A. Beginning January I, 2019, 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 business has been issued a cannabis business license or permit 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 will not constitute the City's approval or consent to such illegal operations.
B. The initial rate of the cannabis business tax shall be as follows:
1. For every person who is engaged in commercial cannabis cultivation in the City:
a. Seven dollars ($7.00) annually per square foot of canopy space in a facility that uses exclusively artificial lighting.
b. Four dollars ($4.00) annually per square foot of canopy space in a facility that uses a combination of natural and supplemental artificial lighting.
c. Two dollars ($2.00) annually per square foot of canopy space in a facility that uses no artificial lighting.
d. One dollar ($1.00) annually per square foot of canopy space for any nursery.
For purposes of this subdivision (B), the square feet of canopy space for a business shall be rebuttably presumed to be the maximum square footage of canopy allowed by the business's City permit for commercial cannabis cultivation, or, in the absence of a City permit, the square footage shall be the maximum square footage of canopy for commercial cannabis cultivation allowed by the state license type. Should a City permit be issued to a business which cultivates only for certain months of the year, the City shall prorate the tax as to sufficiently reflect the period in which cultivation is occurring at the business. In no case shall canopy square footage which is authorized by the City commercial cannabis permit but not utilized for cultivation be deducted for the purpose of determining the tax for cultivation, unless the Tax Administrator is informed in writing and authorizes such reduction for the purpose of relief from the tax prior to the period for which the space will not be used, that such space will not be used.
2. For every person who engages in the operation of a testing laboratory: one percent (1%) of gross receipts.
3. For every person who engages in the retail sales of cannabis as a retailer (dispensary) or non-store front retailer (delivery) or microbusiness (retail sales): four percent (4%) of gross receipts.
4. For every person who engages in a cannabis distribution business: two percent (2%) of gross receipts.
5. For every person who engages in a cannabis manufacturing, processing, or microbusiness (non-retail), or any other type of cannabis business not described in Section (B) (1), (2), (3) or (4): two and half percent (2.5%) of gross receipts. However, cultivation for a microbusiness shall be taxed at the rate established in 5.18.0S0(B)(l)(a).
C. The City Council may, by resolution or ordinance, adjust the rate of the cannabis business tax. However, in no event may the City Council set any adjusted rate that exceeds the maximum rate calculated pursuant to Subdivision (D) of this Section for the date on which the adjusted rate will commence.
D. The maximum rate shall be calculated as follows:
1. For every person who is engaged in commercial cannabis cultivation in the City:
a. Through January 1, 2021, the maximum rate shall be:
i. Ten dollars ($10.00) annually per square foot of canopy space in a facility that uses exclusively artificial lighting.
ii. Seven dollars ($7.00) annually per square foot of canopy space in a facility that uses a combination of natural and supplemental artificial lighting.
iii. Four dollars ($4.00) annually per square foot of canopy space in a facility that uses no artificial lighting.
iv. Two dollars ($2.00) annually per square foot of canopy space for any nursery.
b. On January 1, 2022 and on each January 1 thereafter, the maximum annual tax rate per square foot of each type of canopy space shall increase by the percentage change between January of the calendar year prior to such increase and January of the calendar year of the increase in the Consumer Price Index ("CPI") for all urban consumers in the Riverside-San Bernardino-Ontario 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 who engages in the operation of a testing laboratory, the maximum tax rate shall not exceed two and a half percent (2.5%) of gross receipts.
3. For every person who engages in the retail sales of cannabis as a retailer (dispensary) or non-store front retailer (delivery business), or microbusiness (retail sales activity) the maximum tax rate shall not exceed six percent (6%) of gross receipts.
4. For every person who engages in a cannabis distribution business, the maximum tax rate shall not exceed three percent (3%) of gross receipts.
5. For every person who engages in a cannabis manufacturing, processing, or microbusiness (non-retail activity) or any other type of cannabis business not described in Section (D) (1), (2), (3) or (4), the maximum tax rate shall not exceed four percent (4%) of gross receipts. However, the maximum tax rate for cultivation for a microbusiness shall be the rate established in 5.18.050(0)(1) (a)(i), as may be increased from time to time by the provisions of 5.l 8.050(D) (l)(b).
(Ord. MC-1501, 11-06-18)