HomeMy WebLinkAboutCity Council - 2022-07 RESOLUTION NO. 2022-07
A 1ESOLUTION OF THE CITY COUNCIL 017 THE CITY OF FIUNfINGTON BEACH
CALLING FOR A MUNICIPAL ELECTION FOR THE PURPOSE OF SUBMITTING TO
THE VOTERS OF THE CITY OF HUNTINGTON BEACH A PROPOSED ORDINANCE
ADDING CHAPTER 3.25 TO TITLE 3 OF THE HUNTINGTON BEACH MUNICIPAL
CODE, ESTABLISHING A SPECIAL TAX ON CANNABIS BUSINESSES OPERATING
WITHIN THE CITY OP HUNTINGTON BEACH; REQUESTING CONSOLIDATION OF
THIS ELECTION WffH THE JUNE 7. 2022 STATi--WIDE PRIMARY ELECTION AND
REQUESTING ELECTION SERVICES FROM THE COUNTY OF ORANGE -1.0
CONDUCT SAID ELECTION: AND SETTING RULES AND DEADLINE'S FOR
ARGUMENTS AND REBUTTALS FOR AND AGAINST THE ORDINANCE.
WHEREAS, pursuant to California Government Code Sections 37100.5 and 37101, the
City of Huntington Beach has the authority to establish a local business tax upon Cannabis
Businesses that engage in business in the City: and
WHEREAS, pursuant to Section 9222 of the California Elections Code, the City
Council has authority to place propositions on the ballot to be considered at the Special
Municipal Election; and
WHEREAS, the Citv Council desires to submit to the voters an ordinance establishing
both (i) a not to exceed rate of 6% local special tax on the Gross Receipts received by any
Cannabis retail business: and (ii) a not-to-exceed rate of' 1% local special tax on anv other
Cannabis Business, including but not limited to Indoor Cultivation, Manufacturing, Testing
Laboratory. and Distribution: and
WHEREAS, the proposed Cannabis Business Tax is a special tax, the proceeds of
which would be deposited into the City special fund for police services for public safety, and
behavioral health and homeless prevention, and intervention programs and services: and
WHEREAS, on November 6, 1996, the voters of the State of California approved
Proposition 218 (California Constitution. Article XIIIC), an amendment to the State
Constitution that requires that all special taxes imposed, extended or increased by the City
must be submitted to the electorate and approved by a 2/3 vote of the qualified electors voting
in the election: and
WHEREAS, the proposed ordinance would establish a special tax which is subject to
Proposition 218; and
WHEREAS, pursuant to Proposition 218 (California Constitution Article XIIIC),
§2(b)), the general rule is a special tax may be consolidated with a regularly scheduled primary
election: and
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WHEREAS, the next regularly-scheduled Statewide primary election is set for June 7,
2022: and
WHEREAS, the City Council also desires to request that the Orange County Registrar
of Voters provide full election services to the City in order to conduct a Special Municipal
Election for the Ordinance/Measure described herein to be held and consolidated with the
Statewide Primary Election on June 7. 2022; and
WHEREAS. the Cite Council also desires to establish deadlines and rules for the
submission of written arguments and rebuttals for and against the Ordinance in accordance
with applicable California Elections Code procedures; and
WHEREAS, the specific terms relating to the Cannabis Business Tax are provided for
in the ordinance to be considered by the qualified voters, attached hereto as Exhibit I (the
"Ordinance" or"Measure") and by this reference made an operative part hereof, in accordance
with all applicable laws.
NOW. THEREFORE, THE CITY COUNCIL OI' THE CITY OI' HUNTINGTON
BEACH, CALIFORNIA, DOES RESOLVE. DECLARE, DETERMINE. AND ORDER AS
FOLLOWS:
SECTION 1. Recitals. The City Council hereby finds and determines that the foregoing
recitals are true and correct, are incorporated herein, and by this reference made an operative
part thereof.
SECTION 2. Submission of Ballot Measure. The City Council of the Cite pursuant to its
right and authority as contained in Government Code Section 37100.5 and Elections Code
Section 9222 and consistent with the requirements of California Proposition 218 hereby orders
the Ordinance attached hereto as Exhibit I be submitted to the qualified voters of the City at
the Statewide Primary Election to be held on June 7, 2022. The proposed Ordinance shall be
in the form attached hereto as Exhibit 1 to this Resolution and incorporated by this reference as
if fully set forth herein.
SECTION J. Ballot Measure. The City Council, pursuant to its right and authority, does
hereby order that the Measure shall be presented and printed upon the ballot submitted to the
qualified voters in the manner and form set forth in this Section 3. On the ballot to be
submitted to the qualified voters at the Statewide Primary Election to be held on June 7. 2022,
in addition to any other matters required by law, there shall be printed substantially the
following:
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RESOLUTION NO. 2022-07
Measure—: The City of 1-luntington Beach Cannabis Btuiness"fax Measure
Shall the City adopt a special tax measure ol'up to 6% of gross
receipts on Cannabis retailers and up to 1% of gross receipts on all YES
other Cannabis businesses, which is expected to generate an estimated
$300,000 to $600.000 annually for the specific purposes of funding
police, homeless prevention, behavioral health services, and
intervention programs, and levied until terminated by voters? NO
SECTION 4. Election Procedures.
A. The ballots to be used at the election shall be in the form and content as required by
law.
B. In accordance with Section 10403 of the Elections Code, the Board of Supervisors of
Orange County is hereby requested to consent to the consolidation of a Special
Municipal Election with the Statewide Primary Election on June 7. 2022, with the
election to be held and conducted in the manner prescribed by Election Code Section
10418 for the purpose of submitting to the voters of the Citv of Huntington Beach a
question relating to the adoption of the proposed ordinance.
C. In addition, in accordance with Section 10002 of the Elections Code, the Board of
Supervisors, is hereby requested to consent to having the County Election
Department/Registrar of Voters render full election services to the City of Huntington
Beach as may be requested by the City Clerk of said City, with the County of Orange
to be reimbursed in full for services as are performed.
D. The full election services which the City of Huntington Beach requests the Registrar of
Voters. or such other official as may be appropriate, to perform and which such officer
is hereby authorized and directed to perform if said Board of Supervisors consents,
include the preparation, printing and mailing of sample ballots; the establishment or
appointment of vote centers, and election officers, the preparation, printing, mailing
and furnishing of vote-by-mail ballots, making such publications as are required by law
in connection therewith; the furnishing ol'ballots, voting booths and other necessary
supplies or materials for polling places; the canvassing to the City Clerk of the City of
Huntington Beach; and the performance of such other election services as may be
requested by the City Clerk.
E. In all particulars and recited in this Resolution. the election shall be held and conducted
as provided by law for holding municipal elections in the City.
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F. Notice of the time and place of holding the election is given and the City Clerk is
authorized, instructed, and directed to give further or additional notice of the election.
in the time, form, and manner required by Elections Code Section 121 11 and all other
applicable laws.
G. All ballots shall be tallied in a manner that complies with all applicable laws and as
designated by the Registrar of Voters.
1-1. The Orange County Registrar of Voters is hereby authorized to canvass the returns of
said election.
I. The City Clerk of the City of I-luntington Beach shall receive the canvass from the
County as it pertains to the election on the measure, and shall certify the results to the
Citv Council as required by law.
SECTION 5. Arguments and Impartial Analysis
A. The City Council authorizes: (i) the City Council or any member(s) of the City
Council; (ii) any individual voter eligible to vote on the above measure; (iii) a bona
fide association of'such citizens: or (iv) any combination of'voters and associations to
file a written argument in favor of or against the City measure. in accordance with
Article 4, Chapter 3, Division 9 of the Elections Code of the State of California. Such
parties may change the argument until and including March 11. 2022 by 5:00 p.m.,
after which no arguments for or against the measure may be submitted to the City
Clerk. Arguments in favor of or against the measure shall each not exceed 300 words
in length. Each argument shall be filed with the City Clerk, signed and include the
printed name(s) and signature(s) of the author (s) submitting it, or if submitted on
behalf of an organization. the name ofthe organization, and the printed name and
signature of at least one of its principal officers who is the author of the argument.
B. The City Clerk shall comply with all provisions of laxv establishing priority of
arguments for printing and distribution to the voters, and shall take all necessary
actions to cause the selected arguments to be printed and distributed to the voters.
C. Pursuant to Section 9280 of the Elections Code. the City Council directs the City Clerk
to transmit a copy of the measure to the City Attorney. The City Attorney shall prepare
an Impartial Analysis of the measure, not to exceed 500 words in length, showing the
effect of the measure on the existing law and the operation of the measure. The City
Attorney shall transmit such Impartial Analysis to the City Clerk, who shall cause the
analysis to be published in the voter information guide along with the ballot measure
and provided by law. The Impartial Analysis shall be filed by the deadline set for
filing of primary arguments as set forth in subsection (A) above. The Impartial
Analysis shall include a statement indicating whether the measure was placed on the
ballot by a petition signed by the requisite number of voters or by the City Council.
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D. That the provisions of this Section 5 herein shall apply only to the election to be held
on .tune 7, 2022, and shall then be repealed.
SECTION 6. Rebuttals
Pursuant to Section 9285 of the Elections Code of the State of California when the City Clerk
has selected the arguments for and against the various City initiated measures which will be
printed and distributed to the voter, the City Clerk shall send copies of the argument in favor
of the measures to the authors of the argument against and copies of the argument against to
the authors of the argument in favor. The authors or persons designated by them may prepare
and submit rebuttal arguments not exceeding 250 words. The rebuttal arguments shall be
filed with the City Clerk no later than \larch 21, 2022 by 5:00 p.m. Rebuttal arguments shall
be printed in the same manner as the direct arguments. Each rebuttal argument shall
immediately follow the direct argument which seeks to rebut. The provisions of this Section
6 herein shall apply only to the election to be held on June 7, 2022, and shall then be
repealed.
SECTION 7. Placement of the Ballot. The full text of the Ordinance shall not be printed in
the voter information guide, and a statement shall be printed on the ballot pursuant to Section
9223 of the Elections Code advising voters that they may obtain a copy of this
Ordinance/Measure at no cost, upon request made to the City Clerk.
SECTION 8. Delivery of Resolution to the County. The City Clerk shall certify to the
passage and adoption of this Resolution and enter it into the book of original resolutions. The
City Council directs the City Clerk to deliver copies of this Resolution, including the
Ordinance/Measure attached hereto as Exhibit I, to the Clerk of the Board of Supervisors of
Orange County and to the Registrar of Voters of Orange County, no later than March 11, 2022.
SECTION 9. Public Examination. Pursuant to California Elections Code Section 9295, this
Measure will be available for public examination for no fewer than ten (10) calendar days prior
to being submitted for printing in the voter information guide. The City Clerk shall post notice
in the City Clerk's office of the specific dates that the examination period will run.
SECTION 10. CEQA. The City Council hereby finds and determines that the ballot measure
related to organization or administrative activities of governments that will not result in direct
or indirect physical changes in the environment, and therefore is not a project within the
meaning of the California Environmental Quality Act (`'CEQA") and the State CEQA
guidelines, Section 15378(b)(5). This ballot measure is also exempt from CEQA review
pursuant to Business & Professions Code Section 26055(h) because any subsequent ordinance
adopted by the City Council permitting Cannabis Businesses will require environmental
review prior to any decision relating to the issuance of a permit or other authorization for the
Cannabis Business to continence operations.
SUCTION 11. Severability. If any provision of this Resolution or the application thereof to
any person or circumstance is held invalid, such invalidity shall not affect other provisions or
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application, and to this end the provisions of this Resolution are severable. The City Council
hereby declares that it would have adopted this Resolution irrespective of the invalidity of any
particular portion thereof.
SECTION 12. The City Council will designate a subcommittee to draft an argument on the
Council's behalf, or designate specific Council Members to draft an argument under their
names. In the event such a Council authorized argument is not prepared, individual voters
(including Council Members) may submit an argument, and a priority is set forth by Election
Code Section 9287 to be applied by the City Clerk in selecting the ballot argument to use.
SECTION 13. Effective Date of Resolution. This Resolution shall take effect immediately
upon its adoption.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 1st day of March , 20.22_.
60AWZ44(
Ma
ATTE�'`'""'� ""�IG"sl^'�� APPROVED ORM:
City Clerk 7 Ci Attorney
7EDND APPROVEDAPPROVED: ITIATED AND APPROVED:
City Manager
Assistant City Manage
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RESOLUTION NO. 2022-07
EXH1131T 1
COUNCIL-SPONSORED INITIATIVE MEASURE TO BE SUBMITTED DIRECTLY
TO TI-IE VOTERS
The City Council for the City of Huntington Beach submits the following
measure to the voters ofthe City for approvaland enactment:
ORDINANCE NO. \')G`iX
AN ORDINANCE OF THE PEOPLE OF THE CITY OF
HUNTINGTON BEACH, CALIFORNIA, ADDING CHAPTER 325
TO TITLE 3 OF THE HUNTINGTON BEACH MUNICIPAL CODE
ESTABLISHING TAXES ON CANNABIS BUSINESSES
OPERATING WITHIN THE CITY OF HUNTINGTON BEACH
The People ofthe City of Funtington Beach ordain as follows:
SECTION 1. Subject to the approval of two-thirds ofthe voters of the City of
Huntington Beach attheMunicipal Election so designated by the City Council in a
separate resolution placing the proposal on the ballot for such election,Chapter 325 is
hereby added to"1 itle 3 ofthe Huntington Beach Municipal Code to read as follows:
Chapter 3.25 CANNABIS BUSINESS TAX
).25.010 "title
3.25.020 Authority and purpose
3.25.030 Intent
3.25.040 Definitions
3.25.050 Tax Imposed
3.25.060 Reporting and remittance of tax
3.25.070 Payments and communications— timely remittance
3.25.080 Payment— when taxes deemed delinquent
3.25.090 Notice not required by City
3.25.100 Penalties and interest
25.110 Refunds and credits
3.25.120 Refunds and procedures
3.25.130 Personal cultivation not taxed
3.25.140 Administration of the tax
3.25.150 Appeal procedure
3.25.160 Enforcement —action to collect
3.25.170 Apportionment
3.25.180 Constitutionally and legality
3.25.190 Audit and examination of premises and records.
3.25.200 Other license, permits, taxes, fees or changes
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3.25.210 Payment of tax does not authorize unlawful business
3.25.220 Deficiency determinations
3.25.230 Failure to report— nonpayment. fraud
3.25.240 Tat assessment — notice requirements
3.25.250 Tax assessment — hearing, application and determination
3.25.260 Relief from rases— disaster relief
3.25.270 Conviction of violation — taxes not waived
3.25.280 Severabilitv
3.25.290 Remedies cumulative
3.25.300 Amendment or modifications
3.25.010 Title:
This ordinance shall be known as the Cannabis Business Tax Ordinance.
3.25.020 Authority and Purpose.
The purpose of this Ordinance is to adopt a special tax, pursuant
to Sections 37101 and 37100.5 of the California Government Code, upon Cannabis
Businesses that engage in business in the City of Huntington Beach ("City"), the Cannabis
Business Tax is levied based upon business Gross Receipts. The Cannabis Business Tax is
not a sales and use tax, a tax upon income, or a tax upon real property.
The Cannabis Business -fax is a special tax enacted solely for the special purpose of
supporting the City's (a) police services for public safety and (b) behavioral health and
homeless prevention and intervention programs and services. All of the proceeds from the
tax imposed by this section shall be placed in a Special Fund and be available only for the
purposes identified in this Section 3.25.020.
3.25.030 Intent.
The intent of this Ordinance is to levy a tax on all Cannabis Businesses operating
in the City, regardless of-whether conducting such business within the City would have been
legal at the time this section was adopted. Nothing in this section shall be interpreted to
authorize or permit any business activity that would not otherwise be legal or permissible in
the City under laws applicable to the activity at the time the activity is undertaken.
3.25.040 Definitions.
The following words and phrases shall have the meanings set forth below when used in
this section:
"Business" shall include all activities engaged in, or caused to be engaged in, within the
City, including any commercial or industrial enterprise, trade, profession, occupation,
vocation, calling, or livelihood, whether or not carried on for gain or profit, but shall not
include services rendered by an Employee to his or her employer.
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"Calendar year" means January I through December 31 of the same year.
"Cannabis' means all parts of the plant Cannabis Sativa, Linnaeus, Cannabis Indica or
Cannabis Ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or
purified, extracted from any par of the plant; and every compound, manufacture, salt,
derivative, mixture, or preparation of the plant, its seeds or resin. "Cannabis' also means the
separated resin, whether crude or purified, obtained from Cannabis. "Cannabis' shall not
include "industrial hemp," unless otherwise specified.
"Cannabis Business" means any Business activity involving Cannabis or industrial
hemp, including but not limited to cultivating, transporting, distributing, manufacturing,
compounding, converting, processing, preparing, storing, packaging, delivering, testing.
dispensing, retailing and wholesaling of Cannabis, Cannabis products. industrial hemp,
industrial hemp products or of ancillary products and accessories, whether or not carried on
for gain or profit.
"Cannabis Business Tax" or "Business Tax," means the taxes due pursuant to this
Chapter for engaging in a Cannabis Business in the City.
"Cannabis Product" means raw Cannabis that has undergone a process whereby the raw
agricultural product has been transformed into a concentrate, an edible product, or a topical
product. "Cannabis Product" also means Cannabis products as defined in Section 1 1018.1 of
the California Health and Safety Code and is not limited to medicinal Cannabis products.
"City" means the City of Huntington Beach.
"Commercial Cannabis Cultivation" means cultivation of Cannabis undertaken in the
course of conducting a Cannabis Business.
"Commercial Cannabis Permit" means a permit issued by the City to a person
authorizing that person to operate a Cannabis Business or engage in business as a Cannabis
Business within the City.
"Cultivation" means any activity involving the planning, growing, harvesting, drying,
curing, grading, or trimming of cannabis and includes, but is not limited to, the operation of
indoor, outdoor, mixed light, or nursery. All outdoor or mixed light cultivation shall be
prohibited in the City.
"Distribution" means business activities including the procurement, sale, and transport of
cannabis and cannabis products between other licensed Cannabis Businesses.
"Employee" means each and every person engaged in the operation or conduct of any
business, whether as owner, member of the owner's family, partner, associate, agent, manager
or solicitor, and each and every other person employed or working in such business for a
wage, salary, commission. barter or any other form of compensation.
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"Engaged in business as a Cannabis Business" means the commencing, conducting,
operating, managing or carrying on of a Cannabis Business, whether done as owner. or by
means of an officer, agent, manager, employee, or otherwise, whether operating from a fixed
location in the City or coming into the City from an outside location to engage in such
activities. A person shall be deemed engaged in business within the City if:
1. Such person or person's employee maintains a fixed place of business within the City
for the benefit or partial benefit of such person;
2. Such person or person's employee owns or leases real property within the City for
business purposes;
3. Such person or person's employee regularly maintains a stock of tangible personal
property in the City for sale in the ordinary course of business;
4. Such person or person's employee regularly conducts solicitation of business within the
City; or
5. Such person or person's employee performs work or renders services in the City.
The foregoing specified activities shall not be a limitation on the meaning of"engaged in
business."
"Evidence of doing business" means evidence such as, without limitation, use of signs.
circulars, cards or any other advertising media, including the use of internet or telephone
solicitation, or representation to a government agency or to the public that such person is
engaged in a Cannabis Business in the City.
"Gross Receipts." except as otherwise specifically provided herein, means, whether
designated a sales price. royalty, rent, slotting fee, commission, dividend, or other designation,
the total amount (including all receipts. cash, credits, services and property of any kind or
nature) received or payable for sales of goods, wares or merchandise, or for the performance of
any act or service of any nature for which a charge is made or credit allowed (whether such
service, act or employment is done as part of or in connection with the sale of goods, wares,
merchandise or not), without any deduction therefrom on account of the cost of the property
sold, the cost of materials used, labor or service costs, interest paid or payable, losses, or any
other expense whatsoever. Notwithstanding the foregoing, the following shall be excluded
from Gross Receipts:
1. Cash discounts where allowed and taken on sales;
2. Any tax required by law to be included in or added to the purchase price and collected
from the consumer or purchaser;
3. Such part of the sale price of any property returned by purchasers to the seller as
refunded by the seller by way of cash or credit allowances or return of refundable deposits
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previously included in gross receipts;
4. Receipts derived from the occasional sale of used, obsolete, or surplus trade fixtures,
machinery, or other equipment used by the taxpayer in the regular course of'the taxpayer's
business;
5. Cash value of sales, trades or transactions between departments or units of the same
business located in the City, or if authorized by the Tax Administrator in writing in accordance
with section 325.140 (B);
6. Whenever there are included within the gross receipts amounts that reflect sales for
which credit is extended and such amount proved uncollectible in a subsequent year, those
amounts may be excluded from the gross receipts in the year they prove to be uncollectible;
provided, however, if the whole or portion of such amounts excluded as uncollectible are
subsequently collected they shall be included in the amount of'gross receipts for the period
when they are recovered;
7. Receipts of refundable deposits, except that such deposits when forfeited and taken into
income of the business shall not be excluded when in excess of one dollar;
8. Amounts collected for others where the business is acting as an agent or trustee and to
the extent that such amounts are paid to those for whom collected. Such agents or trustees
must provide the City's Tax Administrator with the names and the addresses of the others and
the amounts paid to them. This exclusion shall not apply to any fees, percentages, or other
payments retained by the agent or trustees.
9. Retail sales oft-shirts. sweaters , hats, stickers, key chains, bags, books, posters, rolling
papers. Cannabis accessories such as pipes, pipe screens, vape pen batteries (without Cannabis
or industrial hemp) or other personal tangible property which the Tax Administrator has
excluded in writing by issuing an administrative ruling per Section 3.25.140 shall not be
subject to the Cannabis Business tax tinder this section.
"Indoor Cultivation" means the cultivation of Cannabis inside a permanent enclosed
building or structure.
"Lighting" means a source of light that is primarily used for promoting the biological
process of plant growth. Lighting does not include sources of light that primarily exist for the
safety or convenience of staff or visitors to the facility, such as emergency lighting, walkway
lighting, or light admitted via small skylights, windows or ventilation openings.
"Manufacturing" means 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 at a fixed location that packages or repackages Cannabis or Cannabis products or
labels or relabels their containers.
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"Person" means an individual, firm, partnership.joint venture, association. corporation,
limited liability company, estate, trust, business trust, receiver, syndicate, or any other group or
combination acting as a unit, whether organized as a nonprofit or for-profit entity, and includes
the plural as well as the singular number.
"Processing" means a cultivation site that conducts only trimming, drying, curing,
grading, packaging, or labeling of Cannabis, industrial hemp and non-manufactured Cannabis
products.
"Retail. Retailer, or Retail Facility" means a licensed premises where Cannabis, Cannabis
products, or devices for the use of Cannabis or Cannabis products are offered, either
individually or in any combination for retail sale, including an establishment that delivers
Cannabis or Cannabis products as part of a retail sale.
"Sale," "sell" and "to sell" means and includes any sale, exchange, or barter. It shall also
mean any transaction whereby, for any consideration, title to Cannabis, Cannabis Products,
industrial hemp and/or industrial hemp products are transferred from one person to another and
includes the delivery of Cannabis, Cannabis Products, industrial hemp and/or industrial hemp
products pursuant to an order placed for the purchase of the same, but does not include the
return of Cannabis, Cannabis Products, industrial hemp and/or industrial hemp products to the
licensee from whom the Cannabis, Cannabis Product, industrial hemp and/or industrial hemp
product was purchased.
"State" means the State of California.
"State license," "license," or "registration" means a State license issued pursuant to
California Business R Professions Code Section 26050. and all other applicable State laws,
required for operating a Cannabis Business.
"Tax Administrator" means the City Manager of the City off-Iuntington Beach or his or
her designee.
"Testing Laboratory" means a Cannabis Business that (i) offers or performs tests of
Cannabis, Cannabis products, industrial hemp and/or industrial hemp products, (ii) offers no
service other than such tests, (iii) sells no products, excepting only testing supplies and
materials, (iv) is accredited by an accrediting body that is independent from all other persons
involved in the Cannabis industry in the State, and (v) is licensed by the State Bureau of
Cannabis Control or other State agency required by law.
3.25.050 Tax Imposed.
A. There is imposed upon each person who is engaged inbusiness as aCannabis
Business Tax. Such tax is payable regardless of whether the business has been issued a
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Commercial Cannabis Permit to operate lawfully in the City or is operating unlawfully. The
City's acceptance of a Cannabis Business Tax payment from a Cannabis Business operating
illegally shall not constitute the City's approval orconsent to such illegal operations.
B. Pursuant to State law. the City Council may, by resolution or ordinance, set, increase or
decrease the rate of the Cannabis Business Tax, including the initial rate of Cannabis Business
Tax, within the minimum and maximum prescribed range of tax rates, and establish a class of
persons that is exempt or excepted from the tax or discontinue any such exemption or
exception. Notwithstanding the foregoing, in no event shall the City Council repeal this tax, or
set any adjusted rate that is less than the minimum rate, nor that exceeds the maximum rates
calculated pursuant to this section.
C. The maximum rate of the Cannabis Business Tax shall be calculated as follows:
I. Every person engaged in Retail sales of Cannabis and/or Cannabis Products,
including as a Retailer (dispensary)or non-storefront Retailer (retail delivery
business) shall be subject to up to a maximum tax rate not to exceed six
percent (6%) of Gross Receipts.
2. Every person engaged in the Indoor Cultivation for Cannabis shall be subject up
to a maximum tax rate not to exceed one percent (I%) of Gross Receipts,
3. Every person engaged in the operation of a Testing Laboratory for Cannabis
and/or Cannabis Products shall be subject to up to a maximum tax rate not to
exceed one percent (I%)of Gross Receipts.
4. Every person engaged in Distribution of Cannabis and/or Cannabis Products
shall be subject to up to a maximum tax rate not to exceed one percent (1%)of
Gross Receipts.
5. Every person engaged in manufacturing or processing of Cannabis and/or
Cannabis Products, orany other type of Cannabis Business not described in
Section 3.25.050 (C) (1), (2), (3), or (4) shall be subject to up to a
maximum tax rate not to exceed one percent (1%)of Gross Receipts.
Persons subject to the Cannabis Business "fax shall register with the City and pay
any fees established by the City Council. Such fees shall not exceed the cost ol'providing
the service and not be considered as a tax and may be adjusted front time to time to recover
related costs by resolution of the City Council,
3.25.060 Reporting and remittance of tax.
A. The Cannabis Business "fax imposed by this section shall be paid,in
arrears, on a monthly basis. Each person owing a Cannabis Business Tax each calendar
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month shall, no hater than the last day of the month following the close of the calendar
month, file with the Tax Administrator a statement ("Tax Statement")of the tax owed for
that calendar month and the basis for calculating that tax. The Tax Statement is required to
be submitted on a form prescribed by the Tax Administrator. The Cannabis Business
Tax for each calendar month shall be due and payable on that same date that the Tax
Statement for the calendar month is due.
B. Upon cessation of a Cannabis Business,Tax Statements and Cannabis tax
payments shall be nnnediately due for all calendar months up to and including the
calendar month during Nvhich cessation occurred.
C. The Tax Administrator may, at his or her discretion, establish
alternative reporting and payment periods for any taxpayer as the Tax Administrator
deems necessary to ensure efficient and effective collection ofthe Cannabis Business Tax,
but no less frequently than quarterly. The Tax Administrator may also require that a
deposit, to be applied against the Cannabis Business Taxes due for a calendar month, be
made by a taxpayer at the beginning of that calendar month. In no event shall the
deposit required by the Tax Administrator exceed the Cannabis Business Tax amount he
or she projects will be owed, in his or herjudgment, by die taxpayer for the calendar
month. The -fax Administrator may require that a taxpayer make Cannabis "fax
payments via a cashier's check,money order, w&e transfer,or similar instrument.
3.25.070 Pavments and communications— timely remittance.
Whenever anv Cannabis Tax payment, statement, report, request or other
communication is due, it must be received by the Tax Administrator on or before the final
due date. A postmark will not be accepted as timely remittance. If the due date would fall on
a Saturday. Sunday, or a holiday observed by the City, the due date shall be the last business
day of the month following the close of the calendar month which the City is open to the
public
3.25.080 Payment when taxes deemed delinquent.
Unless otherwise specifically provided under other provisions of this section, the
Cannabis Business Taxes required to be paid pursuant to this section shall be deemed
delinquent if not received by the Tax Administrator on or before the due date as specified in
Sections 3.25.060 and/or 3.25.070.
3.25.090 Notice not required by the City.
The City may as a courtesy send a tax notice to the Cannabis Business which owes the
City a Cannabis Business Tax. However, the Tax Administrator is not required to send a
delinquency or other notice or bill to any person subject to the provisions of this section.
Failure to send such notice or bill shall not affect the validity of any tax or penalty due under
the provisions of this section.
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3.25.100 Penalties and interest.
A. Any person who fails or refuses to pay any Cannabis Business Tax required
to be paid pursuant to this section on or before the due date shall pay penalties and interest
as follows:
I. A penalty equal to ten percent (10%) of the amount of the tax due, in
addition to the amount of the tax due, plus interest on the unpaid tax calculated
from the due date of the tax at the rate of one percent (1.0%) per month.
2. If the tax remains unpaid for a period exceeding one calendar month
beyond the due date, an additional penalty equal to twenty-five percent (25%) of'
the amount of the tax, plus interest at the rate of one percent (1.0%) per month on
the unpaid tax and on the unpaid penalties.
3. Interest shall be applied at the rate of'one percent (1 .0%) per month
on the first day of the month for the full month and will continue to accrue monthly
on the tax and penalty until the balance is paid in full.
B. Whenever a check or electronic payment is submitted in payment of a
Cannabis Business Tax and the payment is subsequently returned unpaid by the bank for
any reason, the taxpayer will be liable for the tax amount due plus any fees, penalties and
interest as provided for in this section, and any other amount allowed under State law.
C. The City may revoke or refuse to renew the license required by Section
3.25.030 for any business that is delinquent in the payment of any tax due pursuant to this
section or that fails to make additional fee payments required by the City.
3.25.110 Refunds and credits.
A. No refund shall be made of any tax collected pursuant to this section,
except as provided in Section 3.25.120.
B. No refund of any Cannabis Business Tax collected pursuant to this
section shall be made because of the discontinuation, dissolution, or other termination of
a business.
325.120 Refunds and procedures.
A. Whenever the amount of any Cannabis Business Tax, penalty or interest has
been overpaid, paid more than once, or has been erroneously collected or received by the
City under this section, it may be refunded to the claimant who paid the tax provided that
it written claim for refund is filed with the "fax Administrator within one (1) year of the
date the tax was originally due or paid, whichever came first.
13. The "fax Administrator, his or her designee, or any other City officer
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charged with the administration of this section shall have the right to examine and audit all
the books and business records of the claimant in order to determine the eligibility of the
claimant to the claimed refund. No claim for refund shall be allowed if the claimant
refuses to allow such examination of claimant's books and business records after request
by the "fax Administrator to do so.
C. In the event that the Cannabis Business Tax was erroneously paid in an
amount in excess of the tax due, and the error is attributable to the City, the City shall
refund the amount of tax erroneously paid; provided that (i) a claim for refund has been
timely filed with the Tax Administrator: and (ii) the refund cannot exceed, under any
circumstance, the amount of tax overpaid during the twelve months preceding the last
month for which the claim states the tax was overpaid.
3.25.130 Personal cultivation not tared.
The provisions of this section shall not apply to personal Cannabis cultivation or
personal use of Cannabis, to the extent those activities are authorized in the State's
"Medicinal and Adult Use Cannabis Regulation and Safety Act," as may be amended.
This section shall not apply to personal use of Cannabis that is specifically exempted
from State licensing requirements, that meets the definition of"personal use or
equivalent terminology under State law, and provided that the individual receives no
compensation whatsoever related to that personal Cultivation or use.
3.25.140 Administration of the tax.
A. It shall be the duty of the Tax Administrator to collect the taxes, penalties,
fees, and perform the duties required by this section.
B. For purposes of administration and enforcement of this section generally,
the Tax Administrator may from time to time promulgate such administrative
interpretations, rules and/or procedures consistent with the purpose, intent and express
terms of this Section as he or she deems necessary to implement or clarify such
provisions or aid in enforcement.
C. The Tax Administrator may take such administrative actions as needed to
administer the Cannabis Business Tax, including but not limited to:
1. Provide to all Cannabis Business taxpayers forms for the reporting
of the tax;
2. provide information to any taxpayer concerning the provisions of
this section;
3. Receive and record all taxes remitted to the City as provided in this
section;
4. Maintain records of taxpayer reports and taxes collected pursuant
to this section;
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5. Assess penalties and interest to taxpayers pursuant to this section:
6. Determine amounts owed under and enforce collection pursuant to
this section.
3.25.150 Appeal procedure.
Any taxpayer aggrieved by any decision of the Tax Administrator with respect to the
amount of tax, interest, penalties and fees, if any, due under this section may appeal to the City
Council by filing a notice of appeal with the City Clerk within thirty (30) calendar daps of the
serving or mailing of the "fax Administrator's determination of the amount due. The City
Clerk, or his or her designee, shall fix a time and place for hearing such appeal, and the City
Clerk, or his or her designee, shall give notice in writing to such operator at the last known
place of address. The finding of the City Council shall be final and conclusive and shall be
served upon the appellant in the manner prescribed by this section 3.25.150 for service of
notice of hearing. Any amount found to be due shall be immediately due and payable upon the
service of the notice.
3.25.160 Enforcement — action to collect.
Any taxes, penalties and/or fees required to be paid under the provisions of this section
shall be deemed a debt owed to the City. Any person owing money to the City under the
provisions of this section shall be liable in an action brought in the name of the City for the
recovery of such debt. The provisions of this section shall not be deemed a limitation upon the
right of the City to bring any other action including criminal, civil and equitable actions. based
upon the failure to pay the Cannabis Business Tax, penalties and/or fees imposed by this
section, or the failure to comply with any of the provisions of this section.
3.25.170 Apportionment.
If a business subject to the Cannabis Business Tax is operating both within and outside
the Citv, it is the intent of the City to apply the Cannabis Business Tax so that the measure of
the tax fairly reflects the proportion of the tared activity actual]), carried on in the City. To the
extent Federal or State law requires that any tax due from any taxpayer be apportioned, the
taxpayer may indicate said apportionment on his or her tax return. 'I he Tax Administrator may
promulgate administrative procedures for apportionment as he or she finds useful or necessary.
3.25.180 Constitutionality and legality.
The Cannabis Business Tax is intended to be applied in a manner consistent with
the United States and California Constitutions and State law. None of the tax provided for
by this section shall be applied in a manner that causes an undue burden upon interstate
commerce, a violation of the equal protection or due process clauses of the Constitutions
of the United States or the State of California, or a violation of any other provision of the
California Constitution or State law. If a person believes that the tax, as applied to him or
her, is impermissible under applicable law, he or she may request that the Tax
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Administrator release him or her from the obligation to pay the impermissible portion of
the tax.
3.25.190 Audit and examination of'premises and records.
A. For the purpose of ascertaining the amount of Cannabis Business Tax owed or
verifying any representations made by any taxpayer to the City in support of his or her tax
calculation. the Tax Administrator shall have the power to inspect any location where
commercial Cannabis Cultivation occurs and to audit and examine all books and records
(including, but not limited to bookkeeping records. State and Federal income tax returns, and
other records relating to the Gross Receipts of'the business) of persons engaged in Cannabis
Businesses in the City. In conducting such investigation, the "fax Administrator shall have the
power to inspect any equipment, such as but not limited to computers or point of sale
machines, that may contain such records.
B. It shall be the duty of even person liable for the collection and payment to
the City ofany Cannabis Business Tax imposed by this section to keep and preserve, for a
period of at least three (3) years, all records as may be necessary to determine the amount of
such tax as he or she may have been liable for the collection of'and payment to the City.
which records the Tax Administrator or his/her designee shall have the right to inspect at all
reasonable times.
C. Should the Tax Administrator be required to perform an audit of the records
of any Cannabis Business for failure to timely or accurately report Cannabis Business "Faxes
pursuant to sections 3.25.060 and/or 3.25.070, the entire cost of the audit shall be assessed
against the operator.
3.25.200 Other licenses, permits, taxes. fees or charges.
Nothing contained in this section shall be deemed to create, replace, amend, repeal or
be in lieu of, or in any way affect any requirements for, any Commercial Cannabis Permit or
License the City may require for any purpose. In addition, nothing contained in this section
shall be deemed to create, replace, amend, repeal or be in lieu of, or in any way affect any
requirements for, any tax, fee or other charge imposed, assessed or required under any other
Chapter of this code or any other ordinance or resolution of the City.
.).25.210 Pavment of tax does not authorise unlawful business.
A. The payment of a Cannabis Business Tax required by this section, and its
acceptance by the City, shall not entitle any person to carry on any Cannabis Business.
B. No tax paid under the provisions of this section shall be construed as
authorizing the conduct or continuance of any illegal or unlawful business, or any
business in violation of any local or state law.
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3.25.220 Dcficiencv determinations.
If the Tax Administrator is not satisfied that any statement filed as required under
the provisions of this section is correct, or that the amount of Cannabis Business "fax is
correctly computed, he or she may compute and determine the amount to be paid and make a
deficiency determination upon the basis of the facts contained in the statement or upon the
basis of any information in his or her possession or that may come into his or her possession
within three (3) years of the date the tax was originally due and payable. One or more
deficiency determinations of the amount of tax due for a period or periods may be made.
When a person discontinues engaging in a Cannabis Business, a deficiency determination
may be made at any time within three (3) years thereafter as to any liability arising from
engaging in such Cannabis Business whether or not a deficiency determination is issued
prior to the date the tax would otherwise be due. Whenever a deficiency determination is
made, a notice shall be given to the person concerned in the same manner as notices of
assessment are given under Section 3.25.240.
3.25.230 Failure to report — nonpayment, fraud
A. Under any of the following circumstances, the Tax Administrator may make
and give notice of an assessment of the amount of Cannabis Business 'Fax owed by a person
under this section at any time:
L If the person has not filed a complete statement required under the
provisions of this section:
2. If the person has not paid the tax due under the provisions of this
section:
3. If the person has not. after demand by the "fax Administrator, filed a
corrected statement. or furnished to the Tax Administrator adequate substantiation of
the information contained in a statement already filed, or paid any additional amount of
tax due under the provisions of this section: or
4. if the Tax Administrator determines that the nonpayment ofany
Cannabis Business tax due under this section is due to fraud, a penalty of twenty-five
percent (25%) of the amount of the tax shall be added thereto in addition to penalties
and interest otherwise payable under this section and any other penalties allowed by
law.
B. The notice of assessment shall separately set forth the amount of any tax known
by the Tax Administrator to be due or estimated by the "fax Administrator, after consideration
of all information within the Tax Administrator's knowledge concerning the business and
activities of the person assessed, to be due under each applicable provision of this section and
shall include the amount of any penalties or interest accrued on each amount to the date of the
notice of assessment.
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3.25.240 Tax assessment — notice requirements.
The notice of assessment shall be served upon the person either by personal delivery,
by overnight delivery by a nationally-recognized courier service, or by a deposit of the notice
in the United States mail, postage prepaid thereon, addressed to the person at the address of the
location of the business or to such other address as he or she shall register with the Tax
Administrator for the purpose of receiving notices provided under this section: or, should the
person have no address registered with the Tax Administrator for such purpose, then to such
person's last known address. For the purpose of Section 3.25.240 , service by overnight
delivery shall be deemed to have occurred one (I) calendar day following deposit with a
courier and service by mail shall be deemed to have occurred three (3) days following deposit
in the United States mail.
3.25.250 Tax assessment hearing, application and determination.
Within thirty (30) calendar days after the date of service of the notice of assessment
the person may apply in writing to the Tax Administrator for a hearing on the assessment. If
application for a hearing before the City is not made within the time herein prescribed, the
Cannabis Business Tax assessed by the Tax Administrator shall become final and
conclusive. Within thirty (30) calendar days of the receipt of any such application for
hearing, the Tax Administrator shall cause the matter to be set for hearing before him or her
no later than thirty (30) calendar days after the receipt of the application, unless a later date
is agreed to by the Tax Administrator and the person requesting the hearing. Notice of such
hearing shall be given by the Tax Administrator to the person requesting such hearing not
later than five (5) calendar days prior to such hearing. At such hearing said applicant may
appear and offer evidence why the assessment as made by the "fax Administrator should not
be confirmed and fixed as the tax due. After such hearing the Tax Administrator shall
determine and reassess (if necessary) the proper tax to be charged and shall give written
notice to the person in the manner prescribed in Section 3.25.240 for giving notice of
assessment.
3.25.260 Relief from taxes—disaster relief.
A. Ifa Cannabis Business is unable to compy, with any tax requirement
imposed under this section due to a disaster, the business may notify the Tax
Adm inistrator of its inability to comply and request relief from the tax requirement. For
purposes ofthis section, "disaster" means fire, flood,storm,tidal wave, earthquake,or
public calamity,whether or not resulting from natural causes.
B. The Cannabis Business shall provide any information required by the
"fax Administrator including,without limitation, why relief is requested, the time period
for which the relief is requested,and the reason relief is needed for the specific amount
of time. The Cannabis Business agrees to grant the Tax Administrator or his/her designee
access to the location where the Cannabis Business has been impacted due to a disaster.
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C. The Tax Administrator, in his/her sole discretion, may provide relief'from
the Cannabis Business Tax requirement for businesses whose operations have been
impacted by a disaster if' such tax relief does not exceed fifteen thousand ($15,000)
dollars. Such temporary relief may be granted for a reasonable amount of time,in the
Tax Adm inistrator's sole discretion, and the amount and duration of relief should be based
upon how long it would reasonably take for the Cannabis business to recover from the
disaster. Further,the Tax Administrator may require that the Cannabis Business
follow certain conditions to receive temporary relief from the Cannabis Business Tax
requirement.
325.270 Conviction for violation — taxes not waived.
The conviction and punishment of any person for failure to pay the required
Cannabis Business "fax 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 section or of any State
law requiring the payment of all taxes.Any person violating any of the provisions of this
section shall be guilty ofa misdemeanor.
325.280 Severabilily.
If any provision of this section, or its application to any person or circumstance, is
determined by a court of competent jurisdiction to be unlawful, unenforceable or otherwise
void, that determination shall have no effect on any other provision of this section or the
application of this section to any other person or circumstance and, to that end, the provisions
hereof are severable.
3.25.290 Remedies cumulative.
All remedies and penalties prescribed by this section or which are available under
any other provision of this code and any other provision of law or equity are
cumulative.
The use of one or more remedies by the City shall not bar the use of any other
remedy for the purpose of enforcing the provisions of this section.
3.25.300 Amendment or modification.
Except as set forth in this section 3.25.300, this section may be amended or
modified but not repealed by the City Council without a vote of the people. However,
as required by Article XIII C of the California Constitution, voter approval is required
for any amendment that would expand, extend, or increase the rate of any tax levied
pursuant to this section. The people of the City off 1-funtington Beach affirm that the
following actions shall not constitute an increase of the rate of a tax:
A. The restoration or adjustment of the rate of the tax to a rate that is neither
less nor higher than that allowed by this chapter,in those circumstances where, among
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others, the City Council has previously acted to reduce or increase the rate of the tax
within the allowed range or is incrementally implementing an increase authorized by this
chapter;
B. An action that interprets or clarifies (i) the methodology of applying or
calculating the Cannabis Business Tax or (ii) any definition applicable to the tax, so long
as the interpretation or clarification (even if contrary to some prior interpretation or
clarification) is not inconsistent with the provisions of this Chapter 325; or
C. The collection of the tax unposed by this section even ifthe City had, for
some period of time,failed to collect the tax.
SECTION 2. Pursuant to Article MIT B of the California Constitution; the appropriation
limit for the City of Huntington Beach will be increased by the maximum projected
aggregate collection authorized by the levy of this special tax, as indicated in Section 1, in
each of the years covered by this Ordinance plus the amount, if any, by which the
appropriation limit is decreased by law as a result of the levy of the special tax set forth in
this Ordinance.
SECTION 3. If any portion of this Ordinance is declared invalid by a court of law or other
legal body with applicable authority, the invalidity shall not affect or prohibit the force and
effect of any other provision or application of the Ordinance that is not deemed invalid. The
voters of the City hereby declare that they would have circulated f'or qualification and/or voted
for the adoption of this Section, and each portion thereof. regardless of the fact that any portion
of the initiative may be subsequently deemed invalid.
SECTION 4. Pursuant to California Constitution Article XIIIC §(2)(b) and California
Elections Code §9217, this Ordinance shall take effect only if approved by two thirds of
the eligible voters of the City of Huntington Beach voting at the Special Election to be
held on June 7, 2022, and shall take effect ten (10)days after the City Council has certified
the results of' the Municipal Election by resolution.
SECTION 5. This order shall take effect according to k1w ten days after certification of
the election at which it is adopted.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the day of 20
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Mayor
ATTEST: APPROVED AS TO DORM:
City Clerk City Attorney
REVIEWED AND APPROVED: INITIATED AND APPROVED:
City Manager
Assistant City Manager
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STATE OF CALIFORNIA
COUNTY OF ORANGE ss:
CITY OF HUNTINGTON BEACH
I, ROBIN ESTANISLAU, the duly elected, qualified City Clerk of the
City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do
hereby certify that the whole number of members of the City Council of the City of
Huntington Beach is seven; that the foregoing resolution was passed and adopted
by the affirmative vote of at least a majority of all the members of said City Council
at a Regular meeting thereof held on March 1, 2022 by the following vote:
AYES: Bolton, Delgleize, Carr, Moser, Kalmick
NOES: Peterson, Posey
ABSENT: None
RECUSE: None
City Clerk and ex-officio Clerk of the
City Council of the City of
Huntington Beach, California