally, 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 appearing on the face of the business license issued under Chapter 5.05 RDMC or to such other address as he or she shall register with the Director for the purpose of receiving notices provided under this chapter; or, should the person have no business license issued and should the person have no address registered with the Director 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. 354 § 2, 2017.]

5.40.580 Tax assessment – Hearing – Application and determination.

Within 10 days after the date of service the person may apply in writing to the Director 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 Director shall become final and conclusive. Within 30 days of the receipt of any such application for hearing, the 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 Director and the person requesting the hearing. Notice of such hearing shall be given by the Director to the person requesting such hearing not later than five days prior to such hearing. At such hearing said applicant may appear and offer evidence why the assessment as made by the Director should not be confirmed and fixed as the tax due. After such hearing the Director shall determine and reassess the proper tax to be charged and shall give written notice to the person in the manner prescribed in RDMC 5.40.570 for giving notice of assessment. [Ord. 354 § 2, 2017.]

5.40.590 Conviction for chapter violation – Taxes not waived.

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. 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. 354 § 2, 2017.]

5.40.600 Violation deemed misdemeanor – Penalty.

Any person violating any of the provisions of this chapter or any regulation or rule passed in accordance herewith, or knowingly or intentionally misrepresenting to any officer or employee of the City any material fact in procuring the business license provided for in Chapter 5.05 RDMC, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punishable by a fine of not more than $500.00 or by imprisonment for a period of not more than six months, or by both such fine and imprisonment. [Ord. 354 § 2, 2017.]

5.40.610 Effect of State and Federal reference/authorization.

Unless specifically provided otherwise, any reference to a State or Federal statute in this chapter shall mean such statute as it may be amended from time to time; provided, that such reference to a statute herein shall 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) shall 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) shall be applicable to the maximum possible extent.

To the extent that the City’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 shall be required to conform the tax to those changes, and the tax shall be imposed and collected to the full extent of the authorization up to the full amount of the tax imposed under this chapter. [Ord. 354 § 2, 2017.]

5.40.620 Subject to annual City audits.

The revenues from the tax imposed by this chapter shall be subject to the annual audit performed by the City’s independent auditor of the City’s municipal books, records, accounts and fiscal procedures. [Ord. 354 § 2, 2017.]

5.40.630 Remedies cumulative.

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 (Government Code Section 12650 et seq.) and the California Unfair Practices Act (Business and Professions Code Section 17070 et seq.), are cumulative. 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 of this chapter. [Ord. 354 § 2, 2017.]

5.40.640 Amendment or repeal.

This chapter may be repealed or amended by the City Council without a vote of the people. However, as required by Article XIII C of the California Constitution, voter approval is required for any amendment provision that would increase the maximum rate of any tax levied pursuant to this chapter. The people of the City of Rio Dell affirm that the following actions shall not constitute an increase of the rate of a tax:

(1) 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;

(2) 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;

(3) 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

(4) The collection of the tax imposed by this chapter, even if the City had, for some period of time, failed to collect the tax. [Ord. 354 § 2, 2017.]

5.40.650 Severability.

Should any provision, section, paragraph, sentence or word of this chapter be rendered or declared invalid by any final court action in a court of competent jurisdiction or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences and words of this chapter as hereby adopted shall remain in full force and effect. [Ord. 354 § 2, 2017.]