Chapter 3.40
TAX ON SALE OF MARIJUANA AND MARIJUANA-INFUSED PRODUCTS
Sections:
3.40.050 Seller responsible for payment of tax.
3.40.060 Penalties and interest.
3.40.070 Failure to report and remit tax – Determination of tax by director.
3.40.080 Appeal and redetermination.
3.40.130 Audit of books, records or persons.
3.40.140 Forms and regulations.
3.40.010 Purpose.
For the purposes of this chapter, every person who sells marijuana, medical marijuana or marijuana-infused products in the City of Newberg is exercising a taxable privilege. The purpose of this chapter is to impose a tax upon the retail sale of marijuana, medical marijuana, and marijuana-infused products. [Ord. 2777 § 1, 10-6-14.]
3.40.020 Definitions.
When not clearly otherwise indicated by the context, the following words and phrases as used in this chapter shall have the following meanings:
“Director” means the director of finance for the City of Newberg or his/her designee.
“Gross taxable sales” means the total amount received in money, credits, property or other consideration from sales of marijuana, medical marijuana and marijuana-infused products that is subject to the tax imposed by this chapter.
“Marijuana” means all parts of the plant of the Cannabis family Moraceae, whether growing or not; the resin extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant or its resin, as may be defined by Oregon Revised Statutes as they currently exist or may from time to time be amended. It does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination.
“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.
“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.
“Purchase or sale” means the acquisition or furnishing for consideration by any person of marijuana within the city.
“Purchaser” means any person who acquires marijuana from a seller for any valuable consideration.
“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.
“Retail sale” means the transfer of goods or services in exchange for any valuable consideration.
“Seller” means any person who is required to be licensed or has been licensed by the State of Oregon to provide marijuana or marijuana-infused products to purchasers for money, credit, property or other consideration.
“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.
“Taxpayer” means any person obligated to account to the finance director for taxes collected or to be collected, or from whom a tax is due, under the terms of this chapter. [Ord. 2777 § 1, 10-6-14.]
3.40.030 Levy of tax.
A. There is hereby levied and shall be paid a tax by every seller exercising the taxable privilege of selling marijuana and marijuana-infused products as defined in this chapter.
B. The amount of tax levied is as follows:
1. Five percent of the gross sale amount paid to the seller by a registry identification cardholder.
2. Ten percent of the gross sale amount paid to the seller of marijuana and marijuana-infused products by individuals who are not purchasing marijuana under the Oregon Medical Marijuana Program.
C. The purchaser shall pay the tax to the seller at the time of the purchase or sale of marijuana. [Ord. 2777 § 1, 10-6-14.]
3.40.040 Deductions.
The following deductions shall be allowed against sales received by the seller providing marijuana:
A. Refunds of sales actually returned to any purchaser;
B. Any adjustments in sales which amount to a refund to a purchaser, providing such adjustment pertains to the actual sale of marijuana or marijuana-infused products and does not include any adjustments for other services furnished by a seller. [Ord. 2777 § 1, 10-6-14.]
3.40.050 Seller 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 ensure collection of the tax and 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. The quarters are:
First quarter: January, February, March
Second quarter: April, May, June
Third quarter: July, August, September
Fourth quarter: October, November, December
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 that are 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. Non-designated 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. If the director, in his or her sole discretion, determines that 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 ensure 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.
D. For good cause, the director may extend the time for filing a return or paying the tax for not more than one month. Further extension may be granted only by the city council. A seller to whom an extension is granted shall pay interest at the rate of one percent per month on the amount of tax due, without proration for a fraction of a month. If a return is not filed and if the tax and interest due are not paid by the end of the extension granted, the interest shall become a part of the tax for computation of penalties prescribed in NMC 3.40.060.
E. Every seller required to remit the tax imposed in this chapter shall be entitled to retain five percent of all taxes due 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 dispensary 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. 2777 § 1, 10-6-14.]
3.40.060 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.
B. Any seller who fails to remit any delinquent remittance on or before a period of 60 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 that 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 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. A seller who fails to remit the tax within the required time may petition the city manager for waiver and refund of the penalty or a portion of it. The manager may, if good cause is shown, direct a refund of the penalty or a portion of it. Any such hearing will be conducted under the procedures described in NMC 3.40.080. [Ord. 2777 § 1, 10-6-14.]
3.40.070 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 when a 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 so assessed at the last known place of address. Such seller may appeal such determination as provided in NMC 3.40.080. If no appeal is filed, the director’s determination is final and the amount thereby is immediately due and payable. [Ord. 2777 § 1, 10-6-14.]
3.40.080 Appeal and redetermination.
A. Any person against whom a determination is made under NMC 3.40.070 or any person directly interested in the determination may petition for a redetermination, within 15 days after service of the notice described in NMC 3.40.070. If no petition is filed, the determination shall become final at the expiration of the allowable time.
B. If a petition for redetermination is filed within the allowable time period, the city manager shall reconsider the determination, and, if the person has so requested in the person’s petition, shall grant the person an oral hearing and shall give the person 10 days’ notice of the time and place of the hearing. The city manager may continue the hearing from time to time as necessary.
C. The city manager may decrease or increase the amount of the determination as a result of the hearing, and if an increase is determined, the increase shall be payable immediately after the hearing.
D. The order or decision of the city manager upon a petition for redetermination shall become final 10 days after service upon the petitioner of notice, unless appeal of such order or decision is filed with the city council within 10 days after service of such notice. An appeal fee of $250.00 shall be paid at the time the notice of appeal to the city council is filed.
E. No petition for redetermination or appeal therefrom shall be effective for any purpose unless the seller first deposits with the city the amount of tax determined to be owing pursuant to NMC 3.40.070. Refunds, if any, will be processed under NMC 3.40.090. [Ord. 2777 § 1, 10-6-14.]
3.40.090 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 calendar 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 the director of claimant’s choice no later than 15 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 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. 2777 § 1, 10-6-14.]
3.40.100 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. Within three years after the tax becomes payable or within three years after a determination becomes final, the city may bring an action in the name of the city in the courts of this state, another state or the United States to collect the amount delinquent and penalties and interest. In lieu of filing an action for the recovery, the city, when taxes due are more than 30 days delinquent, can submit any outstanding tax to a collection agency. So long as the city has complied with the provisions set forth in ORS 697.105 (as hereafter amended), in the event the city turns over a delinquent tax account to a collection agency, it 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. 2777 § 1, 10-6-14.]
3.40.110 Penalties.
A. It is unlawful for any seller or any other person so required to fail or refuse to furnish any return required to be made, or fail or refuse to furnish the supplementary return or other data required by the director or to enter a false or fraudulent report, with intent to defeat or evade the determination of any amount due required by this chapter.
B. Violation of any provision of this chapter of this code shall constitute a Class 1 civil infraction and be enforced under the provisions of Chapter 2.30 NMC. Every day in which the violation is caused or permitted to exist constitutes a separate infraction, and the punishment therefor shall be in addition to any other penalty, interest, sum or charge imposed by this code or this chapter. Delinquent taxes and fees, penalty and interest imposed by this chapter and this code may be collected in a civil action.
C. 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. [Ord. 2777 § 1, 10-6-14.]
3.40.120 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 is 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. Presentation of evidence to the court, or other tribunal having jurisdiction in the prosecution of any criminal or civil claim by the director or an appeal from the director for amount due to 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’s failure to report and remit the tax when the report or tax is in arrears for over six 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. 2777 § 1, 10-6-14.]
3.40.130 Audit of books, records or persons.
A. It shall be the duty of every seller liable for the collection and payment to the city of any tax imposed by this chapter to keep and preserve, for a period of three years and six months, all records, books, reports, income tax reports and other matters required by this chapter as may be necessary to determine the amount of such tax as the seller may have been liable for the collection of and payment to the city, which records the director shall have the right to inspect at all reasonable times as set forth below. Every operator shall maintain records of marijuana purchase and sales, accounting books and records of income. Sellers must, at a minimum, include a cash receipt and deposit journal, and a cash disbursements journal/check register for all authorized deductions. These records and books shall reconcile to the tax reports and be auditable. They shall also reconcile to the seller’s income tax reports. If the director finds the books and records of the seller are deficient in that they do not provide adequate support for tax reports filed, or the seller’s accounting system is not auditable, it shall be the responsibility of the seller to improve its accounting system to the satisfaction of the director.
B. The city, for the purpose of determining the correctness of any tax return, or for the purpose of an estimate of taxes due, 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 return, bearing upon the matter of the seller’s tax return. 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 immediately seek a subpoena from the Newberg municipal court to require that the taxpayer or a representative of the taxpayer attend a hearing or produce any such books, accounts and records for examination. [Ord. 2777 § 1, 10-6-14.]
3.40.140 Forms and regulations.
The director is hereby authorized to prescribe forms and promulgate rules and regulations to aid in the making of returns, the ascertainment, assessment and collection of said medical marijuana tax and in particular and without limiting the general language of this chapter, to provide for:
A. A form of report on sales and purchases to be supplied to all vendors;
B. The records which sellers providing marijuana and marijuana-infused products are to keep concerning the tax imposed by this chapter. [Ord. 2777 § 1, 10-6-14.]