A. Beginning January 1, 2023, there is imposed upon each person who is engaged in business as a cannabis business a cannabis business tax. Such tax is payable regardless of whether the person has been issued a commercial cannabis business license, permit, or certificate to operate lawfully in the City or is operating unlawfully. The City's acceptance of a cannabis business tax payment from a cannabis business operating illegally shall not constitute the City's approval or consent to such illegal operations.
B. The City Council may, by resolution or ordinance, increase or decrease the rate of the cannabis business tax, including the initial rate of cannabis business tax. The City Council may, by resolution or ordinance, increase or decrease the rate of the medicinal cannabis business tax, including the initial rate of the medicinal cannabis business tax, independent of other cannabis business tax activities. In addition, the City Council may, by resolution or ordinance, increase or decrease the rate of the cannabis business tax on hemp or hemp products, including the initial rate of the tax on hemp or hemp products independent of other cannabis activities. Notwithstanding the foregoing, in no event shall the City Council repeal this tax or set any adjusted rate that exceeds the maximum rates calculated pursuant to this chapter.
C. The maximum rate of the cannabis business tax shall be calculated as follows:
1. For every person engaged in commercial cannabis cultivation, including cultivation of industrial hemp, in the City:
a. Through January 1, 2026, the annual maximum rate shall be:
(1) Twenty dollars ($20.00) per square foot of canopy space in a facility that uses exclusively artificial lighting.
(2) Fourteen dollars ($14.00) per square foot of canopy space in a facility that uses a combination of natural and supplemental lighting as defined in Section 4-17-4 (S) of this chapter.
(3) Eight dollars ($8.00) per square foot of canopy space in a facility that uses no artificial lighting.
(4) Four dollars ($4.00) per square foot of canopy space for any nursery.
b. On January 1, 2026 and on each January 1, thereafter, the maximum annual tax rates specified in Subsection 4-17-5 (C) (1) (a), shall increase by the percentage increase in the Consumer Price Index ("CPI") for consumers in the Los Angeles-Riverside-Orange County area as published by the United States Government Bureau of Labor Statistics. However, no CPI adjustment resulting in a decrease of any tax imposed by this subsection shall be made.
2. For every person engaged in the operation of a testing laboratory for cannabis, cannabis products, industrial hemp and/or industrial hemp products the person shall be subject to the maximum tax rate not to exceed two percent (2%) of gross receipts.
3. For every person engaged in retail sales of cannabis, cannabis products, industrial hemp, and/or industrial hemp products, including as a retailer (dispensary) or non-storefront retailer (retail delivery business), or microbusiness, the person shall be subject to the maximum tax rate not to exceed ten percent (10%) of gross receipts.
4. For every person engaged in distribution of cannabis, cannabis products, industrial hemp and/or industrial hemp products, the person shall be subject to the maximum tax rate not to exceed ten percent (10%) of gross receipts.
5. For every person engaged in manufacturing or processing of cannabis, cannabis products, industrial hemp and/or industrial hemp products, or any other type of cannabis business not described in Section 4-17-5 (C) (1), (2), (3), or (4) the person shall be subject to the maximum tax rate not to exceed ten percent (10%) of gross receipts.
D. Persons subject to the cannabis business tax shall register with the City and if applicable pay the registration fee adopted by resolution or ordinance by the City Council. (Ord. 1644, 12-13-2022)