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HomeMy WebLinkAbout12/13/2017 - STAFF REPORTS - 1.N. QQALMSAP .y � 41 [7 N w Cp 1. s �bgATkp c441poaN�P CITY COUNCIL STAFF REPORT DATE: DECEMBER 13, 2017 CONSENT CALENDAR SUBJECT: A RESOLUTION IMPLEMENTATING MEASURE E IMPOSING A TAX ON CANNABIS ACTIVITY AS APPROVED BY THE VOTERS AT THE MUNICIPAL ELECTION ON NOVEMBER 7, 2017 ESTABLISHING APPLICABLE TAX RATES; AND PROVISION OF ADDITIONAL DIRECTION FOR THE PREPARATION OF AMENDMENTS TO THE CITY'S CANNABIS REGULATION PROGRAM. FROM: David H. Ready, City Manager BY: Edward Z. Kotkin, City Attorney SUMMARY The Electors approved Measure E, a tax on the operations of cannabis businesses, at the November 7, 2017 General Municipal Election. Measure E allows the City Council to set rates lower than the maximum of 15 cents on every dollar of the proceeds of each cannabis business allowed under the ordinance, with the exception of cultivation (grows), which are taxed separately. The Council's subcommittee has recommended the imposition of a 10 cent per $1.00 tax on the proceeds of each cannabis business that has been issued a permit to operate as such by the City Council under the City's ordinances. The tax rate for the cultivation (growing) of cannabis is approved at $10.00 per square foot annually. RECOMMENDATION: 1. Adopt Resolution No. , "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, IMPLEMENTING MEASURE E AND IMPOSING A TAX ON CANNABIS ACTIVITY. 2. Provide direction to the City Attorney and Staff regarding additional issues and considerations related to the City's cannabis regulatory program. ITEM NO.1'N:_-- City Council Staff Report December 13, 2017-- Page 2 Establishing Cannabis Business Tax Rates STAFF ANALYSIS: Measure B On December 5, 2013, the voters, with 66% of the voters in support, approved Measure B. This measure added Chapter 3.35 to the Palm Springs Municipal Code, establishing a tax on cannabis and marijuana collectives. This voter approved ordinance broadly defines the term "cannabis or marijuana collective" to include not only collectives or cooperatives the City Council approves under Section 93.23.15 of the Code, but "any other activity of business that involves planting, cultivating, harvesting, transporting, dispensing, delivering, providing, manufacturing, compounding, converting, processing, preparing, storing, packaging, or testing any part of the marijuana plant for medical purposes." Thus, the City's ordinance is applicable to more than just the three Council approved cooperatives currently operating in the City. It also applies to any dispensary operating in the City and to anyone engaged in one or more of the component parts of the marijuana cultivation, processing, and distribution chain within the City. The maximum tax is 15 cents on each dollar of "proceeds." [PSMC Sec. 3.35.010.] The Council has the authority to adjust the rate to an amount that is less than 15 cents per dollar. The Council also has the authority to establish "exemptions, incentives, or other reductions, and penalties and interest charges or assessments for failure to pay the tax in a timely manner." [PSMC Sec 3.35.040.] This tax is not a sales or use tax and it can "not be separately identified or otherwise specifically assessed or charged to any member, patient, or customer." [PSMC Sec. 3.35.060.] Measure E On June 27, 2017, Governor Brown signed into law the Medical and Adult Use Cannabis Regulation and Safety Act ("MAUCRSA"), legislation intended to provide and consolidate a comprehensive regulatory framework for licensing, control, and taxation of commercial medical and adult-use cannabis related businesses in California. MAUCRSA expressly protects a City's local licensing practices, zoning authority, and other local actions taken pursuant to the City's Constitutional municipal and police powers. State law, inclusive of MAUCRSA, contains statutory provisions that allow local governments to enact ordinances expressing their intent to allow or prohibit the cultivation of cannabis and their intent to administer or not administer a conditional permit program pursuant to California Health and Safety Code section 11362.777 for the cultivation of cannabis. At the regular municipal election on Tuesday, November 7, 2017, the electorate of the City of Palm Springs, with 78.38% in support, approved Measure "E" adopting a City of Palm Springs Cannabis Business Tax. In response to the passage of Measure "E" by the electorate, on November 7, 2017, Measure E designates Ordinance 1946, adopted by the electorate on November 7, 2017 becoming effective on December 6, 2017, imposing a tax on the gross receipts of all cannabis businesses. 02 City Council Staff Report December 13, 2017-- Page 3 Establishing Cannabis Business Tax Rates Establish the Tax Rates The proposed Resolution will set a tax rate of 10 cents on each dollar of gross receipts for each medical or adult cannabis business that received or receives from the City Council a permit to operate as a cannabis business pursuant to Section 93.23.15, as may be amended from time to time. The City Council further affirms and establishes a tax rate of 15 cents on each dollar of gross receipts for each cannabis business operating the City without a lawful permit issued by the City Council pursuant to Palm Springs Municipal Code Section 93.23.15, as amended. The proposed Resolution also imposes on every cannabis business engaged in commercial cannabis cultivation in the City, an annual tax in an amount established from time to time by resolution of the City Council which does not exceed either $10.00 per square foot of cannabis cultivation area or fraction thereof. The maximum square foot tax shall be adjusted annually (and rounded to the nearest cent) each January 1st based on the year-over-year percentage change in Bureau of Labor Statistics Los Angeles-Riverside-Orange County Consumer Price Index —All Urban Consumers (CPI- U) October to October comparison, or if such index is discontinued, a comparable or successor consumer price index designated by the City Council. The tax shall be due and payable in installments as provided in section 3.42.100. The tax authorized under this section shall not be implemented unless and until the city council acts by resolution to do so. FISCAL IMPACT: The City revenue derived from the Cannabis Business Tax program should be sufficient to fully fund any costs to the City in administering the program. 03 City Council Staff Report December 13, 2017 -- Page 4 Establishing Cannabis and Marijuana Business Tax Rates GEOFFA15Y S. KIEHL, EDWARD Z. KOTKIN, Director of Finance and Treasurer City Attorney DAVID H. READY, City Manager Attachments: Proposed Resolution Establishing Cannabis and Marijuana Business Tax Rates 04 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, ESTABLISHING CANNABIS BUSINESS TAX RATES. THE CITY COUNCIL OF THE CITY OF PALM SPRINGS FINDS: A. The voters of the City of Palm Springs approved Measure E at the November 7, 2017 general municipal election by a 78.38% affirmative vote of the electorate. The City Council recited the fact of the regular municipal election held on November 7, 2017, and declared the result of the election at the December 6, 2017 City Council meeting. B. Ordinance No. 1946 (the "Ordinance"), adopted by the City Council on December 6, 2017, amended Chapter 3.42 of the Palm Springs Municipal Code regarding cannabis taxation. The Ordinance, authorizes the City to impose a tax on the gross receipts of cannabis businesses as defined in the Ordinance at a maximum amount of 15 cents of every dollar of gross receipts. C. The Ordinance provides the Council with the authority to set the tax at a rate that is less than 15 cents on each dollar of gross receipts and to establish exemptions, incentives, or other reductions, and penalties and interest charges or assessments for failure to pay the tax in a timely manner. D. This Resolution will set a tax rate of 10 cents on each dollar of gross receipts for each medical cannabis business that received or receives from the City Council a permit to operate as a cannabis business pursuant to Section 93.23.15, as may be amended from time to time. The City Council further affirms and establishes a tax rate of 15 cents on each dollar of gross receipts for each cannabis business operating the City without a lawful permit issued by the City Council pursuant to Palm Springs Municipal Code Section 93.23.15, as amended. E. This Resolution will also set an annual tax rate of $10.00 per square foot of cannabis cultivation area or fraction thereof. The maximum square foot tax shall be adjusted annually (and rounded to the nearest cent) each January 15t based on the year-over-year percentage change in Bureau of Labor Statistics Los Angeles-Riverside- Orange County Consumer Price Index — All Urban Consumers (CPI-U) October to October comparison, or if such index is discontinued, a comparable or successor consumer price index designated by the City Council. The tax shall be due and payable in installments as provided in section 3.42.100. The tax authorized under this section shall not be implemented unless and until the City Council acts by resolution to do so. F. This Resolution also establishes appropriate penalties and interest charges for payment delinquencies and appropriate audit and financial review requirements to ensure timely and full payment of all taxes required under the Ordinance and this Resolution. f� VJ Resolution No. Page 2 G. The definitions contained in the Ordinance shall pertain to words or terms used in this Resolution. For the purpose of this Resolution the term "Director" means the City Manager or the City Manager's designee; "Tax" means the Cannabis Business Tax" as established in the Ordinance and as administered under this Resolution. THE CITY COUNCIL OF THE CITY OF PALM SPRINGS RESOLVES: SECTION 1. The Tax on a cannabis business for which the City has issued a permit pursuant to Palm Springs Municipal Code Section 93.23.15 as amended shall be 10 cents for each dollar (or portion thereof) of the gross receipts of such business. SECTION 2. The Tax on each cannabis business operating in the City and which has not been issued a permit pursuant to Palm Springs Municipal Code Section 93.23.15 as amended shall be 15 cents for each dollar (or portion thereof) of the gross receipts of such business. SECTION 3. There is hereby imposed on every cannabis business engaged in commercial cannabis cultivation in the City, an annual tax in an amount established from time to time by resolution of the City Council which does not exceed either $10.00 per square foot of cannabis cultivation area or fraction thereof. The maximum square foot tax shall be adjusted annually (and rounded to the nearest cent) each January 1s' based on the year-over-year percentage change in Bureau of Labor Statistics Los Angeles-Riverside-Orange County Consumer Price Index — All Urban Consumers (CPI- U) October to October comparison, or if such index is discontinued, a comparable or successor consumer price index designated by the City Council. The tax shall be due and payable in installments as provided in section 3.42.100. The tax authorized under this section shall not be implemented unless and until the city council acts by resolution to do so. SECTION 4. The Tax shall be due and payable as follows: A. Each person owing Tax, on or before the last day of each calendar month, shall prepare a tax return to the Director of the total gross receipts and the amount of Tax owed for the preceding calendar month. At the time the Tax return is filed, the full amount of the Tax owed for the preceding calendar month shall be remitted to the Director. B. All tax returns shall be completed on forms provided by the Director. C. Tax returns and payments for all outstanding taxes owed the City are immediately due the Director upon cessation of business for any reason. SECTION 5. Whenever any payment, statement, report, request or other communication received by the Director is received after the time prescribed by this Resolution for the receipt thereof, but is in an envelope bearing a postmark showing that it was mailed on or prior to the date prescribed in this Resolution for the receipt thereof, or whenever the Director is furnished substantial proof that the payment, statement, report, request, or other communication was in fact deposited in the United States mail on or prior to the date prescribed for receipt thereof, the Director may regard such payment, statement, report, request, or other communication as having been timely 0 t Resolution No. Page 3 received. If the due day falls on Friday, Saturday, Sunday, or a holiday, the due day shall be the next regular business day on which the City hall is open to the public. SECTION 6. Unless otherwise specifically provided under other provisions of this Resolution, the taxes required to be paid pursuant to this Resolution shall be deemed delinquent if not paid on or before the due date specified in Section 4 of this Resolution. SECTION 7. The Director is not required to send a delinquency or other notice or bill to any person subject to the provisions of this Resolution and failure to send such notice or bill shall not affect the validity of any tax or penalty due under the provisions of this Resolution. SECTION 8. A. Any person who fails or refuses to pay any tax required to be paid pursuant to this Resolution on or before the due date shall pay penalties and interest as follows: 1. A penalty equal to twenty-five percent 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 a rate established by resolution of the City Council; and 2. An additional penalty equal to twenty-five percent of the amount of the Tax if the tax remains unpaid for a period exceeding one calendar month beyond the due date, plus interest on the unpaid Tax and interest on the unpaid penalties calculated at the rate established by resolution of the City Council. B. Whenever a check is submitted in payment of a Tax and the check is subsequently returned unpaid by the bank upon which the check is drawn, and the check is not redeemed prior to the due date, the taxpayer will be liable for the Tax amount due plus penalties and interest as provided for in this section plus any amount allowed under state law. C. The Tax due shall be that amount due and payable from January 1, 2018 or the first date on which the business first operated in the City, whichever date occurred last, together with applicable penalties and interest calculated in accordance with Subsection A of this Section. SECTION 9. The Director may waive the first and second penalties of twenty- five percent each imposed upon any person if: A. The person provides evidence satisfactory to the Director that failure to pay timely was due to circumstances beyond the control of the person and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, and the person paid the delinquent business tax and accrued interest owed the City prior to applying to the Director for a waiver. B. The waiver provisions specified in this subsection shall not apply to interest accrued on the delinquent tax and a waiver shall be granted only once during any twenty-four month period. SECTION 10. A. No refund shall be made of any tax collected pursuant to this Resolution, 07 Resolution No. Page 4 except as provided in Section 11 of this Resolution. B. No refund of any Tax collected pursuant to this Resolution shall be made because of the discontinuation, dissolution, or other termination of a business. C. Any person entitled to a refund of taxes paid pursuant to this Resolution may elect in writing to have such refund applied as a credit against business' Taxes for the next calendar month. SECTION 11. A. Whenever the amount of any tax, penalty, or interest has been overpaid, paid more than once, or has been erroneously or illegally collected or received by the City under this Resolution, it may be refunded to the claimant who paid the Tax provided that a written claim for refund is filed with the Director. B. The Director 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 therefor refuses to allow such examination of claimant's books and business records after request by the Director to do so. C. In the event that the Tax was erroneously paid and the error is attributable to the City, the entire amount of the Tax erroneously paid shall be refunded to the claimant. If the error is attributable to the claimant, the City shall retain the amount set forth in this Resolution from the amount to be refunded to cover expenses. D. The Director shall initiate a refund of any Tax which has been overpaid or erroneously collected whenever the overpayment or erroneous collection is uncovered by a City audit of Tax receipts. In the event that the Tax was erroneously paid and the error is attributable to the City, the entire amount of the Tax erroneously paid shall be refunded to the claimant. If the error is attributable to the claimant, the City shall retain the amount set forth in this Resolution from the amount to be refunded to cover audit expenses. SECTION 12. A. It shall be the duty of the Director to enforce each and all of the provisions of this Resolution. B. For purposes of administration and enforcement of this Resolution generally, the Director, with the concurrence of the City Attorney, may from time to time promulgate administrative rules and regulations. SECTION 13. The Director shall have the power to audit and examine all books and records of businesses as well as persons engaged in the operation of a cannabis business including both state and federal income tax returns, California sales tax returns, or other evidence documenting the gross receipts of businesses or persons engaged in the operation of a cannabis business, for the purpose of ascertaining the amount of Tax, if any, required to be paid by the provisions of this Resolution or the Ordinance, and for the purpose of verifying any statements or any item thereof when filed by any person pursuant to the provisions of this Resolution. If such business or person, after written demand by the Director, refuses to make available for audit, examination or verification such books, records, or equipment as the Director requests, the Director may, after full consideration of all information within the Director's 0 Resolution No. Page 5 knowledge concerning the business and activities of the person so refusing, make an assessment in the manner provided in Sections 15 and 16 of this Resolution. SECTION 14. The amount of any tax, penalties, and interest imposed by the provisions of this Resolution shall be deemed a debt to the City and any person operating a business without first having procured a business tax license as provided in Division II Business Tax Chapters 3.40 through 3.96 of the Palm Springs Municipal Code shall be liable in an action in the name of the City in any court of competent jurisdiction for the amount of the tax, and penalties and interest imposed on such business. SECTION 15. If the Director is not satisfied that any statement filed as required under the provisions of this Resolution 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. 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 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 Sections 16 through 18 of this Resolution. SECTION 16. A. Under any of the following circumstances, the Director may make and give notice of an assessment of the amount of tax owed by a person under this Resolution: 1. If the person has not filed any statement or return required under the provisions of this Resolution; 2. If the person has not paid any tax due under the provisions of this Resolution; 3. If the person has not, after demand by the Director, filed a corrected statement or return, or furnished to the Director adequate substantiation of the information contained in a statement or return already filed, or paid any additional amount of tax due under the provisions of this Resolution; 4. If the Director determines that the nonpayment of any business tax due under this Resolution is due to fraud, a penalty of twenty-five percent of the amount of the tax shall be added thereto in addition to penalties and interest otherwise stated in this Resolution. B. The notice of assessment shall separately set forth the amount of any tax known by the Director to be due or estimated by the Director, after consideration of all information within the Director's knowledge concerning the business and activities of the person assessed, to be due under each applicable section of this Resolution, and shall include the amount of any penalties or interest accrued on each amount to the date of the notice of assessment. G Resolution No. Page 6 SECTION 17. The notice of assessment shall be served upon the person either by handing it to him or her personally, 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 appearing on the face of the business tax certificate issued under Resolution 4.76 or to such other address as he or she shall register with the Director for the purpose of receiving notices provided under this Resolution; or, should the person have no business tax certificate issued and should the person have no address registered with the Director 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. SECTION 18. Within ten days after the date of service the person may apply in writing to the Director 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 Director shall become final and conclusive. Within thirty days of the receipt of any such application for hearing, the Director shall cause the matter to be set for hearing before him or her not later than thirty days after the date of application, unless a later date is agreed to by the Director and the person requesting the hearing. Notice of such hearing shall be given by the Director to the person requesting such hearing not later than five days prior to such hearing. At such hearing said applicant may appear and offer evidence why the assessment as made by the Director should not be confirmed and fixed as the tax due. After such hearing the Director shall determine and reassess the proper tax to be charged and shall give written notice to the person in the manner prescribed in Section 16 for giving notice of assessment. SECTION 19. 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 Resolution or of any state law requiring the payment of all taxes. SECTION 20. Any person violating any of the provisions of this Resolution or any regulation or rule passed in accordance herewith, or knowingly or intentionally misrepresenting to any officer or employee of the City any material fact in procuring the certificate or document from the City as provided for in the Ordinance or this Resolution shall be deemed guilty of a misdemeanor SECTION 21. The operative date of this Resolution shall be January 1, 2018. PASSED, APPROVED AND ADOPTED BY THE PALM SPRINGS CITY 10 Resolution No. Page 7 COUNCIL THIS 13T" DAY OF DECEMBER, 2017. DAVID H. READY, CITY MANAGER ATTEST: ANTHONY MEJIA, CITY CLERK CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS ) I, ANTHONY MEJIA, City Clerk of the City of Palm Springs, hereby certify that Resolution No. is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on December 13, 2017, by the following vote: AYES: NOES: ABSENT: ABSTAIN: ANTHONY MEJIA, CITY CLERK City of Palm Springs, California RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, ESTABLISHING CANNABIS BUSINESS ACTIVITY TAX RATES. THE CITY COUNCIL OF THE CITY OF PALM SPRINGS FINDS: A. The voters of the City of Palm Springs approved Measure E at the November 7, 2017 general municipal election by a 78.38% affirmative vote of the electorate. The City Council recited the fact of the regular municipal election held on November 7, 2017, and declared the result of the election at the December 6, 2017 City Council meeting. B. Ordinance No. 1946 (the "Ordinance"), adopted by the Gity-C )Wnsilvoters of the City on December 6, 2017, amended Chapter 3.42 of the Palm Springs Municipal Code regarding cannabis taxation. The Ordinance, authorizes the City to impose a tax on the gross receipts of cannabis businesses as defined in the Ordinance at a maximum amount of 15 cents of every dollar of gross receipts. C. The Ordinance provides the Council with the authority to set-impose the tax at a rate that is less than 15 cents on each dollar of gross receipts and to establish exemptions, incentives, or other reductions, and penalties and interest charges or assessments for failure to pay the tax in a timely manner. D. This Resolution will set-establish and impose a tax rate of 10 cents on each dollar of gross receipts for each Fnedical cannabis business that received or receives from the City Council a permit to operate as a cannabis business pursuant to Sect an Palm Springs Municipal Code (PSMC) Chapters 5.45 and 5 55, as may be amended from time to time. The City Council further '++�and establishes and imposes a tax rate of 15 cents on each dollar of gross receipts for each cannabis business operating the City without a lawful permit issued by the City Council pursuant to PSMC Chapters 5.45 and 5.55 , as may be amended from time to time. E. This Resolution will also set stablish and impose an annual tax rate of $10.00 per square foot of cannabis cultivation area or fraction thereof (the "Cultivation Tax" . The maximum square foot Cultivation Ttax shall be adjusted annually (and rounded to the nearest cent) each January 1st based on the year-over-year percentage change in Bureau of Labor Statistics Los Angeles-Riverside-Orange County Consumer Price Index - All Urban Consumers (CPI-U) October to October comparison, or if such index is discontinued, a comparable or successor consumer price index designated by the City Council. The Cultivation Ttax shall be due and payable in installments as provided in section 3.42.100. The tax authorized RdeF this shall nAt hp F. This Resolution also establishes appropriate penalties and interest charges for payment delinquencies and appropriate audit and financial review Resolution No. Page 2 requirements to ensure timely and full payment of all taxes required under the Ordinance and this Resolution. G. The definitions contained in the Ordinance shall pertain to words or terms used in this Resolution. For the purpose of this Resolution the term "Director" means the City Manager or the City Manager's designee: "Tax" means the Cannabis Business Tax" as established in the Ordinance and as administered under this Resolution. THE CITY COUNCIL OF THE CITY OF PALM SPRINGS RESOLVES: SECTION 1. The true and correct recitals above, inclusive of the defined terms therein, are incorporated in this Resolution by this reference as the material basis for the City Council action taken herein. SECTION 2. The Tax on a cannabis business for which the City has issued a permit pursuant to PSMC Chapters 5.45 and 5.55, 93:23.15 as may be amended from time to time, is established and shall be imposed at the rate of 10 cents for each dollar (or portion thereof) of the gross receipts of such business. The Tax on permitted cannabis businesses shall be due and payable on or before the last business day of each month and as provided in section 3.42.100. SECTION 32. The Tax on each cannabis business operating in the City and which has not been issued a permit pursuant to PSMC Chapters 5.45 and 5.55, as may be amended from time to time. ,rr�Q is established and shall be imposed at the rate of be-15 cents for each dollar (or portion thereof) of the gross receipts of such business. The Tax on unpermitted cannabis businesses shall be due and payable on or before the last business day of each month, and as provided in section 3.42.100. SECTION 43. There is hereby established and imposed on every cannabis business engaged in commercial cannabis cultivation in the City, an annual ta* Cultivation Tax in a+}the amount established fFelTl time to tome by reseWtion of the Gity of $10.00 per square foot of cannabis cultivation area or fraction thereof. —. The maximum square foot tax shall be adjusted annually (and rounded to the nearest cent) each January 15' based on the year-over-year percentage change in Bureau of Labor Statistics Los Angeles-Riverside-Orange County Consumer Price Index - All Urban Consumers (CPI-U) October to October comparison, or if such index is discontinued, a comparable or successor consumer price index designated by the City Council. The to -Cultivation Tax shall be due and payable in monthly installments on or before the last business day of each month and -as provided in section 3.42.100. The tax autharzed under this GeGt"OR hall of be pler.,.Rte d SECTION 54. The Tax and the Cultivation Tax shall be due and payable as fellawsin accordance with the following requirements: A. Each person owing Tax and/or Cultivation Tax, on or before the last day of each calendar month, shall prepare a tax return to the Director of the total gross Resolution No. Page 3 receipts and the amount of Tax owed for the preceding calendar month. At the time the Tax return is filed, the full amount of the Tax owed for the preceding calendar month shall be remitted to the Director. B. All tax returns shall be completed on forms provided by the Director. C. Tax returns and payments for all outstanding taxes owed the City are immediately due the Director upon cessation of business for any reason. SECTION 65. Whenever any payment, statement, report, request or other communication received by the Director is received after the time prescribed by this Resolution for the receipt thereof, but is in an envelope bearing a postmark showing that it was mailed on or prior to the date prescribed in this Resolution for the receipt thereof, or whenever the Director is furnished substantial proof that the payment, statement, report, request, or other communication was in fact deposited in the United States mail on or prior to the date prescribed for receipt thereof, the Director may regard such payment, statement, report, request, or other communication as having been timely received. If the due day falls on Friday.. Saturday, Sunday, or a holiday, the due day shall be the next regular business day on which the City hall is open to the public. SECTION 79. Unless otherwise specifically provided under other provisions of this Resolution, the taxes Tax and the Cultivation Tax required to be paid pursuant to this Resolution shall be deemed delinquent if not timely paid in accordance with this Resolution. ^^ 9F before the due date spe Gif ed OR C 4' 4 f this R I +' SECTION 87. The Director is not required to send a delinquency or other notice or bill to any person subject to the provisions of this Resolution and failure to send such notice or bill shall not affect the validity of any tam-Tax, Cultivation Tax, or penalty due under the provisions of this Resolution. SECTION 95. A. Any person who fails or refuses to pay any tax required to be paid pursuant to this Resolution on or before the due date shall pay penalties and interest as follows: 1 . A penalty equal to twenty-five percent 2( 5%) of the amount of the Tax and/or Cultivation Tax (in the aggregate and each "Cannabis Tax") due in addition to the amount of tkany and all Cannabis Tax, plus interest on the unpaid Cannabis Tax calculated frern at the rate of one percent (1%) per month from the due date of the delinquent Cannabis Tax until the date paid. at a rate ectab!ished by resalut:on of the 2. An additional penalty equal to twenty-five percent 2f 5%) of the amount of the Cannabis Tax if the tax remains unpaid for a period exceeding one calendar month beyond the due date, plus interest on the unpaid Cannabis Tax as specified above, and interest on the unpaid penalties calculated at the rate one percent (1%) per month from the date when the penalties in question accrued. Co,m it B. Whenever a check is submitted in payment of a Cannabis Tax or any fee payable pursuant to PSMC Chapter 3 42 and the check is subsequently returned unpaid by the bank upon which the check is drawn, and the check is not redeemed prior to the due date, the taxpayer will be liable for the Cannabis Tax amount due plus Resolution No. Page 4 penalties and interest as provided for in this section plus any amount allowed under state law. C. The Cannabis Tax due shall be that amount due and payable from January 1, 2018 or the first date on which the business first operated in the City, whichever date occurred last, together with applicable penalties and interest calculated in accordance with Subsection A of this Section 9. f rive naernon+ each imposeduponaRy 'F - - A. The per6GR previde6 evideRGe satisfaGteFy to the DaFeGtE)F that failure to pay person paid the deliRquent busine66 tax and aGGFUed interest owed the Gity pF49F tG twenty four month nor'od j S ECT�I ON-I— business. ARY person entitled to a f r♦ f +axe6 id + ♦ 1h' Resolution may e!eGt iR WFit Rg te have SUGh refund applied as a GFed ess' Taxes for the n8A GaleRdAr month cGrT�TT Gity under this Re6elutieR, it Fnay be refi-14-A-C-A in- �he' id the Tax B. The DiFeGtGF shall have the Fight W examone and audit all the beGks and thp Al;;qMPrj rpfund. No E;IamFn for refund shall be allowed if the Glamma DOreGtOF to do so- G. lR the eveRt that the Tax was eFFOReewsly paid and the eFrar is; attrihi-table OF to the City, the eRt*Fe arneunt of the Tax eFFOReew6ly paid shall be Fefunded to the claimant. if the erFaF is attFibutable to the Glaimant, the City shall FetaiR the amount set by a City audit of Tax reGempts. IR the event that the Tax wa6 eFFeReously paid and the Resolution No Page 5 error is a+tribut-ahle }e the City, the entire amount of the Tax ^ sly paid shall be PP-fu.odcd_to_the_claimant. If the error is attributable to the-^vlca•FFRaHt-,-the-city shall rre^tta^tt^t thp mn n+ set forth in this Resolution from the ameuR} + be f rl d to reveF r♦' expeRses. C EGTvcv-,-invrrr� It shall he the duty of the Director to nforne eacih and all f the B. Ferparpeses Of adMiRistration and enfGFGeM8Rt - f t� Resolution nrem Ina+e arlmin'strat've rules and lat' N�v..r , SECTION 13 The Hiroo}or shall have thep9weF to edit and examine all hooks bu6mne66 both state and federal ORGGFne tax returns, Galifomia sale6 ta* amount of Tax, if any, ^u'resl to he paid by the provisions of ♦hm6 Resolution __ the (3rdinanse and for the r^ rrose o verifying ifya any y t^+ + eF aRy iteFR th f wheR pprcan after wFitten demand by the Bireeter, reklses to make available fkaw mot; the c it enter may, after f II nons'rier ^ f Ili de a+'cic all„ information within the DdFeGt+o, 6 assessment On the manner nrev'rled FR C +'ORS 15 ^ ri 16 f this I t' SECTION 14 The aMO nt of any tax, ne lfi ri t i d by th T a a c ,icci oc poocc� --�rrro Division 11 Business Tax Chaptem 3.40 through 3.96 of the Palm SpFdng6 MuniGipaf hi'sir.cnes m+vrasSECTION 15. if the DmFeGtOF m6 RGt satisfied that any statemeRt filed as FequmFed computed, he or she maY GeMpute and determine the amount to be paid and make a determanatieR is issued PF'OF te the date the tax would ethepMse be due. Reselttmef. Resolution No. Page 6 2. if the person has not paid any tax due undeF the pF9vir-"iqR- of thkr, Resolution; 3 If the person has no} after d d by the Qi 4OF, filed a GOrreG} d 4 Rfermation Gontaill8d iR a Gtatement er return alFeady filed, OF paid any additional amount of tax due uRdeF the provisions of this ResalutiaF4� 4. if the D'rentor determines that thG RORpayment of any bU6mReE;E; tax due the tax shal' be added thereto 6n additiGR tG PeRalties and interest etheFWq6e stated -B. The ROtiGe of aG6e66FReRt shall separately set foFth the aMOURt ef any tax the no}ine of asseoome } SECTION 17. The n9tiGe ef assessment shall be served LIPGR the peFSGR epth&F by ha Rdino oeroo i} }o him or her lly, h1 d Ycif f the }' the I I 4 d St at � � r n�+ the purpese Of FeGeqV4;g ROtiGes provided under th is Resolution; eir, should the per-SeF4 registered with the DqFeGtGF fGF SIAGh purpe6e, then tG SUGh persen'6 last known addres's the LJRwt8d Stalps mail SECTION.' 19. �.A.14thi.n. teR days aftei: the date of serviGe the PeFSOR may apply befeire the City 06 not made wthiR the time herein prescribed, the tax asseissed by the app!FGat'GR foF hearing, the DireGtOF shall Gause the matteir to be set f49r hewing before him OF heF RGt later thaR thiFty days after the date of app!'E;at4GR, WRIess a later date a shall be given by the DiFeistei: to the per6GR reque6fing suGh hearming net lateir than five dayis prier to SLJGh heaFiRg. At si-Inh hearing said app"GaRt may appear and 9#e fixed as the tax due. Afteic such hearing the D FeGtOF shall determine and reassess the Resolution No. Page 7 required ta)( Shall RE)t eXGUse er exempt suGh person fFom aRy GwV I aGtw@R for the tax regUiFiRg the payment of all taxes SECTION_ 20 ARy peroein vielatiRg any ef the provisions of this Resolution of any regulation or rule pa6sed OR aGG9FdaRGe herewith, or knGWiRgly or inteRtignally shall he deemed guilty of a misderneane Jee4! SECTION 2410. The operative date of this Resolution shall be January 1 , 2018. PASSED, APPROVED AND ADOPTED BY THE PALM SPRINGS CITY COUNCIL THIS 13T" DAY OF DECEMBER, 2017. DAVID H. READY, CITY MANAGER ATTEST: ANTHONY MEJIA, CITY CLERK CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS ) Resolution No. Page 8 I, ANTHONY MEJIA, City Clerk of the City of Palm Springs, hereby certify that Resolution No. is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on December 13, 2017, by the following vote: AYES: NOES: ABSENT: ABSTAIN: ANTHONY MEJIA, CITY CLERK City of Palm Springs, California RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, ESTABLISHING CANNABIS BUSINESS ACTIVITY TAX RATES. THE CITY COUNCIL OF THE CITY OF PALM SPRINGS FINDS: A. The voters of the City of Palm Springs approved Measure E at the November 7, 2017 general municipal election by a 78.38% affirmative vote of the electorate. The City Council recited the fact of the regular municipal election held on November 7, 2017, and declared the result of the election at the December 6, 2017 City Council meeting. B. Ordinance No. 1946 (the "Ordinance"), adopted by the voters of the City on December 6, 2017, amended Chapter 3.42 of the Palm Springs Municipal Code regarding cannabis taxation. The Ordinance, authorizes the City to impose a tax on the gross receipts of cannabis businesses as defined in the Ordinance at a maximum amount of 15 cents of every dollar of gross receipts. C. The Ordinance provides the Council with the authority to impose the tax at a rate that is less than 15 cents on each dollar of gross receipts and to establish exemptions, incentives, or other reductions, and penalties and interest charges or assessments for failure to pay the tax in a timely manner. D. This Resolution will establish and impose a tax rate of 10 cents on each dollar of gross receipts for each cannabis business that received or receives from the City Council a permit to operate as a cannabis business pursuant to Palm Springs Municipal Code (PSMC) Chapters 5.45 and 5.55, as may be amended from time to time. The City Council further establishes and imposes a tax rate of 15 cents on each dollar of gross receipts for each cannabis business operating the City without a lawful permit issued by the City Council pursuant to PSMC Chapters 5.45 and 5.55, as may be amended from time to time. E. This Resolution will also establish and impose an annual tax rate of $10.00 per square foot of cannabis cultivation area or fraction thereof (the "Cultivation Tax"). The maximum square foot Cultivation Tax shall be adjusted annually (and rounded to the nearest cent) each January 1st based on the year-over-year percentage change in Bureau of Labor Statistics Los Angeles-Riverside-Orange County Consumer Price Index — All Urban Consumers (CPI-U) October to October comparison, or if such index is discontinued, a comparable or successor consumer price index designated by the City Council. The Cultivation Tax shall be due and payable in installments as provided in section 3.42.100. F. This Resolution also establishes appropriate penalties and interest charges for payment delinquencies and appropriate audit and financial review requirements to ensure timely and full payment of all taxes required under the Ordinance and this Resolution. Resolution No. Page 2 G. The definitions contained in the Ordinance shall pertain to words or terms used in this Resolution. For the purpose of this Resolution the term "Director" means the City Manager or the City Manager's designee; "Tax" means the Cannabis Business Tax" as established in the Ordinance and as administered under this Resolution. THE CITY COUNCIL OF THE CITY OF PALM SPRINGS RESOLVES: SECTION 1. The true and correct recitals above, inclusive of the defined terms therein, are incorporated in this Resolution by this reference as the material basis for the City Council action taken herein. SECTION 2. The Tax on a cannabis business for which the City has issued a permit pursuant to PSMC Chapters 5.45 and 5.55, as may be amended from time to time, is established and shall be imposed at the rate of 10 cents for each dollar (or portion thereof) of the gross receipts of such business. The Tax on permitted cannabis businesses shall be due and payable on or before the last business day of each month, and as provided in section 3.42.100. SECTION 3. The Tax on each cannabis business operating in the City and which has not been issued a permit pursuant to PSMC Chapters 5.45 and 5.55, as may be amended from time to time, is established and shall be imposed at the rate of 15 cents for each dollar (or portion thereof) of the gross receipts of such business. The Tax on unpermitted cannabis businesses shall be due and payable on or before the last business day of each month, and as provided in section 3.42.100. SECTION 4. There is hereby established and imposed on every cannabis business engaged in commercial cannabis cultivation in the City, an annual Cultivation Tax in the amount of $10.00 per square foot of cannabis cultivation area or fraction thereof. The maximum square foot tax shall be adjusted annually (and rounded to the nearest cent) each January 15' based on the year-over-year percentage change in Bureau of Labor Statistics Los Angeles-Riverside-Orange County Consumer Price Index — All Urban Consumers (CPI-U) October to October comparison, or if such index is discontinued, a comparable or successor consumer price index designated by the City Council. The Cultivation Tax shall be due and payable in monthly installments, on or before the last business day of each month and as provided in section 3.42.100. SECTION 5. The Tax and the Cultivation Tax shall be due and payable in accordance with the following requirements: A. Each person owing Tax and/or Cultivation Tax, on or before the last day of each calendar month, shall prepare a tax return to the Director of the total gross receipts and the amount of Tax owed for the preceding calendar month. At the time the Tax return is filed, the full amount of the Tax owed for the preceding calendar month shall be remitted to the Director. B. All tax returns shall be completed on forms provided by the Director. C. Tax returns and payments for all outstanding taxes owed the City are immediately due the Director upon cessation of business for any reason. Resolution No. Page 3 SECTION 6. Whenever any payment, statement, report, request or other communication received by the Director is received after the time prescribed by this Resolution for the receipt thereof, but is in an envelope bearing a postmark showing that it was mailed on or prior to the date prescribed in this Resolution for the receipt thereof, or whenever the Director is furnished substantial proof that the payment, statement, report, request, or other communication was in fact deposited in the United States mail on or prior to the date prescribed for receipt thereof, the Director may regard such payment, statement, report, request, or other communication as having been timely received. If the due day falls on Friday, Saturday, Sunday, or a holiday, the due day shall be the next regular business day on which the City hall is open to the public. SECTION 7. Unless otherwise specifically provided under other provisions of this Resolution, the Tax and the Cultivation Tax required to be paid pursuant to this Resolution shall be deemed delinquent if not timely paid in accordance with this Resolution. SECTION 8. The Director is not required to send a delinquency or other notice or bill to any person subject to the provisions of this Resolution and failure to send such notice or bill shall not affect the validity of any Tax, Cultivation Tax, or penalty due under the provisions of this Resolution. SECTION 9. A. Any person who fails or refuses to pay any tax required to be paid pursuant to this Resolution on or before the due date shall pay penalties and interest as follows: 1. A penalty equal to twenty-five percent (25%) of the amount of the Tax and/or Cultivation Tax (in the aggregate and each "Cannabis Tax") due, in addition to the amount of any and all Cannabis Tax, plus interest on the unpaid Cannabis Tax calculated at the rate of one percent (1%) per month, from the due date of the delinquent Cannabis Tax until the date paid. 2. An additional penalty equal to twenty-five percent (25%) of the amount of the Cannabis Tax if the tax remains unpaid for a period exceeding one calendar month beyond the due date, plus interest on the unpaid Cannabis Tax as specified above, and interest on the unpaid penalties calculated at the rate one percent (1%) per month, from the date when the penalties in question accrued. B. Whenever a check is submitted in payment of a Cannabis Tax or any fee payable pursuant to PSMC Chapter 3.42, and the check is subsequently returned unpaid by the bank upon which the check is drawn, and the check is not redeemed prior to the due date, the taxpayer will be liable for the Cannabis Tax amount due plus penalties and interest as provided for in this section plus any amount allowed under state law. C. The Cannabis Tax due shall be that amount due and payable from January 1, 2018 or the first date on which the business first operated in the City, whichever date occurred last, together with applicable penalties and interest calculated in accordance with Subsection A of this Section 9. Resolution No. Page 4 SECTION 10. The operative date of this Resolution shall be January 1, 201& PASSED, APPROVED AND ADOPTED BY THE PALM SPRINGS CITY COUNCIL THIS 13TH DAY OF DECEMBER, 2017. DAVID H. READY, CITY MANAGER ATTEST: ANTHONY MEJIA, CITY CLERK CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS ) I, ANTHONY MEJIA, City Clerk of the City of Palm Springs, hereby certify that Resolution No. is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on December 13, 2017, by the following vote: AYES: NOES: ABSENT: ABSTAIN: ANTHONY MEJIA, CITY CLERK City of Palm Springs, California