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cq�rFcsN�P CITY COUNCIL STAFF REPORT
DATE: JULY 26, 2017 LEGISLATIVE
SUBJECT: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
SPRINGS, CALIFORNIA, ORDERING THE SUBMISSION TO THE
QUALIFIED ELECTORS OF THE CITY A MEASURE APPROVING
AND IMPLEMENTING A GROSS RECEIPTS TAX ON CANNABIS
BUSINESS ACTIVITY AND A CULTIVATION TAX ON COMMERCIAL
CANNABIS CULTIVATORS AT THE TUESDAY, NOVEMBER 7, 2017
GENERAL MUNICIPAL ELECTION
FROM: David H. Ready, City Manager
BY: Edward Z. Kotkin, City Attorney
SUMMARY
Pursuant to California Elections Code and the City Charter, the City Council may add a
measure to the November 7, 2017, General Municipal Election. Staff has prepared a tax
ballot measure for placement on the ballot based upon the request by the City Council
that it have the opportunity to consider cannabis tax proposals.
The attached resolution, see ATTACHMENT A, submits the measure to voters at the
November 7, 2017, regular municipal election. A majority vote of the City's qualified
voters will be needed to adopt the ordinance.
RECOMMENDATION:
Adopt Resolution No. "A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF PALM SPRINGS, CALIFORNIA, ORDERING THE SUBMISSION TO THE
QUALIFIED ELECTORS OF THE CITY A MEASURE APPROVING AND
IMPLEMENTING A GROSS RECEIPTS TAX ON CANNABIS BUSINESS
ACTIVITY AND A CULTIVATION TAX ON COMMERCIAL CANNABIS
CULTIVATORS AT THE TUESDAY, NOVEMBER 7, 2017 GENERAL MUNICIPAL
ELECTION."
ITEM NO.
City Council Staff Report
July 26, 2017 -- Page 2
Cannabis Taxes
2. Approve an appropriation of thirty thousand dollars ($30,000) from the General
Fund unappropriated balance, to be transferred into Acct. 001-1150-43860
(Elections) for expenditure in this matter.
STAFF ANALYSIS:
On July 19, 2017, the Council introduced an ordinance updating Chapter 5.45 of the Palm
Springs Municipal Code regarding "Medical Cannabis Related Businesses and Activities"
and adding new Chapter 5.55 regarding "Adult-Use Cannabis Related Businesses and
Activities." The cannabis business in the City is likely to grow, and the City staff has
prepared a cannabis tax measure to be placed on the November 7, 2017, General
Municipal Election ballot, see ATTACHMENT B. It would impose a gross receipts tax of
up to $0.15 per $1.00 of gross receipts from cannabis business activity in Palm Springs,
with the exception of cultivation, which would be subject to an annual cultivation tax of
calculated at the rate of $10.00 per square foot of cultivation area. Since the proposed
tax is of a general nature, i.e., a general tax, the City can use its proceeds for any desired
purpose. These taxes would replace the existing tax collected from the City's six (6)
permitted cooperatives/collectives.
Pursuant to State law, the City need not adopt any ordinance to place this matter before
the City's voters.
The measure includes a provision for an independent annual audit of tax proceeds, caps
the new taxes, and requires voter approval to increase them. The City Council can set
the tax at or below the caps provided, and any increase in tax above 5% requires four (4)
affirmative votes by City Council members.
The tax measure requires a majority of votes cast for adoption.
ALTERNATIVES:
The City Council is not obliged to propose a tax on commercial marijuana activity in the
City and may therefore approve, deny, or amend this proposal.
FISCAL IMPACT:
The City Clerk estimates the cost of placing this matter on the ballot will be between
twenty-five and thirty thousand dollars ($25,000-$30,000). Revenues will depend upon
the level to which the cannabis marketplace finds the City of Palm Springs to be a
desirable environment in which to operate. Regardless of the amount of new tax revenue,
it will not all be "new." This tax, if approved by the City's voters, will replace the City's
existing annual cannabis tax revenue of approximately one million six hundred thousand
dollars ($1,600,000).
02
City Council Staff Report
July 26, 2017 -- Page 3
Cannabis Taxes
Edward Z. Kotkin, David H. Ready, Esq., .,
City Attorney City Manager
Attachments:
A. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS,
CALIFORNIA, ORDERING THE SUBMISSION TO THE QUALIFIED ELECTORS
OF THE CITY A MEASURE APPROVING AND IMPLEMENTING A GROSS
RECEIPTS TAX ON CANNABIS BUSINESS ACTIVITY AND A CULTIVATION TAX
ON COMMERCIAL CANNABIS CULTIVATORS AT THE TUESDAY, NOVEMBER
7, 2017 GENERAL MUNICIPAL ELECTION
B. AN ORDINANCE OF THE CITY OF PALM SPRINGS IMPOSING A TAX ON
CANNABIS BUSINESS ACTIVITY
03
RESOLUTION NO._
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, ORDERING THE SUBMISSION
TO THE QUALIFIED ELECTORS OF THE CITY A MEASURE
APPROVING AND IMPLEMENTING A GROSS RECEIPTS TAX
ON CANNABIS BUSINESS ACTIVITY AND A CULTIVATION
TAX ON COMMERCIAL CANNABIS CULTIVATORS AT THE
TUESDAY, NOVEMBER 7, 2017 GENERAL MUNICIPAL
ELECTION
WHEREAS,Elections Code section 9222 and City Charter section 803 authorizes the
City Council to submit a measure to the voters to levy a tax for general purposes to be
approved or rejected by a majority of the qualified voters of the city voting in an
election on the issue; and
WHEREAS,the City Council proposes to the City's voters the City of Palm Springs
Cannabis Business Gross Receipts and Cultivation Tax Ordinance of 2017 (the
"Ordinance"), attached hereto as Exhibit A and incorporated herein by reference; and
WHEREAS, the Ordinance imposes a gross receipts tax up to $0.15 per $1.00 of
proceeds, on any Palm Springs cannabis business, and a cultivation tax of$10.00 per
square foot of cannabis cultivation area or fractional part thereof on Palm Springs
cannabis businesses (the "Tax") to be collected as set forth in the Ordinance, and
WHEREAS, California Constitution, article XIII C, section 2, subdivision (b) requires a
majority of voters to approve the Tax if it is to be effective; and
WHEREAS,by Resolution No. 24249, adopted June 21, 2017, this Council has called a
general municipal election in the City to be held November 7, 2017 (the "Election"); and
WHEREAS, the City Council desires to submit the Tax to the electorate at the Election.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF PALM SPRINGS, CALIFORNIA AS FOLLOWS:
1. The City Clerk is hereby directed to submit the following question (the
"Measure") to the qualified voters of the City of Palm Springs at the Election:
Page 1 of 3 04
Shall Palm Springs update the existing gross receipts tax on
medical cannabis collectives and cooperatives to also apply to YES
all medical and adult-use cannabis businesses apart from
cultivation businesses, which will instead be taxed at the rate of
no more than $10 per square foot, to be used to
maintain/improve city services such as addressing
homelessness, increasing affordable housing/public safety; NO
requiring audits/public oversight, with all funds used in Palm
Springs?
A majority of those casting ballots in favor shall be sufficient to adopt the
Measure.
2. The City Clerk shall 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 within ten (10) days of the adoption of this Resolution.
3. The City Clerk shall certify to the passage and adoption of this Resolution and
enter it in the book of original Resolutions.
4. The City Clerk shall file a certified copy of this Resolution with the Registrar of
Voters of Riverside County.
5. The City Clerk is further directed to take all other administrative actions
necessary to accomplish the orders set forth in this Resolution.
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PASSED AND ADOPTED by the following vote on July 26, 2017.
AYES:
NOES:
ABSENT:
ABSTAIN:
Robert Moon, MAYOR
ATTEST:
Kathie Hart, Interim City Clerk
APPROVED AS TO FORM:
Edward Z. Kotkin, City Attorney
Page 3 of 3 06
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF PALM SPRINGS IMPOSING A
TAX ON CANNABIS BUSINESS ACTIVITY
THE PEOPLE OF THE CITY OF PALM SPRINGS DO ORDAIN AS FOLLOWS:
Section 1. Code Amendment. The Palm Springs Municipal Code is hereby
amended to adopt chapter 3.42 regarding Cannabis taxation.
Chapter 3.42 CANNABIS
3.42.010 Purpose.
The purpose of this ordinance is to impose a gross receipts tax not to exceed $0.15 per
$1.00 of gross receipts, on any cannabis business conducted in the City of Palm Springs,
as "cannabis business' is defined in section 3.42.020 of this code whether or not such
cannabis business has a permit under chapter 5.35, 5.45 or 5.55 of this code.
3.42.020 Definitions.
The following definitions shall apply to the construction of this chapter unless the
context is such that it is plain a different meaning is intended:
A. "Cannabis" or "marijuana" means all parts of the plant Cannabis sativa
Linnaeus, Cannabis indica, 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 of
such plants. "Cannabis" also means marijuana as defined by section 11018 of the Health
and Safety Code and as defined by other state law.
B. "Cannabis business" means the activity of any natural or legal person, business,
or collective in the City relating to cannabis, including but not limited to cultivation
(including nurseries), transportation, distribution, manufacture, compounding,
conversion, processing, preparation, testing, storage, packaging, delivery and sales
(wholesale and/or retail sales) of cannabis, cannabis products, or any accessories for the
use of cannabis or cannabis products, whether or not carried on for gain or profit,
whether or not for medical or adult-use, and whether or not such business is licensed by
the state.A cannabis business does not include any business the only relationship of
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which to cannabis or cannabis products is the production or sale of cannabis
accessories.
C. "Cannabis cultivation area" means the total aggregate area(s) of cannabis
cultivation on one or more parcels in the City 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, space between plants within a cultivation area, the exterior dimensions of
garden beds, garden plots, hoop houses, green houses, and each room or area where
cannabis plants are grown, as determined by the city manager.
D. "Cannabis product' means any product containing cannabis or its derivatives,
including,but not limited to, flowers,buds, oils, tinctures, concentrates, extractions,
edibles and those products described in section 11018.1 of the Health and Safety Code.
E. "Canopy" means the designated area(s) at a licensed premises that will contain
mature plants at any time. If mature plants are cultivated using a shelving system, the
surface area of each level shall be included when calculating canopy area. Canopy area
shall be expressed in square feet and measured using clearly identifiable boundaries of
all areas that will contain mature plants at any time, including the entire area with those
boundaries. Canopy may be noncontiguous, but each noncontiguous area shall be
defined by an identifiable boundary such as an interior wall or by 10 feet or more feet of
open space.
F. "City manager" has the meaning provided by section 1.06.020 of this code.
G. "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 adult-use as authorized under
the "California Control, Regulate and Tax Adult Use of Marijuana Initiative" approved
by the state's voters on November 8, 2016,for which the individual receives no
compensation whatsoever.
H. "Cultivation" means any activity involving the planting, growing,harvesting,
drying, curing, grading, or trimming of cannabis.
I. "Cultivator" means any person engaged in cultivation.
J. "Delivery" means the transfer for any form of compensation of cannabis or
cannabis products to a customer or caregiver at a location that is not a dispensary.
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K. "Dispensary" means a place at which cannabis, cannabis products, or accessories
for the use of cannabis or cannabis products are offered, either individually or in any
combination, for retail sale, including an establishment that engages in delivery.
L. "Distributor' means a person engaged in procuring cannabis and/or procuring
cannabis products for sale to a dispensary or other point of retail sale. "Distribution"
means engaging in that conduct and a "distribution facility" is any real estate, whether
or not improved,used in such conduct.
M. Except as otherwise specifically provided in this code or by regulation authorized
by this code, "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. Included in "gross receipts" shall be all receipts, cash, credits and property
of any kind or nature,without any deduction or setoff 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.
N. "Manufacturer" means a person who engages in 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.
O. "Nursery" means a person, facility or activity that transfers for any form of
consideration cannabis clones, immature plants, and/or seeds for planting, propagation,
and/or cultivation of cannabis.
3.42.030 Gross Receipts Tax.
A. There is hereby imposed on every cannabis business in the City an annual
cannabis industry tax at a rate established from time to time by resolution of the City
Council that shall not exceed fifteen percent (15%) of gross receipts. The tax imposed
under this section shall be due and payable as provided in section 3.42.100. As noted in
section 3.42.040, cultivators shall pay a cultivation tax in lieu of this gross receipts tax.
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B. The City Council may by resolution, in its discretion, implement a tax rate
lower than the maximum rate established in subsection (A) of this section for all
persons engaged in a cannabis business in the City, or establish differing tax rates for
different categories of cannabis business, including for medical versus adult-use. 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 (A) of this section.An affirmative vote of at least four (4)
members of the City Council is required for any increase in tax payable pursuant to this
section 3.42.030.
C. Cannabis businesses subject to the tax imposed by subsections (A) and (B) of this
section shall also register and pay the registration fee described in section 3.42.045,but
shall be exempt from paying the general business tax imposed by Title 3, Division II of
the Palm Springs Municipal Code.Any cannabis business not subject to the tax imposed
by subsections (A) and (B) of this section is subject to the general business tax imposed
by Title 3, Division II of the Palm Springs Municipal Code except as otherwise provided
by this Code or other applicable law.
3.42.040 Cultivation Tax.
A. Any cannabis business engaged in the cultivation of cannabis shall pay (i) the
cultivation tax imposed by this section instead of the tax imposed by section 3.42.030 on
its cultivation activity and (ii) the tax imposed by section 3.42.030 on its other cannabis
business activity. The activity of nurseries as defined in section 3.42.020 is subject to the
tax imposed by section 3.42.030 rather the tax imposed by this section.
B. 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.
C. The city council may by resolution, in its discretion, implement a tax rate lower
than the maximum rates set forth in subsection (B) of this section for all businesses
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engaged in commercial cannabis cultivation in the City or establish tax rates for 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-use, or for indoor
rather than outdoor or mixed-light cultivation. 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 established in subsection (A) of this section. An
affirmative vote of at least four (4) members of the City Council is required for any
increase in tax payable pursuant to this section 3.42.040.
D. Cannabis businesses engaged in cultivation and subject to the tax imposed by
subsections (A) and (B) of this section and liable for the tax imposed by this chapter
shall also register and pay the registration fee described in section 3.42.045,but shall be
exempt from the general business tax required under Title 3, Division II of the Palm
Springs Municipal Code.Any business not subject to the tax imposed by this section
3.42.040 is subject to the general business tax required under Title 3, Division II of the
Palm Springs Municipal Code except as otherwise provided by this code or other
applicable law.
3.42.045 Registration of Cannabis Business.
A. All persons engaging in a cannabis business, whether an existing, newly-
established or acquired business, shall register with the city manager's office by the
later of(i) 30 days of commencing operation or (ii) by January 1, 2018 and shall annually
renew such registration no more than a calendar year after the date of the most recent
registration. In registering, such persons shall furnish to the City Manager a sworn
statement,upon a form provided by the City Manager, setting forth the following
information:
. The name of the business;
2. The names and addresses of each owner;
3. The nature or kind of all business activity to be conducted;
4. The place or places where such business is to be carried on; and
S. Any further information which the City Manager may require.
B. Such persons shall pay an annual registration fee in an amount established from
time to time by resolution of the city council to recover the city's costs to implement the
taxes imposed under this chapter, the registration requirement of this section, and the
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other provisions of this chapter.As a regulatory fee, such fee shall be limited to the
City's reasonable regulatory costs.
C. The registration and registration fee shall be collected and enforced in
accordance with Title 3, Division II of this code ('Business Tax").
D. The tax registration certificate required and the general business license required
under Title 3, Division II of the Palm Springs Municipal Code may constitute a single
document.
3.42.050 Payment Obligation.
All taxpayers subject to a tax under this this chapter shall pay that tax regardless of any
rebate, exemption, incentive, or other reduction set forth elsewhere in this code, except
as required by state or federal Law. Failure to pay such a tax shall be subject to
penalties, interest charges, and assessments as provided in this chapter and the City
may use any or all other code enforcement remedies available at law or in equity. No
provision of this code shall be interpreted to reduce a tax rate established under this
chapter or otherwise reduce the taxes paid hereunder unless the provision specifically
expresses that reduction.
3.42.060 City Council Authorization to Adjust Rates.
The city council may impose a tax authorized by this chapter at a lower rate and may
establish exemptions, incentives, or other reductions, and penalties and interest charges
or assessments for failure to pay the tax when due, as otherwise allowed by the city
charter and California law. No action by the city council under this section shall prevent
it from later increasing the tax or removing any exemption, incentive, or reduction, and
restoring the maximum tax authorized by this chapter provided only that the maximum
taxes stated in section 3.42.030, subsection (A) and 3.42.040, subsection (B) may not be
increased without voter approval.
3.42.070 Tax Payment Does Not Authorize Activity.
The payment of a tax imposed under this chapter shall not be construed to authorize the
conduct or continuance of any illegal business or of a legal business in an illegal
manner. Nothing in this chapter authorizes or implies the lawfulness of any activity
connected with the distribution or possession of cannabis unless otherwise authorized
and allowed in strict and full conformance with this code, including without limitation
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chapters 5.35, 5.45 and 5.55. Nothing in this chapter shall be applied or construed as
authorizing the sale of cannabis.
3.42.080 Cannabis Tax Is Not a Sales Tax.
The taxes provided for under this chapter are excises on the privilege of doing business
in the City and legally incident on those engaged in such business. It is not a sales or
use tax and shall not be calculated or assessed as such. Nevertheless, at the option of the
taxpayer, the tax may be separately identified on invoices, receipts and other evidences
of transactions.
3.42.090 Amendments and Administration.
A. Voters approved this chapter.Any amendment to this chapter to increase the tax
above the maximum rates provided requires further voter approval. The voters
authorize the city council to set the tax at or below that maximum or otherwise to
amend, modify, change, or revise any provision of this chapter as the city council deems
in the best interest of the city.
B. The city manager, in consultation with the city attorney, may promulgate rules,
regulations, and procedures to implement and administer this chapter to ensure the
efficient and timely collection of the taxes and fee imposed by this chapter, including
without limitation, formulation and implementation of penalties and interest to be
assessed for failure to pay the taxes as provided. Notice of such regulations shall be
given as required for ordinances of the city council and such regulations shall be
immediately effective when such notice is given unless a different effective date is
provided by a regulation.
C. The city manager shall annually audit the cannabis taxes imposed by this chapter
to verify that tax revenues have been properly collected and expended in accordance
with the law.
D. Pursuant to California Constitution, article XIII B, the appropriation limit for the
City is increased to the maximum extent over the maximum period of time allowed
under law consistent with the revenues generated by the taxes and fee imposed by this
chapter.
3.42.100 Returns and Remittances.
The Tax shall be due and payable as follows:
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A. Each cannabis business owing tax shall provide a tax return to the city manager
on or before the last business day of each month stating the tax owed and the basis of its
calculation for the preceding month. The taxpayer shall remit the tax owed to the city
manager when the return is due whether or not a return is filed as required.
B. All tax returns shall be completed on forms provided by the city manager.
C. Tax returns and payments for all outstanding taxes, fees, penalties and interest
owed the city are immediately due upon cessation of business for any reason.
D. Whenever any payment, statement, report, request or other communication is
received by the city manager after the time prescribed by this section for its receipt,but
is in an envelope postmarked on or before the date prescribed by this section for its
receipt, the city manager shall regard such payment, statement, report, request, or other
communication as timely. If the due date falls on Friday, Saturday, Sunday, or a
holiday, the due date shall be the last earlier business day on which City Hall is open to
the public.
E. Unless otherwise specifically provided by this chapter, the taxes imposed by this
chapter shall be deemed delinquent if not paid on or before the due date specified in
subsection A of this section.
F. The city manager need not send a delinquency or other notice or bill to any
person subject to a tax or fee imposed by this chapter and failure to send such notice or
bill shall not affect the validity of any tax, fee, interest or penalty due under this chapter.
3.42.110 Failure to Pay Timely,
A. Any person who fails or refuses to pay any tax or fee imposed by this chapter
when due shall pay penalties and interest as follows:
1. A penalty equal to 25 percent of the tax or fee, and
2. An additional penalty equal to 25 percent of the amount of the tax or fee if
unpaid for a more than a month beyond the due date; and
3. Unpaid tax, fee, penalties shall bear 1 percent interest per month from the
date due until paid.
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B. If a check is submitted in payment of a tax or fee and is returned unpaid by the
bank upon which drawn, and the check is not redeemed before the due date, the
taxpayer will be liable for the tax or fee due plus penalties and interest as provided for
in this section plus any amount allowed under state law for the returned check.
C. The tax due shall be that amount due and payable from the later of(i) the
effective date of the taxes under this chapter as determined by resolution of the city
council or (ii) the first date on which the cannabis business first operated in the city.
D. The city manager may waive some or all of the penalties imposed by this section
as to any person if:
1. The person provides evidence satisfactory to the city manager 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 tax or fee and accrued interest owed
the city upon applying for a waiver.
2. A waiver authorized by this subsection shall not apply to tax, fee or interest
and may be granted only once during any 24-month period.
3.42.120 Refunds.
A. No refund shall be made of any tax collected pursuant to this chapter, except as
provided in this section.
B. No refund of any tax collected pursuant to this chapter shall be made because of
the discontinuation, dissolution, or other termination of a cannabis business.
C. Any person entitled to a refund of sums paid under this chapter may elect to have
such refund applied as a credit against future obligations under this chapter.
D. Whenever any tax, fee, penalty, or interest under this chapter has been overpaid,
paid more than once, or has been erroneously or illegally collected or received by the
city, such amount shall be refunded to the person who paid the tax upon a timely
written claim for refund filed with the city manager.
E. The city manager may examine and audit all the books and business records of
the claimant to determine eligibility to the claimed refund. No claim for refund shall be
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allowed if the claimant refuses to allow such examination of the claimant's books and
business records.
F. A sum erroneously paid under this chapter due to an error of the city shall be
refunded to the claimant in full upon a timely claim. If an error is attributable to the
claimant, the city may retain an amount established by resolution of the city council
from time to time in an amount sufficient to recover the city's cost to process the claim
and refund the balance.
G. The city manager shall initiate a refund of any sum overpaid or erroneously
collected under this chapter whenever the overpayment or erroneous collection is
disclosed by a City audit for the period of time unprotected by the duty to file a timely
claim under the Government Claims Act.
3.42.125 Enforcement.
A. The city manager shall enforce this chapter.
B. The city manager may audit and examine all business locations, books and
records of cannabis businesses, including both state and federal income tax returns,
California sales tax returns, or other evidence documenting the gross receipts of a
cannabis business to ascertain any tax due under this chapter and to verify any returns
or other information any person submits to the city under this chapter. If a cannabis
business, after written demand by the city manager, refuses to make available for audit,
examination or verification such locations, books, and records as the city manager
requests, the city manager may, after full consideration of all such information as is
available make an assessment of tax or fee due and demand payment from the tax- or
fee-payer, together with any penalties and interest due for late payment.
C. The conviction and punishment of any person for failure to pay a sum required
under this chapter shall not excuse or exempt such person from any civil action for the
debt. No civil action shall prevent a criminal prosecution for any violation of this
chapter or of any state law requiring the payment of all taxes. No election of remedies
shall apply to the enforcement of this chapter or any other provision of this code and
the city may pursue one or more remedies in its discretion provided only that no
double recovery shall be permitted.
D. Any person violating any of the provision of this chapter or any regulation or rule
adopted pursuant to it, or knowingly or intentionally misrepresenting any material fact
to the city in procuring a certificate or document from the city under this chapter, or
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under chapter 5.35, 5.45, or 5.55, shall be deemed guilty of a misdemeanor unless the
city attorney, in his or her discretion, elects to prosecute it as an infraction.
3.40.130 Consistency with Business Tax Rules.
The People of the City of Palm Springs intend this chapter to be enforced consistently
with Title 3,Division II of this code and any rule or regulation promulgated under that
division except as expressly provided to the contrary in this chapter.
3.42.135 Successor And Assignee Responsibility.
A. If any person, while liable for any amount under this chapter, sells, assigns or
otherwise transfers half or more of a taxed 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 pay that
amount when due.A transferee shall notify the city manager of a transfer 30 days
before the transfer date; or if the agreement to sell, transfer, or otherwise dispose of the
business is made less than 30 days before the date of transfer, on the first day City Hall
is open for business after the transfer.
B. A transferee shall be deemed to have satisfied an unpaid liability if the transferee
complies with the requirements of California Revenue and Taxation Code Section 7283.5
and this section by withholding from the purchase price, for the benefit of the city, an
amount sufficient to cover the liability, or by otherwise paying the liability and
obtaining from the city manager a "Tax Clearance Certificate" showing that all
outstanding liability has been paid through the date of transfer.
C. Within 90 days of receiving a written request from a Transferee, the city manager
may issue a "Tax Clearance Certificate" stating either the amount due as to the business
under this chapter, or stating that there is no liability due for the business through a
stated date. The city manager may also request financial records from the transferor to
audit the amount due under this chapter. The city manager shall issue a tax clearance
certificate within 30 days of completing the audit, stating any amount owed, unless the
city manager determines the records provided for audit are insufficient to determine
whether taxes, fees, penalties and/or interest are due and in what amounts. If so, the city
manager may rely on available information to estimate any amount due and shall issue
a tax clearance certificate stating that amount.A written application for an appeal
Page 11 of 15 17
hearing on the amount assessed on a tax clearance certificate must be made within 10
days after the city manager serves or mails the certificate. The appeal provision of
section 3.68.010 of this code shall apply. If a timely application for a hearing is not
made, the tax clearance certificate shall serve as conclusive evidence of the liability
under this chapter associated with the business through the date stated on the
certificate.
3.42.140 Debts; Deficiencies;Assessments.
A. The amount of any tax, fee, penalties, and interest imposed by this chapter shall
be deemed a debt to the city and any person operating a cannabis business without first
having procured a business tax license as provided in Division II of Title 3 of this code
shall be liable in an action in the name of the city in any court of competent jurisdiction
for the amount due.
B. If no return or statement is timely filed, or if the city manager is not satisfied that
any return or other statement filed under this chapter is correct, or that the amount due
is correctly computed, the city manager may determine that amount and make a
deficiency determination upon available information. The city manage may make one
or more deficiency determinations for a period or periods. When a person discontinues
engaging in a business, the city manager may make a deficiency determination may 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 before the date the tax
would otherwise be due. Whenever a deficiency determination is made, a notice shall
be given to the person concerned as are notices of assessment under subsections C, D,
and E of this section.
C. Under any of the following circumstances, the city manager may make and give
notice of an assessment of taxes, fees, penalties and interest owed under this chapter:
1. If the person has not filed any statement or return required by this
chapter;
2. If the person has not paid any tax, fee, penalty or interest due under
this Ordinance;
3. If the person has not, after demand by the city manager, filed a
corrected statement or return, or adequate substantiation of the
information contained in a statement or return previously filed, or paid
any additional amount due under this chapter;
Page 12 of 15 18
4. If the city manager determines nonpayment of any amount due
under this chapter or Division 11 of Title 3 is due to fraud, a penalty of 25
percent of the amount of otherwise due shall be added thereto in addition
to penalties and interest otherwise stated in this chapter.
5. The notice of assessment shall separately set forth any amount the
city manager knows or estimates to be due under this chapter, including
any penalties or interest accrued to the date of the notice.
D. A notice of assessment shall be served upon the tax-or fee-payer either by
personal service or by a deposit in the United States mail, postage prepaid, addressed to
the address appearing on the business tax certificate issued under Division II of Title 3,
or such other address as he or she may provide the city manager in writing for notices
under this chapter or that Division 11; or, should the person have no business tax
certificate issued and no address provided to the city manager for such purpose, then to
such persoWs last known address. Service by mail is complete upon deposit in the
United States mail as provided in this paragraph.
E. Within 10 days after service of a notice of assessment, the tax- or fee-payer may
apply in writing to the City Manager for a hearing on the assessment. If no timely
application for a hearing is made, the amount assessed shall be final and conclusive.
Within 30 days of the receipt of an application for hearing, the city manager shall cause
the matter to be set for hearing before a hearing officer pursuant to section 1.06.050 of
this code. The city manager shall give notice of such hearing to the person requesting it
not later than five days before the hearing.At such hearing, the applicant may appear
and offer evidence why the assessment should not be confirmed. After such hearing, the
hearing officer shall determine the amount due under this chapter and shall give
written notice to the person as prescribed in this chapter for giving notice of assessment.
That decision is final as to the city,but either the city or the applicant may seek judicial
review as provided by California Code of Civil Procedure section 1094.5.
Section 2. AMENDMENT. This Ordinance may be repealed or amended by the City
Council without a vote of the People except as follows: as required by Article XIII C of
the California Constitution, any amendment that increases the amount or rate of tax
beyond the levels authorized by this Ordinance may not take effect unless approved by
a vote of the People. The City Council may impose the tax in any amount or rate which
does not exceed the rate approved by the voters of the City.
Page 13 of 15
19
SECTION 3. SEVERABILITY. If any provision of this Ordinance or the application
thereof to any person or circumstance is held invalid, the remainder of the Ordinance
and the application of such provision to other persons or circumstances shall not be
affected thereby. The People hereby declare that they would have adopted this
Ordinance and each portion thereof regardless of the fact that an invalid portion or
portions may have been present in the Ordinance.
SECTION 4. CEQA. This measure to be submitted to the voters adopts a general tax
to fund any legitimate purpose of the City. As such, under CEQA Guidelines section
15378(b)(4), the tax is not a project within the meaning of CEQA because it creates a
government funding mechanism that does not involve any commitment to any specific
project that may result in a potentially significant impact on the environment.
Therefore, under CEQA Guidelines section 15060, review under CEQA is not required.
SECTION 5. EFFECTIVE DATE. This Ordinance relates to the levying and collecting
of the City's cannabis tax and shall not take effect until ten days after the certification of
its approval by the majority of the voters voting at the general municipal election to be
held on November 7, 2017 pursuant to Elections Code section 9217.
SECTION 6. SUSPENSION OF CANNABIS AND MARIJUANA TAX. While the
taxes imposed by this Ordinance are in effect, the tax imposed by Chapter 3.35 of the
Palm Springs Municipal Code shall be suspended. Should either of the taxes in this
Ordinance be repealed, suspended, invalidated, ruled unenforceable or otherwise
rendered ineffective, the tax imposed by Chapter 3.35 of the Palm Springs Municipal
Code shall return to force without further action by the voters of the City.
SECTION 7. 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.
Page 14 of 15
20
It is hereby certified that this Ordinance was duly adopted by the voters at the
November 7, 2017 General Municipal Election and took effect 10 days following
adoption of a resolution declaring the results of the election at a regular meeting of the
City Council held on by the following vote:
AYES:
NOES:
ABSENT:
Kathie Hart, Interim City Clerk
City of Palm Springs
Page 15 of 15 21
pLM SA
City of Palm Springs
Office of the City Attorney
3200 E.Tliquitz Canyon Way. - Palm Springs, Calitoruia 92262
Tel:760.323.8205 - Fax: 760.322.8332 -TDD 760.864.9527 -www.palmspringsca.gov
C,Q</FORN�P
Palm Springs Essential Services / Public Safety Measure
To maintain essential city services, including rapid 911
emergency response, fire/police protection, add paramedic
services, keep fire stations open/staffed, address homelessness,
repair local streets/potholes, improve rapid response to assault,
burglaries/crimes, keep public areas safe/clean, maintain senior
services, attract/retain jobs/business, increase water
conservation; shall the City of Palm Springs establish a '/2 cent
sales tax; requiring annual independent audits/public oversight;
all funds used locally?
Palm Springs Cannabis Business Taxation
Shall Palm Springs update the existing gross receipts tax on
medical cannabis collectives and cooperatives to apply to all
medical and adult-use cannabis businesses, apart from
cultivation businesses, which will be taxed at a rate up to 10
dollars per square foot, with all revenue used in Palm Springs to
maintain and improve essential city services, including public
safety and youth drug prevention education; requiring annual
independent audits and public oversight?
07-7-(o-21017 fa o io i n c>lq qz. Mogrepl)i -s
3.c
Post Office Box 2743 - Palm Springs, California 92263-2743
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, AMENDING THE BUDGET
FOR FISCAL YEAR 2017-18.
WHEREAS, Resolution No. 24238 approving the Budget for the Fiscal Year
2017-2018 was adopted on June 7, 2017; and
WHEREAS the City Manager has recommended, and the City Council desires to
approve, certain amendments to said budget.
NOW THEREFORE THE CITY COUNCIL DETERMINES, RESOLVES AND
APPROVES AS FOLLOWS: that the Director of Finance is authorized to record inter-
fund cash transfers as required in accordance with this Resolution, and Resolution No.
24238, adopting the Budget for Fiscal Year 2017-18 is hereby amended as follows:
SECTION 1. ADDITIONS
Fund Activity Account Amount
001 General Fund 1150 City Clerk 43860 Elections $30,000
Purpose: To cover City's cost to submit a measure approving and implementing a gross
receipts tax on cannabis business activity and a cultivation tax on commercial cannabis
cultivators to the electorate at the November 7, 2017 general municipal election.
SECTION 2. SOURCE
Fund Activity Account Amount
001 General Fund 29301 Fund $ 30,000
Balance
ADOPTED THIS 26th DAY OF July, 2017.
David H. Ready, City Manager
ATTEST:
Kathie Hart, Interim City Clerk
Resolution No.
Page 2
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS )
I, Kathie Hart, Interim 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 by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Kathie Hart, Interim City Clerk
City of Palm Springs, California