The Medicine Woman May 2026 2024–2022Calendar Years Operations for Dispensary Related to the Audit of Final Determination of Tax Administrator’s (“Taxpayer”) Appeal Group, LLC’s
Audit Background.2023infindingsauditthetorelateddueamountstaxadditionalthepaidTaxpayerThe.receiptsgrosstaxablefromfeesdeliveryandpurchasersfromcollectedTax”Cannabis“Cityaslabeledamountsofexclusionthe includingissues,similaridentified,2023incompletedand2021to2019yearscalendarcoveringaudit,taxcannabisfirstCity’sThe)260.37.3§(BMC)CodeMunicipal(Bellflowercostsauditallforresponsibleistaxpayerthemore,o r%5oftaxesofunderreportingidentifiesauditanIf•.regulationslocalandStateapplicableandpaid,taxescannabisreceipts,grossreportedincludingCode,TaxCannabisCity’sthewithcomplianceevaluatesauditThe•.operatio nsofyearscalendar3priorthereviewingcycle,year-3aontaxbased–receiptsgrossatosubjectpermitteesauditstypicallyCityThe•
Audit Timeline .receiptsgrosstaxableofcalculationtheinfeesdeliveryandsales,cannabis-nonTax,CannabisCityaslabeledamountsofinclusionthecontestingbriefobjectionansubmittedTaxpayer:2026,17FebTaxpayer requested to continue hearing Feb 24, 2026. Feb 13, 2026:related fees only.-Taxpayer remitted permit fee and other permitFeb 9, 2026:.daysametheissuedwasdatehearing2026,17Febtheconfirmingnotice;hear ingadministrativeanrequestedTaxpayerThe:2026,5Feb.2026,9FebbydueamountsoutstandingallofpaymentrequiringsuspensionofnoticeandletterdemandformalaissuedOfficeAttorney’sCityThe:2026,30Jan.unpaidremainedo bligationsoutstandingotherandfeepermitcannabis2026the.;liabilitiestaxandinterest,penalties,related-audittofirstappliedwaspaymentTaxpayer:2026,9Jan.date)duerenewalpermitthewith(coinciding2026,9Janduel iabilitiesand2025Novemberthroughcalculatedinterestwithdispensaries,auditedalltodistributedReport:2025DecAudit report finalized. Nov 2025:.LLCAnalytics,&InsightsAvenuasknownformerlyNeumowithContracted City.2024–2022yearscalendarcoveringauditconductedCity:2025ofHalfnd2
02.Councilthetoissues2firsttheondeterminationtheappealingisTaxpayerThe•appealtheofpartlongernoisdeliveryunreportedin750,4$reflecttoadjustedbeenhas•.reportoriginaltheinusedwereestimatesReasonable;disc repanciesfeedeliveryreconciletodocumentationsupportingprovidetimelynotdidTaxpayerThe•feesDelivery3.receiptsgrosstaxableinsalescannabis-nonofInclusion2.receiptsgrosstaxableinCannabis“Citylabeledamount sofInclusion1.:torelatehearingtheatcontestedThe•.documentationsupplementalsubmittoallowedwasandevidence,presentedfindings,theofportionsdisputedTaxpayerThe•26 Tax Assessment Hearing & Matters on Appeal-24-
Issue 1 .decisionbusinessvoluntaryaiscustomerstothrough-passanyandobligation,owntaxpayer’stheistaxthe;applynotdoesexemptiontrustee”or“Agent•.treatmenttaxchangenotdoesitemizeorthroughpasstodecisionbus inessThe•.receiptsonititemizeseparatelyorcustomerstothroughpassedbetorequirednotisIt•.consumertheonnotactivities,cannabiscommercialconductingofprivilegetheforoperatortheonimposedisTaxCannabisCityThe• :becausereceiptsgrosstaxableinincludedbeshouldamountssuchthatdeterminedAdministratorTaxThe•trusteeoragentanasactsTaxpayerthewhereothersofbehalfoncollectedAmounts•orcustomers,fromcollectedandpricepurc hasethetoaddedorinincludedbetolawbyrequiredTaxes•:eitherrepresenttheybecause020.37.3§BMCunderreceiptsgrosstaxableofcalculationthefromexcludedbeshouldTax”Cannabis“CityaslabeledamountsthatcontendsTaxpa yerThe•Amounts Labeled as “City Cannabis Tax”-
Issue 2 .taxexcisecannabis(CDTFA)AdministrationFeeandTaxofDepartmentCaliforniathetosubjectarewhichofNone.bagsandpouches,storageresistantchildcaps,winterhoodies,hats,socks,shorts,shirts,-tassuchclothi ngbrandedto,limitednotarebutinclude,itemscannabis-Non•.taxcannabisCity’sthetosubjectbewillgoodscannabis-nonthatindicatenotdoesmaterialsballotandreportsstaffand(D)060.37.3BMCunderTaxBusinessCannabisth etosubjectnotareitemscannabis-noncontendsTaxpayer•cannabis items-Non–
•cannabis items-Non–Issue 2 accessories in the City, whether or not carried on for gain or profit.of cannabis and any ancillary products and (wholesale and/or retail sales) converting, processing, preparing, storing, packaging, delivering, and selling limitation, cultivating, transporting, distributing, manufacturing, compounding, means any commercial business activity relating to cannabis including, without "Cannabis business" or "commercial cannabis business".accessoriesorproductsancillaryanyandactivitiescannabiscommercialencompasstobusiness”“cannabisadefineswhi ch,020.37.3BMCunderreceiptsgrosstaxableinincludedareitemscannabis-nonfromrevenuesthatdeterminedAdministratorTax
"Gross receipts,"cannabis items-Non–Issue 2 way of cash or credit allowances or return of refundable deposits previously included in gross receipts;Such part of the sale price of any property returned by purchasers to the seller as refunded by the seller by 4.purchaser;Any tax required by law to be included in or added to the purchase price and collected from the consumer or 3.which time the sales price is included as gross receipts;Credit allowed on property accepted as part of the purchase price and which property may later be sold, at 2.Cash discounts where allowed and taken on sales;1.following is excluded:service costs, interest paid or payable, or losses or other expenses whatsoever, except that the deduction there from on account of the cost of the property sold, the cost of materials used, labor or Included in "gross receipts" is all receipts, cash, credits and property of any kind or nature, without any royalties, fees, commissions, dividends, and gains realized from trading in stocks or bonds, however designated. done as a part of or in connection with the sale of materials, goods, wares or merchandise; discounts, rents, whatever nature it may be, for which a charge is made or credit allowed, whether or not such act or service is the total amount or compensation actually received or receivable for the performance of any act or service, of ; all salesexcept as otherwise specifically provided, means the total amount actually received or receivable from
"Gross receipts,“cannabis items-Non–Issue 2 fees, percentages, or other payments retained by the agent or trustees.the names and the addresses of the others and the amounts paid to them.
This exclusion does not apply to any amounts are paid to those for whom collected. These agents or trustees must provide the finance department with Amounts collected for others where the business is acting as an agent or trustee and to the extent that such 9.business must not be excluded when in excess of one dollar ($1.00);Receipts of refundable deposits, except that such deposits when forfeited and taken into income of the 8.period when they are recovered;excluded as uncollectible are subsequently collected they are included in the amount of gross receipts for the receipts in the year they prove to be uncollectible; provided, however, if the whole or portion of such amounts and such amount proved uncollectible in a subsequent year, those amounts may be excluded from the gross Whenever there are included within the gross receipts amounts which reflect sales for which credit is extended 7.equipment used by the taxpayer in the regular course of the taxpayer's business;Receipts derived from the occasional sale of used, obsolete or surplus trade fixtures, machinery or other 6.in the ordinary course of a business;annuities and gains from the sale or exchange of stock or securities solely for a person's own account, not derived Receipts from investments where the holder of the investment receives only interest and/or dividends, royalties, 5.Exemptions continued:
•cannabis items-Non–Issue 2 .merchandisecannabis-nonincludingbusinesses,cannabisqualifyingofreceiptsgrosstotaxtheapplies)18-22.ResolutioninCouncilCitythebyratifiedandamended(as3.ProcedureandPolicyAdm inistrativeCity’s•rules have no bearing on or control over the City’s local tax treatment.The City Cannabis Tax is distinct from the state excise tax, and CDTFA •.productscannabisofsalethemerelynotop eration,entiretheencompasses“businesses”wordthe—adoptedbeshouldbusinesses”relatedcannabison“taxawhethervotersaskedlanguageBallot
Fiscal Impact Net Tax Due$60,985.42 Rounding(14.81)on Excise TaxPaidTax (33,070.85)Delivery FeesTax on Unreported 403.75 cannabis Items-Nonon PaidTax (3,752.81)cannabis Items-NonTax on 28,175.34 “City Cannabis Tax”Tax on Amounts Labeled $69,244.80 .Taxpayerthetoallocatedbeenhas000,9$orcostaudittheoffifth-oneAccordingly,.interestandpenalties,taxes,resultingallandaudittheofcostre asonabletheforresponsibleistaxpayerthemore,or%5ofunderstatementanidentifiesauditanwhere260.37.3SectiontoPursuant.activitydistributiononeanddispensariesfourforcostsauditin000,45$incurredCityThe Net Amount Due$57,284.40 (Jan 2026)(38,847.00)Total Amount Due$96,131.40 9,000.00 2026May -Dec 20252,228.29 Through Nov 202511,024.76 InterestPenalty12,892.93 Tax$60,985.42
1 RECOMMENDATION TO CITY COUNCIL.itemthistorelatedactionothertakeanddiscussAlternatively,)3or;promptlyremittednotispaymentifactionsenforcementandcollectionauthorizedwithproceedtostaffDirect)2and;paya bleandduearecostsauditandinterest,penalties,taxes,assessedthatconfirmingfull,in,2026,15AprildatedDecisionAdministrativeAdministrator’sTaxtheupholdevidence,theconsideringafterand,;evidencedocumentarya ndtestimonialtake;hearingpublictheOpen)