HomeMy WebLinkAboutReso 2018-071 - Cannabis Business General Tax RESOLUTION NO. 2018-071
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDDING
ESTABLISHING NOVEMBER 6, 2018, AS THE DATE FOR A GENERAL
ELECTION ON A PROPOSED BALLOT MEASURE SEEKING VOTER
APPROVAL OF A GENERAL BUSINESSS TAX ON CANNABIS
BUSINESSES OPERATING IN THE CITY OF REDDING
WHEREAS, the City of Redding has responsibly and proactively managed its finances
and its taxpayer dollars through transparent budget and decision-making processes; and
WHEREAS, on November 8, 2016, California voters enacted Proposition 64 to legalize
adult recreational use of cannabis and to allow businesses that support such cannabis use to
operate legally, subject to regulations imposed by state and local public entities; and
WHEREAS, the State of California Governor's Office proposed a series of amendments
to the state's regulatory structure during the budget process, known as "SB 94," "the Governor's
Trailer Bill," in order to better align the requirements of the Medical Cannabis Regulation and
Safety Act ("MCRSA") and Proposition 64, now known as the Medical and Adult Use Cannabis
Regulation and Safety Act or"MAUCRSA;" and
WHEREAS, more than fifty(50) other California jurisdictions—typically in collaboration
with cannabis businesses — have enacted local measures to impose a general tax on cannabis
business for the privilege of operating within the local jurisdiction; and
WHEREAS, such business taxes are imposed on cannabis businesses, and not directly on
cannabis users or consumers; and
WHEREAS, adopting such a local cannabis industry business tax measure in the City of
Redding will benefit residents of the City by ensuring that cannabis businesses contribute �r
reasonably and fairly to paying for the costs associated with allowing this emerging industry to
operate while allowing the City to continue to maintain stable funding for essential City services
and continued quality of life; and
J
WHEREAS, the City recognizes the volatility of the newly-legalized cannabis market and
will therefore set limited initial tax rates to balance the financial needs of the City and the desire
of the City to support and encourage the industry to engage in the regulated market; and
WHEREAS, such a tax measure will provide locally-controlled revenue that cannot be
taken by the State; and
WHEREAS, the taxes which result from this measure are payable solely by the regulated
cannabis businesses thereby causing no fiscal impact to those who are not participants, either as
producer or consumer, in the cannabis industry; and
WHEREAS, such a tax measure will help to maintain the City's long-term financial
stability, with public oversight and annual fiscal reviews; and
WHEREAS, the City of Redding wishes to continue its policy engagement and
discussions with stakeholders and the public about how cannabis businesses operating in Redding
should be regulated, while acting quickly and decisively to address any significant financial
disruptions or impact to the City's General Fund and provision of services to Redding citizens;
and
WHEREAS, the revenue from such a business tax can be spent for unrestricted general
revenue purposes;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF
REDDING RESOLVES AS FOLLOWS:
SECTION 1. NOTICE AND CALL OF GENERAL ELECTION.
The City Council, pursuant to its right and authority, does call a General Municipal Election and
orders submitted to the voters at a General Municipal Election to be held and consolidated with
the Statewide General Election on Tuesday, November 6, 2018, the following questions:
BALLOT MEASURE#
Shall the City of Redding adopt a business tax on cannabis YES
cultivation businesses up to $25 per square foot of cultivation
area and on cannabis manufacturing, processing, laboratory
testing, delivery, storage, distribution, and retail sale up to 10% NO
of gross receipts, to enhance and maintain vital public safety
services, reduce crime, and protect other general services with
all funds to be spent for unrestricted general revenue purposes,
generating approximately $750,000 annually?
SECTION 2. REQUEST TO CONSOLIDATE AND CONDUCT
ELECTION AND CANVASS RETURNS.
(A) The City Council of the City of Redding hereby requests and consents to the
consolidation of this election with other elections which may be held in whole or in part
in the territory of the City as provided in Elections Code 10400 et seq. The Redding City
Clerk shall file a certified copy of this Resolution with the Shasta County Clerk/Registrar
of Voters to ensure the requisite timeframes for holding the election as required by
applicable law.
(B) The City hereby requests the Board of Supervisors of the County of Shasta to consolidate
the Municipal Election with the statewide election being conducted on the same date in
the same territory or any territory which is in part the same, and the City consents to
reimburse the Registrar of Voters for all costs incurred by said services. Pending
approval of such request, the Municipal Election will be consolidated with any election
held by the County of Shasta. In any event, the Municipal Election will be held on
November 6, 2018, from the hour of 7:00 a.m. to the hour of 8:00 p.m., during which
period of time the polls will remain continuously open. At 8:00 p.m. the polls will be
closed, except as provided in Section 14401 of the Elections Code, and the officers of the
election shall thereupon proceed to canvass the ballots cast thereat.
(C) The election precincts, polling places, and voting booths within said City for said
Municipal Election shall in every case be the same as the election precincts, polling
places, and voting booths established for the statewide election, and the election officers
for said Municipal Election shall be the same as those selected and designated or to be
selected and designated for the statewide election.
(D) Said Municipal Election shall be held and conducted, and the voters thereof canvassed,
and the returns thereof made, all in accordance with the general election laws of the State
of California and the ordinances of said City.
(E) All persons qualified to vote at municipal elections in said City shall be qualified to vote.
(F) Said Council shall meet forthwith after the canvass of the returns of said election and
shall state in the minutes of such meeting the results of said election as ascertained by
said canvass.
SECTION 3. PLACEMENT OF BUSINESS TAX MEASURE
ON THE NOVEMBER 6, 2018, BALLOT.
The Ordinance authorizing the business tax to be approved by the voters is set forth in Exhibit A.
The City Council hereby approves the Ordinance, the form thereof, and its submission to the
voters of the City at the November 6, 2018, general election. If a simple majority of the
qualified voters voting on the Ordinance shall vote in favor thereof, the Ordinance shall be
deemed adopted and shall be effective in accordance with its terms. Initial cannabis business tax
rates, should the proposed ballot initiative pass on November 6, 2018, shall be set as follows for
a term of one (1) year beginning the day the Ordinance goes into effect:
a. Cultivation Initial Rate: $3.00 per square foot of cannabis
cultivation area.
b. Manufacturing, Processing, Laboratory Testing, Storage, and
Distribution Initial Rate: three percent (3%)of gross receipts.
c. Retailer's Initial Rate: five percent (5%) of gross receipts. Sales to
persons with a state issued medical identification card, issued for
medical purposes, shall be excluded from the calculation of gross
receipts for the purpose of the cannabis business tax. State issued
medical identification card means a document issued by the State
Department of Public Health that identifies a person authorized to
engage in the medical use of cannabis and the person's designated
primary caregiver, if any, in accordance with Section 11362.71 of the
Health and Safety Code.
After the term of one (1) year, the City Council of the City of Redding may, by resolution,
modify the tax rates up to,but not to exceed, the amount authorized by the electorate.
SECTION 4. PUBLICATION OF MEASURES.
The City Clerk of the City of Redding is hereby authorized to sign a Notice of Election and
Measure To Be Voted On in a form substantially similar to that attached hereto as Exhibit B.
The City Clerk is hereby authorized and directed to publish said Notice of Election and Measure
To Be Voted On at least one time not later than a week before the election in a newspaper of
general circulation circulated within the City of Redding, in accordance with the provisions of
Section 12111 of the Elections Code of the State of California.
SECTION 5. SUBMISSION OF BALLOT ARGUMENTS
AND IMPARTIAL ANALYSIS.
(A) The City Clerk is hereby authorized and directed to cause to be delivered, no later than
June 22, 2018, (which date is not fewer than 88 days prior to the date set for the statewide
election), one copy of this Resolution to the Registrar of Voters of the County.
(B) The City Council hereby directs the City Clerk to transmit a copy of the measure to the
City Attorney. The City Attorney shall prepare an impartial analysis of the measure, not
to exceed 500 words in length, showing the effect of the measure on the existing law and
the operation of the measure, and transmit such impartial analysis to the City Clerk by
12:00 p.m. on July 9, 2018.
(C) The Finance Director of the City is hereby authorized and directed to prepare and file
with the City Clerk an impartial analysis of the measure contained in Section 2 hereof
covering its financial impact upon the City government by 12:00 p.m. on July 9, 2018.
(D) Pursuant to Section 9282 of the Elections Code of the State of California, the City
Council is hereby authorized to prepare a written argument in favor of the proposed
measure, not to exceed 300 words. The argument may be signed by members of the City
Council or bona fide associations or by individual voters who are eligible to vote on the
measure. In the event that an argument is filed against the measure, members of the City
Council are also authorized to prepare a rebuttal argument, which may also be signed by
bona fide associations or by individual voters who are eligible to vote on the measure.
(E) The last day for submission of direct arguments for or against the measures to the City
Clerk shall be by 12:00 p.m. on July 9, 2018.
(F) The last day for submission of rebuttal arguments for or against the measures to the City
Clerk shall be by 12:00 p.m. on July 19, 2018.
SECTION 7. SIMPLE MAJORITY VOTE FOR PASSAGE.
This tax is a general tax requiring the approval of a simple majority of the qualified electors
casting votes.
SECTION 8. EFFECTIVE DATE.
This Resolution shall take effect immediately upon its adoption, and the City Clerk is directed to
send certified copies of this Resolution to the Shasta County Board of Supervisors and to the
County Clerk by no later than June 22, 2018.
SECTION 9. CALIFORNIA ENVIRONMENTAL QUALITY ACT.
Based on all of the information presented at the City Council meeting on June 19, 2018, both
written and oral, including the staff reports, minutes, and other relevant materials, the City
Council finds that under the California Environmental Quality Act ("CEQA") Guidelines
sections 15060(c)(2) and 15378, subdivisions (2) and (4) of subdivision (b), the proposed tax
measure does not constitute a project under CEQA and, therefore, review under CEQA is not
required.
I HEREBY CERTIFY that the foregoing resolution was introduced and adopted at a
regular meeting of the Redding City Council on the 19th day of June, 2018, by a unanimous
vote.
AYES: COUNCIL MEMBERS: McElvain,Weaver, Winter, and Schreder
NOES: COUNCIL MEMBERS: None
ABSENT: COUNCIL MEMBERS: Sullivan
ABSTAIN: COUNCIL MEMBERS: None
KRISTEN SC DER, Mayor
ATTEST: FORM APPROVED:
(--Pa/knePa, 4/r/6)
PAMELA MIZE, C. y Clerk BARR E. eWAL , City Attorney
Exhibit A
Ordinance
ORDINANCE NO.
ORDINANCE OF THE PEOPLE OF THE CITY OF REDDING ADDING
CHAPTER 4.10 TO THE REDDING MUNICIPAL CODE TO IMPOSE A
BUSINESSS TAX ON CANNABIS BUSINESSES OPERATING IN
REDDING
WHEREAS, the City of Redding has responsibly and proactively managed its finances
and its taxpayer dollars through transparent budget and decision-making processes; and
WHEREAS, on November 8, 2016, California voters enacted Proposition 64 to legalize
adult recreational use of cannabis and to allow businesses that support such cannabis use to
operate legally, subject to regulations imposed by state and local public entities; and
WHEREAS, the State of California Governor's Office proposed a series of amendments
to the state's regulatory structure during the budget process, known as "SB 94," "the Governor's
Trailer Bill," in order to better align the requirements of the Medical Cannabis Regulation and
Safety Act ("MCRSA") and Proposition 64, now known as the Medical and Adult Use Cannabis
Regulation and Safety Act or"MAUCRSA;" and
WHEREAS, more than fifty(50) other California jurisdictions—typically in collaboration
with cannabis businesses — have enacted local measures to impose a general tax on cannabis
business for the privilege of operating within the local jurisdiction; and
WHEREAS, such business taxes are imposed on cannabis businesses, and not directly on
cannabis users or consumers; and
WHEREAS, adopting such a local cannabis industry business tax measure in the City of
Redding will benefit residents of the City by ensuring that cannabis businesses contribute
reasonably and fairly to paying for the costs associated with allowing this emerging industry to
operate while allowing the City to continue to maintain stable funding for essential City services
and continued quality of life; and
WHEREAS, the City recognizes the volatility of the newly-legalized cannabis market and
will therefore set limited initial tax rates to balance the financial needs of the City and the desire
of the City to support and encourage the industry to engage in the regulated market; and
WHEREAS, such a tax measure will provide locally-controlled revenue that cannot be
taken by the State; and
WHEREAS, the taxes which result from this measure are payable solely by the regulated
cannabis businesses thereby causing no fiscal impact to those who are not participants, either as
producer or consumer, in the cannabis industry, and
WHEREAS, such a tax measure will help to maintain the City's long-term financial
stability,with public oversight and annual fiscal reviews; and
WHEREAS, the City of Redding wishes to continue its policy engagement and
discussions with stakeholders and the public about how cannabis businesses operating in Redding
should be regulated, while acting quickly and decisively to address any significant financial
disruptions or impact to the City's General Fund and provision of services to Redding citizens;
and
WHEREAS, the revenue from such a business tax can be spent for unrestricted general
revenue purposes;
NOW, THEREFORE, THE PEOPLE OF THE CITY OF REDDING DO ORDAIN
AS FOLLOWS:
Section 1: The above recitals constitute a part of the findings made by the citizens
in enacting this Ordinance.
Sectij n 2. Chapter 4.10 is hereby added to Title 4 of the Redding Municipal Code
to read as follows:
CHAPTER 4.10 CANNABIS BUSINESS TAX
Sections:
4.10.010—Title.
4.10.020 - General Excise Tax.
4.10.030—Purpose.
4.10.040—Definitions.
4.10.050—Authorized.
4.10.060—Registration of Cannabis Business.
4.10.070—Reporting and Remittance of Tax.
4.10.080— Payments and Communications—Timely Remittance.
4.10.090— Payment—When Taxes Deemed Delinquent.
4.10.100—Notice Not Required By City.
4.10.110—Delinquent Registration or Taxes— Penalties and Interest.
4.10.120—Exemptions from the Tax.
4.10.130—Enforcement.
4.10.140—Rules and Regulations.
4.10.150—Apportionment.
4.10.160—Construction.
4.10.170—Audit and Examination of Records and Equipment.
4.10.180 - Other License, Permits, Taxes, Fees, or Charges.
4.10.190—Successor's and Assignee's Responsibility.
4.10.200—Payment of Tax Does Not Authorize Unlawful Business.
4.10.210—Deficiency Determinations.
4.10.220—Failure to Report—Nonpayment.
4.10.230—Tax Assessment—Notice Requirements.
4.10.240—Appeal Procedure.
4.10.250—Conviction for Chapter Violation —Taxes no Waived.
4.10.260—Violation Deemed Misdemeanor.
4.10.270—Actions to Collect.
4.10.280—Remedies Cumulative.
4.10.290—Amendment.
4.10.300—Others Taxes and Fees.
4.10.310—California Environmental Quality Act Requirements.
4.10.320—Revenue Collected.
4.10.010. Title.
This ordinance shall be known as the Cannabis Business Tax Ordinance.
4.10.020. General Excise Tax.
The cannabis business tax is enacted solely to raise revenue and not to regulate cannabis activity;
regulation of that activity remains the province of the City Council. The cannabis business tax is
an excise tax on the privilege of engaging in cannabis business activity in the City; it is not a sales
or use tax. All of the proceeds from the tax imposed by this Chapter shall be placed in the City's
general fund and used for general governmental purposes.
4.10.030. Purpose.
This ordinance is adopted to achieve the following purposes, among others, and shall be
interpreted to accomplish those purposes:
A. To impose an excise tax on certain businesses engaged in the cannabis industry
operating within the City of Redding pursuant to the Medicinal and Adult-Use Cannabis
Regulation and Safety Act (MAUCRSA), the Adult Use of Marijuana Act (AUMA)
which was approved by the state's voters on November 8, 2016, and/or any other
enabling legislation or regulation, or in violation of such legislation, and notwithstanding
whether such state laws use the term "marijuana" or "cannabis;" and
B. To specify the type of tax and maximum rate of tax that may be levied and the method of
collection; and
C. To comply with all requirements to impose a general excise tax, such tax to become
operative only if and to the extent implemented by the City Council by resolution.
4.10.040. Definitions.
The following words and phrases shall have the meanings set forth below when used in this
Chapter unless the context plainly requires otherwise:
A. "Business" means professions, trades, occupations and all and every kind of calling,
whether or not carried on for profit.
B. "Cannabis" means all parts of the plant Cannabis sativa Linnaeus, Cannabis indicia, or
Cannabis ruderalis, or any other strain or varietal of the genus Cannabis that may exist or
hereafter be discovered or developed that has psychoactive or medicinal properties,
whether growing or not, including the seeds thereof. In addition, and without limiting the
foregoing, "Cannabis" also means cannabis as defined by Section 26001 of the Business
and Professions Code, as may be amended from time to time, and all other applicable
state law.
C. "Cannabis business" or "cannabis industry" means any business activity in the City
relating to cannabis (whether medical or adult-use recreational), including but not limited
to cultivation (including nurseries), transportation, processing, distribution, manufacture,
compounding, conversion, processing, preparation, laboratory testing, storage, packaging,
delivery and sales (wholesale and/or retail sales) of cannabis or cannabis products,
whether or not carried on for gain or profit. A cannabis business does not include any
business whose only relationship to cannabis or cannabis products is the production or
sale of cannabis accessories.
D. "Cannabis cultivation area" means the total aggregate area(s) of cannabis cultivation by a
cannabis business as measured around the outermost perimeter of each separate and
discrete area of cannabis cultivation at the dripline of the canopy expected at maturity and
includes, but is not limited to, the space between plants within the cultivation area, the
exterior dimensions of garden beds, garden plots, hoop houses, green houses, and each
room or area where cannabis plants are grown, excluding non-production areas, as
determined by the Development Services Director or designee.
E. "Cannabis business tax" means the tax due pursuant to this Chapter for engaging in
cannabis business in the City of Redding.
F. "Cannabis concentrate" means cannabis that has undergone a process to concentrate one
or more active cannabinoids, thereby increasing the product's potency. Resin from
granular trichomes from a cannabis plant is a concentrate for purposes of this division.
G. "Cannabis product" means any product containing cannabis, including, but not limited to,
flowers, buds, oils, tinctures, concentrates, extractions, edibles and those products
described in Section 11018.1 of the California Health and Safety Code.
H. "Canopy" means all areas occupied by any portion of a cannabis plant, inclusive of all
vertical planes, whether the areas are contiguous or noncontiguous. The plant canopy
need not be contained to a single parcel of land in determining the total square footage
that will be subject to tax under this Chapter.
"City" means the City of Redding, either the entity or its territorial limits, as the context
requires.
J. "City Council" or"Council"means the City Council of the City of Redding.
K. "Collector"means the City Director of Finance or designee.
L. "Commercial cannabis cultivation" means cultivation conducted by, for, or as part of a
cannabis business. Commercial cannabis cultivation does not include personal medical
cannabis cultivation, or cultivation for personal recreational use as authorized under the
AUMA and as amended by MAUCRSA, for which the individual receives no
compensation whatsoever.
M. "Cultivation" means any activity involving the planting, growing, harvesting, drying,
curing, grading, or trimming of cannabis or any part thereof. "Cultivation" also includes
nurseries. In addition, and without limiting the foregoing, "cultivation" includes
"cultivation" as defined in California Business and Professions Code section 26001 and
any successor statute, as may be adopted and amended from time to time.
N. "Distributor" means a person engaged in procuring cannabis from a cultivator, and/or
procuring cannabis products from a manufacturer, for sale to a Retailer. "Distribution"
means the procurement, sale, and transport of cannabis and cannabis products between
licensees.
0. "Employee" means each and every person engaged in the operation or conduct of any
cannabis 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 cannabis business for a wage, salary, commission, barter or any other form of
compensation.
P. "Evidence of doing business" means when any person shall by use of signs, circulars,
cards, telephone book, internet, advertisement or newspapers, advertise, hold out, or
represent that he is in business in the City, or when any person holds an active license or
permit issued by a governmental agency indicating that he is in business in the City, or
when such person fails to deny by a sworn statement given to the Collector that he is not
conducting a business in the City, after being requested to do so by the Collector, then
these facts shall be considered prima facie evidence that he or she is conducting a
business in the City.
Q. "Gross receipts" means the total amount actually received or receivable from all sales;
the total amount or compensation actually received or receivable for the performance of
any act or service, of whatever nature, for which a charge is made or credit allowed,
whether or not such act or service is done as a part of or in connection with the sale of
materials, goods, wares or merchandise; discounts, rents, royalties, fees, commissions,
dividends, and gains realized from trading in stocks or bonds, however designated.
"Gross receipts" shall include all receipts, cash, credits and property of any kind or
nature, 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, or losses or other
expenses whatsoever.
R. "Manufacturer" means a person who conducts the production, preparation, propagation,
or compounding of cannabis or cannabis products either directly or indirectly or by
extraction methods, or independently by means of chemical synthesis, or by a
combination of extraction and chemical synthesis, or who packages or repackages
cannabis or cannabis products or labels or re-labels its container. In addition, and without
limiting the foregoing, "manufacturer" includes "manufacturer" as defined in California
Business and Professions Code section 26001 and any successor statute, as may be
adopted or amended from time to time.
S. "Nursery" means a person who produces cannabis clones, immature plants, and/or seeds
for wholesale distribution, used specifically for the planting, propagation, and cultivation
of cannabis. In addition, and without limiting the foregoing, "nursery" includes "nursery"
as defined in California Business and Professions Code section 26001 and any successor
statute, as may be adopted or amended from time to time.
T. "Person" shall have the meaning set forth in Section 6.12.010.
U. "Personal medical cannabis cultivation" means cultivation, by either a qualified patient
who cultivates cannabis exclusively for his or her personal medical use or by a caregiver
who cultivates cannabis exclusively for medical use by qualified patients and who is
exempt from State licensing requirements under MAUCRSA .
V. "Retailer" means a business where cannabis or cannabis products, are offered, either
individually or in combination, for retail sale, including a business that engages in
delivery of cannabis or cannabis products as part of a retail sale.
W. "Sale" means the transfer, in any manner or by any means whatsoever, of title to real or
personal property for a consideration; the serving, supplying, or furnishing for a
consideration of any property; and a transaction whereby the possession of property is
transferred and the seller retains the title as security for the payment of the price shall
likewise be deemed a sale. The definitions in this subsection shall be deemed to include
any transaction which is or which, in effect, results in a sale within the contemplation of
law.
X. "State" means the State of California.
Y. "State license" means a state license issued pursuant to California Business & Professions
Code Sections 26000 et seq. or other applicable state law.
Z. "Vertically Integrated Business"means a cannabis business with a Type 12 license or any
cannabis business holding two or more license types that internally transfers products
between cultivation, manufacturing, distribution, or retail operations without a recorded
sale to determine gross receipts for purposes of the cannabis business tax.
4.10.050. Authorized.
A cannabis business tax is hereby imposed on every person who is engaged in cannabis business
in the City as prescribed herein, from and after the effective date of a City Council resolution
implementing the tax. It is unlawful for any person to transact or carry on any cannabis business
in the City without paying, in accordance with this Chapter, the cannabis business tax imposed by
this section.
A. Tax on Commercial Cannabis Cultivation.
1. There is hereby imposed on every person engaged in commercial cannabis
cultivation in the City, an annual tax at a rate established by resolution of the City
Council which rate shall not exceed $25 per square foot of cannabis cultivation
area. The maximum square foot tax shall be adjusted annually each January 1st
based on the year-over-year percentage change in Bureau of Labor Statistics San
Francisco/Oakland/San Jose Consumer Price Index —All Urban Consumers (CPI-
U) October to October comparison, or if such index is discontinued, a comparable
successor consumer price index as determined by the City Council. The tax
imposed under this Subsection (A)(1) shall be due and payable in quarterly
installments as provided in Section 4.10.070 of this Chapter. The tax imposed
under this Subsection (A)(1) shall not be implemented unless and until the City
Council acts by resolution to do so.
2. The City Council may by resolution, in its discretion, implement a tax rate lower
than the maximum rates set forth in Subsection (A)(1) for all persons engaged in
commercial cannabis cultivation in the City or establish differing tax rates for
different categories of commercial cannabis cultivation. For example, and without
limitation, the City Council may set different tax rates for cannabis cultivation for
medical or adult recreational use, or for indoor rather than outdoor or mixed light
cultivation. The City C ouncil may, by resolution, also decrease or increase any
such tax rate from time to time, provided that the tax rate shall not, at any time,
exceed the maximum tax rates established in Subsection (A)(1). Tax rates shall
be set for a minimum term of one (1) year.
B. Tax on Cannabis Manufacturers, Processors, Laboratory Testers, Storers, Distributors, and
Retailers.
1. There is hereby imposed on every person engaged in a cannabis business in the
City as a manufacturer, processor, laboratory tester, storer, distributor or a
retailer an annual tax at a rate established by resolution of the City council which
rate shall not exceed ten percent (10%) of annual gross receipts. The tax
imposed under this Subsection (B)(1) shall be due and payable in quarterly
installments as provided in Section 4.10.070 of this Chapter. The tax imposed
under this Subsection (B)(1) shall not be implemented unless and until the City
Council acts by resolution to do so.
2. The City Council may by resolution, in its discretion, implement a tax rate lower
than the maximum rate established in Subsection (B)(1)for all persons engaged in
a cannabis business in the City as a manufacturer, processor, l a b o r a to r y
tester, store r, distributor or a retailer, or establish differing tax rates for
different categories of cannabis business. For example, and without limitation, the
City Council may set different rates for businesses serving medical or adult
recreational use, or for different types of manufacturers, distributors or retailers.
The City Council may, by resolution, also decrease or increase any such tax rate
from time to time, provided that the tax rate shall not, at any time, exceed the
maximum tax rate established in Subsection (B)(1). Tax rates shall be set for a
minimum term of one (1) year.
B. No further voter approval shall be required for the adoption or increase of a tax under the
authority granted by Section 4.10.050 of this Chapter, it being the intent of the People of
the City of Redding to authorize such a tax up to and including the maximum rates set
forth above whenever implemented by the City C ouncil by resolution hereafter.
4.10.060. Registration of Cannabis Business.
All persons engaging in a cannabis business, whether an existing, newly-established or acquired
business, shall register with the Collector within thirty (30) days of commencing operation or by
January 1, 2019, whichever is later, and shall annually renew such registration by January 1 of
each year thereafter. In registering, such persons shall furnish to the Collector a sworn statement,
upon a form provided by the Collector, setting forth the following information:
(1) The name of the business;
(2) The names and addresses of each owner;
(3) The exact nature or kind of business;
(4) The place where such business is to be carried on; and
(5) Any further information which the Collector may require.
4.10.070. Reporting and Remittance of Tax.
The cannabis business tax imposed by this Chapter shall be due and payable as follows:
A. Each person subject to tax under this Chapter, except a cannabis cultivation tax based on
square footage, shall, on or before the last day of the month following the close of each
calendar quarter, prepare and submit a tax return and remit to the Collector the tax due
for that quarter. At the time the return is filed, the full amount of the tax due for the prior
quarter shall be remitted to the Collector.
B. Each person subject to a cannabis cultivation tax based on a square footage shall, on or
before the last day of the month following the close of each calendar quarter, prepare and
submit a tax return and remit to the Collector the tax due for that quarter. The tax shall
be calculated in accordance with rules and regulations established by the Collector
pursuant to Section 4.10.160. The tax return may include a request for adjustment of the
tax due to crop loss or periods without cultivation, along with evidence substantiating the
crop loss or fallow periods. If the cultivation begins sixty days or more after January 1 or
terminates sixty days or more before December 31 of the calendar year, a request to
prorate the tax may be submitted with evidence supporting the timing of the cultivation.
The decision to prorate or adjust the tax will be made at the sole discretion of the
Collector. At the time the return is filed, the full amount of the tax due for the prior
quarter shall be remitted to the Collector.
C. All tax returns shall be completed on forms prescribed by the Collector.
D. Tax returns and payments for all outstanding taxes owed the City under this Chapter are
immediately due and payable to the City of Redding upon cessation of business for any
reason.
4.10.080. Payments and Communications—Timely Remittance.
Whenever any payment, return, report, request or other communication is due under this Chapter,
it must be received by the Collector on or before the due date. A postmark will not be accepted as
timely remittance. If the due date falls on Saturday, Sunday or a City holiday, the due date shall
be the next regular business day on which the City is open to the public.
4.10.090. 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 City of
Redding on or before the due date as specified in Section 4.10.070.
4.10.100. Notice Not Required By City.
The City of Redding is not required to send a delinquency or other notice or bill to any person
subject to this Chapter. Failure to send such notice or bill shall not affect the validity of any tax
or penalty or interest due under this Chapter.
4.10.110. Delinquent Taxes—Penalties and Interest.
A penalty in the amount of ten percent (10%) of the tax due shall be applied when a delinquency
occurs. All amounts due shall be considered general accounts receivable, and there shall be
assessed interest on all such amounts as determined by the City Council.
4.10.120. Exemptions from the Tax.
A. Nothing in this Chapter shall be deemed or construed to apply to any person transacting
and carrying on any business that is exempt from the payment of such taxes as are herein
prescribed by virtue of the Constitution or applicable statutes of the United States or of the
State.
B. Any person claiming an exemption pursuant to this Section shall file a sworn statement
with the Collector stating the facts upon which exemption is claimed. Unless and until the
Collector determines in writing that such person is exempt from tax under this Chapter,
such person shall be liable for the payment of the tax imposed by this Chapter.
4.10.130. Enforcement.
It shall be the duty of the Collector to enforce each and all of the provisions of this Chapter.
4.10.140. Rules and Regulations.
The Collector may adopt rules and regulations not inconsistent with the provisions of this Chapter
as may be necessary or desirable to aid in the implementation and enforcement of the provisions
of this Chapter. A copy of any such rules and regulations shall be available for public inspection
in the Collector's office.
4.10.150. Apportionment.
If a cannabis business subject to a cannabis business 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. The Collector
may adopt administrative procedures for apportionment pursuant to section 4.10.140 of this
Chapter.
4.10.160. Construction.
A. This tax is intended to be applied in a manner consistent with the United States and
California Constitutions, state and local 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, state or local law.
B. This Chapter shall be construed and implemented consistent with the provisions of
Chapter 6.12 of this code except as this Chapter or other law otherwise requires or the
Collector otherwise determines in writing as authorized under this code.
4.10.170. Audit and Examination of Records and Equipment.
A. The Collector shall have the power to audit and examine all books and records of any
person engaged in cannabis business in the City, including both state and federal income
tax returns, California sales tax returns, or other evidence documenting the gross receipts
of persons engaged in cannabis business, and, where necessary, all equipment of any
person engaged in cannabis business in the City, for the purpose of ascertaining the
amount of cannabis business tax, if any, required to be paid under this Chapter, and for
the purpose of verifying any statements or any item thereof when filed by any person
pursuant to this Chapter. If such person, after written demand by the Collector, refuses to
make available for audit, examination or verification such books, records or equipment as
the Collector requests, the Collector may, after full consideration of all information within
his or her knowledge concerning the cannabis business and activities of the person so
refusing, make an assessment against the cannabis business of the taxes estimated to b e
due under this Chapter.
B. The cannabis business being audited shall be liable for the cost of the audit and all
reasonable City administrative expenses related to the audit.
C. 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
Collector shall have the right to inspect at all reasonable times.
4.10.180. Other Licenses, Permits,Taxes, Fees, or Charges.
Except as expressly provided in this Chapter, 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 title or 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 title or Chapter of this code or any other ordinance or resolution of the
City. Any references made or contained in any other title or Chapter of this code to any permits,
licenses, taxes, fees, or charges, or to any schedule of license fees, shall be deemed to refer to the
permits, licenses, taxes, fees or charges, or schedule of license fees, provided for in other titles or
chapters of this code unless otherwise expressly provided.
4.10.190 Successor's and Assignee's Responsibility.
A. If any person, while liable for any amount under this Chapter, sells, assigns or otherwise
transfers the cannabis business, whether voluntarily or involuntarily, the person's
successor, assignee or other transferee, or other person or entity obtaining ownership or
control of the business (`Transferee"), shall satisfy any tax liability owed to the City
associated with the business when due hereunder. Failure to do so for the benefit of the
City will result in the Transferee being personally liable to the City for the full amount of
the unpaid tax liability, interest and penalties. The Transferee shall notify the Collector
of the date of transfer at least thirty (30) days before the transfer date; or if the agreement
to sell, transfer, or otherwise dispose of the business was made less than thirty (30) days
before the date of transfer, notice shall be provided immediately upon the existence of
the agreement.
B. The Transferee shall be deemed to have complied with the requirement of this section to
satisfy the unpaid tax liability if the Transferee complies with the requirements of
California Revenue and Taxation Code Section 7283.5 by withholding from the purchase
price, for the benefit of the City, an amount sufficient to cover the tax liability, or by
otherwise paying the tax liability and obtaining from the Collector a "Tax Clearance
Certificate" showing that all outstanding tax liability has been paid and stating that no
amount is due through the date of transfer.
C. The Collector, within ninety (90) days of receiving a written request from a Transferee,
may issue a "Tax Clearance Certificate" stating either the amount of tax liability due and
owing for the business, or stating that there is no tax liability due and owing for the
business through a stated date. The Collector may also request financial records from
the current or former owner or operator to audit the tax that may be due and owing. The
Collector shall issue a Tax Clearance Certificate within thirty (30) days of completing
the audit, stating the amount of the tax liability owed, if any, unless the Collector
determines that the records provided in connection with the audit are insufficient to
determine whether taxes are due and owed or in what amount. If the Collector
determines that the records are insufficient, the Collector may rely on the facts and
information available to estimate any tax liability. The Collector may issue a Tax
Clearance Certificate stating the amount of the tax liability, if any, based on such facts
and information available. Unless an appeal is filed in accordance with Section
4.10.240, the Tax Clearance Certificate shall serve as conclusive evidence of the tax
liability associated with the property through the date stated on the certificate.
4.10.200. Payment of Tax Does Not Authorize Unlawful Business.
A. The payment of a tax required by this Chapter, and its acceptance by the City, shall not
entitle any person to engage in any cannabis business unless the person has complied
with all of the requirements of this code and all other applicable state or local laws.
B. No tax paid under this Chapter shall be construed as authorizing the conduct or
continuance of any illegal or unlawful business, or any business in violation of any state
or local laws.
4.10.210. Deficiency Determinations.
If the Collector is not satisfied that any tax return or other statement filed as required under 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 facts contained in
the tax return or statement or 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, or
such later date as allowable by law. 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, or such later
date as allowable by law, 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 4.10.230.
4.10.220. Failure to Report—Nonpayment.
A. Under any of the following circumstances and at any time, the Collector may make and
give notice of an assessment of the amount of tax owed by a person under this Chapter:
1. If the person has not filed a complete return or statement required under this
Chapter;
2. If the person has not timely paid any tax, fee, interest and/or penalties due under of
this Chapter; or
3. If the person has not, after demand by the Collector, filed a corrected return or
statement, or furnished to the Collector adequate substantiation of the information
contained in a return or statement filed previously.
B. The notice of assessment shall separately set forth the amount of any tax, fee, interest
and/or penalties known by the Collector to be due or estimated by the Collector, after
consideration of all information within the Collector's knowledge concerning the business
and activities of the person assessed, to be due under each applicable section of this
Chapter.
4.10.230. Tax Assessment—Notice Requirements.
The notice of assessment shall be served upon the person liable for the tax under this Chapter
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 Collector for the purpose of receiving notices
provided under this Chapter; or, should the person have no address registered with the Collector
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.
4.10.240. Appeal Procedure.
Any taxpayer aggrieved by any decision of the Collector with respect to the amount of tax, fee,
interest and penalties, if any, due under this Chapter may appeal to the City manager by filing a
written appeal with the City Clerk of the Redding City Council within fifteen (15) calendar days
of the mailing of the decision or determination. The City Clerk shall schedule the appeal and give
fifteen (15) days' written notice to the appellant of the time and place of hearing by serving the
notice personally or by depositing in the United States Post Office in the City, postage prepaid,
addressed as shown on the appeal papers or, if none, such other address as is known to the City
or, absent any address, by publication in a newspaper of general circulation in the City. The City
Manager shall have authority to determine all questions raised on such appeal. The determination
of the City Manager shall be final.
4.10.250. Conviction for Chapter Violation—Taxes not Waived.
The conviction and punishment of any person for failure to pay a required tax, fee, penalty
and/or interest under this Chapter shall not excuse or exempt such person from any civil action
for the amounts due under this Chapter. 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.
4.10.260. Violation Deemed Misdemeanor.
Any person who violates any provision of this Chapter or who other than by a sworn statement,
knowingly or intentionally misrepresents to any officer or employee of the City any material fact
herein required to be provided is guilty of a misdemeanor punishable as provided in Chapter 1.12
of the Redding Municipal Code. A person who on a sworn statement states as true a material
fact that he or she knows to be false is guilty of perjury.
4.10.270. Actions to Collect.
The amount of any tax, fee, penalty and/or interest imposed pursuant to this Chapter shall be
deemed a debt owed to the City. An action may be commenced in the name of the City in any
court of competent jurisdiction, for the amount of any delinquent tax, fees, penalties and interest
thereon.
4.10.280. Remedies Cumulative.
All remedies prescribed under this Chapter shall be cumulative and 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 hereof.
4.10.290. Amendment.
As required by Article XIIIC of the California Constitution, any amendment that increases the
maximum rates of tax beyond the levels authorized in Section 4.10.050 above shall not take effect
unless approved by a vote of the People. The City council may, by resolution, implement a tax
under this Chapter in any amount or at any rate that does not exceed the maximum rates set forth
in Section 4.10.050.
4.10.300. Other Taxes and Fees.
Except as provided herein, persons required to pay a tax for transacting and carrying on any
business under this Chapter shall not be relieved from the payment of any license tax, permit,
charge, assessment, or fee for the privilege of doing such business required under other laws or
regulations of the City, and shall remain subject to the provisions of such other laws and
regulations.
4.10.310. Revenue Collected.
The revenue collected as a result of this Chapter can be spent for unrestricted general revenue
purposes.
Section 3. Severability. If any section, subsection, sentence, clause, or phrase of this
Ordinance is for any reason held to be unconstitutional or invalid, such decision shall not affect
the validity of the remaining portion of this Ordinance. The People of the City of Redding hereby
declare that they would have passed this Ordinance and every section, subsection, sentence,
clause or phrase thereof irrespective of the fact that any one or more sections, subsections,
sentences, clauses or phrases be declared unconstitutional or invalid.
Section 4_ Effective and Operative Dates. This ordinance shall take effect ten (10)
days after the election result is certified as provided by Elections Code section 9127, but the
taxes imposed by this ordinance shall take effect only when and to the extent implemented
by resolution of the City Council.
Section 5. Certification; Publication. Upon approval by the voters, the City Clerk
shall certify to the passage and adoption of this Ordinance and shall cause it to be published
according to law.
Date of Certification: City of Redding City Clerk
Exhibit B
Notice of Election and Measure To Be Voted On
CITY OF REDDING
NOTICE OF MUNICIPAL ELECTION
AND MEASURE TO BE VOTED ON
NOTICE IS HEREBY GIVEN that a Municipal Election will be held in the City of
Redding on Tuesday, November 8, 2018, at which there will be submitted to the voters the
following measures:
BALLOT MEASURE#
Shall the City of Redding adopt a business tax on cannabis YES
cultivation businesses up to $25 per square foot of cultivation
area and on cannabis manufacturing, processing, laboratory
testing, delivery, storage, distribution, and retail sale up to 10% NO
of gross receipts, to enhance and maintain vital public safety
services, reduce crime, and protect other general services with
all funds to be spent for unrestricted general revenue purposes,
generating approximately $750,000 annually?
Said Municipal Election has been consolidated with the Statewide General Election to be
held in the City of Redding on November 8, 2018. The election precincts within the City of
Redding for said Municipal Election shall be the regular election precincts established for said
Statewide General Election, and the polling places and officers of election within the City of
Redding for said Municipal Election shall be the same as those selected and designated or to be
selected and designated for said Statewide General Election.
NOTICE IS FURTHER GIVEN pursuant to Article 4, Section 9282 of the Elections
Code of the State of California, the legislative body of the City of Redding, or any member or
members of the legislative body authorized by the body, or any individual voter who is eligible
to vote on the measure or bona fide association of citizens, or any combination of voters and
associations,may file a written argument, not to exceed 300 words in length, accompanied by the
printed name(s) and signature(s) of the person(s) submitting it, or if submitted on behalf of an
organization, the name of the organization, and the printed name and signature of at least one of
its principal officers, for or against the City measure.
NOTICE IS FURTHER GIVEN that, based upon the time reasonably necessary to
prepare and print the arguments and sample ballots for the election, the City Clerk has fixed July
9, 2018, by 12:00 p.m., as the date after which no arguments for or against the City measure may
be submitted to the Clerk for printing and distribution to the voters as provided in Article 4.
Arguments shall be submitted to the City Clerk, accompanied by the printed name(s) and
signature(s) of the person(s) submitting it, or if submitted on behalf of an organization, the name
of the organization, and the printed name and signature of at least one of its principal officers
who is the author of the argument, at the Redding City Hall, 777 Cypress Avenue, Redding,
California. No more than five signatures may appear on the argument.
NOTICE IS FURTHER GIVEN that the City Clerk of the City of Redding has
determined that rebuttal arguments, not to exceed 250 words in length, as submitted by the
authors of the opposing direct arguments, may be filed with the City Clerk by July 19, 2018, by
12:00 p.m., accompanied by the printed names(s) and signature(s) of the person(s) submitting it,
or if submitted on behalf of an organization, the name of the organization, and the printed name
and signature of at least one of its principal officers. No more than five signatures may appear on
the rebuttal.
NOTICE IS FURTHER GIVEN that any ordinance, impartial analysis, or direct
argument filed under the authority of the Elections Code will be available for public examination
in the City Clerk's office between the hours of 8:00 a.m. and 5:00 p.m., from July 10, 2018, to
July 19, 2018. Any rebuttal argument filed under the authority of the Elections Code will be
available for public examination in the City Clerk's Office between the hours of 8:00 a.m. and
5:00 p.m., from July 20, 2018, to July 30, 2018.
The polls will be open on Election Day between the hours of 7:00 a.m. and 8:00 p.m.
Pamela Mize
Clerk of the City of Redding
City Elections Official
Dated:
Publish: GC 36933 publication