Short Title. | |
Definitions. | |
Imposition of Tax. | |
Allocation; Gross Receipts Attributable to the City. | |
Exemptions and Exclusions. | |
Returns; Combined Returns. | |
Tax Collector Authorized to Determine Gross Receipts. | |
Construction and Scope of the Cannabis Business Tax Ordinance. | |
Administration of the Cannabis Business Tax Ordinance. | |
Expenditure of Proceeds. | |
Amendment of Ordinance. | |
Effect of State and Federal Authorization. | |
Severability. | |
Savings Clause. | |
This Article 30 shall be known as the “Cannabis Business Tax Ordinance,” and the tax it imposes shall be known as the “Cannabis Business Tax.”
(Added by Proposition D, 11/6/2018, Eff. 12/14/2018, Oper. 1/1/2021)
Unless otherwise defined in this Article 30, the terms used in this Article shall have the meanings given to them in Articles 6 and 12-A-1 of the Business and Tax Regulations Code, as amended from time to time. For purposes of this Article 30, the following definitions shall apply:
“Cannabis” 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, or resin. “Cannabis” also means the separated resin, whether crude or purified, obtained from cannabis. “Cannabis” 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. For the purpose of this Article 30, “Cannabis” does not mean “Industrial Hemp.”
“Cannabis Business Activities” means any business activities directly related to Cannabis or Cannabis Products, including but not limited to the cultivation, possession, manufacture, processing, storing, labeling, distribution, or sale of Cannabis or Cannabis Products for consideration. “Cannabis Business Activities” shall not include: (a) business activities indirectly related to Cannabis or Cannabis Products, including the sale of items that do not themselves contain Cannabis or Cannabis Products; (b) laboratory testing; and (c) transportation of Cannabis or Cannabis Products where the person transporting Cannabis or Cannabis Products never takes title to or sells Cannabis or Cannabis Products.
“Cannabis Products” means Cannabis that has undergone a process whereby the plant material has been transformed into a concentrate, including, but not limited to, concentrated Cannabis, or an edible or topical product containing Cannabis or concentrated Cannabis and other ingredients.
“Industrial Hemp” means a fiber or oilseed crop, or both, that is limited to types of the plant Cannabis sativa L. having no more than three tenths of 1% tetrahydrocannabinol (THC) contained in the dried flowering tops, whether growing or not; the seeds of the plant; the resin extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds or resin produced therefrom.
“Medicinal Cannabis” means Cannabis or a Cannabis Product, respectively, sold for use under the Compassionate Use Act of 1996 (Proposition 215) by a medicinal cannabis patient in California who possesses a physician’s recommendation.
“Retail Sale” means any transaction whereby, for any consideration, title to Cannabis or Cannabis Products is transferred from one person to another for the latter person’s use and not for resale, and includes the delivery of Cannabis or Cannabis Products to a person for such person’s own use and not for resale pursuant to an order placed for the purchase of the same and soliciting or receiving an order for the same.
(Added by Proposition D, 11/6/2018, Eff. 12/14/2018, Oper. 1/1/2021)
(a) Except as otherwise provided in this Article 30, for the privilege of engaging in Cannabis Business Activities in the City, the City imposes an annual Cannabis Business Tax on each person engaged in business in the City that receives gross receipts from Cannabis Business Activities attributable to the City.
(b) The Cannabis Business Tax shall be calculated in the following manner:
(1) The person or combined group’s first $1,000,000 of gross receipts attributable to the City from Cannabis Business Activities shall be exempt from the Cannabis Business Tax.
(2) The person or combined group’s gross receipts attributable to the City from the Retail Sale of Cannabis or Cannabis Products, including the amount exempt under Section 3003(b)(1), shall be multiplied as follows:
(A) by 2.5% for gross receipts in excess of the amount exempt under Section 3003(b)(1) and up to and including $1,500,000; and
(B) by 5% for gross receipts over $1,500,000.
(3) The person or combined group’s gross receipts attributable to the City from all Cannabis Business Activities other than the Retail Sale of Cannabis or Cannabis Products, including the amount exempt under Section 3003(b)(1), shall be multiplied as follows:
(A) by 1% for gross receipts in excess of the amount exempt under Section 3003(b)(1) and up to and including $1,500,000; and
(B) by 1.5% for gross receipts over $1,500,000.
(4) The Board of Supervisors may from time to time by an ordinance adopted by at least two-thirds of the members of the Board increase one or more of the rates provided for in Sections 3003(b)(2) and 3003(b)(3), except that no rate may increase more than 1% annually and no rate may exceed 7%. The Board of Supervisors may from time to time by an ordinance adopted by a majority of the members of the Board decrease one or more of the rates provided for in Sections 3003(b)(2) and 3003(b)(3). Any such adjustments in this Section 3003(b)(4) shall be effective no sooner than the tax year following the tax year in which the ordinance adjusting the rate is effective. The Controller shall prepare and submit a market analysis and impact report to the Board before the Board adjusts any tax rate under this Section 3003(b)(4).
(5) If a person or combined group has gross receipts attributable to the City from the Retail Sale of Cannabis or Cannabis Products and from Cannabis Business Activities other than the Retail Sale of Cannabis or Cannabis Products, the person or combined group’s Cannabis Business Tax shall be determined as follows:
(A) The person or combined group’s taxable gross receipts shall be determined on an aggregate basis first for gross receipts attributable to the City from Cannabis Business Activities other than the Retail Sale of Cannabis or Cannabis Products, and then for gross receipts attributable to the City from the Retail Sale of Cannabis or Cannabis Products;
(B) The $1,000,000 exemption in Section 3003(b)(1) shall be applied first to gross receipts attributable to the City from Cannabis Business Activities other than the Retail Sale of Cannabis or Cannabis Products, with any remaining portion of the exemption then applied to gross receipts attributable to the City from the Retail Sale of Cannabis or Cannabis Products;
(C) The rates applicable under Section 3003(b)(2) shall be determined by applying the rate scale commencing with the gross receipts attributable to the City from Cannabis Business Activities other than the Retail Sale of Cannabis or Cannabis Products; and
(c) The imposition of the Cannabis Business Tax under this Section 3003 shall be suspended for the 2021, 2022, 2023, 2024, and 2025 tax years.
(Added by Proposition D, 11/6/2018, Eff. 12/14/2018, Oper. 1/1/2021; amended by Ord. 240-20, File No. 201009, App. 11/25/2020, Eff. 12/26/2020; Ord. 231-21, File No. 211150, App. 12/17/2021, Eff. 1/17/2022, Retro. 1/1/2022; Ord. 247-22, File No. 221070, App. 12/9/2022, Eff. 1/9/2023, Retro. 1/1/2023)
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