Chapter 3.26
RECREATIONAL MARIJUANA TAXATION
Sections:
3.26.010 Purpose and limitations.
3.26.050 Seller (marijuana retailer) responsible for payment of tax.
3.26.055 Administration by DOR – Penalties and interest.
3.26.060 Nonexclusive penalties and interest.
3.26.070 Failure to report and remit tax – Determination of tax by director.
3.26.110 Criminal and civil penalties for code violations.
3.26.130 Inspection of records – Administrative warrant or subpoena.
3.26.140 Forms and regulations.
3.26.010 Purpose and limitations.
A. For the purposes of this chapter, every person who sells marijuana items in the city of Lincoln City is exercising a taxable privilege. The purpose of this chapter is to impose a tax upon the retail sale of marijuana items and not on the business of producing marijuana.
B. Sellers (marijuana retailers) shall be solely responsible for obtaining all required approvals, permits, licenses, and authorizations from the responsible federal, state and local authorities, or other entities, necessary to engage in the business of selling or otherwise providing marijuana items for consideration in the manner contemplated. The city of Lincoln City has no duty, responsibility or liability for requesting, obtaining, ensuring, or verifying seller’s compliance with the applicable federal or state permit or approval requirements. The imposition of this tax on transactions which are subject to a licensing program under Oregon state law is not an approval or endorsement of the transaction and shall not in any way be interpreted as a waiver, modification, or grant of any federal, state or local agency permit, approval or authorization. Businesses operating within the city of Lincoln City shall comply with all applicable federal, state and local laws. (Ord. 2016-10 § 1)
3.26.020 Definitions.
When not clearly otherwise indicated by the context, the following words and phrases as used in this chapter shall have the following meanings:
A. “Cannabinoid” means any of the chemical compounds that are the active constituents of marijuana.
B. “Cannabinoid concentrate” means a substance obtained by separating cannabinoids from marijuana by:
1. A mechanical extraction process;
2. A chemical extraction process using a non-hydrocarbon-based or other solvent, such as water, vegetable glycerin, vegetable oils, animal fats, isopropyl alcohol or ethanol;
3. A chemical extraction process using the hydrocarbon-based solvent carbon dioxide; provided, that the process does not involve the use of high heat or pressure; or
4. Any other process identified by the Oregon Liquor Control Commission, in consultation with the Oregon Health Authority, by rule.
C. “Cannabinoid edible” means food or potable liquid into which a cannabinoid concentrate, cannabinoid extract or dried marijuana leaves or flowers have been incorporated.
D. “Cannabinoid extract” means a substance obtained by separating cannabinoids from marijuana by:
1. A chemical extraction process using a hydrocarbon-based solvent, such as butane, hexane or propane;
2. A chemical extraction process using the hydrocarbon-based solvent carbon dioxide, if the process uses high heat or pressure; or
3. Any other process identified by the Oregon Liquor Control Commission, in consultation with the Oregon Health Authority, by rule.
E. 1. “Cannabinoid product” means a cannabinoid edible and any other product intended for human consumption or use, including a product intended to be applied to the skin or hair, that contains cannabinoids or dried marijuana leaves or flowers.
2. “Cannabinoid product” does not include:
a. Usable marijuana by itself;
b. A cannabinoid concentrate by itself;
c. A cannabinoid extract by itself; or
d. Industrial hemp, as defined in ORS 571.300.
F. “Consumer” means a person who purchases, acquires, owns, holds, or uses marijuana items. Sales from suppliers to marijuana retailers for the purpose of resale do not make the marijuana retailer a consumer.
G. “Director” means the finance director for the city of Lincoln City or his/her designee.
H. “Gross taxable sales” means the total amount received in money, credits, property or other consideration from retail sales of marijuana items subject to the tax imposed by this chapter. The gross taxable sale is the retail sale price paid for marijuana items, excluding tax, to a marijuana retailer by or on behalf of a consumer of the marijuana items.
I. “Marijuana” means the plant Cannabis family Cannabaceae, any part of the plant Cannabis family Cannabaceae and the seeds of the plant Cannabis family Cannabaceae. “Marijuana” does not include industrial hemp, as defined in ORS 571.300.
J. “Marijuana items” has the meaning given that term in Oregon Laws 2015, Chapter 614, Section 1; specifically “marijuana items” includes one or more of the following items: marijuana, a cannabinoid product, a cannabinoid concentrate or a cannabinoid extract.
K. “Marijuana retailer” (also referred to as “seller”) means a person who sells marijuana items to a consumer.
L. “Oregon Medical Marijuana Program” means the office within the Oregon Health Authority that administers the provisions of ORS 475.300 through 475.346, the Oregon Medical Marijuana Act, and all policies and procedures pertaining thereto.
M. “Person” means natural person, joint venture, joint stock company, partnership, association, club, company, corporation, business, trust, organization, or any group or combination acting as a unit, including the United States of America, the state of Oregon and any political subdivision thereof, or the manager, lessee, agent, servant, officer or employee of any of them.
N. “Purchase or sale” means the retail acquisition or furnishing for consideration by any person of marijuana items within the city and does not include the (wholesale) acquisition or furnishing of marijuana by a grower or processor to a licensed seller.
O. “Registry identification cardholder” means a person who has been diagnosed by an attending physician with a debilitating medical condition and for whom the use of medical marijuana may mitigate the symptoms or effects of the person’s debilitating medical condition, and who has been issued a registry identification card by the Oregon Health Authority.
P. “Retail sale” means the transfer of goods or services in exchange for any valuable consideration and does not include the transfer or exchange of goods or services between a grower or processor and a seller.
Q. “Seller” (also referred to as “marijuana retailer”) means any person who is required to be licensed or has been licensed by the state of Oregon to sell or otherwise provide marijuana items to purchasers for money, credit, property or other consideration within the city.
R. “Tax” means either the tax payable by the seller or the aggregate amount of taxes due from a seller during the period for which the seller is required to report collections under this chapter.
S. “Taxpayer” means any person (seller or marijuana retailer) obligated to account to the director for taxes collected or to be collected, or from whom a tax is due, under the terms of this chapter. (Ord. 2016-10 § 1)
3.26.030 Levy of tax.
A. Every seller/marijuana retailer exercising the taxable privilege of selling marijuana items, as defined herein, is subject to and must pay a tax for exercising that privilege.
B. The amount of tax levied is as follows:
1. Three percent of the gross taxable sale amount paid to the seller of marijuana items by persons who are purchasing marijuana items but are not doing so under the provisions of the Oregon Medical Marijuana Program. (Ord. 2016-10 § 1)
3.26.040 Deductions.
The following deductions shall be allowed against sales received by the seller providing marijuana:
A. Documented refunds of sales where funds are actually returned to any purchaser;
B. Documented adjustments in sales which amount to a refund to a purchaser, providing such adjustment pertains to the actual sale of marijuana items and does not include any adjustments for other services furnished by a seller. (Ord. 2016-10 § 1)
3.26.050 Seller (marijuana retailer) responsible for payment of tax.
A. Every seller shall, on or before the fifteenth day of the month following the end of each calendar quarter (in the months of April, July, October and January), make a return to the director, on forms provided by the city, specifying the total sales subject to this chapter and the amount of tax collected under this chapter. The seller may request or the director may establish shorter reporting periods for any seller if the seller or director deems it necessary in order to insure collection of the tax. The director may require further information in the return relevant to payment of the tax. A return shall not be considered filed until it is actually received by the director.
B. At the time the return is filed, the full amount of the tax collected shall be remitted to the director. Payments received by the director for application against existing liabilities will be credited toward the period designated by the taxpayer under conditions not prejudicial to the interest of the city. A condition considered prejudicial is the imminent expiration of the statute of limitations for a period or periods.
C. Nondesignated payments shall be applied in the order of the oldest liability first, with the payment credited first toward any accrued penalty, then to interest, then to the underlying tax until the payment is exhausted. Crediting of a payment toward a specific reporting period will be first applied against any accrued penalty, then to interest, then to the underlying tax.
D. If the director, in his or her sole discretion, determines an alternative order of payment application would be in the best interest of the city in a particular tax or factual situation, the director may order such a change. The director may establish shorter reporting periods for any seller if the director deems it necessary in order to insure collection of the tax. The director also may require additional information in the return relevant to payment of the liability. When a shorter return period is required, penalties and interest shall be computed according to the shorter return period. Returns and payments are due immediately upon cessation of business for any reason. All taxes collected by sellers pursuant to this chapter shall be held in trust for the account of the city until payment is made to the director. A separate trust bank account is not required in order to comply with this provision.
E. Every seller required to remit the tax imposed in this chapter shall be entitled to retain five percent of all taxes collected and due to the city to defray the costs of bookkeeping and remittance.
F. Every seller must keep and preserve, in an accounting format established by the director, records of all sales made by the seller and such other books or accounts as may be required by the director. Every seller must keep and preserve for a period of three years all such books, invoices and other records. The director shall have the right to inspect all such records at all reasonable times. (Ord. 2016-10 § 1)
3.26.055 Administration by DOR – Penalties and interest.
A. The Oregon Department of Revenue (DOR) may administer and collect the tax imposed by this chapter as approved by the voters pursuant to an intergovernmental agreement. In administering the tax statewide, it is impractical for the DOR to administer individual city administrative provisions, including individual city penalties and interest provisions; accordingly, in the event the three percent tax approved by the voters is administered by DOR, DOR shall be responsible for all aspects of city tax administration, including but not limited to adopting administrative rules, auditing returns, assessing deficiencies and collecting the city tax and penalties and interest under applicable state statutes, including, but not limited to ORS 305.220, 305.265 and 314.400. Without limitation, in the event of such intergovernmental agreement, DOR is authorized to make refunds, hold conferences with local taxpayers, handle appeals to the Oregon Tax Court, issue warrants for the collection of unpaid taxes, determine the minimum amount of city tax economically collectible, and take any other actions reasonably necessary to administer and collect the city of Lincoln City voter-approved three percent tax. The IGA will indicate that the city accepts and acknowledges the use of DOR rules addressing the requirements for paying taxes with currency and other matters related to taxation of marijuana under ORS Chapter 475B.
B. Notwithstanding any other local administrative provisions, the following additional administrative provisions shall apply in the event the tax is administered by the Department of Revenue:
1. Interest shall be added to the overall tax amount due at the same rate established under ORS 305.220 for each month, or fraction of a month, from the time the return to the Oregon Department of Revenue was originally required to be filed by the marijuana retailer to the time of payment.
2. If a marijuana retailer fails to file a return with the Oregon Department of Revenue or pay the tax as required, a penalty shall be imposed upon the marijuana retailer in the same manner and amount provided under ORS 314.400.
3. Every penalty imposed, and any interest that accrues, becomes a part of the financial obligation required to be paid by the marijuana retailer and remitted to the Oregon Department of Revenue.
4. Taxes, interest and penalties transferred to the city of Lincoln City by the Oregon Department of Revenue will be distributed to the city’s general fund.
5. If at any time a marijuana retailer fails to remit any amount owed in taxes, interest or penalties, the Oregon Department of Revenue is authorized to enforce collection on behalf of the city of the owed amount in accordance with ORS 475B.700 to 475B.755, any agreement between the Oregon Department of Revenue and the city of Lincoln City under ORS 305.620 and any applicable administrative rules adopted by the Oregon Department of Revenue. (Ord. 2017-02 § 1)
3.26.060 Nonexclusive penalties and interest.
A. Any seller who fails to remit any portion of any tax imposed by this chapter within the time required shall pay a penalty of 10 percent of the amount of the tax, in addition to the amount of the tax.
B. Any seller who fails to remit any delinquent remittance on or before a period of 30 days following the date on which the remittance first became delinquent shall pay a second delinquency penalty of 15 percent of the amount of the tax in addition to the amount of the tax and the penalty first imposed.
C. If the director determines the nonpayment of any remittance due under this chapter is due to fraud, a penalty of 25 percent of the amount of the tax shall be added thereto in addition to the penalties stated in subsections (A) and (B) of this section.
D. In addition to the penalties imposed, any seller who fails to remit any tax imposed by this chapter shall pay interest at the rate of one and one-half 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.
E. Every penalty imposed, and such interest as accrues under the provisions of this section, shall become a part of the tax required to be paid.
F. Taxes collected pursuant to this chapter shall be segregated into a distinct account. All sums collected pursuant to the penalty provisions in subsections (A) through (C) of this section may be distributed to a separate city of Lincoln City fund to offset the costs of auditing and enforcement of this tax.
G. Waiver of Penalties. Penalties for certain late tax payments may not be waived except pursuant to administrative waiver provisions adopted as part of this title.
H. The administrative remedies in this section are nonexclusive and do not prohibit or otherwise limit other authorized enforcement methods available under the code. (Ord. 2016-10 § 1)
3.26.070 Failure to report and remit tax – Determination of tax by director.
If any seller should fail to make, within the time provided in this chapter, any report of the tax required by this chapter, the director shall proceed in such manner as deemed best to obtain facts and information on which to base the estimate of tax due. As soon as the director shall procure such facts and information as is able to be obtained, upon which to base the assessment of any tax imposed by this chapter and payable by any seller, the director shall proceed to determine and assess against such seller the tax, interest and penalties provided for by this chapter. In case such determination is made, the director shall give a notice of the amount so assessed by having it served personally or by depositing it in the United States mail, postage prepaid, addressed to the seller at the last known place of address. Such seller may make an appeal of such determination as provided in LCMC 3.26.080. If no appeal is filed, the director’s determination is final and the amount thereby is immediately due and payable. (Ord. 2016-10 § 1)
3.26.080 Appeal.
Any seller aggrieved by any decision of the director with respect to the amount of such tax, interest and penalties, if any, may only appeal pursuant to the uniform administrative appeals ordinance in Chapter 1.26 LCMC, except that the appeal shall be filed within 20 days of the serving or mailing of the determination of tax due. All appeal requirements are jurisdictional and shall be strictly observed. The hearing officer shall hear and consider any records and evidence presented bearing upon the director’s determination of amount due, and make findings affirming, reversing or modifying the determination. The findings of the hearing officer shall be final and conclusive and shall be served upon the appellant in the manner prescribed above for service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of notice. (Ord. 2016-10 § 1)
3.26.090 Refunds.
A. Whenever the amount of any tax, interest or penalty has been overpaid or paid more than once, or has been erroneously collected or received by the city under this chapter, it may be refunded as provided in subsection (B) of this section, provided a claim in writing, stating under penalty of perjury the specific grounds upon which the claim is founded, is filed with the director within one year of the date of payment. The claim shall be on forms furnished by the director.
B. The director shall have 20 working days from the date of receipt of a claim to review the claim and make a determination in writing as to the validity of the claim. The director shall notify the claimant in writing of the director’s determination. Such notice shall be mailed to the address provided by claimant on the claim form. In the event a claim is determined by the director to be a valid claim, in a manner prescribed by the director a seller may claim a refund, or take as credit against taxes collected and remitted, the amount overpaid, paid more than once or erroneously collected or received. The seller shall notify director of claimant’s choice no later than 15 working days following the date director mailed the determination. In the event claimant has not notified the director of claimant’s choice within the 15-day period above, and the seller is still in business, a credit will be granted against the tax liability for the next reporting period. If the seller is no longer in business, a refund check will be mailed to claimant at the address provided in the claim form.
C. No refund shall be paid under the provisions of this section unless the claimant established the right by written records showing entitlement to such refund and the director acknowledged the validity of the claim. (Ord. 2016-10 § 1)
3.26.100 Actions to collect.
Any tax required to be paid by any seller under the provisions of this chapter shall be deemed a debt owed by the seller to the city. Any such tax collected by a seller which has not been paid to the city shall be deemed a debt owed by the seller to the city. Any person owing money to the city under the provisions of this chapter shall be liable to an action brought in the name of the city of Lincoln City for the recovery of the amount owing. In lieu of filing an action for the recovery, the city of Lincoln City, when taxes due are more than 30 days delinquent, may submit any outstanding tax to a collection agency. So long as the city of Lincoln City has complied with the provisions set forth in ORS 697.105, in the event the city turns over a delinquent tax account to a collection agency, the city may add to the amount owing an amount equal to the collection agency fees, not to exceed the greater of $50.00 or 50 percent of the outstanding tax, penalties and interest owing. (Ord. 2016-10 § 1)
3.26.110 Criminal and civil penalties for code violations.
A. A violation of any provision of this chapter is punishable as set forth in Chapter 1.16 LCMC. Without limitation, it is a violation of this chapter for any seller or other person to:
1. Fail or refuse to comply as required herein;
2. Fail or refuse to furnish any return required to be made;
3. Fail or refuse to permit inspection of records;
4. Fail or refuse to furnish a supplemental return or other data required by the director;
5. Render a false or fraudulent return or claim; or
6. Fail, refuse or neglect to remit the tax to the city by the due date.
B. Violation of subsections (A)(1), (2), (3), (4) and (6) shall be considered a Class A violation. Filing a false or fraudulent return shall be considered a Class B misdemeanor crime. The remedies provided by this section are not exclusive and shall not prevent the city from exercising any other remedy available under the law, nor shall the provisions of this chapter prohibit or restrict the city or other appropriate prosecutor from pursuing criminal charges under state law or city ordinance.
C. The penalties in this chapter are cumulative; imposition of administrative penalties and interest shall not prohibit any other alternative remedies set forth in this code or the laws of the state of Oregon, including but not limited to the criminal prosecution, civil citation or abatement of nuisances. (Ord. 2016-10 § 1)
3.26.120 Confidentiality.
Except as otherwise required by law, it shall be unlawful for the city, any officer, employee or agent to divulge, release or make known in any manner any financial information submitted or disclosed to the city under the terms of this chapter. Nothing in this section shall prohibit:
A. The disclosure of the names and addresses of any person who is operating a licensed establishment from which marijuana items are sold or provided; or
B. The disclosure of general statistics in a form which would not reveal an individual seller’s financial information; or
C. The disclosure of information to city, state, and federal personnel for purposes of civil and criminal law enforcement as well as the presentation of evidence to the federal, state or municipal court or any other administrative agency or hearing officer having jurisdiction in the prosecution of any claim by the city, the state, or federal authorities or from an appeal from the director for amount due the city under this chapter; or
D. The disclosure of information when such disclosure of conditionally exempt information is ordered under public records law procedures; or
E. The disclosure of records related to a business’ failure to report and remit the tax when the report or tax is in arrears for over three months or the tax exceeds $5,000. The city council expressly finds and determines that the public interest in disclosure of such records clearly outweighs the interest in confidentiality under ORS 192.501(5). (Ord. 2016-10 § 1)
3.26.130 Inspection of records – Administrative warrant or subpoena.
The city may examine, or may cause to be examined by an agent or representative designated by the city for that purpose, any books, papers, records, or memoranda, including copies of seller’s state and federal income tax returns, bearing upon the matter of the seller’s tax return for the purpose of tax collection, including verification and calculation of estimate, as well as for all related law enforcement purposes. All books, invoices, accounts and other records shall be made available within the city limits and be open at any time during regular business hours for examination by the director or an authorized agent of the director. If any taxpayer refuses to voluntarily furnish any of the foregoing information when requested, the director may seek an administrative warrant or subpoena from the Lincoln City municipal court or Lincoln County circuit court to compel inspection of records or require the taxpayer or a representative of the taxpayer to attend a hearing or produce any such books, accounts and records for examination. After warrants or subpoenas for records are executed, the failure to submit to examination of records (provided a minimum of 10 days’ written notice of examination was provided) is an offense against the city and is punishable as provided in Chapter 1.16 LCMC. (Ord. 2016-10 § 1)
3.26.140 Forms and regulations.
A. The director is authorized to prescribe forms and promulgate rules and regulations to aid in the making of returns, the ascertainment, assessment and collection of said marijuana tax, in particular, and without limiting the general language of this chapter, to provide for:
1. A form of report on sales and purchases to be supplied to all vendors;
2. The records which sellers providing marijuana items are to keep concerning the tax imposed by this chapter. (Ord. 2016-10 § 1)