HomeMy WebLinkAboutCity Council - 2022-48 RESOLUTION NO. 2022-48
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON
BEACH, CALIFORNIA, ORDERING THE SUBMISSION TO THE
QUALIFIED ELECTORS OF THE CITY OF A GENERAL TAX MEASURE
FOR THE SUBMISSION TO THE QUALIFIED VOTERS OF A PROPOSED
ORDINANCE ADDING CHAPTER 3.25 TO TITLE 3 OF THE HUNTINGTON
BEACH MUNICIPAL CODE, ESTABLISHING A GENERAL TAX ON
CANNABIS BUSINESSES OPERATING WITHIN THE CITY OF
HUNTINGTON BEACH AT THE GENERAL ELECTION TO BE HELD ON
TUESDAY, NOVEMBER 8, 2022, AS CALLED BY RESOLUTION NO. 2022-
39
WHEREAS, a General Election on Tuesday, November 8, 2022 has been called by
Resolution No. 2022-39, adopted on July, 5, 2022; and
WHEREAS,the City Council desires to submit to the voters at the election an additional
Measure relating to the taxation of Commercial Cannabis Businesses;
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 Commercial
Cannabis Businesses that engage in business in the City; and
WHEREAS, the City Council desires to submit to the voters a General Tax Measure
with an Ordinance establishing both (i) a not-to-exceed rate of 6% local general tax on the Gross
Receipts received by any cannabis retail business and(ii) a not-to-exceed rate of 1% local general
tax on any other cannabis business, including but not limited to indoor cultivation, manufacturing,
testing laboratory, and distribution; and
WHEREAS, the proposed Cannabis Business Tax is a general tax, the proceeds of
which would be deposited into the City's general fund for general municipal services to the public;
and
RESOLUTION NO. 2022-48
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
which requires that all general taxes which are imposed, extended or increased must be submitted
to the electorate and approved by a majority vote of the qualified electors voting in the election;
and
WHEREAS, the proposed Ordinance would establish a general tax which is subject to
Proposition 218; and
WHEREAS,pursuant to Proposition 218 (California Constitution Article XIIIC, §2(b)),
the general rule is that any local election for the approval of a general tax must be consolidated
with a regularly scheduled general election for members of the governing body of the local
government; and
WHEREAS, pursuant to Proposition 62 and Government Code Section 53724, an
Ordinance or Resolution proposing a general tax must be approved by a two-thirds vote of all
members of the legislative body of the local government prior to being submitted to the voters;
and
WHEREAS, the specific terms relating to the Cannabis Business Tax Measure are
provided for in the Ordinance to be considered by the qualified voters, attached hereto as Exhibit
A (the "Ordinance" or "Measure") and by this reference made an operative part hereof, and in
accordance with all applicable laws.
NOW, THEREFORE, the City Council of the City of Huntington Beach, California,
does hereby resolve, declare, determine and order as follows:
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RESOLUTION NO. 2022-48
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
hereof.
SECTION 2. Submission of Ballot Measure Ordinance. The City Council of the City,
pursuant to its right and authority as contained in California Propositions 218 and 62, Government
Code section 53724,and Elections Code section 9222,hereby orders the Ordinance attached hereto
as Exhibit A to be submitted to the qualified voters of the City at the General Municipal Election
to be held on November 8, 2022. The proposed Ordinance shall be in the form attached hereto as
Exhibit A to this Resolution and is incorporated by this reference as if fully set forth herein.
SECTION 3. 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 General Municipal Election to be held on November 8, 2022, in
addition to any other matters required by law, there shall be printed substantially the following:
Measure : Taxation of Commercial Cannabis Businesses
"Shall the City adopt an Ordinance that taxes cannabis YES
businesses up to 6% of gross receipts for retailers and up to
1% of gross receipts for all other cannabis businesses if they
were to be permitted in the City; which is expected to
generate an estimated $300,000 to $600,000 annually to fund
general municipal services for Huntington Beach and will be No
levied until repealed by the voters?"
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RESOLUTION NO. 2022-48
SECTION 4. That the proposed Measure submitted to the voters are as follows:
"Shall the City adopt an Ordinance that taxes cannabis businesses up to 6% of gross
receipts for retailers and up to 1% of gross receipts for all other cannabis businesses if they were
to be permitted in the City; which is expected to generate an estimated $300,000 to $600,000
annually to fund general municipal services for Huntington Beach and will be levied until repealed
by the voters?" (Ordinance is attached as Exhibit A.)
SECTION 5. That the vote requirement for the Measure to pass is a majority (50%+1)
of the votes cast.
SECTION 6. That in all particulars not recited in this Resolution, the election shall be
held and conducted as provided by law for holding municipal elections.
SECTION 7. That 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 time, form and manner as required by law.
SECTION 8. That the City Clerk shall certify to the passage and adoption of this
Resolution and enter it into the book of original Resolutions.
SECTION 9. CEQA. The City Council hereby finds and determines that the ballot
Measure relates to organizational 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 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 commence operations.
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RESOLUTION NO. 2022-48
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 19th day of July, 2022.
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Resolution No. 2022-48
EXHIBIT A Exhibit"A"
COUNCIL-SPONSORED INITIATIVE MEASURE TO BE SUBMITTED DIRECTLY TO
THE VOTERS
The City Council for the City of Huntington Beach submits the following Measure to the
voters of the City for approval and enactment:
ORDINANCE NO.
AN ORDINANCE OF THE PEOPLE OF THE CITY OF HUNTINGTON
BEACH, CALIFORNIA, ADDING CHAPTER 3.25 TO TITLE 3 OF THE
HUNTINGTON BEACH MUNICIPAL CODE ESTABLISHING TAXES ON
CANNABIS BUSINESSES OPERATING WITHIN THE CITY OF
HUNTINGTON BEACH
The People of the City of Huntington Beach ordain as follows:
SECTION 1. Subject to the approval of a majority of the voters of the City of
Huntington Beach at the General Municipal Election so designated by the City Council in a
separate Resolution placing the proposal on the ballot for such election, Chapter 3.25 is hereby
added to Title 3 of the Huntington Beach Municipal Code to read as follows:
Chapter 3.25. CANNABIS BUSINESS TAX
3.25.010 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
3.25.110 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 Constitutionality and legality
3.25.190 Audit and examination of premises and records
3.25.200 Other licenses,permits, taxes, fees or charges
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 Tax assessment-notice requirements
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3.25.250 Tax assessment - hearing, application, and determination
3.25.260 Relief from taxes—disaster relief
3.25.270 Conviction for violation -taxes not waived
3.25.280 Severability
3.25.290 Remedies cumulative
3.25.300 Amendment or modification
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 general tax, pursuant to Sections 37101 and 37100.5
of the California Government Code, upon Cannabis Commercial 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 Tax is a general tax enacted solely for general, governmental purposes of
the City and not for specific purposes. All of the proceeds from the tax imposed by this section
shall be placed in the City's General Fund and be available for any lawful municipal purpose.
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 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 under laws applicable to the activity at
the time the activity is undertaken.
3.25.40 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 the services rendered by an Employee to his or her employer.
"Calendar year" means January 1 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 part of the plant; and every compound, manufacture, salt,
derivative, mixture, or preparation of the plant, its seeds or resin. "Cannabis" also means
the separated resin, whether crude or purified, obtained from Cannabis. "Cannabis" shall
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not include "industrial hemp," unless otherwise specified.
"Cannabis Business" means any Business activity involving Cannabis or Cannabis
Products.
"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 by Section
11018.1 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 planting, growing, harvesting, drying,
curing, grading, or trimming of cannabis and includes, but is not limited to, the operation
of an 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.
"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;
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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 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 3.25.140 (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
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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 of t-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 under this section.
"Indoor Cultivation" means the cultivation of Cannabis inside a permanent enclosed
building or structure.
"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.
"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
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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
Products, 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 & 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 of Huntington 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
California Department of Cannabis Control or other State agency required by law.
3.25.50 Tax Imposed.
A. There is imposed upon each person who is engaged in business as a Cannabis
Business Tax. Such tax is payable regardless of whether the business has been issued a
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 or consent 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 minimum and maximum rate of the Cannabis Business Tax shall be
calculated as follows:
1. 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 (1%) of Gross Receipts.
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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 (1%) 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, or any 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 Tax shall register with the City and pay any fees
established by the City Council. Such fees shall not exceed the cost of providing the service and
not be considered as a tax and may be adjusted from time to time to recover related costs by
Resolution of the City Council.
3.25.60 Reporting and remittance of tax.
A. The Cannabis Business Tax imposed by this section shall be paid, in arrears, on a
monthly basis. Each person owing a Cannabis Business Tax each calendar month shall,
no later 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 immediately due for all calendar months up to and including the
calendar month during which 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 of the 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 her judgment, by the taxpayer for the calendar month. The Tax
Administrator may require that a taxpayer make Cannabis Tax payments via a cashier's
check, money order, wire transfer, or similar instrument.
3.25.070 Payments and communications - timely remittance.
Whenever any 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
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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.
3.25.100 Penalties and interest.
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:
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.
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.
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.
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.
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.
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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.
3.25.120 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 a
written claim for refund is filed with the Tax Administrator within one (1) year of the
date the tax was originally due or paid, whichever came first.
B. The Tax Administrator, his or her designee, or any other City officer 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 Tax
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 taxed.
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
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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;
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 days of the serving or
mailing of the Tax 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 City,
it is the intent of the City to apply the Cannabis Business Tax so that the Measure of the tax
fairly reflects the proportion of the taxed activity actually carried on in the City. To the extent
Federal or State law requires that any tax due from any taxpayer be apportioned, the taxpayer
may indicate said apportionment on his or her tax return. The Tax Administrator may promulgate
administrative procedures for apportionment as he or she finds useful or necessary.
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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 Administrator release him or her from the obligation to
pay the impermissible portion of the tax.
3.30.190 Audit and examination of premises and records.
A. For the purpose of ascertaining the amount of Cannabis Business Tax owed or
verification 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 Tax 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 every person liable for the collection and payment to the
City of any 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 Taxes
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.
A. 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.
3.25.210 Payment of tax does not authorize 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
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unless the person has complied with all of the requirements of this code and all other
applicable State laws.
B. No tax paid under the provisions of this 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.
3.25.220 Deficiency 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 Tax is correctly computed, he
or she may compute and determine the amount to be paid and make a deficiency determination
upon the basis of the facts contained in the statement or upon the basis of any information in his
or her possession or that may come into his or her possession within three (3) years of the date
the tax was originally due and payable. One or more deficiency determinations of the amount of
tax due for a period or periods may be made. When a person discontinues engaging in a
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 Tax owed by a person
under this section at any time:
1. 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 Tax Administrator, filed a corrected
statement, or furnished to the Tax Administrator adequate substantiation of the
information contained in a statement already filed, or paid any additional amount
of tax due under the provisions of this section; or
4. If the Tax Administrator determines that the nonpayment of any 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 Tax Administrator, after
consideration of all information within the Tax Administrator's knowledge concerning
the business and activities of the person assessed, to be due under each applicable
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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.
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 , a service by overnight
delivery shall be deemed to have occurred one (1) 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 Tax 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. If a Cannabis Business is unable to comply with any tax requirement imposed
under this section due to a disaster,the business may notify the Tax Administrator of its
inability to comply and request relief from the tax requirement. For purposes of this
section, "disaster' means fire, flood, storm, tidal wave, earthquake, or similar public
calamity, whether or not resulting from natural causes.
B. The Cannabis Business shall provide any information required by the Tax
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
Administrator'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 ax requirement.
3.25.270 Conviction for violation - taxes not waived.
The conviction and punishment of any person for failure to pay the required Cannabis Business
Tax shall not excuse or exempt such person from any civil action for the tax debt unpaid at the
time of such conviction. No civil action shall prevent a criminal prosecution for any violation of
the provisions of this 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 of a misdemeanor.
3.25.280 Severability.
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 3.25.310, 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 of Huntington 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 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
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clarification) is not inconsistent with the provisions of this Chapter 3.25; or
C. The collection of the tax imposed by this section even if the City had, for some
period of time, failed to collect the tax.
SECTION 2. Pursuant to Article XIII 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 general 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 general 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 for 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 a majority of the
eligible voters of the City of Huntington Beach voting at the General Municipal Election to be
held on November 8, 2022, and shall take effect ten (10) days after the City Council has certified
the results of the General Municipal Election by Resolution.
SECTION 5. This order shall take effect according to law 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 , 2022.
Mayor
ATTEST: APPROVED AS TO FORM:
City Clerk City Attorney
REVIEWED AND APPROVED: INITIATED AND APPROVED:
City Manager Assistant City Manager
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Res. No. 2022-48
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 July 19, 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