(Added by Ord. No. 184,841, Eff. 4/4/17.)
Editor's note: Section enacted pursuant to Proposition M, adopted by the voters at the election on March 7, 2017.
Nothing in this Section shall be construed as requiring the City to allow, permit, license, authorize, or otherwise regulate cannabis, cannabis products or any business related to cannabis and/or cannabis products.
(a) For the purpose of this Section, the following words and phrases shall be defined as follows:
1. “Cannabis” shall means all parts of the plant Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, resin, separated resin, 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, or industrial hemp, as defined by Section 11018.5 of the Health and Safety Code.
2. “Cannabis products” shall mean any product that includes cannabis that has undergone a process whereby the plant material has been transformed into a concentrate or such other form in order to enhance or deliver the cannabinoid active ingredient.
3. “Cultivating” shall mean to plant, grow, harvest, dry, cure, grade, or trim cannabis.
4. “Gross receipts” shall have the same meaning as set forth in Section 21.00(a) of this Article and shall include without limitation, membership dues, value of in kind contributions, reimbursements, the amount of any tax imposed by the state, county or rapid transit district whether imposed upon the retailer or the consumer, and any other property received by the business in its ordinary course.
5. “License” shall consist of (i) a state license issued under Division 10 of the California Business and Professions Code, Chapter 3.5 of Division 8 of the California Business and Professions Code, or such other applicable cannabis related provisions under state law, and (ii) any such other applicable City authorization, permit, or license (not including a business tax registration certificate which shall not be construed as a permit in any way).
6. “Manufacturing” shall mean to compound, blend, extract, infuse, or otherwise make, process, or prepare cannabis or cannabis products.
7. “Testing” shall mean to perform a test of cannabis and/or cannabis products in a testing laboratory that is accredited by an accrediting body that is independent from all other persons involved in commercial or medical cannabis, and registered with the State Department of Public Health.
8. “Testing laboratory” shall mean a facility, entity, or site in the City of Los Angeles that offers or performs testing.
9. “Transporting” shall mean to transfer cannabis and/or cannabis products from the location of one person with a license to the location of another person with a license.
(b) For purposes of this Section, the business tax to be imposed shall be as follows:
1. Every person with a license that is engaged in business of conducting the sale of cannabis and/or cannabis products shall pay a business tax of $100.00 for each $1,000.00 of gross receipts or fractional part thereof. The sale of medical cannabis shall be taxed as provided under Section 21.52 of this Article.
2. Every person with a license that is engaged in business of transporting cannabis and/or cannabis products shall pay a business tax of $10.00 for each $1,000.00 of gross receipts or fractional part thereof.
3. Every person with a license that is engaged in business of testing cannabis and/or cannabis products shall pay a business tax of $10.00 for each $1,000.00 of gross receipts or fractional part thereof.
4. Every person with a license that is engaged in business of researching cannabis and/or cannabis products shall pay a business tax of $10.00 for each $1,000.00 of gross receipts or fractional part thereof.
5. Every person with a license that is engaged in business of manufacturing or cultivating cannabis and/or cannabis products shall pay a business tax of $20.00 for each $1,000.00 of gross receipts or fractional part thereof.
6. Every person with a license that is engaged in business relating to the commercialization of cannabis and/or cannabis products not specifically taxed under this Section shall pay a business tax of $20.00 for each $1,000.00 of gross receipts or fractional part thereof.
(c) The Office of Finance shall file quarterly reports summarizing the amount of business taxes collected from the persons described in subsection (b) of this Section with the City Council, Mayor, Controller, and City Administrative Officer beginning April 1, 2018.
(e) The Office of Finance shall prescribe and implement a reasonable process, including set times and secure conditions, whereby every person subject to business tax under this Section is allowed to pay, in cash, the amount of business tax reported on their written statement, as prescribed under Section 21.14 of this Article.
(f) The Director of Finance may prescribe such additional requirements or conditions, as provided under Section 21.15(h) of this Article, when granting a business tax registration certificate under Section 21.08 of this Article with respect to a person subject to this Section, which may include an affidavit of compliance and/or proof of license. Any person who makes a false statement or misrepresentation in any required affidavit under this Section is guilty of a misdemeanor.
(g) It shall be a misdemeanor for any person operating a non-medical cannabis business to maintain or display a business tax registration certificate for any classification other than that set forth herein for non-medical cannabis business activity or to maintain or display an expired, suspended or otherwise invalid business tax registration certificate.
(h) No business tax registration certificate issued for purposes of this Section or the payment of any tax required under this Section shall be construed as authorizing the conduct or continuance of any illegal business or of a legal business in an illegal manner. Nothing in this Section implies or authorizes that any activity in connection with cannabis and/or cannabis products is legal unless otherwise authorized by federal and any other applicable law.
(i) Every person subject to this Section must pay the full tax imposed by this Section regardless of any rebate, exemption, incentive, or other reduction set forth elsewhere in the Municipal Code, except as required by state or federal law. No provision in the Municipal Code shall lower the tax rate set forth in this Section or otherwise reduce the amount of taxes paid hereunder unless the provision specifically states that the reduction applies.
(j) The City Council may impose the tax authorized by this Section at a lower rate and may establish exemptions, incentives or other reductions as otherwise allowed by the Charter and state law. No action by the Council under this paragraph shall prevent it from later increasing the tax or removing any exemption, incentive, or reduction and restoring up to the maximum tax specified in this Section.
(k) The provisions of this Section shall be effective January 1, 2018.