HomeMy WebLinkAboutResolution 2018-053
Cannabis Tax Ordinance
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EXHIBIT A
ORDINANCE NO. _____
AN ORDINANCE OF THE CITY OF ATASCADERO,
CALIFORNIA ADDING CHAPTER 3-17 (CANNABIS
BUSINESS TAX) TO TITLE 3 OF THE ATASCADERO
MUNICIPAL CODE ESTABLISHING A CANNABIS
BUSINESS TAX
THE PEOPLE OF THE CITY OF ATASCADERO DO ORDAIN AS FOLLOWS:
SECTION 1. CODE AMENDMENT. Chapter 3-17 of Title 3 of the Atascadero Municipal Code
to read as follows:
CHAPTER 3-17
CANNABIS BUSINESS TAX
Sections:
3-17.010 Title.
3-17.020 Authority and Purpose.
3-17.030 Intent.
3-17.040 Definitions.
3-17.050 Tax imposed.
3-17.060 Reporting and remittance of tax.
3-17.070 Payments and communications –timely remittance.
3-17.080 Payment – when taxes deemed delinquent.
3-17.090 Notice not required by City.
3-17.100 Penalties and interest.
3-17.110 Refunds and credits.
3-17.120 Refunds and procedures.
3-17.130 Personal cultivation not taxed.
3-17.140 Administration of the tax.
3-17.150 Appeal procedure.
3-17.160 Enforcement –action to collect.
3-17.170 Apportionment.
3-17.180 Constitutionality and legality.
3-17.190 Audit and examination of premises and records.
3-17.200 Other licenses, permits, taxes or charges.
3-17.210 Payment of tax does not authorize unlawful business.
3-17.220 Deficiency determinations.
3-17.230 Failure to report – nonpayment, fraud.
3-17.240 Tax assessment –notice requirements.
3-17.250 Tax assessment – hearing, application, and determination.
3-17.260 Relief from taxes-disaster relief.
3-17.270 Conviction for violation – taxes not waived.
3-17.280 Violation deemed misdemeanor.
3-17.290 Severability.
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3-17.300 Remedies cumulative.
3-17.310 Amendment or repeal.
3-17.010 Title.
This ordinance shall be known as the Cannabis Business Tax Ordinance.
3-17.020 Authority and Purpose.
The purpose of this Ordinance is to adopt a tax, for revenue purposes, pursuant to Sections
37101 and 37100.5 of the California Government Code, upon Cannabis Businesses that engage in
business in the City, should they be authorized to do so at some future time. The Cannabis
Business Tax is shall be levied based upon business gross receipts and square footage of plant
canopy, should cannabis businesses ever be authorized to operate in the City. In addition, Cannabis
Businesses that operate illegally in the City at any time, regardless of the City’s cannabis
regulations, are subject to the Cannabis Business Tax. It is not a sales and use tax, a tax upon
income, or a tax upon real property.
The Cannabis Business Tax is a general tax enacted solely for general governmental
purposes of the City and not for specific purposes. All of the proceeds from the tax imposed by
this Chapter shall be placed in the City's general fund and be available for any legal municipal
purpose.
3-17.030 Intent.
The intent of this Ordinance is to position the City to levy a tax on all Cannabis Businesses
that operate in the City, regardless of whether such business is operating legally or illegally.
Nothing in this Ordinance shall be interpreted to authorize or permit any business activity that
would not otherwise be legal or permissible under laws applicable to the activity at the time the
activity is undertaken.
3-17.040 Definitions.
The following words and phrases shall have the meanings set forth below when used in
this Chapter:
A. “Business” shall include all activities engaged in or caused to be engaged in within
the City, including any commercial or industrial enterprise, trade, profession, occupation, vocation,
calling, or livelihood, whether or not carried on for gain or profit, but shall not include the services
rendered by an employee to his or her employer.
B. “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” also means marijuana as defined
by Section 11018 of the California Health and Safety Code and is not limited to medical cannabis.
C. “Cannabis product” means raw cannabis that has undergone a process whereby the
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raw agricultural product has been transformed into a concentrate, an edible product, or a topical
product. “Cannabis product” also means marijuana products as defined by Section 11018.1 of the
California Health and Safety Code and is not limited to medical cannabis products.
D. “Canopy” means all areas occupied by any portion of a cannabis plant whether
contiguous or noncontiguous on any one site. When plants occupy multiple horizontal planes (as
when plants are placed on shelving above other plants) each plane shall be counted as a separate
canopy area.
E. “Cannabis business” means any business activity involving cannabis, including but
not limited to cultivating, transporting, distributing, manufacturing, compounding, converting,
processing, preparing, storing, packaging, delivering, testing, dispensing, retailing and
wholesaling of cannabis, of cannabis products or of ancillary products and accessories, whether or
not carried on for gain or profit.
F. “Cannabis business tax” or “business tax,” means the tax due pursuant to this
Chapter for engaging in cannabis business in the City.
G. “Commercial cannabis cultivation” means cultivation in the course of conducting
a cannabis business.
H. “City permit” means a permit issued by the City to a person to authorize that person
to operate or engage in a cannabis business.
I. “Cultivation” means any activity involving the planting, growing, harvesting,
drying, curing, grading, or trimming of cannabis and includes, but is not limited to, the operation
of a nursery.
J. “Employee” means each and every person engaged in the operation or conduct of
any business, whether as owner, member of the owner's family, partner, associate, agent, manager
or solicitor, and each and every other person employed or working in such business for a wage,
salary, commission, barter or any other form of compensation.
K. “Engaged in business as a cannabis business” means the commencing, conducting,
operating, managing or carrying on of a cannabis business, whether done as owner, or by means
of an officer, agent, manager, employee, or otherwise, whether operating from a fixed location in
the City or coming into the City from an outside location to engage in such activities. A person
shall be deemed engaged in business within the City if:
1. Such person or person’s employee maintains a fixed place of business
within the City for the benefit or partial benefit of such person;
2. Such person or person’s employee owns or leases real property within the
City for business purposes;
3. Such person or person’s employee regularly maintains a stock of tangible
personal property in the City for sale in the ordinary course of business;
4. Such person or person’s employee regularly conducts solicitation of
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business within the City; or
5. Such person or person’s employee performs work or renders services in the
City.
The foregoing specified activities shall not be a limitation on the meaning of “engaged in
business.”
L. “Evidence of doing business” means evidence such as, without limitation, use of
signs, circulars, cards or any other advertising media, including the use of internet or telephone
solicitation, or representation to a government agency or to the public that such person is engaged
in a cannabis business in the City.
M. “Calendar year” means January 1 through December 31 of the following calendar
year.
N. “Gross Receipts,” except as otherwise specifically provided, means, whether
designated a sales price, royalty, rent, commission, dividend, or other designation, the total amount
(including all receipts, cash, credits and property of any kind or nature) received or payable for
sales of goods, wares or merchandise or for the performance of any act or service of any nature for
which a charge is made or credit allowed (whether such service, act or employment is done as part
of or in connection with the sale of goods, wares, merchandise or not), without any deduction
therefrom on account of the cost of the property sold, the cost of materials used, labor or service
costs, interest paid or payable, losses or any other expense whatsoever. However, the following
shall be excluded from Gross Receipts:
1. Cash discounts where allowed and taken on sales;
2. Any tax required by law to be included in or added to the purchase price
and collected from the consumer or purchaser;
3. Such part of the sale price of any property returned by purchasers to the
seller as refunded by the seller by way of cash or credit allowances or return of refundable
deposits previously included in gross receipts;
4. Receipts derived from the occasional sale of used, obsolete or surplus trade
fixtures, machinery or other equipment used by the taxpayer in the regular cou rse of the
taxpayer's business;
5. Cash value of sales, trades or transactions between departments or units of
the same business;
6. Whenever there are included within the gross receipts amounts which
reflect sales for which credit is extended and such amount proved uncollectible in a
subsequent year, those amounts may be excluded from the gross receipts in the year they
prove to be uncollectible; provided, however, if the whole or portion of such amounts
excluded as uncollectible are subsequently collected they shall be included in the amount
of gross receipts for the period when they are recovered;
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7. Receipts of refundable deposits, except that such deposits when forfeited
and taken into income of the business shall not be excluded when in excess of one dollar;
8. Amounts collected for others where the business is acting as an agent or
trustee and to the extent that such amounts are paid to those for whom collected. These
agents or trustees must provide the Administrative Services Department with the names
and the addresses of the others and the amounts paid to them. This exclusion shall not apply
to any fees, percentages, or other payments retained by the agent or trustees.
9. Retail sales of t-shirts, sweaters, hats, stickers, key chains, bags, books,
posters or other personal tangible property which the Tax Administrator has excluded in writing
by issuing an administrative ruling per Section 3-17.140 shall not be subject to the cannabis
business tax under this chapter. However, any retail sales not subject to this Chapter as a result of
the administrative ruling shall be subject to the appropriate business tax under Chapter 3-5 or any
other Chapter or Title as determined by the Tax Administrator.
O. “Indoor cultivation” means the cultivation of cannabis within a permanent structure
using exclusively artificial light or within any type of structure using artificial light at a rate above
twenty-five (25) watts per square foot.
P. “Lighting” means a source of light that is primarily used for promoting the
biological process of plant growth. Lighting does not include sources of light that primarily exist
for the safety or convenience of staff or visitors to the facility, such as emergency lig hting,
walkway lighting, or light admitted via small skylights, windows or ventilation openings.
Q. “Nursery” means a facility or part of a facility that is used only for producing
clones, immature plants, seeds, and other agricultural products used specifically for the planting,
propagation, and cultivation of cannabis.
R. “Outdoor cultivation” means the cultivation of mature cannabis without the use of
artificial lighting in the canopy area at any point in time. Artificial lighting is permissible only to
maintain immature plants.
S. “Person” means an individual, firm, partnership, joint venture, association,
corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or any other
group or combination acting as a unit, whether organized as a nonprofit or for-profit entity, and
includes the plural as well as the singular number.
T. “Sale” means and includes any sale, exchange, or barter.
U. “State” means the State of California.
V. “State license,” “license,” or “registration” means a state license issued pursuant to
California Business & Professions Code Sections 19300, et seq. or other applicable state law.
W. “Tax Administrator” means the City of Atascadero Director of Administrative
Services or his or her designee.
X. “Testing Laboratory” means a cannabis business that (i) offers or performs tests of
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cannabis or cannabis products, (ii) offers no service other than such tests, (iii) sells no products,
excepting only testing supplies and materials, (iv) is accredited by an accrediting body that is
independent from all other persons involved in the cannabis industry in the state and (v) is
registered with the State Department of Public Health.
3-17.050 Tax imposed.
A. Beginning January 1, 2019, there is imposed upon each person who is engaged in
business as a cannabis business a cannabis business tax regardless if the business
has been issued a permit to operate lawfully in the City or is operating unlawfully.
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 for indoor
cultivation within a permanent structure that uses exclusively artificial
lighting.
b. Four dollars ($4.00) annually per square foot of canopy space for indoor
cultivation within a permanent structure that uses a combination of natural
and supplemental artificial lighting.
c. Two dollars ($2.00) annually per square foot of canopy space for outdoor
cultivation 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
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(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.
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 for
indoor cultivation within a permanent structure that uses exclusively
artificial lighting.
ii. Ten dollars ($10.00) annually per square foot of canopy space for
indoor cultivation within a permanent structure that uses a
combination of natural and supplemental artificial lighting.
iii. Ten dollars ($10.00) annually per square foot of canopy space for
outdoor cultivation that uses no artificial lighting.
iv. Ten dollars ($10.00) 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 Los Angeles-Long
Beach-Anaheim area as published by the United States Government Bureau
of Labor Statistics (BLS). In the event the BLS modifies the Los Angeles-
Long Beach-Anaheim Index, then its successor or equivalent shall apply.
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
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(retail sales activity) the maximum tax rate shall not exceed ten percent (10%)
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 six percent (6%) of gross receipts.
3-17.060 Reporting and remittance of tax.
A. The cannabis business tax imposed by this Chapter shall be paid, in arrears, on a
quarterly basis. For commercial cannabis cultivation, the tax due for each calendar
quarter shall be based on the square footage of the business’s canopy space during
the quarter and the rate shall be 25% of the applicable annual rate. For all other
cannabis businesses activities, the tax due for each calendar quarter shall be based
on the gross receipts for the quarter.
B. Each person owing cannabis business tax for a calendar quarter shall, no later than
the last day of the month following the close of the calendar quarter, file with the
Tax Administrator a statement of the tax owed for that calendar quarter and the
basis for calculating that tax. The Tax Administrator may require that the statement
be submitted on a form prescribed by the Tax Administrator. The tax for each
calendar quarter shall be due and payable on that same date as the statement for the
calendar quarter is due.
C. Upon cessation of a cannabis business, tax statements and payments shall be
immediately due for all calendar quarters up to the calendar quarter during which
cessation occurred.
D. The Tax Administrator may, at his or her discretion, establish shorter report and
payment periods for any taxpayer as the Tax Administrator deems necessary to
ensure collection of the tax. The Tax Administrator may also require that a deposit,
to be applied against the taxes for a calendar quarter, be made by a taxpayer at the
beginning of that calendar quarter. In no event shall the deposit required by the
Tax Administrator exceed the tax amount he or she projects will be owed by the
taxpayer for the calendar quarter. The Tax Administrator may require that a
taxpayer make payments via a cashier’s check, money order, wire transfer, or
similar instrument.
E. For purposes of this section, the square feet of canopy space for a business shall be
rebuttably presumed to be no less than 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. In no case shall canopy square footage which is authorized by the permit or
license but not utilized for cultivation be excluded from taxation unless the Tax
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Administrator is informed in writing, prior to the period for which the space will
not be used, that such space will not be used.
3-17.070 Payments and communications – timely remittance.
Whenever any payment, statement, report, request or other communication is due, it must
be received by the Tax Administrator on or before the final due date. A postmark will not be
accepted as timely remittance. If the due date would fall on a Saturday, Sunday or a holiday, the
due date shall be the next regular business day on which the City is open to the public.
3-17.080 Payment - when taxes deemed delinquent.
Unless otherwise specifically provided under other provisions of this Chapter, the taxes
required to be paid pursuant to this Chapter shall be deemed delinquent if not received by the Tax
Administrator on or before the due date as specified in Sections 3-17.060 and 3-17.070.
3-17.090 Notice not required by the City.
The City may as a courtesy send a tax notice to the business. However, the Tax
Administrator is not required to send a delinquency or other notice or bill to any person subject to
the provisions of this Chapter. Failure to send such notice or bill shall not affect the validity of
any tax or penalty due under the provisions of this Chapter.
3-17.100 Penalties and interest.
A. Any person who fails or refuses to pay any cannabis business tax required to be
paid pursuant to this Chapter on or before the due date shall pay penalties and interest as follows:
1. A penalty equal to ten percent (10%) of the amount of the tax, in addition
to the amount of the tax, plus interest on the unpaid tax calculated from the due date of the
tax at the rate of one percent (1.0%) per month.
2. If the tax remains unpaid for a period exceeding one calendar month beyond
the due date, an additional penalty equal to twenty-five percent (25%) of the amount of the
tax, plus interest at the rate of one percent (1.0%) per month on the unpaid tax and on the
unpaid penalties.
3. Interest shall be applied at the rate of one percent (1.0%) per month on the
first day of the month for the full month and will continue to accrue monthly on the tax and
penalty until the balance is paid in full.
B. Whenever a check or electronic payment is submitted in payment of a cannabis
business tax and the payment is subsequently returned unpaid by the bank for any reason, the
taxpayer will be liable for the tax amount due plus any fees, penalties and interest as provided for
in this Section, and any other amount allowed under state law.
3-17.110 Refunds and credits.
A. No refund shall be made of any tax collected pursuant to this Chapter, except as
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provided in Section 3-17.120.
B. No refund of any tax collected pursuant to this Chapter shall be made because of
the discontinuation, dissolution, or other termination of a business.
3-17.120 Refunds and procedures.
A. Whenever the amount of any cannabis business tax, penalty or interest has been
overpaid, paid more than once, or has been erroneously collected or received by the City under
this Chapter, it may be refunded to the claimant who paid the tax provided that a written claim for
refund is filed with the Tax Administrator within one (1) year of the date the tax was originally
due and payable.
B. The Tax Administrator, his or her designee or any other City officer charged with
the administration of this Chapter shall have the right to examine and audit all the books and
business records of the claimant in order to determine the eligibility of the claimant to the claimed
refund. No claim for refund shall be allowed if the claimant refuses to allow such examination of
claimant's books and business records after request by the Tax Administrator to do so.
C. In the event that the cannabis business tax was erroneously paid, and the error is
attributable to the City, the City shall refund the amount of tax erroneously paid up to one (1) year
from when the error was identified. If an error is attributable to the claimant, the City may retain
an amount established by resolution of the City Council from time to time in an amount sufficient
to recover the City’s cost to process the claim and refund the balance.
3-17.130 Personal Cultivation Not Taxed.
The provisions of this Chapter shall not apply to personal cannabis cultivation as defined
in the “Medicinal and Adult Use Cannabis Regulation and Safety Act”. This Chapter shall not
apply to personal use of cannabis that is specifically exempted from state licensing requirements,
that meets the definition of personal use or equivalent terminology under state law, and for which
the individual receives no compensation whatsoever related to that personal use.
3-17.140 Administration of the tax.
A. It shall be the duty of the Tax Administrator to collect the taxes, penalties, fees, and
perform the duties required by this Chapter.
B. For purposes of administration and enforcement of this Chapter generally, the Tax
Administrator may from time to time promulgate such administrative interpretations, rules, and
procedures consistent with the purpose, intent, and express terms of this Chapter as he or she deems
necessary to implement or clarify such provisions or aid in enforcement.
C. The Tax Administrator may take such administrative actions as needed to
administer the tax, including but not limited to:
1. Provide to all cannabis business taxpayers forms for the reporting of the tax;
2. Provide information to any taxpayer concerning the provisions of this Chapter;
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3. Receive and record all taxes remitted to the City as provided in this Chapter;
4. Maintain records of taxpayer reports and taxes collected pursuant to this Chapter;
5. Assess penalties and interest to taxpayers pursuant to this Chapter;
6. Determine amounts owed and enforce collection pursuant to this Chapter.
7. Take such other reasonable steps as he or she deems necessary and appropriate to
enforce this chapter.
3-17.150 Appeal procedure.
Any taxpayer aggrieved by any decision of the Tax Administrator with respect to the
amount of tax, interest, penalties and fees, if any, due under this Chapter may appeal to the City
Council by filing a notice of appeal with the City Clerk within thirty (30) days of the serving or
mailing of the determination of tax due. The City Clerk, or his or her designee, shall fix a time
and place for hearing such appeal, and the City Clerk, or his or her designee, shall give notice in
writing to such operator at the last known place of address. The finding of the City Council shall
be final and conclusive and shall be served upon the appellant in the manner prescribed by this
Chapter for service of notice of hearing. Any amount found to be due shall be immediately due
and payable upon the service of the notice.
3-17.160 Enforcement - action to collect.
A. Any taxes, penalties and/or fees required to be paid under the provisions of this
Chapter shall be deemed a debt owed to the City. Any person owing money to the City under the
provisions of this Chapter shall be liable in an action brought in the name of the City for the
recovery of such debt. The provisions of this Section shall not be deemed a limitation upon the
right of the City to bring any other action including criminal, civil and equitable actions, based
upon the failure to pay the tax, penalties and/or fees imposed by this Chapter or the failure to
comply with any of the provisions of this Chapter.
B. In addition to any other remedies available under federal, state, or local law, if any
amount required to be paid to the City under this Chapter is not paid when due, the Tax
Administrator may, within three years after the amount is due record a certificate of lien specifying
the amount of taxes, fees and penalties due, and the name and address of the individual or business
as it appears on the records of Tax Administrator. The lien shall also specify that the Tax
Administrator has complied with all provisions of this Chapter in the determination of the amount
required to be paid. From the time of the filing for record, the amount required to be paid, together
with penalties thereon, constitutes a lien upon all real property in the City owned by the individual
or business, or subsequently acquired by the individual or business before the lien expires. The
lien has the force, effect, and priority of a judgment lien and shall continue for ten years from filing
of the certificate unless sooner released or otherwise discharged.
C. At any time within three years after any individual or business is delinquent in the
payment of any amount herein required to be paid or within three years after the last recording of
a certificate of lien under subsection B of this Section, the Tax Administrator may issue a warrant
for the enforcement of any liens and for the collection of any amount required to be paid to the
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City under this Chapter. The warrant shall be directed to the sheriff and shall have the same effect
as a writ of execution. The warrant shall be levied and sale made pursuant to it in the same manner
and with the same effect as a levy of and a sale pursuant to a writ of execution. The Tax
Administrator may pay or advance to the sheriff, the same fees, commissions and expenses for
service provided by law for similar services pursuant to a writ of execution. The Tax Administrator
shall approve the fees for publication in the newspaper.
D. At any time within three years after recording a lien against any individual or
business, if the lien is not discharged and released in full, the Tax Administrator may forthwith
seize any asset or property, real or personal (including bank account), of the operator and sell at
public auction the asset or property, or a sufficient part of it to pay the amount due together with
any penalties and interest imposed for the delinquency and any cost incurred on account of the
seizure and sale. Assets or property of the business subject to seizure and sale subject to this
Chapter shall not include any asset or property which is exempt from execution under the
provisions of Code of Civil Procedure.
3-17.170 Apportionment.
If a business subject to the tax is operating both within and outside the City, it is the intent
of the City to apply the cannabis business tax so that the measure of the tax fairly reflects the
proportion of the taxed activity actually carried on in the City. To the extent federal or state law
requires that any tax due from any taxpayer be apportioned, the taxpayer may indicate said
apportionment on his or her tax return. The Tax Administrator may promulgate administrative
procedures for apportionment as he or she finds useful or necessary.
3-17.180 Constitutionality and legality.
A. This tax is intended to be applied in a manner consistent with the United States and
California Constitutions and state law. None of the tax provided for by this Chapter shall be applied
in a manner that causes an undue burden upon interstate commerce, a violation of the equal
protection or due process clauses of the Constitutions of the United States or the State of California
or a violation of any other provision of the California Constitution or state law. If a person believes
that the tax, as applied to him or her, is impermissible under applicable law, he or she may request
that the Tax Administrator release him or her from the obligation to pay the impermissible portion
of the tax.
B. The taxes imposed under this chapter are excises on the privilege of engaging in
business as a cannabis business in the City. It is not a sales or use tax and shall not be calculated
or assessed as such. Nevertheless, at the option of a cannabis business, the tax may be separately
identified on invoices, receipts and other evidences of transactions.
C. Pursuant to California Constitution, article XIII B, the appropriation limit for the
City is hereby increased to the maximum extent over the maximum period of time allowed under
law by the amount of the revenues generated by the tax.
3-17.190 Audit and examination of premises and records.
A. For the purpose of ascertaining the amount of cannabis business tax owed or
verifying any representations made by any taxpayer to the City in support of his or her tax
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calculation, the Tax Administrator shall have the power to inspect any location where commercial
cannabis cultivation occurs and to audit and examine all books and records (including, but not
limited to bookkeeping records, state and federal income tax returns, and other records relating to
the gross receipts of the business) of persons engaged in cannabis businesses. In conducting such
investigation, the Tax Administrator shall have the power to inspect any equipment, such as
computers or point of sale machines, that may contain such records.
B. It shall be the duty of every person liable for the collection and payment to the City
of any tax imposed by this Chapter to keep and preserve, for a period of at least three (3) years, all
records as may be necessary to determine the amount of such tax as he or she may have been liable
for the collection of and payment to the City, which records the Tax Administrator or his/her
designee shall have the right to inspect at all reasonable times.
3-17.200 Other licenses, permits, taxes, fees or charges.
A. Nothing contained in this Chapter shall be deemed to repeal, amend, be in lieu of,
replace or in any way affect any requirements for any permit or license required by,
under or by virtue of any provision of any other Chapter of this code or any other
ordinance or resolution of the City, nor be deemed to repeal, amend, be in lieu of,
replace or in any way affect any tax, fee or other charge imposed, assessed or required
by, under or by virtue of any other Chapter of this code or any other ordinance or
resolution of the City. Any references made or contained in any other Chapter of this
code to any licenses, license taxes, fees, or charges, or to any schedule of license fees,
shall be deemed to refer to the licenses, license taxes, fees or charges, or schedule of
license fees, provided for in other Chapter of this Code.
B. Notwithstanding subdivision (A) of this Section, a cannabis business shall not be
required to pay the license fee required by Chapter 3-5 of Title 3 of this Code so long
as all of business’ activities within the City that would require payment of a license fee
are activities subject to the cannabis business tax.
C. The Tax Administrator may revoke or refuse to renew the license required by Chapter
3-5 of Title 3 of this Code for any business that is delinquent in the payment of any tax
due pursuant to this Chapter or that fails to make a deposit required by the Tax
Administrator pursuant to Section 3-17.060.
3-17.210 Payment of tax does not authorize unlawful business.
A. The payment of a cannabis business tax required by this Chapter, and its acceptance
by the City, shall not entitle any person to carry on any cannabis business unless the person has
complied with all of the requirements of this Code and all other applicable state laws.
B. No tax paid under the provisions of this Chapter shall be construed as authorizing
the conduct or continuance of any illegal or unlawful business, or any business in violation of any
local or state law.
3-17.220 Deficiency determinations.
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If the Tax Administrator is not satisfied that any statement filed as required under the
provisions of this Chapter is correct, or that the amount of tax is correctly computed, he or she may
compute and determine the amount to be paid and make a deficiency determination upon the basis
of the facts contained in the statement or upon the basis of any information in his or her possession
or that may come into his or her possession within three (3) years of the date the tax was originally
due and payable. One or more deficiency determinations of the amount of tax due for a period or
periods may be made. When a person discontinues engaging in a business, a deficiency
determination may be made at any time within three (3) years thereafter as to any liability arising
from engaging in such business whether or not a deficiency determination is issued prior to the
date the tax would otherwise be due. Whenever a deficiency determination is made, a notice shall
be given to the person concerned in the same manner as notices of assessment are given under
Section 3-17.240.
3-17.230 Failure to report—nonpayment, fraud.
A. Under any of the following circumstances, the Tax Administrator may make and
give notice of an assessment of the amount of tax owed by a person under this Chapter at any time:
1. If the person has not filed a complete statement required under the
provisions of this Chapter;
2. If the person has not paid the tax due under the provisions of this Chapter;
3. If the person has not, after demand by the Tax Administrator, filed a
corrected statement, or furnished to the Tax Administrator adequate substantiation of the
information contained in a statement already filed, or paid any additional amount of tax
due under the provisions of this Chapter; or
4. If the Tax Administrator determines that the nonpayment of any business
tax due under this Chapter is due to fraud, a penalty of twenty-five percent (25%) of the
amount of the tax shall be added thereto in addition to penalties and interest otherwise
stated in this Chapter and any other penalties allowed by law.
B. The notice of assessment shall separately set forth the amount of any tax known by
the Tax Administrator to be due or estimated by the Tax Administrator, after consideration of all
information within the Tax Administrator's knowledge concerning the business and activities of
the person assessed, to be due under each applicable section of this Chapter, and shall include the
amount of any penalties or interest accrued on each amount to the date of the notice of assessment.
3-17.240 Tax assessment - notice requirements.
The notice of assessment shall be served upon the person either by personal delivery, or by
a deposit of the notice in the United States mail, postage prepaid thereon, addressed to the person
at the address of the location of the business or to such other address as he or she shall register
with the Tax Administrator for the purpose of receiving notices provided under this Chapter; or,
should the person have no address registered with the Tax Administrator for such purpose, then to
such person's last known address. For the purposes of this Section, a service by mail is complete
at the time of deposit in the United States mail.
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3-17.250 Tax assessment - hearing, application and determination.
Within thirty (30) days after the date of service the person may apply in writing to the Tax
Administrator for a hearing on the assessment. If application for a hearing before the City is not
made within the time herein prescribed, the tax assessed by the Tax Administrator shall become
final and conclusive. Within thirty (30) days of the receipt of any such application for hearing, the
Tax Administrator shall cause the matter to be set for hearing before him or her no later than thirty
(30) days after the receipt of the application, unless a later date is agreed to by the Tax
Administrator and the person requesting the hearing. Notice of such hearing shall be given by the
Tax Administrator to the person requesting such hearing not later than five (5) days
prior to such hearing. At such hearing said applicant may appear and offer evidence why the
assessment as made by the Tax Administrator should not be confirmed and fixed as the tax due.
After such hearing the Tax Administrator shall determine and reassess the proper tax to be charged
and shall give written notice to the person in the manner prescribed in Section 3-17.240 for giving
notice of assessment.
3-17.260 Relief from taxes -disaster relief.
(a) If a business is unable to comply with any tax requirement due to a disaster, the business may
notify the Tax Administrator of this inability to comply and request relief from the tax requirement;
(b) The Tax Administrator, in its sole discretion, may provide relief from the cannabis business
tax requirement for businesses whose operations have been impacted by a disaster if such tax
liability does not exceed five thousand ($5,000) dollars. If such tax liability is five thousand one
($5,001) dollars or more than such relief shall only be approved by the City Council;
(c) Temporary relief from the cannabis tax may be relieved for a reasonable amount of time as
determined by the Tax Administrator in order to allow the cannabis business time to recover from
the disaster;
(d) The Tax Administrator may require that certain conditions be followed in order for a cannabis
business to receive temporary relief from the cannabis business tax requirement;
(e) A cannabis business shall not be subject to an enforcement action for a violation of a cannabis
business requirement in which the licensee has received temporary relief from the Tax
Administrator;
(f) For purposes of this section, “disaster” means fire, flood, storm, tidal wave, earthquake, or
similar public calamity, whether or not resulting from natural causes.
(1) The cannabis business must notify the Tax Administrator in writing a request for temporary
relief from imposition of the tax requirement pursuant to subsection (a) of this section of such
disaster clearly indicates why relief is requested from, the time period for which the relief is
requested, and the reasons relief is needed for the specified amount of time;
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(2) The cannabis business agrees to grant the Tax Administrator or his/her designee access to the
location where the cannabis business has been impacted due to a disaster.
3-17.270 Conviction for violation - taxes not waived.
The conviction and punishment of any person for failure to pay the required tax shall not
excuse or exempt such person from any civil action for the tax debt unpaid at the time of such
conviction. No civil action shall prevent a criminal prosecution for any violation of the provisions
of this Chapter or of any state law requiring the payment of all taxes.
3-17.280 Violation deemed misdemeanor.
Any person violating any of the provisions of this Chapter shall be guilty of a misdemeanor.
3-17.290 Severability.
If any provision of this Chapter, or its application to any person or circumstance, is
determined by a court of competent jurisdiction to be unlawful, unenforceable or otherwise void,
that determination shall have no effect on any other provision of this Chapter or the application of
this Chapter to any other person or circumstance and, to that end, the provisions hereof are
severable.
3-17.300 Remedies cumulative.
All remedies and penalties prescribed by this Chapter or which are available under any
other provision of the Atascadero Municipal Code and any other provision of law or equity are
cumulative. The use of one or more remedies by the City shall not bar the use of any other remedy
for the purpose of enforcing the provisions of this Chapter.
3-17.310 Amendment or repeal.
This Chapter may be repealed or amended by the City Council without a vote of the people
to the extent allowed by law. However, as required by Article XIII C of the California
Constitution, voter approval is required for any amendment that would increase the rate of any tax
levied pursuant to this Chapter. The people of the City of Atascadero affirm that the following
actions shall not constitute an increase of the rate of a tax:
A. The restoration of the rate of the tax to a rate that is no higher than that set by this
Chapter, if the City Council has acted to reduce the rate of the tax;
B. An action that interprets or clarifies the methodology of the tax, or any definition
applicable to the tax, so long as interpretation or clarification (even if contrary to some prior
interpretation or clarification) is not inconsistent with the language of this Chapter; or
C. The collection of the tax imposed by this Chapter even if the City had, for some
period of time, failed to collect the tax.
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SECTION 2. SEVERABILITY. If any section, subsection, sentence, clause or phrase of
this ordinance is for any reason held to be invalid, such decision shall not affect the validity of the
remaining portions of this ordinance. The City Council hereby declares that it would have passed
this ordinance and each section, subsection, sentence, clause and phrase thereof, irrespective of the
fact that any one or more sections, subsections, sentences, clauses, or phrases be declared invalid.
SECTION 3. CEQA. This Ordinance is exempt from the California Environmental
Quality Act (CEQA), Public Resources Code Section 21000 et seq., because it can be seen with
certainty that there is no possibility that the enactment of this Ordinance would have a significant
effect on the environment (Pub. Resources Code § 21065; CEQA Guidelines §§ 15378(b)(4),
15061(b)(3)) and because the Ordinance involves the approval of government revenues to fund
existing services (Pub. Resources Code § 21080, subd. (b)(8); CEQA Guidelines § 15273(a)(4)).
It does not make any commercial activity lawful nor commit the city to fund any particular activity.
This Ordinance was approved and adopted by the People of the City of Atascadero at the City’s
November 6, 2018 statewide election.
____________________________________
XXX, Mayor
ATTEST:
____________________________________
City Clerk
APPROVED AS TO FORM:
____________________________________
City Attorney