12-B — Bellflower City Council, June 22, 2026

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12-B
TO: Honorable Mayor and Members of the City Council

FROM: Ryan Smoot, City Manager

SUBJECT: Consideration and possible action to conduct a public hearing to consider The Medicine Woman Group, LLC’s appeal of
the City Manager’s decision to revoke Cannabis Business Permit No. CUP CU-CAN 17-12.

DATE: June 22, 2026

EXECUTIVE SUMMARY

The Medicine Woman Group, LLC (“TMW”) appealed the City Manager’s decision to revoke Cannabis Business Permit No. CUP CU-CAN 17-12 (the “CBP”). The basis for the City Manager’s revocation is clear and supported by the Bellflower Municipal Code (“BMC”). Despite receiving multiple notices of its obligations, being afforded due process, and having ample opportunity to rectify its delinquencies, TMW failed to remit the taxes due to the City and comply with the City’s Cannabis Regulations. This appeal hearing does not consider the amount of taxes owed to the City. That issue was already decided by the City Council. The revocation decision is based upon TMW’s failure to pay any taxes. This is an ongoing failure by TMW; it constitutes an unfair business practice, and, accordingly, an imminent threat to public welfare. Staff’s recommendation is to uphold the City Manager’s determination to revoke TMW’s CBP.

RECOMMENDATION TO CITY COUNCIL

1) Open the public hearing; take testimonial and documentary evidence; and after considering the evidence, uphold the City Manager’s decision to revoke Cannabis Business Permit No. CUP CU-CAN 17-12 issued to The Medicine Woman Group, LLC; or

2) Alternatively, discuss and take other action related to this item.

FISCAL IMPACT

The outstanding liability resulting from the audit of the taxpayer’s dispensary operations for calendar years 2022-2024 is $57,655.91, plus applicable interest accruing monthly.

In addition, TMW has failed to remit cannabis taxes for the January-March 2026 tax period, which became due on April 30, 2026. During the revocation hearing, on June 1, 2026, TMW’s representative stated that the amount due for that quarter was estimated to be approximately $40,000. This figure excludes any applicable penalties and interest.

Though this figure is generally consistent with previous quarterly payments, it has not been verified because TMW has also failed to submit the necessary documentation to substantiate the tax amount due.
1 Staff Report – TMW’s Appeal of the City Manager's Revocation of CBP June 22, 2026

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DISCUSSION

On May 11, 2026, based on an appeal by TMW, the City Council upheld the City Tax Administrator’s administrative decision regarding TMW’s taxes owed as a result of the audit findings for the calendar years 2022-2024. On May 12, 2026, the City issued a written notice and order by USPS certified mail directing both TMW and its legal counsel to immediately satisfy all outstanding liabilities. Despite being notified of its obligations, TMW failed to respond, remit payment, or otherwise take action to satisfy the outstanding liability.

On May 28, 2026, after receiving neither a response nor payment, the City Manager initiated revocation proceedings and issued a Notice of Revocation of TMW’s CBP, and scheduled a hearing for June 1, 2026, to consider revocation of TMW’s CBP pursuant to the BMC. At the revocation hearing, the City Manager considered the documentary evidence, testimony, and arguments presented by TMW’s legal counsel. TMW’s legal counsel acknowledged that TMW had sufficient funds to satisfy the liability resulting from the tax audit but represented that TMW lacked sufficient funds to pay the cannabis taxes for the January-March 2026 tax period, which became due on April 30, 2026. Despite receiving notice of its obligations, being afforded due process, and having ample opportunity to cure its delinquencies, to date, TMW has continued to fail to meet its obligations.

On June 2, 2026, following the revocation hearing, the City Manager issued a written determination, via email and USPS certified mail, upholding his revocation of TMW’s CBP. The certified mailing was returned to the City after the TMW refused delivery; however, TMW’s legal counsel responded via email. Based on TMW’s expressed desire during the hearing to find resolution to its obligations, t he City Manager’s determination letter also outlined a proposed conditional offer of resolution under which the City would suspend enforcement of its revocation of TMW’s CBP and allow for continued operations.

These conditions, outlined in the attached CBP revocation notice dated June 2, 2026, generally included immediate payment of the outstanding audited amounts due, and an extended period for payment of taxes due for the first quarter of 2026 . TMW failed to respond to or accept the conditions outlined. Instead, pursuant to BMC § 14.28.050 (Appeals), TMW’s legal counsel submitted an appeal of the City Manager’s decision to revoke its CBP. In anticipation of TMW’s appeal of the City Manager’s determination, the City scheduled an appeal hearing before the City Council on June 22, 2026. Importantly, this appeal hearing does not consider the amount of taxes owed to the City. That issue was already decided by the City Council. The revocation decision is based upon TMW’s failure to pay any taxes. This is an ongoing failure by TMW; it constitutes an unfair business practice, and, accordingly, an imminent threat to public welfare. Staff’s recommendation is to uphold the City Manager’s determination to revoke TMW’s CBP.

ATTACHMENTS
City Manager’s Determination on CBP Revocation (June 2, 2026) ................................. 3 City’s Response to TMW’s May 29, 2026, Letter ............................................................ 6 TMW’s Request for Hearing (May 29, 2026) ................................................................... 8 Notice of CBP Revocation (May 28, 2026) .................................................................... 10 City Council Decision Upholding Tax Administrator’s Determination ............................ 11 Appeal Submitted by The Medicine Woman Group, LLC(June 12, 2026) ..................... 16 2 3

4 5

Sonny R. Santa Ines
Mayor
Victor A. Sanchez
Mayor Pro Tem
Ray Dunton
Council Member
Dan Koops
Council Member
Wendi Morse
Council Member

1 May 29, 2026

VIA E-MAIL ONLY

Jennifer McGrath

LAW OFFICES OF JENNIFER MCGRATH
9114 Adams Avenue #264
Huntington Beach, CA 92646
[email protected]

Re: Response to May 29, 2026 Letter
Cannabis Business Permit No. CUP CU‑CAN 17‑12

Dear Ms. McGrath:

Thank you for your letter dated May 29, 2026 sent on behalf of The Medicine Woman Group (TMW). While that letter requests a hearing, the City’s Notice of Revocation already set a hearing in accordance with the Bellflower Municipal Code (BMC). Please refer to that Notice for the hearing time and place.

BMC § 14.28.040(G) states that TMW:

“may present written and/or oral testimony and evidence at the hearing and will be provided 30 minutes for a presentation. Formal rules of evidence and procedure applicable in a court of law do not apply. The City Manager may, in his or her sole discretion, provide the permittee additional time to present evidence, testimony and argument.” (Emphasis added).

As stated in the Notice, all written materials to be considered during TMW’s hearing must be submitted today by 4:30 p.m. Additional written materials may certainly be presented during the hearing.

The Notice identified the Cannabis Business Permit (CBP) number that was issued to TMW and is the subject of revocation. Revoking the conditional use permit is not currently being considered by the City and would involve a separate process.

The Letter asserts that paying taxes is not a condition of TMW’s CBP. Perhaps this is the TMW’s fundamental misunderstanding regarding the City’s cannabis regulations: “Every person who is engaged in business as a dispensary … must pay an annual commercial cannabis tax.” BMC § 3.37.060(D)(1). The conditions of approval that are part of TMW’s CBP are “[i]n W

Sonny R. Santa Ines
Mayor
Victor A. Sanchez
Mayor Pro Tem
Ray Dunton
Council Member
Dan Koops
Council Member
Wendi Morse
Council Member

2 addition to all applicable provisions of California law and the Bellflower Municipal Code….” How TMW believes it can legally operate in the City without paying a tax for that privilege is a mystery.

Also strange is the Letter’s assertion that the City failed to provide TMW with an opportunity to pay taxes before taking revocation action. If anything, the City has been exceedingly patient waiting for the monies owed to it. Setting aside the well-documented efforts by the City to collect the taxes owed by TMW as confirmed by the City Council on May 11th – which your Letter asserts are now subject to an as-yet unserved writ action – the City waited a month for the outstanding cannabis taxes owed for January through March 2026. Despite repeated warnings to TMW that the deadline for such payment was April 30th – and assurances from TMW representatives that it would be paid – it is now May 29th and no payment was received. Based on historical data, the average quarterly cannabis tax payment owed by TMW is approximately $40,000. The ongoing failure of TMW to pay its taxes contradicts the Letter’s assertion that “TMW has consistently paid its taxes….”

As of today, quick math suggests that TMW owes the City approximately $100,000 in unpaid cannabis tax, penalties, and interest. Yet, it continues to engage in unfair business practices by operating its dispensary and profiting from patrons purchasing its products. Such scofflaw behavior is prohibited under the BMC and California law.

Responding to the balance of your letter: the City Manager is specifically authorized to determine, in his sole discretion, that the continued operation of a cannabis business presents an imminent threat to public health, safety, or welfare. This City Manager determined that the ongoing failure of TMW to remit cannabis tax owed to the City; to maintain a viable business address (mail was returned to the City as undeliverable); and TMW’s ongoing interference with the City’s administration of its CBP meets these criteria. Revocation of the CBP, therefore, is not only entirely justified but required.

Very truly yours,

Karl H. Berger
City Attorney

7 LAW OFFICES OF

JENNIFER MCGRATH

9114 Adams Avenue #264, Huntington Beach, CA 92646
714.231.2124 | [email protected]

City of Bellflower May 29, 2026
16600 Civic Center Drive via email only Bellflower, CA 90706

RE: Request for Hearing on City's Notice of Revocation of Cannabis Business Permit No. CUP CU-CAN 17-12

Dear Mr. Smoot,

TMW is in receipt of the City's Notice of Revocation of Cannabis Business Permit No. CUP CU- CAN 17-12 of The Medicine Woman Group LLC ("TMW"), received at 5:43 p.m. on May 28, 2026, and hereby requests a hearing pursuant to Bellflower Municipal Code ("BMC") Section

14.28.040(F). The BMC states that the request for a hearing must be made on a form approved by the City Manager but no such form has been provided to TMW by the City. If one is provided, it will be completed. Absent the providing of a form, the City will be deemed to have waived this procedure.

Contrary to the Notice of Revocation, the BMC does not state that "[a]ll written materials to be considered during the appeal must be submitted to the City Clerk" less than 24 hours after the City provides notice of the hearing and for the City to make such a demand is a demonstration of bad faith and a violation of due process. TMW will submit written materials by 4:30 p.m. on May 29, 2026, as it reasonably can, and reserves the right to supplement said materials and call witnesses to testify at the hearing on June 1, 2026, at 10 a.m. pursuant to BMC Section

14.28.040(G).

The Notice of Revocation of the Cannabis Business Permit also references a CUP number. We ask that the City clarify whether this is a revocation of the Cannabis Business Permit, or both the Permit and the CUP.

Although not required by the BMC, the grounds for the hearing include, but are not limited to:

1. Inadequate grounds for suspension. Pursuant to BMC 14.28.040(A)(2), the City Manager’s authority to suspend or revoke is limited to “[i]f the permittee violates any condition imposed by this title or by the terms of the permit.” The payment of taxes is not a condition imposed by the BMC or by the terms of the permit; moreover, the City failed to provide The Medicine Woman with the opportunity to pay any disputed tax assessment in advance of the revocation.

8 2. Intentional Interference. The City appears to be intentionally interfering with The Medicine Woman’s legal rights. This entire time the City has been aware that TMW disagrees with and objects to the tax assessment and intends to file a petition for writ of mandate with the Superior Court challenging the City Council's decision. Citing an "imminent threat to public welfare" to support an immediate revocation over a disputed unpaid tax assessment of $57,284.40 is clearly intended by the City to get around the usual procedures under BMC 14.28.040(B) whereby TMW is allowed to continue operating while the parties go through the process of working out this disagreement. A suspension or revocation of the cannabis business permit under the "imminent threat to public welfare" procedures will require TMW to cease business operations which will put TMW out of business permanently resulting in loss of revenue, the termination of employees' jobs, and loss of TMW's investment in the business. This is legally unjustified, an abuse of discretion, and clearly intended to coerce TMW not to pursue its legal rights and acquiesce to the City’s unlawful conduct.

Moreover, TMW has consistently paid its taxes for several years and intends to continue to do so. The City has made it clear that the City would apply any payment from TMW to the disputed tax assessment rather than the undisputed quarterly tax payment further supporting the City's coercive conduct.

3. Abuse of Discretion. All of the above demonstrates that the City has failed to follow its own rules and that city officials have failed to perform their duty. To the extent the City exercised discretion in its decisions, the City abused that discretion and its actions and determinations on such matters were/are arbitrary, capricious, and unfair. In so doing, the City has violated The Medicine Woman’s due process and equal protection rights under the applicable law including the Bellflower Municipal Code, state law, and the state and federal Constitutions.

By attempting to work within the City's demands. TMW does not waive any procedural deficiencies by the City.

We look forward to the hearing.

Sincerely,

Jennifer McGrath, Esq.

Mayra Ochiqui [email protected]
City Clerk [email protected]
Ryan Smoot [email protected]
Wangsu Lee [email protected]
Karl H. Berger [email protected]
Timothy Campen [email protected]
9 May 28, 2026

The Medicine Woman Group, LLC
Attn: Charis Burrett and Damian Collins
9058 Rose Street
Bellflower, CA 90706

Re: NOTICE OF REVOCATION: CANNABIS BUSINESS PERMIT NO. CUP CU-CAN 17-12.

To The Medicine Woman Group, LLC:

This letter constitutes notice of the City Manager’s REVOCATION of CBP No. CUP CU-CAN 17- 12, originally issued under Resolution No. 17-77, on December 18, 2017, and approved for renewal for calendar year 2026 on December 11, 2025.

The REVOCATION of CBP No. CUP CU-CAN 17-12 is based upon the imminent threat to public welfare. Specifically, The Medicine Woman’s (TMW) failure to remit the overdue amount of $57,284.40 resulting from the audit of dispensary operations for calendar years 2022 through 2024 as identified in correspondence dated May 12, 2026. This figure excludes the outstanding cannabis tax liabilities for the January through March 2026 tax period, which must also be reported and paid to the City. The total amount owed to the City as a result of the dispensary audit as of the date of this notice is $57,284.40, with interest continuing to accrue at a rate of $371.51 per month plus any outstanding cannabis tax liabilities for the January through March 2026 tax period.

Cannabis Business Permits are granted for the sole purpose of generating tax revenue for the City. Allowing TMW to continue engaging in unfair business practices by failing to pay the City in accordance with applicable law allows TMW to profit to the detriment of the public. TMW was given ample opportunity to repay its debt and come current with owed taxes. The REVOCATION of the CBP No. CUP CU-CAN 17-12 is effective immediately. The City Council may grant a Cannabis Business Permit to a successful business that complies with applicable law including, without limitation, remitting cannabis taxes owed to the City for the privilege of operating a cannabis dispensary.

Based upon this NOTICE OF REVOCATION, any further operation by TMW is unlawful. The City Manager and City Attorney may take all legal steps required to ensure the closure of TMW dispensary including, without limitation, those listed in BMC Chapters 3.37, 8.48, and 14.28.

Remedies listed in those BMC Chapters include civil and criminal enforcement options against TMW and its principals.

Pursuant to BMC § 14.28.040(D), a CBP permittee may request in writing a hearing before the City Manager to appeal these determinations. In anticipation of a request for such a hearing, the City has proactively scheduled a hearing to be held before the City Manager on Monday, June 1, 2026, at 10:00 AM in the City Council chambers of the City of Bellflower. All written materials to be considered during the appeal must be submitted to the City Clerk no later than 4:30 PM on Friday May 29, 2026.
㄰

11 12

13 14

15 Received by ______________via Date Stamp:
Email  U.S. Mail  Over the Counter

CITY OF BELLFLOWER
BMC TITLE 14 – CANNABIS-RELATED BUSINESSES

REQUEST FOR AN APPEAL HEARING
[Pursuant to Bellflower Municipal Code (BMC) Sections 14.28.040 & 14.28.050] Please indicate below which type of appeal hearing you are requesting:
☐§ 14.28.040 – Revocation and Suspension. A permittee that has been served with a notice of suspension of revocation may, within five business days, request a hearing before the City Manager.

The request must be made on a form approved by the City Manager. ☐§ 14.28.050 – Appeals. If authorized by this title, a decision of the City Manager with respect to a cannabis business permit may be appealed to the City Council, provided that a request for review (appeal) is filed with the office of the City Manager within 10 calendar days fro m the date on which notice of the City Manager's decision was served on the permittee.

Completed forms must be mailed or presented to:

City of Bellflower – City Manager
c/o City Clerk’s Office
16600 Civic Center Drive
Bellflower, CA 90706-5494
[email protected]
The undersigned submits the following request for an appeal and information pursuant to BMC Sections 14.28.040 & 14.28.050. If additional space is required, attach supplemental pages to this form and identify responses by corresponding section number below.

1.Appellant Information:

Name: ___________________________________________________________________________ Address: _________________________________________________________________________ Phone: __________________________________________________________________________ Email Address: ____________________________________________________________________

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NOTE THAT THIS IS A PUBLIC RECORD AND MAY BE DISCLOSED IN ACCORDANCE WITH THE CALIFORNIA PUBLIC RECORDS ACT (GOVERNMENT CODE §§ 6250, ET SEQ.) X
The Medicine Woman Group LLC
9058 Rose Street, Bellflower CA 90706
(949) 887-3589
[email protected]
□ □ □
16 l
City of Bellflower
Request for an Appeal Hearing

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2. A description of the decision, determination or order which is the subject of the appeal and the date such decision, determination or order was made or issued.

The City Manager's decision to uphold and affirm the REVOCATION of CSP No. CUP CU-CAN 17-12, effective immediately on June 2, 2026. (Copy attached.)

3. A complete description of all grounds for appeal, together with any evidence in support of the appeal.

1. Inadequate grounds for suspension;

2. Intentional Interference; and

3. Abuse of Discretion.

Also see attached Request for Hearing filed by The Medicine Woman Group LLC on 5/29/2026.

4. List any attachments included with your request.

1. City Manager's Decision dated 6/2/2026

2. Request for Hearing filed by The Medicine Woman Group LLC on 5/29/2026

3. Revocation Hearing Materials submitted by The Medicine Woman Group LLC on 5/29/2026 The Medicine Woman Group LLC, Charis Surrett, CEO
17 The City of Bellflower
16600 Gvic Cenrer Drive, Bellflnwer, CA 90706
Td 562.804.1424 bx: S62.92S.866o www.bellllow1:r.1)rg
June 2, 2026
Via USPS Certified Mail:

The Medicine Woman Group, LLC
Attn: Charis Surrett and Damian Collins
9058 Rose Street
Bellflower, CA 90706
Re: CITY MANAGER'S DECISION REGARDING REVOCATION HEARING CANNABIS BUSINESS PERMIT NO. CUP CU-CAN 17-12
To The Medicine Woman Group, LLC:

This letter constitutes the City Manager's Decision on Revocation Hearing pursuant to Bellflower Municipal Code (BMC) § 14.28.040.

A. Procedural Background
CBP No. CUP CU-CAN 17-12 was originally issued to The Medicine Woman (TMW) on December 18, 2017, and approved for renewal on December 11, 2025 for calendar year 2026. On May 28, 2026, a Notice of Revocation of CBP No. CUP CU-CAN 17-12 was served on TMW, which cited "TMW's failure to remit the overdue amount of $57,284.40 in cannabis tax identified in correspondence dated May 12, 2026 ... plus outstanding cannabis tax liabilities for the January through March 2026 tax period" as a detriment to the public amounting to an imminent threat to public welfare.

TMW timely filed for a request for hearing to challenge this revocation, which was held on June 1, 2026. TMW provided a letter from its attorney to the City Manager on May 29, 2026, challenging the May 29, 2026 revocation notice and offered testimonial evidence and argument on June 1, 2026. The City Manager took the matter under submission.

B. Decision on Revocation
Having reviewed and considered all documents, correspondence and testimony offered by TMW for this hearing, the City Manager's REVOCATION of CBP No. CUP CU-CAN 17-12 is UPHELD AND AFFIRMED.

Be Advised that this revocation of CBP No. CUP CU-CAN 17-12 is effective immediately.

Conducting any cannabis business within the City of Bellflower without a valid cannabis business permit is unlawful and subject to enforcement, including without limitation: $5,000 administrative fine per day, direct public nuisance abatement, civil action including injunctive relief, and/or misdemeanor criminal prosecution.

Be Further Advised that based on TMW's stated intention to appeal to the City Council in the event this revocation is upheld, that appeal has been scheduled as indicated below. A City Clerk 18 Revocation Notice -The Medicine Woman Group, LLC
June 2, 2026

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Form is attached and still must be completed and returned to the City Clerk no later than 5:00 p.m., Friday, June 12, 2026, to confirm your request for this appeal. Failure to timely return the form fully compliant with BMC§ 14.28.050 will be deemed a waiver of your appeal rights. This is a de novo hearing before the City Council.

NOTICE OF APPEAL HEARING -CBP REVOCATION
June 22, 2026 at 7:00 p.m.

Bellflower City Council Chambers
16600 Civic Center Dr.

Bellflower CA 90706
C. Offer of Resolution
In lieu of immediate enforcement, the City is willing to suspend this revocation under the following terms and conditions:

1. Immediate payment of $57,655.91 to the City in satisfaction of balance due based on the Tax Administrator's audit for tax periods 2022-2024;

2. Waiver of right to appeal City Council's determination regarding balance due based on the Tax Administrator's audit for tax periods 2022-2024;

3. Waiver of right to appeal this determination of revocation by the City Manager;

4. Payment of the Calendar Year 2026 Q1 tax plus the applicable 20% late-payment penalty to City no later than 30 days from the date of this notice;

5. Payment of the Calendar Year 2026 Q2 tax to City no later than July 31, 2026.

6. Reimbursement of City staff and attorney time related to challenge of City Manager's CBP revocation no later than 30 days of this notice; and

7. CBP subject to immediate revocation upon TMW's failure to comply with any of the above terms as a final determination by the City subject to judicial challenge without further administrative process.

Be Further Advised that written notification from TMW accepting these terms and conditions must be received by the City Manager no later than 5:00 p.m., Friday, June 5, 2026, with execution of a formal written agreement detailing the same (prepared by the City) no later than 5:00 p.m., Monday, June 8, 2026. These deadlines regarding resolution are separate and independent from your request to appeal this revocation determination by the City Manager.

Yours very truly,
1?~
City of Bellflower
Attachment: Appeal Form
19 Revocation Notice• The Medicine Woman Group, LLC
June 2, 2026

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Cc:

Jennifer McGrath, [email protected]
Ed Pinchiff, [email protected]
Charis Burrett, [email protected]
Luke Surrett, [email protected]
Dave Lemme, [email protected]
Brandon Scadron, [email protected]
Karl H. Berger, City Attorney [email protected]
Tim Campen, Assistant City Attorney [email protected]
Anna Garan, Director of Finance [email protected] Mayra Ochiqui, City Clerk [email protected]
Wangsu Lee, Assistant to the City Manager [email protected],gov 20 LAW OFFICES OF

JENNIFER MCGRATH

9114 Adams Avenue #264, Huntington Beach, CA 92646
714.231.2124 | [email protected]

City of Bellflower May 29, 2026
16600 Civic Center Drive via email only Bellflower, CA 90706

RE: Request for Hearing on City's Notice of Revocation of Cannabis Business Permit No. CUP CU-CAN 17-12

Dear Mr. Smoot,

14.28.040(G).

Although not required by the BMC, the grounds for the hearing include, but are not limited to:

21 2. Intentional Interference. The City appears to be intentionally interfering with The Medicine Woman’s legal rights. This entire time the City has been aware that TMW disagrees with and objects to the tax assessment and intends to file a petition for writ of mandate with the Superior Court challenging the City Council's decision. Citing an "imminent threat to public welfare" to support an immediate revocation over a disputed unpaid tax assessment of $57,284.40 is clearly intended by the City to get around the usual procedures under BMC 14.28.040(B) whereby TMW is allowed to continue operating while the parties go through the process of working out this disagreement. A suspension or revocation of the cannabis business permit under the "imminent threat to public welfare" procedures will require TMW to cease business operations which will put TMW out of business permanently resulting in loss of revenue, the termination of employees' jobs, and loss of TMW's investment in the business. This is legally unjustified, an abuse of discretion, and clearly intended to coerce TMW not to pursue its legal rights and acquiesce to the City’s unlawful conduct.

By attempting to work within the City's demands. TMW does not waive any procedural deficiencies by the City.

We look forward to the hearing.

Sincerely,

Jennifer McGrath, Esq.

Mayra Ochiqui [email protected]
City Clerk [email protected]
Ryan Smoot [email protected]
Wangsu Lee [email protected]
Karl H. Berger [email protected]
Timothy Campen [email protected]
22 May 28, 2026

The Medicine Woman Group, LLC
Attn: Charis Burrett and Damian Collins
9058 Rose Street
Bellflower, CA 90706

Re: NOTICE OF REVOCATION: CANNABIS BUSINESS PERMIT NO. CUP CU-CAN 17-12.

To The Medicine Woman Group, LLC:

Remedies listed in those BMC Chapters include civil and criminal enforcement options against TMW and its principals.

The City of Bellflower
:.families. 23usinesses. ✓ulures.
16600 Civic Center Drive, Bellflower, CA 90706
Tel 562.804.1424 Fax 562.925.8660 www.bellflower.org
~----> ㈳

TO:

FROM:

SUBJECT:

Honorable Mayor and Members of the City Council
Anna Garan, Director of Finance
Consideration and possible action to conduct a public hearing to consider The Medicine Woman Group, LLC's appeal of the Tax Administrator's final determination related to the audit of dispensary operations for calendar years 2022-2024.

DATE: May 11, 2026

EXECUTIVE SUMMARY
The Medicine Woman Group, LLC ("Taxpayer") has appealed the Tax Administrator's Administrative Decision, which upheld a revised cannabis business tax assessment for the Taxpayer's dispensary operations for calendar years 2022 through 2024. The audit was conducted primarily during the second half of 2025, with the original audit report finalized in November 2025 and distributed to all active dispensary permittees in December 2025. Permittees were provided an opportunity to review and respond to the audit findings prior to finalization.

The Taxpayer was given the opportunity to be heard at an administrative hearing on February 24, 2026, and to submit additional documentation, which the City reviewed.

Following this process, the Tax Administrator issued a final determination affirming the audit findings, with adjustments primarily related to delivery fee calculations based on the supplemental records.

The appeal contests the inclusion of (1) amounts labeled as "City Cannabis Tax" and (2) revenues from non-cannabis sales in taxable gross receipts.

RECOMMENDATION TO CITY COUNCIL
1) Open the public hearing; take testimonial and documentary evidence; and, after considering the evidence, uphold the Tax Administrator's Administrative Decision dated April 15, 2026, in full, confirming that all assessed taxes, penalties, interest, and audit costs are due and payable; and
2) Direct staff to proceed with all authorized collection and enforcement actions if payment is not remitted promptly; or
3) Alternatively, discuss and take other action related to this item.

Page 1 of 5 ends

-1 -24

Staff Report -The Medicine Woman Group, LLC's Appeal of Tax Administrator's Final Determination Related to the Audit of Dispensary Operations for Calendar Years 2022-2024
May 11, 2026

Page 2 of 5 ends

FISCAL IMPACT
The total outstanding amount resulting from the audit of the Taxpayer's dispensary operations for calendar years 2022 through 2024 is $57,957.01. This amount consists of $60,985.42 in tax, $12,892.93 in penalties, $13,925.66 in interest, $9,000.00 for the Taxpayer's proportionate share of audit examination costs and is net of the $38,847 payment made in January 2026.

The increase in interest of $2,900.90 reflects additional accrual resulting from the Taxpayer's failure to remit the assessed amount within 10 business days of the tax assessment letter. The original interest calculation included in the Tax Administrator's letter was accrued only through November 2025, when the audit report was finalized; interest is now calculated through May 2026.

BACKGROUND AND DISCUSSION
The City conducts periodic cannabis business tax audits, generally every three years, covering the preceding three calendar years of operations. The purpose of each audit is to assess compliance with the City's cannabis tax pursuant to Bellflower Municipal Code (BMC) § 3.37. The most recent prior audit of this Taxpayer, conducted in 2023 for calendar years 2019 through 2021, identified similar issues, including the exclusion of amounts labeled "City Cannabis Tax" collected from purchasers and delivery fees from taxable gross receipts. The Taxpayer subsequently paid the additional amounts due as a result of those audit findings in 2023.

The current audit covering calendar years 2022 through 2024 was conducted during the second half of 2025. The audit report was finalized in November 2025 and distributed to all active dispensary permittees in December 2025. Permittees were directed to remit any resulting liabilities by January 9, 2026, which coincided with the 2026 cannabis permit renewal deadline, for administrative efficiency.

On January 9, 2026, the Taxpayer submitted a payment which, consistent with City policy and prior notice to the Taxpayer, was applied first to outstanding tax liabilities, penalties, and interest resulting from the audit. As a result, the 2026 cannabis permit fee and other outstanding obligations remained unpaid.

On January 30, 2026, the City Attorney's Office issued a formal demand for payment requiring satisfaction of all outstanding permit fees, audit liabilities, and delinquent taxes by February 9, 2026. The Taxpayer remitted only the permit and other permit-related fees, and an administrative hearing was initially scheduled for February 17, 2026, but was continued to February 24, 2026 at the Taxpayer's request.

The Taxpayer disputed portions of the audit findings, presented evidence at the administrative hearing, and was granted the opportunity to submit supplemental documentation afterward, which was fully considered.
-2 -25

Staff Report -The Medicine Woman Group, LLC's Appeal of Tax Administrator's Final Determination Related to the Audit of Dispensary Operations for Calendar Years 2022-2024
May 11, 2026

Page 3 of 5 ends

BACKGROUND AND DISCUSSION -Continued
The Tax Administrator issued a final determination affirming the audit with minor adjustments, primarily related to delivery fee revenue based on supplemental records.

The original audit report included estimated delivery revenues because the Taxpayer did not provide the requested documentation or clarification by the established audit deadline.

The determination addressed three issues: (1) inclusion of amounts labeled "City Cannabis Tax" in gross receipts, (2) reporting of delivery fees, and (3) inclusion of non- cannabis sales in taxable gross receipts. The Taxpayer appeals issues (1) and (3) to the City Council.

With respect to the first issue on appeal, the record shows that the Taxpayer collected amounts from customers identified as "City Cannabis Tax" but excluded those amounts from reported gross receipts. The Taxpayer contends these amounts are excludable under BMC§ 3.37.020 as taxes required by law to be included in or added to the purchase price and collected from the consumer, or amounts collected on behalf of others where the business is acting as an agent or trustee.

The determination concludes these amounts are properly included in taxable gross receipts because the City's cannabis business tax is imposed directly on the operator as a tax on the privilege of conducting commercial cannabis activity, not on the consumer.

Unlike state sales tax or the cannabis excise tax, the City Cannabis Tax is not required by law to be passed through to customers or separately stated on receipts. Accordingly, the Taxpayer's decision to itemize and collect a "City Cannabis Tax" charge does not alter its character as a business-level tax obligation or convert it into a pass-through tax.

Instead, amounts collected under this label represent consideration received in the course of business operations and are includable in gross receipts under the BMC.

The '!agent or trustee'' exclusion also does not apply. The Taxpayer is not collecting funds on behalf of a third party but is recovering its own tax obligation as the licensed permittee.

Because no agency or fiduciary relationship exists under the ordinance, the statutory exclusion is inapplicable.

With respect to non-cannabis items, the second issue on appeal, the determination finds that receipts from these sales are properly included in taxable gross receipts. The cannabis business tax is imposed on the privilege of operating a commercial cannabis business as a whole, rather than on individual product categories.

Under BMC § 3.37.020, "commercial cannabis business" is defined to include any commercial activity relating to cannabis, including without limitation the selling of cannabis and ancillary products and accessories, whether conducted for gain or profit. Section

3.37.020 states in relevant part as follows:
"Cannabis business" or "commercial cannabis business"
means any commercial business activity relating to cannabis including, without limitation, cultivating, transporting, distributing, manufacturing, compounding, converting, processing, preparing, storing, packaging, delivering, and selling (wholesale and/or retail sales) of cannabis and any ancillary products and accessories in the City, whether or not carried on for gain or profit.
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Staff Report -The Medicine Woman Group, LLC.'s Appeal of Tax Administrator's Final Determination Related to the Audit of Dispensary Operations for Calendar Years 2022-2024
May 11, 2026

Page 4 of 5 ends

BACKGROUND AND DISCUSSION -Continued
"Gross receipts,"
except as otherwise specifically provided, means the total amount actually received or receivable from all sales; the total amount or compensaUon actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials, goods, wares or merchandise; cfiscounts, rents, royalties, fees, commissions, dividends, and gains realized from, trading in stocks or bonds, however designated. Included in "gross receipts" is all receipts, cash, credits and property of any kind or nature, without any deduction there from on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever, except that the following is excluded:

1. Cash discounts where allowed and taken on sales:

2. Credit allowed on property accepted as part of the purchase price and which property may later be sold, at which time the sales price is included as gross receipts;

3. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;

4. 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;

5. Receipts from investments where the holder of the investment receives only interest and/or dividends, royalties, annuities and gains from the sale or exchange of stock or securities solely for a person's own account, not derived in the ordinary course of a business;

6. 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;

7. Whenever there are included within the gross receipts amounts which 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 unco/lectible are subsequently collected they are included in the amount of gross receipts for the period when they are recovered;

8. Receipts of fefundable deposits, except that such deposits when forfeited and taken into income of the business must not be excluded when in excess of one dollar ($1.00);

9. 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. These agents or trustees must provide the finance department with the names and the addresses of the others and the amounts paid to them. This exclusion does not apply to any fees, percentages, or other payments retained by the agent or trustees. -4-27

Staff Report -The Medicine Woman Group, LLC's Appeal of Tax Administrator's Final Determination Related to the Audit of Dispensary Operations for Calendar Years 2022-2024
May 11, 2026

Page 5 of 5 ends

BACKGROUND AND DISCUSSION -Continued
This interpretation is further supported by City policy clarifying the scope of taxable operations. As reflected in the City's Administrative Policy and Procedure No. 3 (as amended and ratified by the City Council in Resolution No. 22-18), businesses engaged in qualifying cannabis-related retail activity are subject to the cannabis tax on their entire gross receipts when their cannabis-related sales exceed 50% of total gross receipts. The policy explicitly recognizes that once a business meets this threshold and is classified as operating within the cannabis sector for tax purposes, the tax applies to all receipts of the business, including non-cannabis merchandise such as apparel or accessories, because those revenues are generated through and in connection with the cannabis business operation.

Accordingly, receipts from non-cannabis items are properly included in taxable gross receipts because they are part of the total revenue derived from the Taxpayer's commercial cannabis business activities and are not subject to any applicable exclusion under BMC§ 3.37.020.

Staff concludes that the Tax Administrator's Determination Letter is legally sound, supported by substantial evidence, and consistent with the Bellflower Municipal Code.

ATTACHMENTS
Appeal of Administrative Decision ................................................................................... 6 Response to Appeal of Administrative Decision ............................................................ 15 Tax Administrator's Determination Letter ...................................................................... 21 The Medicine Woman Group, LLC Audit Report dated April 14, 2026 .......................... 25 Payment Demand and Notice of Suspension Letter dated January 30, 2026 ............... 33 The Medicine Woman Group, LLC Request for Hearing dated February 5, 2026 ......... 37 Notice of Tax Assessment Hearing for February 17, 2026 dated February 5, 2026 ...... 39 Hearing Extension Request Dated February 13, 2026 .................................................. 52 Notice of Tax Assessment Hearing for February 24, 2026 ............................................ 53 Agenda Item 14-C, Resolution No. 22-18
Ratifying Administrative Policies and Procedures No. 3 -Cannabis Tax Application to Sale of Industrial Hemp-Derived Monies ....................................................................... 54 -5 -28

City of Bellflower

LAW OFFICES OF

JENNIFER MCGRATH
9114 Adams Avenue #264, Huntington Beach, CA 92646
714.231.2124 I [email protected]
April 19, 2026
Attn: Mayra Ochiqui, City Clerk
16600 Civic Center Drive
Bellflower CA 90706
via email only at
[email protected]
RE: Appeal of Administrative Decision Following Tax Assessment Hearing for the Audited Period (Calendar Years 2022-2024) dated April 15, 2026 Dear Ms. Ochiqui:

On February 24, 2026, the City of Bellflower (the "City") held an administrative hearing regarding a tax audit assessment involving The Medicine Woman Group, LLC (the "Taxpayer") pursuant to Chapter 3.37 of the Bellflower Municipal Code ("BMC"). The City had conducted an audit of the Taxpayer's records and determined there were unpaid taxes pursuant to the City's cannabis tax requirements. The Taxpayer challenged portions of the audit findings at the hearing and presented documentation, testimony and argument in support of its position. At the conclusion of the hearing, the Taxpayer requested an opportunity to present additional documentation for the City's consideration, which was granted.

On April 15, 2026, The Medicine Woman Group, LLC, received the Tax Administrator's Decision. This letter constitutes an appeal to the City Council of that Decision and/or the Failure of the Tax Administrator to grant an exemption pursuant to BMC 3.37.180(8).

Said hearing to be scheduled within 30 days. BMC 3.37.180(C).

Although there is no BMC code requirement to state the grounds for the hearing, The Medicine Woman felt it would better serve both the City and The Medicine Woman to detail the reasons for this appeal.

This appeal is based on the attached Objection To Tax Assessment; Hearing Brief By The Medicine Woman Group, LLC submitted to the Tax Administrator for consideration at the assessment hearing of February 24, 2026. Specifically, The Medicine Woman is appealing the Tax Administrator's Decision on two issues:
-6 -29

1. Amounts Collected By TMW From Its Customers For The City's Cannabis Tax Should Not Be Included In Taxable Gross Receipts As Specific Exemptions Under BMC 3.37.020 defining "gross receipts" apply; and

2. Sales of Non-Cannabis Items Should Not be Subject to the City Cannabis Tax Pursuant to BMC 3.3.180(C), The Medicine Women Group, LLC may present such relevant evidence it may have relating to the determination from which the appeal is taken.

We look forward to the hearing before the City Council.

Sincerely,
~~dr~HfCfMlW
Jennifer McGrath, Esq.

I, Charis Surrett, Chief Executive Officer, The
this request for hearing submitted on beh
Charis Surrett
Attachment:

Objection To Tax Assessment: Hearing Brief By The Medicine Woman Group, LLC Cc:

Berger, Kar1 H. ([email protected])
Tim Campen ([email protected])
Solange Fortenbach ([email protected])
Ryan Smoot ([email protected])
Anna Garan ([email protected])
Wangsu Lee ([email protected])
•
-7 -30

JENNIFER McGRATH (SBN 179917)
EDWARD PINCHIFF (SBN 137183)
Law Offices of Jennifer McGrath
9114 Adams Ave., #264
Huntington Beach, CA 92646
Phone: (714) 231-2124
Attorneys for

THE MEDICINE WOMAN GROUP, LLC
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9 CITY OF BELLFLOWER
10 11 In the Matter of the Bellflower City Tax
Assessment against
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28 THE MEDICINE WOMAN GROUP, LLC
dba The Medicine Woman,
OBJECTION TO TAX ASSESSMENT;

HEARING BRIEF BY THE MEDICINE

WOMAN GROUP, LLC
Date:

Time:

Place:

February 24, 2026
1:00 p.m.

Bellflower City Hall
OBJECTION TO TAX ASSESSMENT; HEARING BRIEF BY THE MEDICINE WOMAN GROUP, LLC -1 -8 -31

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I. INTRODUCTION
A. Parties
The Medicine Woman Group, LLC ("TMW") is a California Limited Liability Company operating a licensed cannabis dispensary located at 9058 Rose Street, Bellflower, California. Its CEO is Charis Burrett.

The City of Bellflower (the "City" or "Bellflower") is a municipal corporation located in southeastern Los Angeles County, California. The City was a general law City until Bellflower Measure B was approved by voters in November 2024 establishing Bellflower as a charter city.

B. Procedural History
This matter arises from a tax assessment against Medicine Woman Group, LLC by the City's administrator. The Bellflower Municipal Code ("BMC") defines the administrator as the "city manager, or designee." (BMC§ 3.37.020) The tax assessment is for alleged unpaid taxes pursuant to BMC§ 3.37.120, et seq. That assessment is the result of the City's cannabis tax examination audit for the period from January 1, 2022, through December 31, 2024.

As a result of that tax examination, the City issued a Cannabis Tax Report of Examination ("Tax Report") dated November 24, 2025. The tax examiner for the City was Chris Wills. The Tax Report states that during this period, TMW reported $10,017,465 in Gross Receipts and remitted $851,485 in cannabis tax to the City. The Tax Report determined that an additional cannabis tax liability existed primarily comprised of two issues.

The first issue identified in the Tax Report was that TMW charged and collected the City's Cannabis Tax from their customers and did not report those amounts as taxable gross receipts.

The second issue in the Tax Report was that TMW charged its customers a delivery fee on transactions that are delivered to their customers and did not report those amounts as gross receipts to the City. The City contends that these two items should have been reported as gross receipts to the City pursuant to the BMC 3 .3 7 .020 definition of gross receipts.

TMW contends that the amounts TMW charged and collected from its customers for the City's Cannabis Tax should not be included in gross receipts and that to do so amounts to a "tax on tax" which is inappropriate, unlawful, and unfair.

OBJECTION TO TAX ASSESSMENT; HEARING BRIEF BY THE MEDICINE WOMAN GROUP, LLC -2 -9 -32

1 TMW also contends that it properly included delivery fees in gross receipts. With respect to 2 the amount of the delivery fees, the tax examiner did not have records showing actual delivery 3 fees for the audit period, so the tax examiner estimated monthly delivery fees based on a prior 4 audit. TMW contends that the estimated amounts are not correct as TMW ceased doing 5 deliveries for nearly all of the audit period.
6 The Tax Report also applies the City Cannabis Tax to non-cannabis items. TMW contends 7 that non-cannabis sales are not subject to the City Cannabis Tax and the tax assessment should 8 be modified to reflect as such.
9 The Tax Report includes a finding that TMW owes the City an additional $67,709.76 in 10 local cannabis taxes. It also includes a finding that TMW owes penalties of $13,985.46 and 11 interest of $11,514.97. The total of these amounts is $93,210.19. TMW disagrees with these 12 findings.
13 As a result of the alleged underpaid taxes, the City also claims that TMW owes an 14 additional amount of $9,000.00 for the cost of the tax examination pursuant to BMC 3.16.130. 15 TMW objects to this charge as it contends there was no underpayment of taxes exceeding 2% 16 and asserts that it should not have to pay any amount for the cost of the tax examination. TMW 17 also objects to this charge as the City has not provided documentation establishing what the tax 18 examination costs were for the third party conducting the audit, A venu Insights & Analytics, 19 LLC, or the fair share of costs TMW should be expected to pay (A venu Insights & Analytics was 20 retained by the City to provide examinations/audits for multiple cannabis dispensaries.) 21 The City and TMW disagree on whether the City has issued a proper tax assessment to 22 TMW. The City's Director of Finance, Anna Garan, sent an email dated December 11, 2025, 23 indicating that the City's auditor completed its review and identified $93,210.19 in underpaid 24 taxes including penalties and interest. It also indicated that TMW's share of the audit costs is 25 $9,000. TMW's position is that this email was not a proper notice of assessment by the City as it 26 did not comply with the procedures set forth in BMC 3.37.150 which provides that formal notice 27 of any tax assessment be mailed by the administrator to TMW with details of the assessment and 28 the time and place where the assessment may be contested at least 10 days before a hearing on OBJECTION TO TAX ASSESSMENT; HEARING BRIEF BY THE MEDICINE WOMAN GROUP, LLC -3 -10 -33

1 the assessment. That was not done. The December 11, 2025, email from Anna Garan, Director of 2 Finance, was not mailed, does not contain the requisite information, and there was no hearing 3 providing an opportunity for interested parties to object. Once that hearing takes place, then the 4 assessment, decision, or administrative ruling may be appealed to the City Council under BMC 5 3.37.180.
6 After being notified that TMW did not acknowledge December 11, 2025, email as proper 7 notice of a tax assessment pursuant to the BMC, the City unilaterally set a tax assessment 8 hearing for February 17, 2026. That hearing was then continued by agreement of the parties to 9 February 24, 2026.
10 TMW objects to the tax assessment by the City and asserts that it does not owe any 11 additional cannabis taxes, penalties, or interest. TMW also objects to the December 11, 2025, 12 email as proper notice of a tax assessment and contends the City has failed to date to issue a 13 proper notice.
14 II. LEGAL ARGUMENT
15 The primary issue before the City administrator is whether to confirm or modify the tax 16 assessment. (BMC§ 3.37.150)
17 A. Amounts Collected by TMW from its Customers for the City's Cannabis Tax 18 Should Not be Included in Taxable Gross Receipts
19 TMW collected the City Cannabis Tax for the City from its customers. The tax was 20 included on the customer receipt as required by CDTF A regulations as the City Cannabis Tax 21 amount is necessary to compute the state cannabis excise tax and sales tax. (See 18 CCR§ 22 3802.) California Department of Cannabis Control regulations also require that all taxes be stated 23 on the receipt. (See 4 CCR §15420(a)(8).)
24 Pursuant to BMC§ 3.37.020, the definition of "gross receipts" has several exemptions 25 from that definition. Exemption #3 excludes from gross receipts "Any tax required by law to be 26 included in or added to the purchase price and collected from the consumer or purchaser;" and 27 Exemption #9 excludes "Amounts collected for others where the business is acting as an agent or 28 trustee and to the ex-tent [sic] that such amounts are paid to those for whom collected." OBJECTION TO TAX ASSESSMENT; HEARING BRIEF BY THE MEDICINE WOMAN GROUP, LLC -4 -11 -34

1 As to Exemption #3, CDTFA regulations and DCC regulations require the City Cannabis 2 Tax to be included in or added to the purchase price and collected from the consumer or 3 purchaser. Consequently, the City Cannabis Tax should not be included in the BMC definition of 4 "gross receipts."
5 As to Exemption #9, the City Cannabis Tax was collected (by TMW) for others (the City) 6 where the business (TMW) is acting as an agent or trustee (for the City) and such amounts were 7 paid (by TMW) to those for whom collected (the City). Indeed, at a February 9, 2026, meeting 8 between the parties addressing the tax assessment, the attorney for the City acknowledged that 9 TMW collects the City Cannabis Tax from the consumer on behalf of the City. Consequently, 10 the City Cannabis Tax should not be included in the BMC definition of"gross receipts." 11 B. Amounts Collected by TMW from its Customers for Delivery Fees Are Not 12 Accurately Reflected in the Tax Assessment
13 TMW will show at the hearing that delivery fees collected by TMW from its customers 14 were reported in gross receipts and the tax assessment delivery fee numbers are wrong. As to the 15 amount of the delivery fees, the tax examiner did not have records showing actual delivery fees 16 for the audit period, so the tax examiner estimated monthly delivery fees based on a prior audit. 17 Those estimates are not accurate. TMW will show at the hearing the true amount of the actual 18 delivery fees collected, which are minimal for the audit period as TMW ceased deliveries for 19 nearly all of the audit period.
20 C. Sales of Non-Cannabis Items Should Not be Subiect to the City Cannabis Tax 21 The City Staff Report dated October 10, 2016 (City Council Agenda Item 11D), states, in 22 relevant part that "[t]he primary purpose of this program is to generate revenue for the City's 23 General Fund. Preliminary estimates suggest the City may receive between $1.8 million and $3.4 24 million in annual revenue ( cannabis business tax and sales tax) from the first full year of issuing 25 12 permits to 2023-24, respectively, when all the proposed tax rates are fully phased in prior to 26 subsequent annual CPI adjustments." TMW does not dispute that non-cannabis items are subject 27 to the sales tax under BMC 3.04.
28 OBJECTION TO TAX ASSESSMENT; HEARING BRIEF BY THE MEDICINE WOMAN GROUP, LLC -5 -12 -35

1 However, BMC 3.37.020 defines "Tax," "cannabis tax," "business tax," or commercial 2 marijuana tax" to mean the tax due pursuant to this chapter for engaging in commercial cannabis 3 business in the City. Therefore, TMW does contend that non-cannabis items are not subject to 4 the Cannabis Business Tax under BMC 3.37.060(D). Non-cannabis items include, but are not 5 limited to, branded clothing such as t-shirts, shorts, socks, hats, hoodies, winter caps, child- 6 resistant storage containers, pouches, and bags. None of which are subject to the CDTFA 7 cannabis excise tax. (See 18 CCR § 3802).
8 The October 2016 Staff Report further states that "Of greatest interest to the City is the 9 proposed tax that would be imposed for the privilege of operating a Cannabis Operation within 10 Bellflower' s jurisdiction." All discussion before the City Council in considering the marijuana 11 tax measure in October and November 2016 emphasized "a tax on cannabis related businesses." 12 The ballot language for the Bellflower cannabis tax initiative (Measure B) approved by voters in 13 March 2017 reiterated the same message. Shall the proposition imposing a tax on cannabis 14 related businesses operating within the City of Bellflower be adopted? ( emphasis added) 15 Moreover, neither the impartial analysis nor the ballot arguments dissuaded the voter from 16 believing the taxation was on cannabis. There is no language in the Staff Reports or ballot 17 materials that would educate a voter that a cannabis related business would be subject to the 18 standard sales and use tax similar to any other non-cannabis retail business but also penalized 19 with an additional cannabis tax rate on non-cannabis goods because the t-shirt is sold in the same 20 retail business as cannabis. In short, the "privilege" has become a penalty. 21 If it was the intent of the voters that non-cannabis goods would be subject to a cannabis 22 business tax, the initiative could have explicitly said so. If it was the intent of the City Council 23 that non-cannabis goods would be subject to a cannabis business tax, the BMC could have 24 explicitly said so. They do not.
25 California courts consistently hold that an ambiguity in a tax statute will generally be 26 resolved in favor of the taxpayer. In re Transient Occupancy Tax Cases (2016) 2 Cal. 5th 131, 27 134. See also Microsoft Corp. v. Franchise Tax Bd. (2006) 39 Cal.4th 750, 759; Agnew v. State 28 Bd. of Equalization (1999) 21 Cal.4th 310,330.

OBJECTION TO TAX ASSESSMENT; HEARING BRIEF BY THE MEDICINE WOMAN GROUP, LLC -6 -13 -36

1 TMW will show at the hearing the true amount of the cannabis sales vs. non-cannabis sales. 2 TMW contends that non-cannabis sales are not subject to the Cannabis Business Tax and the tax 3 assessment should be modified to reflect as such.
4 III. CONCLUSION
5 Based on the foregoing, it is respectfully submitted that the administrator should modify 6 the tax assessment to reflect that no additional taxes, interest, or penalties are due from TMW 7 and to reflect that TMW does not owe any amount for the cost of the tax examination. 8 9
10 DATED: February 17, 2026
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Jennifer ivlcGrath
Attorneys for THE MEDICINE WOMAN GROUP, LLC
OBJECTION TO TAX ASSESSMENT; HEARING BRIEF BY THE MEDICINE WOMAN GROUP, LLC -7 -14 -37

The City of Bellflower
?,u,:u1.ies. 'Jlusi'ne.sses. ?ulures.
16600 Civic Center Drive, Bellil~ CA 90706
·rd :;62.804.1424 ~ :;~2.92:; 8660 www.bellfJowe~org
April 28, 2026
VIA EMAIL AND U.S. MAIL
Jennifer McGrath, Esq.

Law Offices of Jennifer McGrath
9114 Adams A venue #264
Huntington Beach, CA 92646
jmcgrath [email protected]
RE: Response to Appeal of Administrative Decision Following Tax Assessment Hearing The Medicine Woman Group, LLC (Calendar Years 2022-2024); Demand for Payment
Dear Ms. McGrath:

A copy of your correspondence dated April 19, 2026 and April 22, 2026 was forwarded to my attent1on (''April Correspondence"). In part, the April Correspondence seeks confinnation that the Tax Administrator's Determination Letter of April 15, 2026 (the "Detennination Letter") is not final and that the assessed amount of $93,903.11 is not due and payable pending resolution of the appeal
The City will schedule a hearing before the City Council within the time frame prescribed by the BMC. However, the City cannot confinn that the obligation to pay the assessed amount is suspended dming the pendency of the appeal. To the contrary, as set forth below, the full amount of$55,056.11 (net of payment receiYed to date) remains due and payable, and the City may pursue all available enforcement remedies in the event of non-payment.

This letter also responds to the substantive arguments raised in TMW's Object1on to Tax Assessment and Hearing Brief dated February 17, 2026, which was attached to and incorporated by reference in your April 19, 2026 appeal letter. The City's position on each issue is as follows. ► The Payment Obligation Is Not Stayed by the Filing of an Appeal The Determination Letter constitutes the Tax Administrator's final determination following the administrative heari.ng held on February 24, 2026, and the subsequent review of all documentation submitted for consideration. While TMW may appeal that determination to the City Council under BMC§ 3.37.180, nothing in BMC Chapter 3.37 provides that the filing of an appeal operates as an automatic stay of the payment obligation or suspends the City's enforcement authority. The assessed amount therefore remains due and payable by the stated deadline.

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Pursuant to BMC§ 3.37.140, taxes that are not received by the administrator on or before the due date are delinquent and subject to penalties and interest. Interest continues to accrue at the rate of 0.75% per month on the delinquent amount until paid. ln addition, BMC Chapter 3.37 authorizes the administratot to record a certificate with the County Recorder specifying the delinquent tax amount, which upon recording constin1tes a lien on all real property owned by the taxpayer. The City may aJso pursue enforcement actions against TMW's cannabis business permit under Title 14 of the BMC.

TMW is strongly encouraged to remit payment of the fu[] assessed amount to avoid further accrual of additional penalties and interest and to preserve the status of its cannabis business pennit. The current tax assessment includes interest accrual only through November 2025, which is the finalization date of the original audit report. Should the City Council grant the appeal in whole or in part, the City will issue a refund of any overpaid amount consistent with the refund provisions of BMC§ 3.37.170.
► Response to TMW's Substantive Arguments on Appeal
The Tax Administrator's Determination Letter thoroughly addressed each of the arguments raised by TMW at the February 24, 2026 hearing and in its supplemental submissions. The City's position on each issue remains as set forth in the Determination Letter. Nevertheless, given that TMW's appeal incorporates by reference the Objection to Tax Assessment and Hearing Brief previously submitted, the City provides the following response to each ofTMW's principal arguments.

A. Amounts Collected from Customers as "City Cannabis Tax" Are Properly Included in Gross Receipts
TMW contends that amounts it collected from customers and ide.ntified on receipts as "City Cannabis Tax" should be excluded from gross receipts under two exemptions in the BMC§

3.37.020 definition of"gross receipts": (1) Exemption #3, which excludes "[a]ny tax required by law to be included in or added to the purchase price and co11ected from the consumer or purchaser''; and (2) Exemption #9, which excludes "[a]mounts 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."
Both arguments fai.l as a matter oflaw.

Exemption #3 does not apply because the City's cannabis tax under BMC§ 3.37.060(D)(l) is a direct tax on the business for tlle privilege of conducting commercial cannabis operations within the City. It is not a tax imposed on the consumer or purchaser. Unlike state sales tax or the state cannabis excise tax, the City Cannabis Tax is not legally required to be passed through to ttte purchaser, and there is no statutory obligation to separately state it on customer receipts. The fact Sonuy R. Sanu, lucs
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that TMW voluntarily chose to collect this amount from its customers ahd itemize it on receipts does not transfonn a privilege tax on the business into a pass-through tax on the consumer. When TMW collects the tax from customers and lists it on receipts, those amounts constitute part of TM W's gross receipts for purposes of calculating the cannabis tax.

Tbis position is consistent with the treatment of local cannabis business taxes throughout the State of California for the calculation of the 15% excise tax and sales tax. The California Department of Tax and Fee Administration ("CDTFA") has expressly stated that "[a]ny cannabis business tax included on the receipt to the customer is considered part of gross receipts unless otherwise excluded" under the Revenue and Taxation Code (see, CDTF A, Gross Receipts Subject to Cannabis Excise Tax (L-931), fn. 1). The CDTFA's guidance further confirms that local cannabis business taxes passed on to customers are included in gross receipts subject to both the state cannabis excise tax and sales tax.

TMW's reliance on CDTF A regulations ( 18 CCR§ 3802) and Department of Cannabis Control regulations ( 4 CCR § l 5420(a)(8)) requiring that taxes be stated on customer receipts is misplaced. Those state regulations govern the fo1mat of receipts for purposes of calculating state excise taxes and sales taxes; they do not control the City's definition of "gross receipts" under the BMC nor do they convert the City Cannabis Tax from a privilege tax on the business into a pass-thtough tax on the consumer.

Exemption #9 likewise does not apply. TMW is not acting as an "agent or trustee" when it collects the City Cannabis Tax from its customers. The tax obligation is TMW's own; it is imposed directly on the cannabis business, not on the customer. TMW's decision to pass this cost to customers is a business decision, not a legal obligation arising from an agency or trust relationship. Because TMW is satisfying its own tax obligation-not collecting on behalf of a third party for whom it acts as agent -the exemption is inapplicable.

Accordingly, all monies received from customers, including amounts identified on receipts as "City Cannabis Tax," constitute gross receipts under BMC§ 3.37.020, and the Tax Administrator's determination on this issue is correct.

B. Delivery Fees Have Been Properly Adjusted Based on TMW's Own Records TMW argued at the hearing that the delivery fee amounts in the original audit report were inaccurate because the auditor had estimated monthly delivery fees based on a prior audit in the absence of actual records. The City acknowledges this concern and notes that the Tax Administrator addressed it directly in the Determination Letter.

Following the hearing, TMW provided supplemental point-of-sale documentation, delivery and transaction logs, and a declaration substantiating its delivery fee revenue. The City's auditor Sonuy R. Sa11u1 lm:.•
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-17-40

The City of Bellflower
'J,:uz:u'hes. 'JJusine.s.se.s. !Julure..s.
16600 Civic Center Drive, Betlil~ CA 90706
·re1 562.804.1424 ~ S~2..925.8660 .,,,,,_..bellflowecorg reviewed this additional documentation and verified that a portion of delivery fees bad, in fact, beeo included in TMW's reported gross receipts. Accordingly, the audit assessment was adjusted to reflect that only $4,750 in delivery fees was not reported on TMW's returns to the City. This adjustment was incorporated into the revised audit report and reflected in the total assessment.

There is no djspute that delivery fees constitute gross receipts under BMC§ 3.37.020, which broadly defines gross receipts to include "the total amount or compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit aflowed." Delivery services provided in connection with cannabis transactions are part of TMW's commercial operations, and the associated fees are properly included in gross receipts. TMW's argument that the delivery fee figures were inaccurate has already been addressed through the adjustment reflected in the Detennination Letter, and no further modification is waiTanted.

C. Sales of Non-Cannabis Items Are Subject to the Cannabis Tax TMW contends tl1at receipts from sales of non-cannabis items -including branded clothing, child-resistant containers, pouches, and bags -should not be subject to the City Cannabis Tax under BMC § 3 .3 7 .060(0). This argument is not supported by the plain language of the ordinance.

BMC§ 3.37.020 defines "cannabis business" or ''commercial cannabis business" to mean "any commercial business activity relating to cannabis including, without limitation, cultivating, transporting, distributing, manufacturing, compow1ding, converting, processing, preparing, storing, packaging, delivering, and selling (wholesale and/or retail sales) of cannabis and any ancillary products and accessories in the City, whether or not carried on for gain or profit." The tax is imposed on the business activity as a whole -it is a tax on the privilege of operating a commercial cannabis business, not a product-specific excise tax. Gross receipts therefore include all receipts generated from operations conducted as part of TMW's cannabis business, including the sale of non-cannabis items such as branded merchandise and accessories.

TMW argues that legislative history and ballot materials demonstrate that the voters intended the tax to apply only to cannabis products. This argument is unavailing. The plain language of the ordinance is clear and tmambiguous: the definition of "commercial cannabis business" expressly includes the sale of "ancillary products and accessories." Where the text of a statute is clear, courts need not resort to extrinsic aids of interpretation (Lungren v. Deulanejian (1988) 45 Cal.3d 727). The ballot language asked voters whether a "tax oh cannabis related businesses" should be adopted -the word ''businesses" encompasses the entire operation, not merely the sale of cannabis products.

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-18-41

The City of Bellflower
?t:unrfies. 7lusi'nesses. !Julure.s.
16600 Civic Center Drive, Beilil~ CA 90706
'fd 562.804_1424 l'u 562.925,8660 www..bdlfJower.org
TM W's reliance on the principle that ambiguities in tax statutes are construed in favor of tbe taxpayer does not assist its position because there is no ambiguity to construe. The definition of "commercial cannabis business" is broad and explicit and includes the sale of ancillary products.

Moi:eover, the California Supreme Court has held that while ambiguities in tax statutes are construed against the taxing authority, the statute must be ambiguous before this canon applies (Agnew v. State Bd. of Equalization (1999) 21 Cal. 4th 310). Here, the BMC's definition is not ambiguous.

Fu1ther, the fact that non-cannabis items may not be subject to the CDTF A cannabis excise tax under 18 CCR§ 3802 is in-elevant to the City's local cannabis business tax. The state cannabis excise tax and the City's cannabis business tax are distinct taxes with distinct legal bases, distinct definitions of the tax base, and distinct administering authorities. State regulatory provisions governing the computation of the state excise tax do not control the City's definition of gross receipts or the scope of the City's cannabis business tax.

Accordingly, the Tax Administrator's determination that receipts from all sales -including non-cannabis items -conducted as part of TM W's cannabis business operations are included in gross receipts is con-ect.
► Demand for Payment
Based on the foregoing, the City demands that TMW remit the full assessed amow1t of $55,056.11 (net of payment received to date) without further delay. This amount reflects the tax due of $60,985.42, penalties of $12,892.93 pursuant to BMC§ 3.37.140(8), and interest of $11,024.76 pursuant to BMC§ 3.37.140(E), as set forth in the revised audit report, and is net of the payment made on January 9, 2026, totaling $38,847. Additionally, interest wlll accrue at the rate of 0.75% per month on the unpaid tax amount from the calculation date of the Determination Letter until payment is made. As outlined in the tax determination letter and the revised audit repo1t, the current amount due reflects intei:est calculated only through November 2025, the date of the original audit repo1t. In addition, the City has assessed TMW $9,000.00 for its proportionate share of the audit examination costs pursuant to BMC§ 3.37.260, which amount is also due and payable.

Be advised of the following consequences of continued non-payment:
l. Additional Penalties and Interest. All unpaid amounts will continue to accnie interest at 0.75% per month until paid.

2. Lien Authority. The City may record a certificate of tax lien with the Los Angeles County Recorder specifying the delinquent amount, which upon recording constitutes a lien on all real property owned by TMW.

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-19-42

The City of Bellflower
?aauf/e.s. ::Jlusinesses. ?ulures.
t660o Civic Ceoter Drive, Bellflower, CA 90706
Tel 562.804.1424 Fax. 562.925.8660 www.bellflowec.org

3. Permit Enforcement. The City reserves the right to pursue enforcement actions with respect to TMW's cannabis business pennit, including suspension or revocation, in accordance with Title 14 of the BMC.

4. Additional Civil Remedies. The City reserves all additional remedjes available under the BMC and applicable law, including the tight to pursue collection of the delinquent tax as a civil debt.

We urge TMW to remit the full assessed amount immediately to avoid further accrual of penalties and interest and to preserve the status of its cannabis business permit. Payment should be directed to the City of Bellflower Finance Department at City Hall, 16600 Civic Center Drive, Bellflower, CA 90706.
c: i Manager
Finance Director
Assistant City Attorney
Sonny R. Santa Ines
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-20 -43

The City of Bellflower
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The Medicine Woman Group, LLC
Re: Administrative Decision Following Tax Assessment Hearing for the Audited Per.iod (Calendar Years 2022-2024)

Page 2 of 4 ends

The exclusions cited by the Taxpayer do not apply. The tax is not imposed on the purchaser by law, such pS with the State excise ta~ .. so the exclusion for taxes collected from the purchaser is inapplicable. Similarly, the exclusion for amounts collected on behalf of others does not apply because the Taxpayer is not acting as an agent or trustee, but is instead satisfying its own tax obligation. State regulatory provisions regarding the disclosure of taxes on receipts do not control the City's definition of gross receipts and are not relevant because the tax is imposed on the Taxpayer, not required to be collected from the customer. All monies received from customers, excluding mandatory passthrough taxes, are part of gross receipts pursuant to the BMC.

Accordingly, amounts identified as "City Cannabis Tax" meet the definition of the City's taxable gross receipts.

With respect to the second issue, the audit determined that the Taxpayer charged delivery fees but did not Include all such amounts in the reported gross receipts to the City. Delivery services provided in connection with cannabis transactions are part of the Taxpayer's commercial operations, and the associated fees constitute gross receipts under BMC§ 3.37.020. During the initial review, the City's contracted auditor found that delivery fees appear on customer receipts, but no corresponding amounts are reflected in the point-of-sale (POS) transaction detail. The Taxpayer did not timely respond to the original audit request for supporting documentation to reconcile this discrepancy. Only after the audit did the Taxpayer submit point-of-sale (POS) records, supplemental delivery and transaction logs, and a declaration to substantiate the delivery fee revenue. Based on this additional information, the auditor was able to verify that a portion of the delivery fees had, in fact, been included in reported gross receipts for the audit period.

Accordingly, the audit assessment has been adjusted to show $4,750 in delivery fees was not reported on the Taxpayer's returns to the City.

With respect to the third issue, the Taxpayer argues that receipts from sales of non-cannabis items should not be subject to the Cannabis Tax. This argument is not supported by the ordinance.

The Cannabis Tax is imposed on the privilege of operating a "Commercial Cannabis Business," which is defined in BMC§ 3.37.020 to expressly include sales relating to cannabis, including the sale of ancillary products and accessories. Section 3.37.020 states in relevant part as follows:
"Cannabis business" or "commercial cannabis business"
means any commercial business activity relating to cannabis including, without limitation, cultivating, transporting, distributing, manufacturing, compounding, converting, processing, preparing, storing, packaging, delivering, and selling (wholesale and/or retail sales) of cannabis and any ancillary products and accessories in the City, whether or not carried on for gain or profit
"Gross receipts,"
except as otherwise specifically provided, means the total amount actually received or receivable from all sales; the total amount or compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for Which a charge is made or credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials, goods, wares or merchandise; discounts, rents, royalties, fees, commissions, dividends, and gains realized from trading in stocks or bonds, however designated. Included in "gross receipts" is all receipts, cash, credits and property of any kind or nature, without any deduction there from on account of the cost of the property sold, the cost of materials used, labor or service costs,. interest paid or payable, or losses or other expenses whatsoever, except that the following is excluded:
-22-45

The Medicine Woman Group, LLC
Re: Administrative Decision Following Tax Assessment Hearing for the Audited Period (Calendar Years 2022-2024)

Page 3 of 4 ends

1. Cash discounts where allowed and taken on sales;

2. Credit allowed on property accepted as part of the purchase price and which property may later be sold, at which time the sales price is included as gross receipts;

3. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;

6. 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;

7. Whenever there are included within the gross receipts amounts which 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 are included in the amount of gross receipts for the period when they are recovered;

8. Receipts of refundable deposits, except that such deposits when forfeited and taken into income of the business must not be excluded when in excess of one dollar ($1.00);

Accordingly, the tax applies to the business activity as a whole rather than to individual product categories. Gross receipts therefore include all receipts generated from operations conducted as part of the Taxpayer's cannabis business, including sales of non-cannabis items. While the Taxpayer references staff reports and ballot materials, those sources do not support Taxpayer's contentions or override the plain language of the ordinance. Accordingly, receipts from non- cannabis sales meet the definition of the City's taxable gross receipts.

Based on the foregoing, the City determines that amounts identified as "City Cannabis Tax" are included in gross receipts, delivery fee revenue is adjusted to $4,750, and receipts from non- cannabis sales are included in gross receipts. The audit assessment is therefore affirmed as modified.
-23 -46

The Medicine Woman Group, LLC
Re: Administrative Decision Following Tax Assessment Hearing for the Audited Period (Calendar Years 2022-2024)

Page 4 of 4 ends

As a result of the City's analysis of Taxpayer's additional evidence presented, the Taxpayer's original liability of $102,210.19 has now been revised to $93,903.11, consisting of $60,985.42 in tax, $12,892.93 in penalties, $11,024.76 in interest (calculated through November 2025), and $9,000.00 in audit costs.1
This Administrative Decision constitutes the Tax Administrator's final administrative determination with respect to the audit period identified above. Payment of the total amount due is required within 10 business days from the date of this letter to avoid revocation of the current cannabis permit.

Sincerely,
• !-'t, Ir ~ ;I'll\ v'V'\-1 .J
Anna Garan
Finance Director
Enclosure: Revised Audit Report dated April 14, 2026
cc: Ryan Smoot, City Manager
Wangsu Lee, Assistant to the City Manager
Karl Berger, City Attorney
Timothy Campen, Assistant City Attorney
Christopher W. Wills, Audit Manager
1 The City incurred $45,000 in audit costs for four dispensaries and one distribution activity. Pursuant to Section

3.37.260 where an audit identifies an understatement of 5% or more, the taxpayer is responsible for the reasonable cost of the audit and all resulting taxes, penalties, and interest. Accordingly, one-fifth of the audit cost or $9,000 has been allocated to the Taxpayer.
-24 -47

City of Bellflower, California
Cannabis Tax
Report of Examination

REVISED
4pril N, 2026
The Medicine Woman Group, LLC
d/b/a The Medicine Woman
Examination Period:

January 1, 2022, through December 31, 2024
Finance Department
City Hall
16600 Civic Center Drive
Bellflower, California 90706
Examination Performed by:

Audit Division/Compliance Section
A venu Insights & Analytics, LLC
600 Beacon Parkway West, Ste. 900
Birmingham, AL 35209
-25 -48

d/b/a: The Medicine Woman
A venu Insights & Analytics, LLC
Audit Division
Business Name: The Medicine Woman Group
Location: 9058 Rose Street, Bellflower, CA 90706
Date of Audit: June 19, 2025
Examiner: Chris Wills
Audit Commentary:

Page 2 ends

The Medicine Woman Group, LLC d/b/a The Medicine Woman, hereinafter referred to as "TMW", is a cannabis dispensary located at 9058 Rose Street, Bellflower, California. TMW is owned by Charis Burrett (50%) and Damian Collins (50%). Brandon Scadron and Roy Woo represented the dispensary during the onsite visit. Mr. Woo and Mr. Scadron presented the records for review. Records were received electronically after the walk-through of the dispensary and were reviewed at Avenu's office.

The scope of the examination was to determine TMW's compliance with the City's cannabis tax pursuant to Bellflower City Code § 3.37 et seq. and their compliance with applicable State and Local Laws and Guidelines for the operation of a cannabis dispensary. The review period for the cannabis tax examination is January 1, 2022, through December 31, 2024. During this period, TMW reported $10,017,465 in Gross Receipts and remitted $851,485 in cannabis tax.

Current Methods:

Purchasing Process & Invento,y Handling Procedures:

Mr. Scadron has been tasked with the responsibility of making all inventory purchases for the facility. Inventory is purchased, as needed, through licensed vendors. TMW pays their vendors either by check or the use of automated clearing house ("ACH") transfers. Each inventory shipment includes a certificate of analysis, shipping manifest, and purchase invoice.

Upon arrival, the delivery driver signs in with the front desk prior to being allowed into the facility. Either Mr.

Scadron or another manager is called to meet the driver in the waiting area. After the driver is met, they are instructed on where to bring the new inventory into the facility. Inventory is received in a back office/receiving area by the manager, at which point the items are inspected to confirm that all packages are properly sealed and match the manifest details. After the manifest details are confirmed, the manifest is accepted in the State's tracking system, METRC. Once accepted in METRC, the manifest is automatically synced with TMW's POS/track and trace system, Treez, and the inventory count is updated to reflect the new product. Once accepted into Treez, a unique barcode is assigned to the products and stickers are printed and placed on the products for tracking purposes. The selling price for each of the new inventory items is set and matched to the barcode before the inventory is either placed in the showroom or placed into their inventory storage room.

A full inventory count is conducted annually by the staff, with cycle counts being completed weekly. Cycle counts consist of pulling certain categories of product, such as flower, extracts, pre-rolls, edibles, etc., and counting those items individually. Both the cycle count and the full inventory count are completed by exporting the expected inventory levels from Treez, which present the current levels in real time, and scanning the barcodes to make sure the quantities match. If discrepancies are discovered the product is recounted and a manager researches the issue if it is still present after the recount. If the discrepancy cannot be accounted for, an adjustment is entered into Treez, which also reports to the State through METRC. Reason codes are required to finalize an adjustment within METRC. At the end of the day, inventory on the showroom floor is locked in their -26 -49

d/b/a: The Medicine Woman
A venu Insights & Analytics, LLC
Audit Division

Page 3 ends

cabinets/display cases and backstock items are locked in large safes in limited access areas. Only a select few personnel have access to the backstock safe and limited access areas.

Customer Check-in/verification Procedures:

Customers are welcomed at the front desk by security, where they are required to present their identification, such as a driver's license, and their medical recommendations (if available). In the case of a new customer, a new member profile is created for them in Treez by entering their information from their driver's license, scanning to get the customer picture, and entering a telephone number. If a customer presents a doctor's recommendation, the recommendation is verified and scanned into the system. The customer's recommendation is saved to their profile during the initial account set up, afterwards the recommendation is not needed for return visits until the recommendation expires. Returning customers are verified/checked in by scanning the barcode on the back of the customer's ID which automatically pulls up the customer's profile. After being checked in, the customer is placed in the "queue" for the next available budtender, i.e. sales associate, to help them. TMW tries to maintain a 1-to-l ratio, meaning one customer ( or group) to one bud tender. Once inside the facility, customers are greeted by a budtender to discuss their needs and is provided consultation regarding available products that meet those needs. Budtenders access customer information in real time via Treez to make sure they do not exceed the maximum amount of cannabis legally allowed based on whether the customer is a medical or adult use customer.

Sales and Cash Handling Procedures:

TMW has two types of customers, pick-up/delivery and in-store purchases. Pick-up/delivery customers order their products on line. If the customer selects pick-up, they will come to the store to pick up their order once they are notified it is ready. Customers that select delivery will have their purchase delivered to them by a TMW employee. In-store customers have their transactions completed in the POS system, Treez, by scanning the barcode on the product(s) that are being purchased by the customer. TMW provides an ATM to their in-store customers so that they can withdraw cash to complete their purchase. TMW fills the A TM machine from cash on hand. Customers are charged a fee to withdraw cash from the A TM.

Budtenders are responsible for managing their own cash register and entering each transaction into Treez which accounts for all monies and inventory management. At the beginning of each day, each cash register till is supplied with cash and issued to a budtender. That budtender will be responsible for their till/cash register until the till is closed out. Tills are closed either at the end of the shift or on an as needed basis based on the amount of cash inside. At the end of the day/shift, the budtender will close out their cash drawer and hand it over to a closing manager to count out. The closing manager removes the deposit amount from the drawer, logs the amount in the system, and places the deposit (total cash minus start up amount) into their smart safe'. The smart safe is synced with their bank and presents a deposit log to TMW for their records. When all the drawers have been balanced, the closing manager will close out the daily sales and report the amounts to their accounting team.

Reporting:

TMW records all sales transactions in Treez 2 . Each customer receipt includes the price of the item(s) purchased as well as separately stated state and local taxes. Taxes listed out include sales tax at 10.25%, the City's 1 Once the deposits go into the smart safe, liability of the money is shifted to the bank. The bank will send an armored truck around once a week, or as needed, to empty the safe.
2 Delivery fees charged to customers were not listed in the original POS repo1ts provided by TMW. TMW requested the help ofTreez to pull the delivery transactions so that applicable delivery fees could be presented for review. -27 -50

d/b/a: The Medicine Woman
A venu Insights & Analytics, LLC
Audit Division

Page 4 ends

cannabis tax at 8.5%, and cannabis excise tax at 15%. At the end of each month, TMW generates a monthly sales summary report from Treez and sends it over to their accounting team to compare with the daily close out reports. At the end of the quarter, the quarterly gross receipts are totaled and reported to the City.

Audit Procedures and Testing Methodology:

Prior to the beginning of the examination, a letter of intent to audit was mailed by the City of Bellflower's Finance Department. A preliminary interview was conducted by phone to introduce the auditor to the appropriate personnel at TMW and to familiarize the auditor with the products and services offered by the dispensary. An onsite visit was completed on June 19, 2025, during which the auditor reviewed the sales practices, customer check-in procedures, and inventory management procedures.

Documents reviewed included: Bellflower cannabis tax returns, Treez / POS monthly sales detail and summary reports, month/quarter end working papers, bank statement, inventory purchase logs, and sample customer receipts. Gross receipts from the POS sales reports were recalculated and compared to the working paper amounts to confirm the calculated taxable gross receipts. The bank statements were also reviewed to verify the amount of cash deposited did not exceed the amount reported to the City. Sample customer receipts were requested to confirm how TMW presented taxes to their customers and to reconcile the amounts listed in the sales reports. Inventory purchase logs were compared to the POS sales details to reconcile purchases with sales to confirm inventory levels were representative of the sales completed. Once the taxable gross receipt amounts were confirmed, they were reconciled to the cannabis tax returns to verify they were accurately reported to the City.

Avenu performed the following tasks to verify TMW's adherence to California Health and Safety Code § 1 1018, § 11362.5, and § 11362. 7 et seq. include:
• Walk Through of Customer Verification Process
• Walk Through of Vendor Verification Process
While onsite, a sample inventory count was conducted to verify if the inventory management function within Treez was functioning as it should. To complete this count, five (5) items were randomly selected to count and were compared with the inventory level in Treez. The table below details the brand, items selected, the available amount, and the counted total.

Brand Product Available
per Treez
St. ldes Purple Grape Tincture 9
Lost Farms Watermelon 18
Alpin Cannatonic 8
Pistil Whip Frozen Banana 8
Coastal Sun Tropicana Cherry 5
Applicable Sections of Law and Municipal Code:

Beliflower City Code§ 3.37 et seq.

California Health and Safety Code§ 11018, § 11362.5, and§ 11362.7 et seq.

California Revenue and Taxation Code§ 34010 -34021.5
California Business and Professional Code § 26000 -26231.2 Counted by
Auditor
9 18
8 8
5 -28 -51

d/b/a: The Medicine Woman
A venu Insights & Analytics, LLC
Audit Division
Audit Findings and/or Errors Discovered:

Page 5 ends

During the audit it was determined that a cannabis tax liability existed. The liability was comprised of primarily two issues. The first issue was that TMW charged and collected the City's cannabis tax from their customers and did not report those amounts as taxable gross receipts. The City's cannabis tax is a tax on the business for the privilege of conducting business within the City. The tax imposed by the City under Belljlower Municipal Code § 3.37 is a direct tax on the cannabis business rather than an indirect tax imposed on the consumer (such as sales tax and excise tax). Belljlower Municipal Code§ 3.37.060 D.1 states that "every person who is engaged in business as a dispensary ... in the City must pay an annual commercial cannabis tax". Since the tax is levied on the business itself, if the amount is collected from the customer, that amount is considered gross receipts based on the broad definition thereof. In this instance, the tax was collected from the customers; therefore, the amounts collected should be included within the gross receipts reported to the City.

The second issue discovered was that TMW charged their customers a delivery fee on transactions that are delivered to their customers and did not report those amounts as gross receipts to the City. Pursuant to the City's definition of gross receipts, amounts received for "the performance of any act or service" in which a charge is made is deemed to be included. Delivery fees are charged for the delivery service provided by TMW and therefore, should be included within the total gross receipts reported to the City. The delivery fees were not listed on the POS transactions provided; however, the fees were identified when reviewing a few sample receipts. The actual amount received for delivery fees for the audit period was requested from TMW. TMW provided a list of all delivery fees charged for the audit period in a declaration provided during the hearing.

Additional support was requested to confirm the amounts were listed accurately. Upon review of the additional support, it was determined that the amounts provided were reliable; therefore, those amounts have been incorporated into the results of the audit. The tables below breakdown the amounts reported to the City as well as the audited gross receipts.

Table 1 below details the audited gross receipts that should have been reported to the City for each reporting period.

Table I-Audited Gross Receipts
Filing Calendar Net Sales Cannabis Tax Delivery Audited Gross (City) Fees3 Receipts Period Period (a) (b) (c) (d)= (a)+ (b) + (c) 2021-22-Q3 Jan-Mar: 2022 $1,017,738.11 $83,619.51 $4,750.00 $1,106,107.62 2021-22-Q4 Apr-Jun: 2022 $1,001,235.04 $82,200.62 $0.00 $1,083,435.66 2022-23-QI Jul-Sep: 2022 $935,267.94 $76,793.50 $0.00 $1,012,061.45 2022-23-Q2 Oct-Dec: 2022 $892,896.90 $72,949.47 $0.00 $965,846.37 2022-23-Q3 Jan-Mar: 2023 $842,697.17 $69,252.38 $0.00 $911,949.55 2022-23-Q4 Apr-Jun: 2023 $826,699.80 $67,954.96 $0.00 $894,654.76 2023-24-Ql Jul-Sep: 2023 $787,645.39 $64,512.59 $0.00 $852,157.97 2023-24-Q2 Oct-Dec: 2023 $776,238.00 $63,092.04 $0.00 $839,330.04 2023-24-Q3 Jan-Mar: 2024 $751,090.06 $61,314.71 $0.00 $812,404.77 2023-24-Q4 Apr-Jun: 2024 $734, 124.24 $61,024.64 $0.00 $795,148.87 2024-25-Ql Jul-Sep: 2024 $690,890.11 $57,464.13 $0.00 $748,354.24 2024-25-Q2 Oct-Dec: 2024 $659,022.92 $54,466.22 $0.00 $713,489.15 Total Audited Gross Receipts $9,915,545.68 $814,644.76 $4,750.00 $10,734,940.44 3 In early 2022, TMW transitioned away from charging a delivery fee on their delivery services to be more competitive. Consequently, delivery fees were gradually discontinued so that the service was completed free of charge. Delivery services began to decline around September 2022 and was completely phased out by November 2024. -29 -52

d/b/a: The Medicine Woman
Avenu losights & Analytics, LLC
Audit Division

Page 6 ends

Table 2 compares the amounts originally reported to the City by TMW to the audited gross receipts.

Table 2-Audit Results: City Ca1111ahis Ttlx
Filing Calendar Gross Receipts Audited Gross Difference (Over) Cannabis Tax (O~rer) reported to City Receipts / Under Reported / Under Paid Period Period (a) (b) (c) = (b)-(a) (d) = (c) x 8.5% 202J-22-Q3 Jan-Mar: 2022 $1,112,641.97 $1,106,107.62 ($6,534.35) (.$555.42) 2021-22-Q4 Apr-Jun: 2022 $1,098,685.73 $1,083,435.66 ($14,170.07) ($1,296.26) 2022-23-Ql Jul-Sep: 2022 $1,031,208.79 $1,012,061.45 ($ I 9,147.34) ($1,627.52) 2022-23-Q2 Oct-Dec: 2022 $858,229.02 $965,846.37 $107,622.35 $9,147.47 2022-23-Q3 Jan-Mar: 2023 $842,697.17 $911,949.55 $69,252.38 $5,886.45 2022-23-Q4 Apr-fan: 2023 $799,470.06 $894,654.76 $95,184.70 $8,090.70 2023-24-Ql Jul-Sep: 2023 $758,971.63 $852,157.97 $93,186.34 $7,920.84 2023-24-Q2 Oct-Dec: 2023 $742,259.00 $839,330.04 $97,071.04 $8,251.04 2023-24-Q3 Jan-Mar: 2024 $721,349.48 $812,404.77 $91,055.29 $7,739.70 2023-24-Q4 Apr-Jun: 2024 $735,124.24 $795,148.87 $60,024.63 $5,102.09 2024-25-Ql Jul-Sep: 2024 $676,048.57 $748,354.24 $72,305.67 $6,145.98 2024-25-Q2 Oct-Dec: 2024 $640,779.11 $713,489.15 $72,710.04 $6,180.35 City Cannabis Tax Results $10,017,464.77 $10,734,940.44 $717,475.67 $60,985.42 Penalty and Interest:

Pursuant to BeU.f{ower City Code § 3.37.140 B, if any cannabis tax is found to be delinquent, a total penalty amount of twenty percent (20%) is due on the amount owed. Additionally, Bellflower City Code§ 3.37.140 E imposes interest in the amount of three-quarters of one percent(. 75%) per month on the amount of camlabis tax found to be delinquent. interest is calculated until the delinquent tax is paid. Table 3 below shows the calculation of penalty and interest owed per the additional tax due.

Table 3: Audit Results (/1tcludiltJ! Pe1taltv a11d Interest) Filing Calendar Cannabis Tax Due Penalty-20% lnterese Total Due Period Period (a) (b) =(a)* 20% (c) (d) =(a)+ (b) + (c) 2021-22-Q3 Jan-Mar: 2022 ($555.42) $0.00 $0.00 ($555.42) 2021-22-Q4 Apr-Jun: 2022 ($1,296.26) $0.00 $0.00 ($1,296.26) 2022-23-Ql Jul-Sep: 2022 ($1,627.52) $0.00 $0.00 ($1,627.52) 2022-23-Q2 Oct-Dec: 2022 $9,147.47 $1,829.49 $2,332.61 $13,309.57 2022-23-Q3 Jan-Mar: 2023 $5,886.45 $1,177.29 $1,368.60 $8,432.34 2022-23-Q4 Apr-Jun: 2023 $8,090.70 $1,618.14 $1,699.05 $11,407.89 2023-24-Q I Jul-Se_p: 2023 $7,920.84 $1,584.17 $1,485.16 $ I 0,990.17 2023~24-Q2 Oct-Dec: 2023 $8,251.04 $1,650.21 $1,361.42 $11,262.67 2023-24-Q3 Jan-Mar: 2024 $7,739.70 $1,547.94 $1,102.91 $10,390.55 2023-24-Q4 Apr-Jtm: 2024 $5,102.09 $1,020.42 $612.25 $6,734.76 2024-25~Ql Jul-Sep: 2024 $6,145.98 $1,229.20 $599.23 $7,974.41 2024-25-Q2 Oct-Dec: 2024 $6,180.35 $1,236.07 $463.53 $7,879.95 Total Audit Results $60,985.42 $12,892.93 $11,024.76 $84,903.11 "The City's interest rate is set at .75% simple interest per month. November 30. 2025, has been used as the pay date to cal'cu'late interest.
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d/b/a: The Medicine Woman
References:

A venu Insights & Analytics, LLC
Audit Division
Bellflower City Code,§ 3.37.020 Definitions.

Page 7 ends

"Gross receipts," except as otherwise specifically provided, means the total amount actually received or receivable.from all sales; the total amount or compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials, goods, wares or merchandise; discounts, rents, royalties, fees, commissions, dividends, and gains realized from trading in stocks or bonds, however designated. Included in "gross receipts" is all receipts, cash, credits and property of any kind or nature, without any deduction there from on account of the cost of the property sold, the cost qf materials used, labor or service costs, interestpaid or payable, or losses or other expenses whatsoever, except that the following is excluded:

1. Cash discounts where allowed and taken on sales;

2. Credit allowed on property accepted as part of the purchase price and which property may later be sold, at which time the sales price is included as gross receipts;

3. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;

6. 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;

8. Receipts of refundable deposits, except that such deposits when foifeited and taken into income of the business must not be excluded when in excess of one dollar ($1.00);

9. 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. These agents or trustees must provide the finance department with the names and the addresses of the others and the amounts paid to them. This exclusion does not apply to any fees, percentages, or other payments retained by the agent or trustees.

Bellflower City Code, § 3.37 .060
D. Tax on All Other Commercial Cannabis Businesses.

1. Every person who is engaged in business as a dispensary, manufacturer, testing laboratory, or distribution facility, or engaging in delive,y of cannabis in the City must pay an annual commercial cannabis tax. The initial tax rate effective July 1, 2017 is set at five percent (5%) of the gross receipts per fiscal year.

2. Beginning on July 1, 2020, the tax rate will automatically increase each fiscal year by two and one-half percent (2.5%). Except as othe,wise provided, the maximum tax rate is ten percent (10%) perfiscal year on gross receipts. (Ord. 1332 § 1, 12112/16; Ord. 1324 § 1, 317117)
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d/b/a: The Medicine Woman
Bellflower City Code,§ 3.37.110
A venu Insights & Analytics, LLC
Audit Division

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Unless voter approval is required by the California Constitution or applicable law, the City Council may exercise all applicable powers set forth in the Government Code including, without limitation, amending this chapter by ordinance upon three (3) affirmative votes by its members. It may, in additional, adopt by ordinance or resolution such additional regulations that may be necesswy to implement the purposes of this chapter. (Ord. 1332 § 1, 12/12/16; Ord. 1324 § 1, 3/7/17)
Bellflower City Code,§ 3.37.140
A. Taxes collected from a person, or owed by a person which are not received by the administrator on or before the due dates provided in this chapter are delinquent and are subject to penalties and interest. Should the due date occur on a weekend or legal holiday, the return must be received by the administrator on the first regular working day following a Saturday/Sunday or legal holiday. A direct deposit, including electronic fund transfers and other similar methods of electronically exchanging monies between financial accounts, made by a person in satisfaction of its obligations under this subsection is considered timely if the transfer is initiated on or before the due date, and the transfer settles into the City's account on or before the following business day.

B. If the person required to remit the tax fails to remit the tax, the administrator will attach a penalty for such delinquencies or deficiencies at the rate of five percent (5%) of the total tax that is delinquent or deficient in the remittance, and if not remitted within two (2) working days after the date of the delinquency, will pay a total penalty of twenty percent (20%) of the amount of tax owed.

C. In addition to all other authorizations under this section, the administrator may impose a maximum civil penalty of five thousand dollars ($5. 000. 00) per day upon an unlicensed cannabis facility that fails to remit any tax required by this chapter.

D. The administrator has the power to impose additional penalties upon persons required to remit taxes under the provisions of this chapter for fraud or gross negligence in reporting or remitting at the rate of fifty percent (50%) of the amount of the tax required to be remitted, or as recomputed by the administrator.

E. In addition to any other penalties imposed by this chapter, any person required to remit any tax imposed by the provisions of this chapter who fails to remit the tax must pay interest at the rate of three-quarters of one percent (0. 75%) per month, or any fraction thereof, on the amount of the tax, exclusive of penalties, from the date on which the remittance first became delinquent, until paid.

F. No penalty or interest will be applied if delinquencies are the result of natural disasters or other phenomena beyond the control of the person charged with remitting the tax, provided the person being delinquent notifies the administrator as soon as normal communications permit. (Ord. 1332 § 1, 12/12/16; Ord. 1338 § 3, 5/22/17) -32 -55

444 South Flower Street, 4011-l FloN
Los Angeles. CA 90071-29<12
voice 213.236,0600 • fax 213,236.2700
BURKE, WILLIAMS & SORENSEN, LLP WWW hwstaw com
Jennifer McGrath, Esq.

Law Officers Jennifer McGrath
9114 Adams Ave #264, Huntington
Beach, CA 92646
jrncgrath 1,[email protected]
January 30, 2026
The Medicine Woman Group, LLC.
(d.b.a. The Medicine Woman)
9058 Rose Street
Bellflower, CA 90706
Re: DEMAND FOR PAYMENT AND NOTICE OF SUSPENSION
The Medicine Woman Group, LLC.

Dear Ms. McGrath:

Thank you for speaking with me this week. This correspondence is in regards to your client, The Medicine Woman Group, LLC, concerning past due taxes and permit renewal fees for the cannabis dispensary located at 9058 Rose Street in the City of Bellflower (the "City").

After thorough review of this matter, the City Attorney's Office has concluded that Be.llflower Municipal Code ("BMC") § 3.37 .180(8) is applicable here concerning your client's appeal rights to dispute the December 11, 2025 Audit Report. It states in relevant part:

BMC 3.37.180-Appeals.

A. The provisions of this section apply to any assessment, decision or administrative ruling of the (tax) administrator, other than a decision relating to a refund. Any person aggrieved by any assessment, decision or administrative ruling of the administrator, other than a decision relating to a refund, is required to comply with the appeals procedure of this section. Compliance with this section is a prerequisite to a lawsuit. Nothing permits the filing of a claim or action on behalf of a class or group of taxpayers.

B. If any person is aggrieved by any assessment, decision or administrative ruling of the administrator, other than a decision relating to a refund; or with the failure of the administrator to grant an exemption as provided 4905-1979-6876 v1
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lo& Anr1elE1r; -ln11111d Empire -Marin County -Onkland -<lranoe County -Palm Desert -San DIOflll -San Franc:1sco -Silicon Vt1llev -Venlura County 56 BURKE;, WILL I/IMS & SORENSEN, l.1.P
The Medicine Woman Group, LLC. (d.b.a. The Medicine Woman) January 30, 2026

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for under this chapter; he or she may appeal to the City Council by filing a notice of appeal with the City Clerk within 14 days of the date of the assessment 1 decision or administrative ruling of the administrator which aggrieved the person or person. (Underline added.}
On December 11, 202·5, Finance Director and tax administrator, Anna Garan, provided your client with her assessment of unpaid taxes to the City with an audit report and past due owed. Any notice of appeal concerning that assessment needed to be filed with the City Clerk no later than December 26, 2025. We have no record of compliance with BMC § 3.37 .180. Consequently, any appeal rights regarding that assessment have been waived.

Even if your client were in a position to file such an appeal, our review indicates that the conclusions of your client's tax liabilities made in the audit report dated December 11, 2025 are substantiated. For example, BMC§ 3.37.020 defines "gross receipts" upon which tax to the City is calculated as including:
.... the total amount actually received or receivable from all sales; the total amount or compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials, goods, wares or merchandise ... (Underline added.)
Fu·rthermore, the calculation of gross receipts includes all taxes recovered from consumers that are not otherwise "required by law to be included in or added to the purchase price and collected from the consumer or purchaser." (BMC§ 3.37.020(3).) No unpaid taxes asserted from the Audit Report were based on excluded taxes.

Lastly with regard to the Audit Report, delivery was assumed based on a random sample of receipts that revealed deliveries were made from the dispensary during the audit period. The auditor even reached out to The Medicine Woman's accountant, Ian Delaura, in early November of 2025 regarding this issue before the Audit Report was issued. Mr. Delaura stated he would respond to the request for more records in a matter of days but never did. As a result, the auditor extrapolated delivery fees based on the random sample for purposes of the Audit report.

But again, this is all now moot as time to file an appeal of the tax administrator's assessment that encompasses all these issues expired last December. 4905-1979-6876 v1
-34-57

BURKE. WILLIAMS & SORENSEN, l.LP
The Medicine Woman Group, LLC. (d.b.a. The Medicine Woman) January 30, 2026

Page 3 ends

You also indicated it was improper for Ms. Garan to apply your client's payment of $38,847.00 to past due taxes, rather than your client's Annual Cannabis Business Permit Fee. By way of context, on December 17, 2025, the City Manager explicitly advised your client in writing that although the City Council approved renewal of your client's Cannabis Business Permit ("CBP") for 2026, the permit fee of $38,847.00 must be paid for that CBP to be active. That letter further advised that The Medicine Woman's then current permit would "expire on December 31, 2025,'' and that "OPERATING A CANNABIS RELATED BUSINESS WITHOUT A VALID PERMIT IS UNLAWFUL AND MAY RESULT IN SEVERE CRIMINAL AND CIVIL PENAL TIES." On January 9, 2026, your client sought to present payment of $38,847.00 for the 2026 CSP. Ms. Garan explicitly advised your client verbally, as she had previously done in writing, that any funds provided to the City would be applied first to the outstanding balance due. After acknowledging this advisal, your client agreed to remit that $38,847.00 in (partial) satisfaction of the unpaid taxes.

Please Be Advised that because of the unpaid balance due, The Medicine Woman location in Bellflower is currently deemed suspended per BMC §

14.28.040(2), and any operation of the dispensary is unlawful and subject to enforcement under the BMC and State law. Such enforcement may include, without limitation, daily administrative fines of $5,000 for each day of operation (BMC §

8.48.100), seizure and destruction of all cannabis products on-site pursuant to public nuisance abatement warrant, and misdemeanor criminal prosecution.

Please Be Further Advised that, as a courtesy, the City has not taken any enforcement action for operating an unlawful cannabis dispensary. The Medicine Woman is being provided until 3:00 p.m. on February 9, 2026. to remit the total due amount of $102,210.19. If payment in full is not received by this date and time, the City may, at its sole discretion, initiate enforcement action.

Please Be Further Advised that The Medicine Woman is also required to pay any tax liability for the July-September 2025 tax period by February 9, 2026, and the October-December 2025 tax period is due by February 2, 2026. This is separate from, and in addition to, the existing balance of $102,210.19.

When considering your response to this Notice, you may also want to advise your client that the terms of their operating a cannabis business in Bellflower specifically includes a defense and indemnity provision concerning any legal challenge involving The Medicine Woman business. This includes any action brought by your client against the City.
4905-1979-6876 v1
-35-58

BURKE. WIL LII\MS & SORE'NSEN, LLP
The Medicine Woman Group, LLC. (d.b.a. The Medicine Woman) January 30, 2026

Page 4 ends

I appreciate this is likely not the response you were hoping for and you may have questions regarding the contents of this letter. Please feel free to reach out to me at 619-814-5810 or at [email protected].
cc: Anna Garan, Director of Finance
Ryan Smoot, City Manager
Karl H. Berger, City Attorney
Sincerely,

BURKE, WILLIAMS & SORENSEN, LLP
Karl H. Berger, City Attorney
City of Bellflower
~-✓
?~ by: Timoth{; .~ampen
Assistant City Attorney
Solange Fortenbach, Deputy City Attorney
4905-1979-6876 v1
-36-59

City of Bellflower

LAW OFFICES OF

JENNIFER MCGRATH
9114 Adams Avenue #264, Huntington Beach, CA 92646
714.231.21241 [email protected]
Attn: Ryan Smoot, City Manager
16600 Civic Center Drive
Bellflower CA 90706
Via em ail only
[email protected]
RE: Request for Hearing on Notice of Suspension of Cannabis Business Permit of The Medicine Woman Group, LLC, dated January 30, 2026
Dear Mr. Smoot:

On January 30, 2026, The Medicine Woman Group, LLC was notified that their Cannabis Business Permit has been suspended effective 3 p.m. on February 9, 2026, due to an unpaid balance of $102,210.19 ($93,210.90 cannabis taxes+ $9000.00 auditor fees), by Assistant City Attorney Tim Campen. The Medicine Woman is exercising its right to a request a hearing before the City Manager under Bellflower Municipal Code ("BMC") 14.28.040(0). Said hearing to be scheduled within 30 days.

BMC 14.28.040(E). Although there is no BMC code requirement to state the grounds for the hearing, The Medicine Woman felt it would better serve both the City and The Medicine Woman to detail the reasons for this request.

Grounds for Hearing:

1. Defective Suspension and Notice. Pursuant to BMC 14.28.040(8), the City Manager is the official with the power to suspend a Cannabis Business Penni! but, in this case, it appears the City Attorney's office improperly made that decision, and the notice of suspension must "provide information regarding the right to a hearing before the City Manager," which it did not.

2. Inadequate grounds for suspension. Pursuant to BMC 14.28.040(A)(2), the City Manager's authority to suspend or revoke is limited to "(i]f the permittee violates any condition imposed by this title or by the terms of the permit." The payment of taxes are not a condition imposed by the BMC or by the terms of the permit; moreover, the City failed to provide The Medicine Woman with proper notice of any tax assessment and the requisite hearing to object to the tax assessment pursuant to BMC 3.37.150. That section requires that formal notice of any tax assessment be mailed by the administrator to The Medicine Woman with details of the assessment and the time and place where the assessment may be contested at least 10 days before a hearing on the assessment. That was not done. The December 11, 2025, email from Anna Garan, Director of Finance, was not mailed. does not contain the requisite information, and there was no hearing providing an opportunity for interested -37 -60

parties to object. Once that hearing takes place, then the assessment, decision, or administrative ruling may be appealed to the City Council under BMC 3.37.180.

3. Intentional Interference. The City appears to be intentionally interfering with The Medicine Woman's legal rights. The City first claimed that The Medicine Woman was notified of a final decision on the tax assessment in November and that its appeal rights ran out later that month. Then the City changed its story and claimed The Medicine Woman was notified of a final decision on the tax assessment in December and that its appeal rights ran out later that month. Neither is true and The Medicine Woman still has not been given proper notice of any final decision on the tax assessment, nor a hearing on the tax assessment. This entire time the City has been aware that The Medicine Woman disagrees with and objects to the tax assessment. The City's suspension of The Medicine Woman's Cannabis Business Permit appears to be an improper tactic to interfere with The Medicine Woman's legal rights and coerce it into acquiescing in the City's unlawful conduct. The City has even gone so far as to instruct its employees not to talk to The Medicine Woman. And, when attorneys for The Medicine Woman requested the City Attorney's office provide the permit suspension appeal form approved by the City Manager to request a hearing with the City Manager as required by BMC

14.28.040(D). the City Attorney's office failed and refused to do so.

4. Abuse of Discretion. All of the above demonstrates that the City has failed to follow its own rules and that city officials have failed to perform their duty. To the extent the City exercised discretion in its decisions, the City abused that discretion and its actions and determinations on such matters were/are arbitrary, capricious, and unfair. In so doing, the City has violated The Medicine Woman's due process and equal protection rights under the applicable law including the Bellflower Municipal Code, state law, and the state and federal Constitutions.

A written brief and testimony will be presented at the hearing as well. We look forward to the hearing.

Sincerely,
~A/c-4 r03 MCf ~«
Jennifer McGrath, Esq.

I, Charis Burrell, Chief Executive Officer, The Medicine Woman Group, LLC, authorize this request for hearing submitted o~~?
(~~ d/4<£
Cc:

Berger, Karl H.([email protected])
Tim Campen ([email protected])
Charis Surrett Date
Solange Fortenbach ([email protected])
Mayra Ochiqui {[email protected])
Anna Garan ([email protected])
Wangsu Lee ([email protected])
-38 -61

444 South f=lower Street, 40th Floor
Los Angeles. CA 90071-2942
voice 213.236.0600 -fax 213.236 2700
BUFIKE. WILLIAMS & SORENSEN. LLP WWW hwslHW com
February 5, 2026
VIA U.S.P.S. MAIL AND ELECTRONIC MAIL
Jennifer McGrath, Esq.

Law Officers Jennifer McGrath
9114 Adams Ave., #264
Huntington Beach, CA 92646
jmcgrath [email protected]
Luke Surrett
The Medicine Woman Group, LLC.
(d.b.a. The Medicine Woman)
9058 Rose Street
Bellflower, CA 90706
[email protected]
Re: NOTICE OF TAX ASSESSMENT HEARING

NOTICE OF RECEIPT OF CBP SUSPENSION APPEAL

NOTICE OF VIOLATION
The Medicine Woman Group, LLC.

Dear Ms. McGrath and Mr. Surrett:

As a show of good faith and on behalf of the Bellflower Director of Finance and tax administrator, Anna Garan, a hearing before the tax administrator to contest her assessment of The Medicine Woman's unpaid cannabis business taxes to the City of Bellflower (BMC§ 3.37.080), a hearing has been set as follows:

NOTICE OF TAX ASSESSMENT HEARING
per BMC § 3.31.1 so
February 17, 2026 at 1 :00 p.m.

Bellflower City Hall
16600 Civic Center Dr.

Bellflower CA 90706
Attached hereto as Exhibit A is a tax audit regarding The Medicine Woman, previously provided to your client on or about December 11, 2025, which constitutes the tax assessor's assessment regarding unpaid taxes pursuant to BMC§ 3.37.120, et seq. 4911-6064-3469 v1
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Los Angel@i; -Inland Empire -Mann County -Oa~land -Orange County -Palm Desert -San Dle~o -San Francisco -Stile.on Valley -Ventura County 62 BURKE, WILLI/IMS & SORENSEN, LLP
Jennifer McGrath, Esq.

Luke Surrett
The Medicine Woman Group, LLC. (d.b.a. The Medicine Woman) February 5, 2026
Page2
NOTIC·E OF RECEIPT OF

CBP SUSPENSION APPEAL
Furthermore, this is Notice that the City of Bellflower (City) is in receipt of your request to appeal the City Manager's suspension of The Medicine Woman's cannabis business permit (CBP) dated January 30, 2026, pursuant to BMC Chapter 14.28. A hearing for this matter will be set before the Bellflower City Council within 45 days. In lieu of a form provided by the City Clerk to submit, please mail to the City Clerk written responses to the following pursuant to BMC§ 14.28.050(8):
~. The name, address and telephone number of the person making the appeal;

2. A description of the decision, determination or order which is the subject of the appeal and the date such decision, determination or order was made or issued; and

3. A complete description of all grounds for appeal, together with any evidence in support of the appeal.

NOTICE OF VIOLATION
Please Be Advised that the Medicine Woman Dispensary in Bellflower is currently operating unlawfully without a valid Cannabis Business Permit in violation of BMC§§ 14.08.010, et seq. On December 16, 2026, The Medicine Woman was mailed the following advisal from the City of Bellflower:

NOTE THAT THE CURRENT PERMIT EXPIRES ON DECEMBER 31,
2025. OPERA TING A CANNABIS RELATED BUSINESS WITHOUT

A VALID PERMIT IS UNLAWFUL AND MAY RESULT IN SEVERE
CRIMINAL AND CIVIL PENAL TIES.

As detailed in my letter to you dated January 30, 2026, and which is fully incorporated by reference, payment for The Medicine Woman's 2026 CBP has not been received. Any funds remitted to the City must first satisfy unpaid cannabis business 4911-6064-3469 v1
-40-63

BURKE, WILLI/IMS I!. SORENSEN, l.l P
Jennifer McGrath, Esq.

Luke Surrett
The Medicine Woman Group, LLC. (d.b.a. The Medicine Woman) February 5, 2026

Page 3 ends

taxes before being applied to the 2026 CBP. A refund of any paid taxes will be provided, if required, following final administrative or judicial determination of The Medicine Woman's appeal of the tax administrator's assessment, as referenced above.

Please Be Further Advised that enforcement relating to operating an unpermitted cannabis dispensary is under the authority of the City Attorney, pursuant to BMC Chapter 14.28, and is separate and independent from the City Manager's suspension of The Medicine Woman's permit.

Please Be Further Advised that because the 2026 CBP fees have not been paid, The Medicine Woman location in Bellflower is currently operating unlawfully without a CBP. Any operation of an unpermitted dispensary in the City is subject to enforcement under the BMC and State law, Such enforcement may include, without limitation, daily administrative fines of $5,000 for each day of operation (BMC §

8.48.100), seizure, and destruction of all cannabis products on-site pursuant to public nuisance abatement warrant, civil injunctive relief, and misdemeanor criminal prosecution. (BMC§§ 14.28.010-020.)
Please Be Further Advised that, as a courtesy, the City Attorney has not taken any enforcement action for operating an unlawful cannabis dispensary. As previously advised on January 30, 2026, The Medicine Woman is being provided until 3:00 p.m. on February 9, 2026, to remit the total due amount of $102,210.19. If payment in full is not received by this date and time, the City Attorney may, at his sole discretion, initiate enforcement action. Any pending hearings before the tax administrator or the City Council will NOT stay enforcement by the City Attorney. 4911-6064-3469 v1
-41 -64

BURKE. WIL UI\MS 8. SORENSEN, LLP
Jennifer McGrath, Esq.

Luke Surrett
The Medicine Woman Group, LLC. (d.b.a. The Medicine Woman) February 5, 2026

Page 4 ends

You may reach me at 619-814-5810 or [email protected] with any questions regarding these Notices.

Sincerely,

BURKE, WILLIAMS & SORENSEN, LLP
Karl H. Berger, City Attorney, City of Bellflower
--,,--~;Pc·
Timoth ~mpen
TEC:meh
Enclosure: as stated
cc: Anna Garan, Director of Finance
Ryan Smoot, City Manager
4911-6064-3469 v1
Assistant City Attorney
-42-65

8Uf;KE, WII.LIAMS & SORENSEN, LLP
Jennifer McGrath, Esq.

Luke Surrett
The Medicine Woman Group, LLC. (d.b.a. The Medicine Woman) February 5, 2026

Page 5 ends

4911-6064-3469 v1
Exhibit A
Bellflower Tax Administrator's Assessment
re: past due cannabis business taxes owed
by The Medicine Woman
-43-66

City of Bellflower, California
Cannabis Tax
Report of Examination
,\o,•ember 24. 2025
The Medicine Woman Group, LLC
d/b/a The Medicine Woman
Examination Period:

January 1, 2022, through December 31, 2024
Finance Department
City Hall
16600 Civic Center Drive
BelUlower, California 90706
Examination Performed by:

Audit Division/Compliance Section
Avenu Insights & Analytics, LLC
600 Beacon Parlovay West, Ste. 900
Birmingham, AL 35209
-44-67

Page 2 ends

Mr. Woo and Mr. Scadron presented the records for review. Records were received electronically after the walk-through of the dispensary and were reviewed at Avenu's office.

Current Methods:

Purchasing Process & Inventory Handling Procedures:

Upon arrival, the delivery driver signs in with the front desk prior to being allowed into the facility. Either Mr.

d/b/a: The Medicine Woman
A venu Insights & Analytics, LLC
Audit Division

Page 3 ends

cabinets/display cases and backstock items are locked in large safes in limited access areas. Only a select few personnel have access to the backstock safe and limited access areas.

Customer Check-in/verification Procedures:

Sales and Cash Handling Procedures:

TMW has two types of customers, pick-up/delivery and in-store purchases. Pick-up/delivery customers order their products online. If the customer selects pick-up, they will come to the store to pick up their order once they are notified it is ready. Customers that select delivery will have their purchase delivered to them by a TMW employee. In-store customers have their transactions completed in the POS system, Treez, by scanning the barcode on the product(s) that are being purchased by the customer. Treez is configured to round the total selling price down, i.e. in favor of the customer, based on the final amount so that TMW does not have to deal with coins. TMW provides an A TM to their in-store customers so that they can withdraw cash to complete their purchase. TMW fills the A TM machine from cash on hand. Customers are charged a fee to withdraw cash from the ATM.

Budtenders are responsible for managing their own cash register and entering each transaction into Treez which accounts for all monies and inventory management. At the beginning of each day, each cash register till is supplied with cash and issued to a budtender. That budtender will be responsible for their till/cash register until the till is closed out. Tills are closed either at the end of the shift or on an as needed basis based on the amount of cash inside. At the end of the day/shift, the budtender will close out their cash drawer and hand it over to a closing manager to count out. The closing manager removes the deposit amount from the drawer, logs the amount in the system, and places the deposit (total cash minus start up amount) into their smart safe 1. The smart safe is synced with their bank and presents a deposit log to TMW for their records. When all the drawers have been balanced, the closing manager will close out the daily sales and report the amounts to their accounting team.

Reporting:

TMW records all sales transactions in Treez. Each customer receipt includes the price of the item(s) purchased as well as separately stated state and local taxes. Taxes listed out include sales tax at 10.25%, the City's 1 Once the deposits go into the smart safe, liability of the money is shifted to the bank. The bank will send an armored truck around once a week, or as needed, to empty the safe.
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cannabis tax at 8.5%, and cannabis excise tax at 15%. At the end of each month, TMW generates a monthly sales summary report from Treez and sends it over to their accounting team to compare with the daily close out reports. At the end of the quarter, the quarterly gross receipts are totaled and reported to the City.

Audit Procedures and Testing Methodology:

Avenu performed the following tasks to verify TMW's adherence to California Health and Safety Code § 11018, § 11362.5, and§ 11362.7 et seq. include:
• Walk Through of Customer Verification Process
• Walk Through of Vendor Verification Process
While onsite, a sample inventory count was conducted to verify if the inventory management function within Treez was functioning as it should. To complete this count, five (5) items were randomly selected to count and were compared with the inventory level in Treez. The table below details the brand, items selected, the available amount, and the counted total.

Brand Product Available
per Treez
St. Ides Purple Grape Tincture 9
Lost Farms Watermelon 18
Alpin Cannatonic 8
Pistil Whip Frozen Banana 8
Coastal Sun Tropicana Cherry 5
Applicable Sections of Law and Municipal Code:

Bellflower City Code§ 3.37 et seq.

California Health and Safety Code§ 11018, § 11362.5, and§ 11362.7 et seq.

California Revenue and Taxation Code § 34010 -34021.5
California Business and Professional Code § 26000 -26231.2 Counted by
Auditor
9 18
8 8
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Audit Findings and/or Errors Discovered:

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During the audit it was determined that a cannabis tax liability existed. The liability was comprised of primarily two issues. The first issue was that TMW charged and collected the City's cannabis tax from their customers and did not report those amounts as taxable gross receipts. The City's cannabis tax is a tax on the business for the privilege of conducting business within the City. The tax imposed by the City under Belljlower Municipal Code § 3.37 is a direct tax on the cannabis business rather than an indirect tax imposed on the consumer (such as sales tax and excise tax). Belljlower Municipal Code§ 3.37.060 D.l states that "eve,y person who is engaged in business as a dispensary ... in the City must pay an annual commercial cannabis tax". Since the tax is levied on the business itself, if the amount is collected from the customer, that amount is considered gross receipts based on the broad definition thereof. In this instance, the tax was collected from the customers; therefore, the amounts collected should be included within the gross receipts reported to the City.

The second issue discovered was that TMW charged their customers a delivery fee on transactions that are delivered to their customers and did not report those amount as gross receipts to the City. Pursuant to the City's definition of gross receipts, amounts received for "the performance of any act or service" in which a charge is made is deemed to be included. Delivery fees are charged for the delivery service provided by TMW and therefore, should be included within the total gross receipts reported to the City. The delivery fees were not listed on the POS transactions provided; however, the fees were identified when reviewing a few sample receipts. The actual amount received for delivery fees for the audit period was requested from TMW, but those amounts were not presented at the time of the audit report. In lieu of having the actuals, a monthly average from the prior audit's delivery fee revenues were calculated and applied to each month of the current audit period.

The tables below breakdown the amounts reported to the City as well as the audited gross receipts.

Table I below details the audited gross receipts that should have been reported to the City for each reporting period.

Table ]-Audited Gross Receipts
Calendar Net Sales Cannabis Tax Delivery Audited Gross
Filing Period Period
(City) Fees 2 Receipts
(a) (b) (c) (d)= (a)+ (b) + (c)
2021-22-Q3 Jan-Mar: 2022 $1,017,738.11 $83,142.97 $7,151.50 $1,108,032.58 2021-22-Q4 Apr-Jun: 2022 $1,001,235.04 $81,604.30 $7,151.50 $1,089,990.84 2022-23-Ql Jul-Sep: 2022 $935,267.94 $76,004.79 $7,151.50 $1,018,424.23 2022-23-Q2 Oct-Dec: 2022 $892,896.90 $72,472.56 $7,151.50 $972,520.97 2022-23-Q3 Jan-Mar: 2023 $842,697.17 $69,082.66 $7,151.50 $918,931.33 2022-23-Q4 Apr-Jun: 2023 $826,699.80 $68,025.23 $7,151.50 $901,876.53 2023-24-QI Jul-Sep: 2023 $787,645.39 $64,746.28 $7,151.50 $859,543.16 2023-24-Q2 Oct-Dec: 2023 $776,238.00 $63,982.77 $7,151.50 $847,372.27 2023-24-Q3 Jan-Mar: 2024 $751,090.06 $61,971.27 $7,151.50 $820,212.83 2023-24-Q4 Apr-Jun: 2024 $734,124.24 $60,432.81 $7,151.50 $801,708.55 2024-25-Ql Jul-Sep: 2024 $690,890.11 $57,036.96 $7,151.50 $755,078.57 2024-25-Q2 Oct-Dec: 2024 $659,022.92 $54,183.88 $7,151.50 $720,358.30 Total Audited Gross Receipts $9,915,545.68 $812,686.47 $85,818.00 $10,814,050.15 2 Average from the prior audit was used as the actuals were not presented during the audit. TMW began charging delivery fees in January 2021. The annual delivery fee revenue in 2021 was $28,606. This amount was divided by four (4) to come up with the quarterly amount of$7, 151.50. This average was applied to all quarters within the audit period. -48 -71

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Table 2 compares the amounts originally repo11ed to the City by TMW to the audited gross receipts.

Table 2-Audit Results: City Ct11111abis Tax
FiUng Calendar Gross Receipts Audited Gross Difference (Over) Cannabis Tax reported to City Receipts / Under Reported (Over)/ Under Paid Period Period (a) (b) (c) = (b)-(a) (d) = (c) x 8.5% 2021-22-Q3 Jan-Mar: 2022 $I,ll2.641.97 $1,108,032.58 ($4,609.39) ($391.80) 2021-22-Q4 Apr-Jun: 2022 $ I ,098,685. 73 $1,089,990.84 ($8,694.89) ($739.07) 2022-23-Ql Jul-Sep: 2022 $1,031,208.79 $ 1,0 l 8,424.23 ($12,784.56) ($1,086.69) 2022-23-Q2 Oct-Dec: 2022 $858,229.02 $972,520.97 $ I 14,291.95 $9,714.82 2022-23-Q3 Jan-Mar: 2023 $842,697.17 $918,931.33 $76,234.16 $6,479.90 2022-23-Q4 Apr-Jun: 2023 $799,470.06 $901,876.53 $102,406.47 $8,704.55 2023-24-Ql Jul-Sep: 2023 $758,971.63 $859,543.16 $100,571.53 $8,548.58 2023-24-Q2 Oct-Dec: 2023 $742,259.00 $847,372.27 $105) 13.27 $8,934.63 2023-24-Q3 Jan-Mar: 2024 $72 I ,349.48 $820_,212.83 $98,863.35 $8,403.38 2023-24-Q4 Apr-Jun: 2024 $735,124.24 $801,708.55 $66,584.31 $5,659.67 2024-25-Ql Jul-Sep: 2024 $676,048.57 $755,078.57 $79,030.00 $6,717.55 2024-25-Q2 Oct-Dec: 2024 $640,779.1 I $720,358.30 $79,579.19 $6,764.23 City Cannabis Tax Results $10,017,464.77 $10~814,050.15 $796~585.38 $67,709.76 Penalty and Interest:

Pursuant to Bel(f]mver City Code § 3.3 7.140 B, if any cannabis tax is found to be delinquent, a total penalty amount of twenty percent (20%) is due on the amount owed. Additionally, Bellflower City Code§ 3.37.140 E imposes interest in the amount of three-quarters of one percent(. 75%) per month on the amount of crumabis tax found to be delinquent. Interest is calculated until the delinquent tax is paid. Table 3 below shows the calculation of penalty and interest owed per the additional tax due.

Table 3: A,ulit Results (Including Pei,alty and Interest) Filing Calendar Cannabis Penalty-• 20% Interest' Total Due Tax Due Period Period (a) (b) =(a)* 20% (c) (d) =(a)+ (b) + (c) 2021-22-Q3 Jan-Mar: 2022 ($391.80) $0.00 $0.00 ($391.80) 2021-22-Q4 Apr-Jttn: 2022 ($739.07) $0.00 $0.00 ($739.07) 2022-23-QI Jul-Sep: 2022 ($1,086.69} $0.00 $0.00 ($1,086.69) 2022-23-Q2 Oct-Dec: 2022 $9,714.82 $1,942.96 $2,404.42 $14,062.20 2022-23-Q3 Jan-Mar: 2023 $6,479.90 $1,295.98 $1,506.58 $9,282.46 2022-23-Q4 Apr-Jun: 2023 $8,704,55 $1,740.91 $1,762.67 $12,208. l 3 2023-24-Ql Jul-Sep: 2023 $8,548.58 $1,709.72 $1,538.74 $11,797.04 2023-24-Q2 Oct-Dec: 2023 $8,934.63 $1.786.93 $1,407.20 $12,128.75 2023-24-Q3 Jan-Mar: 2024 $8,403.38 $1.680.68 $1,197.48 $11,281.54 2023-24-Q4 Apr-Jun: 2024 $5,659.67 $1,131.93 $636.71 $7,428.31 2024-25-Ql Jul-Sep: 2024 $6, 7 t 7.55 $1,343.51 $604.58 $8,665.64 2024-25-Q2 Oct-Dec: 2024 $6,764.23 $1,352.85 $456.59 $8,573.67 Total Audit Results $67,709.76 $13,985.46 $11,514.97 $93,210.19 3 The City·s interest rate is set at .75%, simple interest per month. Novem'ber 30, 2025 has been used as the pay date to calculate interest.
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References:

A venu Insights & Analytics, LLC
Audit Division
Bellflower City Code,§ 3.37.020 Definitions.

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"Gross receipts," except as otherwise specifically provided, means the total amount actually received or receivable Ji-om all sales; the total amount or compensation actually received or receivable for the pe,formance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials, goods, wares or merchandise; discounts, rents, royalties, fees, commissions, dividends, and gains realized from trading in stocks or bonds, however designated. Included in "gross receipts" is all receipts, cash, credits and property of any kind or nature, without any deduction there from on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever, except that the following is excluded:

1. Cash discounts where allowed and taken on sales;

2. Credit allowed on property accepted as part of the purchase price and which property may later be sold, at which time the sales price is included as gross receipts;

3. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;

4. Such part ~f 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;

6. Receipts derived from the occasional sale of used, obsolete or surplus trade ftXtures, machinery or other equipment used by the taxpayer in the regular course of the taxpayer's business;

8. Receipts of refundable deposits, except that such deposits when forfeited and taken into income of the business must not be excluded when in excess of one dollar ($1.00);

Bellflower City Code,§ 3.37.060
D. Tax on All Other Commercial Cannabis Businesses.

1. Every person who is engaged in business as a dispensaty, manufacturer, testing laboratory, or distribution facility, or engaging in delivery of cannabis in the City must pay an annual commercial cannabis tax. The initial tax rate effective July 1, 2017 is set at five percent (5%) of the gross receipts per fiscal year.

2. Beginning on July 1, 2020, the tax rate will automatically increase each fiscal year by two and one-half percent (2.5%). Except as otherwise provided, the maximum tax rate is ten percent (10%) per fiscal year on gross receipts. (Ord. 1332 § 1, 12/12/16; Ord. 1324 § 1, 3/7/17)
Bellflower City Code,§ 3.37.110
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Unless voter approval is required by the California Constitution or applicable law, the City Council may exercise all applicable powers set forth in the Government Code including, without limitation, amending this chapter by ordinance upon three (3) affirmative votes by its members. It may, in additional, adopt by ordinance or resolution such additional regulations that may be necessary to implement the purposes of this chapter. (Ord. 1332 § /, 12/12/16; Ord. 1324 § /, 3/7/17)
Bellflower City Code,§ 3.37.140
A. Taxes collected from a person, or owed by a person which are not received by the administrator on or before the due dates provided in this chapter are delinquent and are subject to penalties and interest. Should the due date occur on a weekend or legal holiday, the return must be received by the administrator on the first regular working day following a Saturday/Sunday or legal holiday. A direct deposit, including electronic fund transfers and other similar methods of electronically exchanging monies between financial accounts, made by a person in satisfaction of its obligations under this subsection is considered timely if the transfer is initiated on or before the due date, and the transfer settles into the City's account on or br:;fore the following business day.

C. In addition to all other authorizations under this section, the administrator may impose a maximum civil penalty of five thousand dollars ($5.000.00) per day upon an unlicensed cannabis facility that fails to remit any tax required by this chapter.

E. In addition to any other penalties imposed by this chapter, any person required to remit any tax imposed by the provisions of this chapter who fails to remit the tax must pay interest at the rate of three-quarters of one percent (0. 7 5%) per month, or any fraction thereof, on the amount of the tax, exclusive of penalties, from the date on which the remittance first became delinquent, until paid.

F. No penalty or interest will be applied if delinquencies are the result of natural disasters or other phenomena beyond the control of the person charged with remitting the tax, provided the person being delinquent notifies the administrator as soon as normal communications permit. (Ord. I 332 § 1, 12/12/16; Ord. 1338 § 3, 5/22/17) -51 -74

From:

To:

Cc:

Subject:

Date:

Jennifer McGrath
Campen, Timothy E.; Anna Garan
Ryan Smoot; [email protected]; Berger, Karl H.; Fortenbach, Solange; Eel Pinchiff The Medicine Woman Group LLC • 3.37.150 Hearing
Friday, February 13, 2026 12:00:32 PM
Mr. Campen and Ms. Garan -
The Medicine Woman Group is respectfully requesting a one week extension of the hearing currently scheduled for February 17, 2026, to February 24, 2026. This request is based on the positive discussions ofFebruary 9 resolving the outstanding suspension issues and the new arguments presented at that meeting. The Medicine Woman would like an opportunity to present a brief outlining the issues with supporting documentation objecting to the audit results with adequate time in advance for the City and its counsel to review in advance of the hearing.

As Monday is a holiday, please respond by the end of the business day today.

Jennifer McGrath
Law Offices of Jennifer McGrath
7755 Center Avenue, Suite 1100
Huntington Beach CA 92647
(714~231-2124
https://www .jennifermcgrath.com/
This email has been scanned for spam and viruses by Proofpoint Essentials. Click here to repo1t this email as spam.
-52 -75

The City of BeJJflower
I 6600 Civic Center Drive, RcllOowcr, CA 90706
l•·I ,6l.N04.1424 i,.,. ')(;J 9:l') R6(..0 www.l:>C"lllluw.-r.0t8

CITY OF BELLFLOWER

NOTICE OF TAX ASSESSMENT FOR UNPAID TAX, PENALTIES,

INTEREST AND PERMITTEE'S SHARE OF AUDIT COST -

THE MEDICINE WOMAN GROUP, LLC
TAKE NOTICE that the Bellflower Cannabis Tax Administrator will hold a hearing on Tuesday, February 24, 2026, at 1 :00 p.m. in the City Council Chambers located at 16600 Civic Center Drive, Bellflower, CA 90706 to consider a tax assessment for unpaid tax, penalties, interest, and permittee's share of audit cost for The Medicine Woman Group, LLC.

This hearing is open to the public. For all questions related to this matter, please contact telephone number (562) 804-1424, extension 2239. All written comments concerning this may be submitted to the City Clerk's Office at 16600 Civic Center Drive, Bellflower, CA 90706; or by email at [email protected].

Post: February 17, 2026
Remove: February 25, 2026

MAYRA OCHIQUI, CITY CLERK
-53-76

TO:

ATTENTION:

FROM:

SUBJECT:

DATE:

Honorable Mayor and Members of the City Council
Jeffrey L. Stewart, City Manager
Tae Rhee, Director of Finance/City Treasurer
Consideration and possible action to adopt Resolution No. 22-18 - A Resolution ratifying Administrative Policy and Procedure No. 3 ("AP&P No. 3"), as amended, determining that the City of Bellflower's cannabis tax applies to the sale of industrial hemp-derived products.

May 9, 2022

EXECUTIVE SUMMARY
In accordance with Bellflower Municipal Code ("BMC") § 3.37 .120, the Director of Finance reviewed the cannabis tax regulations within BMC Chapter 3.37 to determine whether the cannabis tax applies to retail establishments selling industrial hemp-derived products.

The cannabis tax regulations are separate from the BMC regulations governing cannabis business permits issued in accordance with BMC Title 14. After reviewing the matter and consulting with the City Attorney's office, the Director of Finance promulgated administrative policy and procedure ("AP&P") No. 3, which authorizes collection of cannabis taxes from the businesses selling industrial hemp-derived products effective July 1, 2019.

On April 20, 2022, the City received a request for refund for cannabis taxes paid by My CBD Hub, LLC totaling $39,761.85. While that request was denied in accordance with the BMC -and is not the subject of this agenda item -it prompted a reexamination of AP&P No. 3. The amended AP&P No. 3, issued on April 28, 2022, clarifies that only those businesses that sell industrial hemp-derived products exceeding 50% of their overall sales are required to pay the cannabis tax. The purpose of Resolution No. 22-18 is to retroactively ratify AP&P No. 3 effective July 1, 2019 and authorize its implementation since that date and as amended on April 28, 2022.

RECOMMENDATION TO CITY COUNCIL
1) Adopt Resolution No. 22-18 which ratifies AP&P No. 3 and authorizes collection of the cannabis tax from the businesses selling industrial hemp-derived products effective July 1, 2019 and amended April 28, 2022; or
2) Alternatively, discuss and take other action related to this item.

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77 Staff Report -Amended AP&P No. 3, Industrial Hemp-Derived Products May 9, 2022

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FISCAL IMPACT
The amended AP&P No. 3, issued on April 28, 2022, clarifies that only those businesses that sell industrial hemp-derived products exceeding 50% of their overall sales are required to pay the cannabis tax. Based on the current cannabis tax collection data, the impact of the amended AP&P No. 3 may be approximately $100 per year in reduction in cannabis tax from exempting a business that sells below this 50% threshold.

DISCUSSION
AP&P No. 3 was administratively adopted on July 1, 2019, pursuant to BMC § 3.37 .120(A). That section authorizes the Finance Director to promulgate administrative regulations needed to implement BMC 3.37 which governs the cannabis tax authorized by voters in 2017. These regulations are distinctly separate from BMC Title 14 which authorizes cannabis business permits; the cannabis tax is applicable regardless of whether a business is engaging in commercial cannabis activities as defined in BMC Title 14.

Currently, when applying the cannabis tax, retail establishments selling industrial hemp- derived products are considered a "dispensary" for purposes of tax collection under BMC § 3.37.060(0)(1) and must pay the applicable gross receipts tax if the establishment's gross receipts are attributable to the sale of industrial hemp-derived products.

The change to AP&P No. 3 implemented on April 28th clarifies that to be classified a "dispensary" for purposes of tax collection only requires more than 50% of the establishment's gross receipts are attributable to the sale of industrial hemp-derived products. Accordingly, if an establishment's gross receipts attributable to the sale of industrial hemp-derived products are 50% or less, then no cannabis tax would be owed and payable by the business. In contrast, if an establishment's gross receipts attributable to the sale of industrial hemp-derived products are more than 50%, then 100% of the establishment's gross receipts (including non-cannabis items sold such as t-shirts, hats, etc.) would be subject to the cannabis tax.

Such retail establishments, however, are not necessarily required to obtain a cannabis business permit pursuant to BMC Title 14. As explained in greater detail by AP&P No. 3, the definition of "cannabis" in BMC Chapter 3.37 (the cannabis tax regulations) is broader since it does not exclude "industrial hemp" as defined by California law. BMC Title 14, however, contains a narrower definition of "cannabis" to determine whether a business is engaged in commercial cannabis activity and, therefore, is required to obtain a cannabis business permit (BMC§ 14.08.010). As a result, a business may be required to pay the cannabis tax, but is not required to obtain a cannabis business permit.

ATTACHMENTS
Resolution No. 22-18 ...................................................................................................... 3 Amended AP&P No. 3 .................................................................................................... 5 78 CITY OF BELLFLOWER
RESOLUTION NO. 22-18

A RESOLUTION RATIFYING ADMINISTRATIVE POLICY AND
PROCEDURE NO. 3 ("AP&P NO. 3"), AS AMENDED,

DETERMINING THAT THE CITY OF BELLFLOWER'S CANNABIS

TAX APPLIES TO THE SALE OF INDUSTRIAL HEMP-DERIVED

PRODUCTS
THE CITY COUNCIL RESOLVES AS FOLLOWS:

SECTION 1. The City Council finds and declares as follows:

A. Bellflower Municipal Code ("BMC")§ 3.37.120 authorizes the City Manager, or designee, to implement BMC Chapter 3.37 by, in part, promulgating administrative policies and procedures ("AP&P") to facilitate collection of the cannabis tax authorized by voters in 2017.

B. On June 25, 2019, the City Manager promulgated AP&P No. 3 that was subsequently amended on April 28, 2022 and is attached as Exhibit "A," and incorporated by reference. As set forth in AP&P No. 3, the cannabis tax imposed by BMC Chapter 3.37 applies to all retail establishments selling industrial hemp-derived products within the C:ty's jurisdiction. As further detailed within AP&P No. 3, while such retail est~blishments may be required to pay the cannabis tax, they may not be required to obtain a cannabis business permit contemplated by BMC Title 14.

SECTION 2. Ratification. The City Council finds that it is in the public ir.terest to ratify the City Manager's actions in promulgating AP&P No. 3 in order to properly implement the will of the voters as set forth in BMC Chapter 3.37 and assist in the collection of the cannabis tax. Accordingly, the City Council retroactively ratifies AP&P No. 3 effective July 1, 2019 and authorizes its implementation since that date and as amended April 28, 2022.

SECTION 3. This Resolution does not affect any penalty, forfeiture, or liability incurred before, or preclude prosecution and imposition of penalties for any violation occurring before, this Resolution's effective date. Any such amended part will remain in full force and effect for sustaining action or prosecuting violations occurring before the effective date of this Resolution.

SECTION 4. If any part of this Resolution or its application is deemed invalid by a court of competent jurisdiction, the City Council intends that such invalidity will not affect the effectiveness of the remaining provisions or appl:cations and, to this end, the provisions of this Resolution are severable.

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City of Bellflower
Resolution No. 22-18

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SECTION 5. The Mayor, or presiding officer, is authorized to affix a signature to this Resolution signifying its adoption by the City Council of the City of Bellflower and the City Clerk, or her duly appointed deputy, is directed to attest thereto.

SECTION 6. Electronic Signatures. This Ordinance may be executed with electronic signatures in accordance with Government Code §16.5. Such electronic signatures will be treated in all respects as having the same effect as an original signature.

SECTION 7. This Resolution will become effective immediately upon adoption.

PASSED, APPROVED, AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF BELLFLOWER ON THIS 9TH DAY OF MAY 2022.

ATTEST:

Amended AP&P No. 3
-57 -80

ADMINISTRATIVE POLICIES AND PROCEDURES
APP NO.: 3 (Revised 4/28/2022)

WHEN THE GROSS RECEIPTS TAX ON CANNABIS DISPENSARIES APPLIES TO

PERSONS ENGAGED IN THE BUSINESS OF SELLING CANNABIS PRODUCTS

DERIVED FROM INDUSTRIAL HEMP
I. Purpose and Applicability
Every person who is engaged in business as a dispensary in the City of Bellflower must pay an annual commercial cannabis tax based on a percentage of gross receipts per fiscal year.1 For purposes of Title 3, Chapter 3.37 (the "Cannabis Tax Ordinance"), "dispensary" is defined as ~a facility 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 and cannabis products as part of a retail sale."2 For purposes of the Cannabis Tax Ordinance, wcannabis" is defined as:
''[A]II 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" also means marijuana as defined by Health and Safety Code Section 11018 and is not limited to medical cannabis."3
By contrast, for purposes of Title 14 (Cannabis-Related Businesses} "cannabis" is defined as set forth in Business & Professions Code section 26001 {f). That section provides:
w•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' does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. For the purpose of this division. 'cannabis' 1 BMC§ 3.37.060(0)(1).
2 BMC§ 3.37.020.
3 BMC§ 3.37.020.

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ADMINISTRATIVE POLICIES AND PROCEDURES
APP NO.: 3 (Revised 4/28/2022)
does not mean 'industrial hemp' as defined by Section 11018.5 of the Health and Safety Code."
The definition of "cannabis" in the Cannabis Tax Ordinance is broader insofar as it does not exclude "industrial hemp." Accordingly, references to "cannabis" and "cannabis products" in the Cannabis Tax Ordinance necessarily include industrial hemp and industrial hemp-derived products.

Health and Safety Code section 11018. 5 defines "industrial hemp" as "a crop that is limited to types of the plant Cannabis sativa L. having no more than three-tenths of 1 percent tetrahydrocannabinol (THC) contained in the dried flowering tops, whether growing or not; the seeds of the plant; the resin extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds or resin produced therefrom."
In the Agriculture Improvement Act of 2018 (the "Farm Bill"), effective January 1, 2019, Congress removed industrial hemp-derived products from Schedule I status under the Controlled Substances Act, provided that the hemp is produced in a manner consistent with the Farm Bill, federal regulations, state regulations, and by a licensed grower.

Division 24 of the California Food and Agriculture Code provides for the cultivation of industrial hemp by registered growers and established agricultural research institutions.

Industrial hemp-derived products have soared in popularity recently, particularly cannibidiol (CBD) oil and products infused with CBD oil. An increasing number of retail establishments are incorporating these industrial-hemp derived goods into their product mix and some retail establishments are choosing to specialize in the sale of industrial hemp-derived products, making them the focus of their business model.

This policy addresses the question of when a retail establishment selling cannabis products derived from industrial hemp becomes a "dispensary" for purposes of the Cannabis Tax Ordinance and, therefore, subject to the applicable gross receipts tax.

This policy does not apply to any person or retail establishment engaged in the business of selling cannabis or cannabis products that are not derived from industrial hemp.

II. Definitions
Unless the contrary is stated or clearly appears from the context, the words and phrases used herein have the meaning set forth in BMC Chapter 3.37.

Page 2 of 3 ends

-59 -82

ADMINISTRATIVE POLICIES AND PROCEDURES
APP NO.: 3 (Revised 4/28/2022)
Ill. Administration
For purposes of the Cannabis Tax Ordinance, a retail establishment is a "dispensary" for purposes of BMC§ 3.37.060(0)(1)4 , and therefore subject to the applicable gross receipts tax, if more than 50% of the establishment's overall gross receipts5 are attributable to the sale of cannabis products derived from industrial hemp.

Reference:

Authority:

BMC§ 3.37.060,k0)(1)
BMC§ 3.37.126 /
-1/ ,
, // / APPROVED: -----------:.,..._""7--r-~:---
C i ty Manager
1 "'
APPROVED AS TO FORM:

City Attorney
Origination: 7/25/2019
Revised: 4/28/2022
--....... ~~------
l
• This does not mean the establishment would necessarity be classified as a •dispensary" for purposes of Tille 14 and, therefore, require a Cannabis Business Permit to operate lawfully. Because "industrial hemp" is not within the definition of ·cannabis" as used in Title 14, a cannabis business permit is not required for the sale of cannabis products derived from Industrial hemp. 5 In this context, ·overall gross receipts• means the total gross receipts of the retail establishment.

Page 3 of 3 ends

-60-83

ST ATE OF CALIFORNIA )

COUNTY OF LOS ANGELES )SS

CITY OF BELLFLOWER )
I, Mayra Ochiqui, City Clerk of the City of Bellflower, California, do hereby certify under penalty of perjury that the foregoing Resolution No. 22-18 was du!y passed, approved, and adopted by the City Council of the City of Bellflower at the Regular Meeting of the City Council on May 9, 2022, by the following vote to wit:

AYES: Council Members -Sanchez, Santa Ines, Hamada, Koops and Mayor Dunton
Dated: May 10 2022
• '
(SEAL)
-61 -84

Mayra Ochiqui
From:

Sent:

To:

Cc:

Subject
Follow Up Flag:

Flag Status:

Jennifer McGrath
Thursday, May 7, 2026 5:29 PM
Sonny Santa Ines; Victor Sanchez; Dan Koops; Raymond Dunton; Wendi Morse; Mayra Ochiqui; City Clerk
[email protected]; TMW; Charis Burrett; [email protected]; Brandon Scadron; Berger, Karl H.; Campen, Timothy E.; Ryan Smoot; Wangsu Lee Late Communication for meeting of May 11, 2026 / Request for Cohtinuance to May 25, 2026
Flag for follow up
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Honorable Mayor Santa Ines and Member of the City Council - I am writing on behalf of our client, The Medicine Woman Group, LLC, regarding a public hearing scheduled for your regularly scheduled City Council meeting of May 11, 2026 entitled "CITY OF

BELLFLOWER NOTICE OF PUBLIC HEARING APPEAL OF TAX ADMINISTRATOR'S FINAL DETERMINATION THE MEDICINE WOMAN GROUP, LLC."
The Medicine Women Group, LLC, received the minimum notice required by the Bellflower Municipal Code after 5 p.m. on Wednesday, May 6, 2026. My staff and myself have a pre-existing commitment out of town and are unable to attend the hearing.

The Bellflower Municipal Code 3.37 .1 BO(C) specifically contemplates a continuance based on mutual consent.

After unsuccessful attempts with both internal staff and your City Attorney to have the hearing continued to May 25, 2026, I am contacting you di'rectly with this request.

As notices were not sent to anyone else in the public and the agenda has only just been published at the time of this email, there is no prejudice to the City or members of the community in granting a continuance. The City Clerk has adequate time to post a revised agenda identifying the continuance of the item. The item can be continued to May 25, 2026, without opening the public hearing.

In the absence of a continuance, The Medicine Woman Group, LLC, will not be afforded the fair hearing to which it is entitled.

Please advise if a continuance can be facilitated in advance of the meeting through the City Manager's Office.

Jennifer McGrath
Law Offices of Jennifer McGrath
7755 Center Avenue, Suite 1100
Huntington Beach CA 92647
(714t 231-2124
b.Up_s.: // www.JenniLermcgr.ath.__c_om/
1 85

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86 Mayra Ochiqui
From:

Sent:

To:

Cc:

Subject:

Follow Up Flag:

Flag Status:

Dear Ms. McGrath,
Campen, Timothy E.

Thursday, May 7, 2026 6:13 PM
Jennifer McGrath; Sonny Santa Ines; Victor Sanchez; Dan Koops; Raymond Dunton; Wendi Morse; Mayra Ochiqui; City Clerk
[email protected]; TMW; Charis Surrett; [email protected]; Brandon Scadron; Berger, Karl H.; Ryan Smoot; Wangsu Lee
RE: Late Communication for meeting of May 11, 2026 / Request for Continuance to May 25,2026
Flag for follow up
Flagged
As I indicated on our text exchange on this matter, I am providing you here with information relating to the City providing an accommodation, as you requested due to "being out of town," concerning The Medicine Woman's appearance before the Bellflower City Council at its regularly scheduled meeting this Monday, May 11, 2026, concerning your appeal of the Tax Administrator's Final Determination.

The City will provide The Medicine Woman with the opportunity to appear at the appeal hearing remotely via videoconference (Zoom or Microsoft Teams), if you choose to do so, in lieu of personal appearance in Council Chambers. Remote appearance can be for all participants on behalf of The Medicine Woman or a combination of personal and remote appearance. The City anticipates having at least one witness appear via video conference.

If you choose to use this accommodation, please provide the name, email address, and phone number for each person who will be appearing remotely. In those cases where more than one participant will be appearing on the same camera/connection, please identify each such person per connection and who among them is the direct contact regarding any technical logistics related to the video conferencing.

Please be advised that any remote appearance on behalf of either The Medicine Woman or the City is done at their own risk. Any technical issues with the video conferencing system, regardless of the cause or origin, should not be expected to result in any continuance of this appeal hearing. You should plan accordingly.

Please let me know if you have any questions on the logistics of appearing via video conference. Beyond that, this correspondence represents the City's final response regarding your request for accommodation. As previously advised, you are free to request a continuance of the appeal hearing from the City Council at the hearing on Monday, if you choose.

Sincerely,
Timothy E. Campen I Partner
Burke, Williams & Sorensen, LLP
87 501 West Broadway -sutte 1600, San Diego. CA 92101
o 619.814.5810 I o 819 814.5800 I F" 619.814.6799 I M 619.861 7707 tea.mp
Sent: Thursday, May 7, 2026 5:29 PM
To: [email protected]; [email protected]; [email protected]; rdunton@bellflower,ca.gov; [email protected]; Mayra Ochiqui ; City Clerk
Cc: [email protected]; TMW ; Charis Surrett ; [email protected]; Brandon Scadron ; Berger, Karl H. ; Campen, Timothy E. ; Ryan Smoot ;
Wangsu Lee
Subject: Late Communication for meeting of May 11, 2026 / Request for Continuance to May 25, 2026 [EXIERNAL]
Honorable Mayor Santa Ines and Member of the City Council - I am writing on behalf of our client, The Medicine Woman Group, LLC, regarding a public hearing scheduled for your regularly scheduled City Council meeting of May 11, 2026 entitled "CITY OF

The Bellflower Municipal Code 3.37 .180(C) specifically contemplates a continuance based on mutual consent.

After unsuccessful attempts with both internal staff and your City Attorney to have the hearing continued to May 25, 2026, I am contacting you directly with this request.

In the absence of a continuance, The Medicine Woman Group, LLC, will not be afforded the fair hearing to which it is entitled.
2 88

Please advise if a continuance can be facilitated in advance of the meeting through the City Manager's Office.

Jennifer McGrath
Law Offices of Jennifer McGrath
7755 Center Avenue, Suite 1100
Huntington Beach CA 92647
(71_4) 231-2124
b..llps:// www.jennifermcgrath.com/
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3 89

Mayra Ochiqui
From:

Sent:

To:

Cc:

Subject:

Attachments:

Jennifer McGrath
Friday, May 8, 2026 5:34 PM
Sonny Santa Ines; Victor Sanchez; Dan Koops; Raymond Dunton; Wendi Morse; Mayra Ochiqui; City Clerk
[email protected]; TMW; Charis Surrett; [email protected]; Brandon Scadron; Berger, Karl H.; Campen, Timothy E.; Ryan Smoot; Wangsu Lee Late Communication re: Agenda Item #12A; May 11, 2026
Executed Declaration with Exhibits 2.23.26.pdf
Honorable Mayor Santa Ines and Member of the City Council - Please see the attached Declaration of Charis Surrett, Chief Executive Officer of The Medicine Woman Group LLC. This document was originally submitted with the Opposition Brief before the Tax Administrator hearing; however, Staff did not include it in the Staff Report distributed as part of the agenda materials.

Jennifer McGrath
Law Offices of Jennifer McGrath
7755 Center Avenue, Suite 1100
Huntington Beach CA 92647
{714) 231-2124
httns:LJ. www.jennlfermcgrath_._com/
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1 90

2 3
4 5
6 7
8 9
10 JENNIFER McGRATH (SBN 179917)
EDWARD P1NCHIFF (SBN 137183)
Law Offices of Jennifer McGrath
9114 Adams Ave., #264
Huntington Beach, CA 92646
Phone: (714) 231-2 J 24
Attorneys for

THE MEDICJNE WOMAN GROUP, LLC
ClTY OF BELLFLOWER
11 In the Matter of the Bellflower City Tax
Assessment against
12 13 THE MEDICINE WOMAN GROUP, LLC
14 dba The Medicine Woman,

DECLARATION OF CHARIS

BURRETT IN SUPPORT OF

OBJECTION TO TAX ASSESSMENT

AGAINST THE MEDICINE WOMAN

GROUPLLC
15 16
17 18
19 20
21 22
23 24
25 26
27 28
Date: February 24, 2026
Time: 1 :00 p.m.

Place: Bellflower City Hall

DECLARATION OF CHARIS BURRETT

1. I am the Chief Executive Officer of THE MEDICINE WOMAN GROUP LLC dba The Medicine Woman ("TMW"). I submit this declaration in support ofTMW's Objections to the City of Bellflower's ("City1') Tax Assessment against TMW and the findings in the Cannabis Tax Report of Examination for Calendar Years 2022-2024 prepared by Avenu Insights and Analytics dated November 24, 2025. The facts herein are within my personal knowledge, except as to those stated on information and belief, and if called and sworn as a witness, I could and would competently testify thereto.
mwT .AR ATION ()J;' J>ORT OF ORTP.<'TION TO TAX A~~p~~Ml<NT AnATN~T TJ-rn 91 1 2. I am familiar with TMW's recordkeeping practices. TMW utilizes a point-of-sale 2 software system provided by Treez for inventory control, sales, purchasing, METRC 3 compliance, and reporting. Data is entered into the Treez software system in the regular course 4 of business at or near the time of the act, condition, or event. 5 3. From that software system, I requested General Manager Brandon Scandon to create the 6 attached reports in support of the Objections filed by TMW to the City's Tax Assessment against 7 TMW and the Cannabis Tax Report of Examination dated November 24, 2025. The exhibits to 8 this Declaration are true and correct copies of those reports and I certify the authenticity of these 9 business records of TMW.
10 4. The true and correct cannabis product net sales for all audit reporting periods for TMW 11 is identified in the fourth column labeled "Net" of Exhibit A. 12 5. The true and correct non-cannabis product net sales for all audit reporting periods for 13 TMW is identified in the fifth column labeled "Non Cannabis Net" of Exhibit A and the fourth 14 column labeled "Net" of Exhibit B.
15 6. The true and correct delivery fees for all audit reporting periods for TMW is identified in 16 the first column labeled "Fees Collected" of Exhibit C. 17 I declare under penalty of perjury under the laws of the State of California that the 18 foregoing is true and correct. Executed on February 2 19 20
21 22
23 24
25 26
27 28
Charis B ett, Chief Executive Officer
The Medicine Woman Gro1:1p LLC
nRf'T.ARATION OJI f'HARTS TUIRRP.TTTN STJPPORT OFORTPf'TTON TOT AX A.~SFSSMFNT AfMTNSTTHF 92 EXHIBIT A
93 The Medicine Woman Sales Cannabis Products Sales Summary 1/1/2022-12/31/2024 Filing Period Calendar Period Gross Discounts Returns Net Non Cannabis Net Total Net 2021-22-Q3 Jan-Mar: 2022 $127,921.08 $144,162.13 $0.00 $983,758.95 $33,979.16 $1,017,738.11 2021-22-Q4 Apr-Jun: 2022 $1,134,044.57 $166,978.46 $0.00 $967,066.11 $34,168.93 $1,001,235.04 2022-23-Q1 Jul-Sep: 2022 $1,153,021.98 $246,948.00 $2,621.00 $903,452.98 $31,814.96 $935,267.94 2022-23-Q2 Oct-Dec: 2022 $1,043,482.74 $185,038.72 $215.00 $858,229.02 $34,667.88 $892,896.90 2022-23-Q3 Jan-Mar: 2023 $943,197.13 $127,942.30 $521.00 $814,733.83 $27,963.34 $842,697.17 2022-23-Q4 Apr-Jun: 2023 $893,985.24 $93,926.18 $589.00 $799,470.06 $27,229.74 $826,699.80 2023-24-Q1 Jul-Sep: 2023 $870,296.41 $110,963.78 $361.00 $758,971.63 $28,673.76 $787,645.39 2023-24 Q2 Oct-Dec: 2023 $865,469.01 $122,413.69 $796.00 $742,259.32 $33,978.67 $776,237.99 2023-24-Q3 Jan-Mar: 2024 $849,283.50 $126,948.02 $986.00 $721,349.48 $28,740.58 $750,090.06 2023-24-Q4 Apr-Jun: 2024 $875,662.02 $155,161.13 $2,564.00 $717,936.89 $16,187.34 $734,124.23 2024-25-Q1 Jul-Sep: 2024 $865,190.00 $187,376.43 $1,765.00 $676,048.57 $14,841.54 $690,890.11 2024-25-Q2 Oct-Dec: 2024 $851,127.00 $207,468.89 $2,879.00 $640,779.11 $18,228.81 $659,007.92 94 EXHIBITB
95 The Medicine Woman Sales Non-Cannabis Products Sales Summary 1/1/2022-12/31/2024 Filing Period Calendar Period Gross Discounts Returns Net 2021-22-Q3 Jan-Mar: 2022 $39,916.50 $5,937.34 $0.00 $33,979.16 2021-22-Q4 Apr-Jun: 2022 $42,821.50 $8,652.57 $0.00 $34,168.93 2022-23-Q1 Jul-Sep: 2022 $41,219.00 $9,332.04 $72.00 $31,814.96 2022-23-Q2 Oct-Dec: 2022 $42,866.50 $8,198.62 $0.00 $34,667.88 2022-23-Q3 Jan-Mar: 2023 $33,220.00 $5,191.66 $65.00 $27,963.34 2022-23-Q4 Apr-Jun: 2023 $31,002.00 $3,672.26 $100.00 $27,229.74 2023-24-Q1 Jul-Sep: 2023 $32,764.50 $4,090.74 $0.00 $28,673.76 2023-24 Q2 Oct-Dec: 2023 $38,461.50 $4,482.83 $0.00 $33,978.67 2023-24-Q3 Jan-Mar: 2024 $33,467.31 $3,636.73 $90.00 $29,740.58 2023-24-Q4 Apr-Jun: 2024 $24,316.02 $8,088.68 $40.00 $16,187.34 2024-25-Q1 Jul-Sep: 2024 $20,726.02 $5,755.48 $129.00 $14,841.54 2024-25-Q2 Oct-Dec: 2024 $24,695.53 $6,221.72 $245.00 $18,228.81 1 96

EXHIBITC
97 The Medicine Woman Delivery Fees Collected 1/1/2022 -12/31/2024 Filing Period Calendar Period Fees Collected
2021-22-03 Jan-Mar: 2022 $4,750.00
2021-22-04 Apr-Jun: 2022 $1,080.00
2022-23-Q1 Jul-Sep: 2022 $0.00
2022-23-Q2 Oct-Dec: 2022 $5.00
2022-23-Q3 Jan-Mar: 2023 $0.00
2022-23-Q4 Apr-Jun: 2023 $0.00
2023-24-Q1 Jul-Sep: 2023 $0.00
2023-24 Q2 Oct-Dec: 2023 $0.00
2023-24-Q3 Jan-Mar: 2024 $0.00
2023-24-Q4 Apr-Jun: 2024 $0.00
2024-25-01 Jul-Sep: 2024 $0.00
2024-25-Q2 Oct-Dec: 2024 $0.00
98 Mayra Ochiqui
From:

Sent:

To:

Cc:

Subject:

Attachments:

Follow Up Flag:

Flag Status:

Jennifer McGrath
Sunday, May 10, 2026 2:02 PM
Sonny Santa Ines; Victor Sanchez; Dan Koops; Raymond Dunton; Wendi Morse; Mayra Ochiqui; City Clerk
[email protected]; TMW; Charis Burrett; [email protected]; Brandon Scadron; Berger, Karl H.; Campen, Timothy E.; Ryan Smoot; Wangsu Lee Re: Late Communication for meeting of May 11, 2026 / Request for Continuance to May 25,'2026
Late Communication 5.10.26 with attachments.pdf
Flag for follow up
Flagged
Please see the additional Late Communication attached to this email.

Jennifer McGrath
Law Offices of Jennifer McGrath
7755 Center Avenue, Suite 1100
Huntington Beach CA 9264 7
{714) 231-2124
hJtQs:UwwwJenoifermcgrath.com/
On Thu, May 7, 2026 at 6:13 PM Campen, Timothy E. wrote:

Dear Ms. McGrath,
As I indicated on our text exchange on this matter, I am providing you here with information relating to the City providing an accommodation, as you requested due to "being out of town," concerning The Medicine Woman's appearance before the Bellflower City Council at its regularly scheduled meeting this Monday, May 11, 2026, concerning your appeal of the Tax Administrator's Final Determination.

The City will provide The Medicine Woman with the opportunity to appear at the appeal .hearing remotely via videoconference (Zoom or Microsoft Teams), if you choose to do so, in lieu of personal appearance in Council Chambers. Remote appearance can be for all participants on behalf of The Medicine Woman or a combination of personal and remote appearance. The City anticipates having at least one witness appear via video conference.

If you choose to use this accommodation, please provide the name, email address, and phone number for each person who will be appearing remotely. In those cases where more than one 1 99

participant will be appearing on the same camera/connection, please identify each such person per connection and who among them is the direct contact regarding any technical logistics related to the video conferencing.

Please let me know if you have any questions on the logistics of appearing via video conference. Beyond that, this correspondence represents the City's final response regardingyour request for accommodation. As previously advised, you are tree to request a continuance of the appeal hearing from the City Council at the hearing on Monday, if you choose.

Sincerely,
Timothy E. Campen I Partner
Burke, Williams & Sorensen, LLP
501 West Broadway-Suite 1600, San Dfego, CA 921CJ'I
o 619.814.5810 I o 619.814.5800 I f 619.814.6799 I M 619.861.7707 lc..;,npM(tN)w r delivering it to the designated
addressee, you received this document through inadvertent error and any further review. dissemination, distribution or copying of this communication by you or anyone else is strictly prohibited. IF YOU RECEIVED THIS COMMUNICATION IN ERROR. PLEASE NOTIFY US 1IMMEDIATEL Y BY TELEPHONING THE SENDER NAMED ABOVE AT 800.333.4297. Thank you.

From: Jennifer McGrath
Sent: Thursday, May 7, 2026 5:29 PM
2 100

To: [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; Mayra Ochiqui ; City Clerk

Cc: [email protected]; TMW ; Charis Burrett ; [email protected]; Brandon Scadron ; Berger, Karl H. ; Campen, Timothy E. ; Ryan Smoot ;
Wangsu Lee
Subject: Late Communication for meeting of May 11, 2026 / Request for Continuance to May 25, 2026 Honorable Mayor Santa Ines and Member of the City Council - I am writing on behalf of our client, The Medicine Woman Group, LLC, regarding a public hearing scheduled for your regularly scheduled City Council meeting of May 11, 2026 entitled "CITY OF

The Bellflower Municipal Code 3.37 .180(C) specifically contemplates a continuance based on mutual consent.

After unsuccessful attempts with both internal staff and your City Attorney to have the hearing continued to May 25, 2026, I am contacting you directly with this request.

In the absence of a continuance, The Medicine Woman Group, LLC, will not be afforded the fair hearing to which it is entitled.
3 101

Please advise if a continuance can be facilitated in advance of the meeting through the City Manager's Office.

Jennifer McGrath
Law Offices of Jennifer McGrath
7755 Center Avenue, Suite 1100
Huntington Beach CA 92647
(714) 231-2124
hll12s:// www.jennifermcgrath.com/
4 102

City of Bellflower

LAW OFFICES OF

JENNIFER MCGRATH
9114 Adams Avenue #264, Huntington Beach, CA 92646
714.231.21241 [email protected]
16600 Civic Center Drive
Bellflower, CA 90706
May 10, 2026
via email only
RE: Late Communication re: Agenda Item #12A; May 11, 2026 Honorable Mayor Santa Ines and Members of the City Council - With respect to Agenda Item #12A of the City Council meeting on May 11, 2026, please see the attached documents which appellant The Medicine Woman Group, LLC (TMW) is providing in further support of its position that:
1) Amounts collected by TMW from its customers for the City's cannabis tax should not be included in taxable gross income;
2) Sales of non-cannabis items should not be subject to the city cannabis tax.

The attached documents are:
a) City of Bellflower Resolution No. 16-80, approved and adopted by the City Council on November 28, 2016, which is a resolution adding the Bellflower cannabis tax proposition (Measure B) to the March 7, 2017 general municipal election. Exhibit A of the Resolution is the full text of the ballot measure.
b) The Impartial Analysis of Measure B prepared by the Bellflower City Attorney's office (obtained from Ballotpedia at
https://ballotpedia.org/Bellflower , California, Marijuana Tax, Measure B (March 201 I).

Both of these documents support TMW's position. The plain language of Measure B presents the Measure as a cannabis tax and nowhere in the text of the Measure is it stated or implied that the cannabis tax should apply to amounts collected by TMW from its customers for the City's cannabis tax (a tax on tax). Nor does the plain language state or imply that the cannabis tax should be applied to non-cannabis items. 103

The Impartial Analysis of Measure B prepared by the Bellflower City Attorney's office also supports TMW's position and the plain language reading of the Measure B text.

The Impartial Analysis states that Measure B "authorizes imposition of an annual tax upon all commercial cannabis activities ... ". Bellflower Municipal Code section

8.48.040 defines "commercial cannabis activity" as including "cultivation, possession, manufacture, processing, storing, laboratory testing, labeling, transporting, distribution, or sale of cannabis or a cannabis product." (Emphasis added.) The City of Bellflower cannot impose a cannabis tax that goes beyond what was authorized by the voters in Measure B. The City cannot impose a tax on taxes, nor can it impose a tax on non-cannabis items.

TMW encourages the City Council to carefully review these materials as well as the "Objection to Tax Assessment; Hearing Brief by the Medicine Woman Group, LLC." The Objection & Hearing Brief outline the history of this matter and TMW's legal arguments.

Please also take note of the procedural defects in the tax assessment and notice of the tax assessment detailed in the Hearing Brief at page 3 line 21 through page 4 line 13.

TMW has not and does not waive any procedural defects which, in addition to the legal arguments, are fatal to the tax assessment.

The City Council should grant the appeal of TMW and reject the Tax Administrator's Decision upholding the revised cannabis business tax assessment. The City Council should issue findings that 1) amounts collected by TMW from its customers for the City's cannabis tax should not be included in taxable gross income, and 2) sales of non- cannabis items should not be subject to the city cannabis tax.

Sincerely,

V. Sanchez
D. Koops
R. Dutton
W. Morse
Mayra Ochiqui
City Clerk [email protected]
Ryan Smoot
Wangsu Lee [email protected]
Karl H. Berger [email protected]
Timothy Campen
104

CITY OF BELLFLOWER
RESOLUTION NO. 16-80

A RESOLUTION ADDING A PROPOSITION TO THE BALLOT FOR THE PREVIOUSLY CALLED MARCH 7, 2017, GENERAL MUNICIPAL
ELECTION PURSUANT TO ELECTIONS CODE § 9222, FOR THE

SUBMISSION TO THE VOTERS A PROPOSITION WHICH WOULD

IMPOSE A NEW TAX UPON CANNABIS-RELATED BUSINESSES
THE CITY COUNCIL RESOLVES AS FOLLOWS:

SECTION 1. Pursuant to Elections Code § 9222, the City Council places a proposition on the ballot for the regular municipal election scheduled for Tuesday, March 7, 2017, as previously established and implemented by City Council Resolution Nos. 16-76, 16-77, and 16-78 adopted on October 24, 2016.

SECTION 2. A copy of the proposition to be considered by the voters is attached as Exhibit "A," and incorporated by reference.

SECTION 3. Pursuant to Elections Code §§ 9222, 9603, and 13119, the exact form of the question to be voted on at the election as it should appear on the ballot is as follows:

CANNABIS TAX YES
Shall the proposition imposing a tax on cannabis
related businesses operating within the City of
Bellflower be adopted? NO
SECTION 4. The City Clerk must certify to the passage and adoption of this Resolution; enter the same in the book of original Resolutions; and make a minute of the passage and adoption thereof in the records of the proceedings of the City Council in the minutes of the meeting at which the same is passed and adopted.

SECTION 5. The Mayor, or presiding officer, is hereby authorized to affix a signature to this Resolution signifying its adoption by the City Council of the City of Bellflower, and the City Clerk, or her duly appointed deputy, is directed to attest thereto.

Page 1 of 2 ends

105

City of Bellflower
Resolution No. 16-80

Page 2 of 2 ends

SECTION 6. This Resolution will become effective immediately upon adoption.

PASSED, APPROVED, AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF BELLFLOWER ON THIS 28 TH DAY OF NOVEMBER, 2016.

Attest:

APPROV
Karl
Attachment:

Dan Koops, Mayor
106

EXHIBIT A

FULL TEXT OF THE BALLOT MEASURE

CITY OF BELLFLOWER
ORDINANCE NO. 1324

A PROPOSITION ADOPTING AN ORDINANCE TO APPROVE
ARTICLE II OF CHAPTER 3.37 TO TITLE 3 OF THE BELLFLOWER MUNICIPAL CODE ENTITLED "CANNABIS TAX" AND IMPOSING A
TAX ON VARIOUS CANNABIS RELATED BUSINESSES.

THE PEOPLE OF THE CITY OF BELLFLOWER DO HEREBY ORDAIN AS FOLLOWS:

SECTION 1. Article II of Chapter 3.37 in Title 3 of the Bellflower Municipal Code ("BMC") , entitled "Cannabis tax," is approved to read as follows:
"ARTICLE 11 -VOTER APPROVED TAX
§ 3.37 .040 VOTER APPROVAL REQUIRED.

This Article II of Chapter 3.37 of the Bellflower Municipal Code must be approved by voters in accordance with applicable law.
§ 3.37 .050 TAX IMPOSED.

There is established and imposed, beginning July 1, 2017, a cannabis tax in the manner and rates set forth in this chapter.
§ 3.37.060 CANNABIS TAX.

A. Tax on commercial cannabis cultivation except nurseries.

1. Every person who is engaged in commercial cannabis cultivation in the City must pay an annual Cannabis tax. The initial tax rate effective July 1, 2017 for commercial cannabis cultivation, excluding nurseries, is set at $15.00 per fiscal year, per square foot of canopy space authorized by each City permit, or by each state license in the absence of a City permit, not deducting for unutilized square footage. The square footage is the maximum square footage of canopy allowed by the City permit for commercial cannabis cultivation, or, in the absence of a City permit, the square footage is the maximum square footage of canopy for commercial cannabis cultivation allowed by the state license type. In no case can canopy square footage which is authorized by the permit or license, but not utilized for cultivation, be deducted for the purpose of determining the tax for cultivation unless duly authorized in writing by the administrator.

Page 1 of 6 ends

107

City of Bellflower
Ordinance No. 1324

Page 2 of 6 ends

2. Beginning on July 1, 2020, the tax rate will automatically increase each fiscal year by $2.50 per square foot of authorized canopy.

Except as otherwise provided, the maximum tax rate is $25.00 per square foot.

B. Tax on cultivation of cannabis as a nursery.

1. Every person who is engaged in cultivation of cannabis as a nursery as defined in this chapter in the City must pay an annual Cannabis tax. The initial tax rate effective July 1, 2017 is set at $2.00 per square foot of canopy authorized by each City permit, or by each state license in the absence of a City permit, not deducting for unutilized square footage. The square footage is the maximum square footage of canopy allowed by the City permit for cultivation of cannabis as a nursery, or, in the absence of a City permit, the square footage is the maximum square footage of canopy for cultivation of cannabis as a nursery allowed by the state license type. In no case must canopy square footage which is authorized by the permit or license but not utilized for cultivation as a nursery be deducted for the purpose of determining the tax for cultivation as a nursery unless duly authorized in writing by the administrator.

2. Beginning on July 1, 2020, such tax rate will automatically increase each fiscal year by $1.50 per square foot of canopy utilized for cannabis cultivation as a nursery. Except as otherwise provided, the maximum tax rate is $5.00 per square foot per annum.

C. Tax on transportation businesses.

Every person who is engaged in a cannabis transportation business must pay an annual Cannabis tax of $1,500.00 per year effective July 1, 2017.

D. Tax on all other commercial cannabis businesses.

1. Every person who is engaged in business as a dispensary, manufacturer, testing laboratory, or distribution facility, or engaging in delivery of cannabis in the City must pay an annual commercial Cannabis tax. The initial tax rate effective July 1, 2017 is set at 5% of the gross receipts per fiscal year.

2. Beginning on July 1, 2020, the tax rate will automatically increase each fiscal year by 2.5%. Except as otherwise provided, the maximum tax rate is 10% per fiscal year on gross receipts. 108

City of Bellflower
Ordinance No. 1324

Page 3 of 6 ends

§ 3.37 .070 AUTOMATIC TAX INCREASE.

A. Beginning on July 1, 2024, non-gross receipts based taxes imposed by this chapter will be increased annually each July 1st on a percentage basis using the percentage increase in the consumer price index ("CPI") for all urban consumers as calculated by the United States Department of Labor, Bureau of Labor Statistics, for the Los Angeles-Riverside-Orange County area, for the 12 months ending March 31st of each year.

B. Notwithstanding any other provisions of this code, the tax imposed in this chapter will be increased by a minimum of one cent ($0.01) every year for square footage-based or other non-gross receipts based taxes. § 3.37.080 REPORTING AND REMITTANCE OF TAX.

A. Each person required by this chapter to remit a tax must file a return to the administrator on forms approved by the administrator on or before the due date. The full amount of the tax owed must be included with the return and filed with the administrator. The administrator is authorized to require such additional information as deemed necessary to determine if the tax is being levied, collected, and remitted in accordance with this chapter.

Pursuant to Revenue and Tax Code § 7284.6, the administrator, and its agents, must maintain such filing returns as confidential information, and not subject to the California Public Records Act.

B. The Cannabis tax imposed by this chapter is imposed on a fiscal year basis and is due and payable in quarterly installments as follows:

1. Each person or business owing a Cannabis tax must, on or before the last day of the month following the close of each fiscal year quarter remit to the administrator the tax due. The tax due is no less than the quarterly installment due, but the taxpayer may at any time pay the tax due for the entire fiscal year.

2. If the Cannabis tax is owed on commercial cannabis cultivation, the square footage tax due is paid based on the square footage of cultivation authorized by the City permit. The tax will not be prorated or adjusted for any reduction in the square footage authorized but not utilized for cultivation unless duly authorized in writing by the administrator. If the cultivation begins in the middle of a fiscal year, the administrator must prorate, in daily increments, the amount due for the fiscal year.

C. Tax statements and payments for all outstanding taxes owed the City are immediately due to the administrator upon cessation of business for any reason.
109

City of Bellflower
Ordinance No. 1324

Page 4 of 6 ends

D. The administrator may establish shorter reporting and payment periods for any taxpayer as the administrator deems necessary to ensure collection of the tax.

E. The administrator may, as part of administering the tax, modify the form of payment and take such other administrative actions as needed to facilitate collection of the tax.
§ 3.37 .090 CONSTITUTIONAL EXEMPTIONS.

A. The tax imposed by this chapter does not apply to:

1. Any person or service when imposition of the tax upon that person or service would violate a federal or state statute, the Constitution of the United States, or the Constitution of the state of California;

2. The city.

B. Except as otherwise provided, any person that is exempt from the tax imposed by this chapter must file an application with the administrator for an exemption. The application for a Tax exemption must be made upon a form approved by the administrator and state those facts, declared under penalty of perjury, which qualify the applicant for an exemption, and include the names of all utility service providers serving that person. If deemed exempt by the administrator, such person must give the administrator timely written notice of any change in utility service providers so that the administrator can properly notify the new utility service provider of the person's Tax exempt status.

C. A person failing to comply with this section is not entitled to a refund of Tax remitted to the administrator from such person as a result of such non-compliance.
§ 3.37.100 SUSPENSION OR REDUCTION.

Nothing in this chapter requires the City Council to collect a tax; the city council may suspend or reduce tax rates imposed by this chapter by resolution after a public hearing.
§ 3.37 .110 CITY COUNCIL AUTHORITY TO AMEND.

Unless voter is approval is required by the California Constitution or applicable law, the City Council may exercise all applicable powers set forth in the Government Code including, without limitation, amending this chapter by ordinance upon three affirmative votes by its members. It may, in additional, adopt by ordinance or resolution such additional regulations that may be necessary to implement the purposes of this chapter."
110

City of Bellflower
Ordinance No. 1324

Page 5 of 6 ends

SECTION 2. Environmental Analysis. This Resolution is exempt from review under the California Environmental Quality Act (California Public Resources Code §§ 2100, et seq., "CEQA") and CEQA regulations (14 California Code of Regulations§§ 15000, et seq.) because it establishes rules and procedures to implement government funding mechanisms; does not involve any commitment to a specific project which could result in a potentially significant physical impact on the environment; and constitutes an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. Accordingly, this Resolution does not constitute a "project" that requires environmental review (see specifically 14 CCR§ 15378(b)(4-5)).

SECTION 3. Interpretation. This Proposition must be interpreted so as to be consistent with all federal and state laws, rules, and regulations. If any section, sub- section, sentence, clause, phrase, part, or portion of this Proposition is held to be invalid or unconstitutional by a final judgment of a court of competent jurisdiction, such decision does not affect the validity of the remaining portions of this Proposition. The voters declare that this Proposition, and each section, sub-section, sentence, clause, phrase, part, or portion thereof, would have been adopted or passed irrespective of the fact that any one or more sections, sub-sections, sentences, clauses, phrases, part, or portion is found to be invalid. If any provision of this Proposition is held invalid as applied to any person or circumstance, such invalidity does not affect any application of this Proposition that can be given effect without the invalid application.

SECTION 4. Severability. If any portion of this Proposition is held by a court of competent jurisdiction to be invalid, the remainder of the Proposition and the application of such provision to other persons or circumstances will not be affected thereby. We the People indicate our strong desire that: (i) the City Council use its best efforts to sustain and reenact that portion, and (ii) the City Council implement this Proposition by taking all steps possible to cure any inadequacies or deficiencies identified by the court in a manner consistent with the express and implied intent of this Proposition, and then adopting or reenacting such portion as necessary or desirable to allow imposition of the tax.

SECTION 5. Construction. This Proposition must be broadly construed in order to achieve the purposes stated in this Proposition. It is the intent of the voters that the provisions of this Proposition be interpreted or implemented by the City and others in a manner that facilitates the purposes set forth in this Proposition.

SECTION 6. Effective Date. This Proposition will enact and impose a general tax. Accordingly, it will be submitted to a general election on March 7, 2017 for voter approval. If a majority of voters vote in favor of this Proposition, it will become valid and binding ten days after the date that the City Council certifies the election results in accordance with Elections Code § 9217.
111

City of Bellflower
Ordinance No. 1324

Page 6 of 6 ends

SECTION 7. City Council Authority. BMC Chapter 3.37 may be repealed or amended by a majority of the City Council without voter approval. However, voter approval is required for any amendment that would increase the rate of any tax levied pursuant to this Proposition as required by California Constitution Article XIIIC. Should the provisions of Government Code § 53720, et seq. or California Constitution Article XIIIC be repealed or amended, or interpreted by the courts so that voter approval is not required for enacting this Proposition, then this Proposition will take effect as provided for all other City ordinances and may be amended in the same manner as all other City ordinances.

SECTION 8. Effective Date. The Mayor will sign this Proposition and the City Clerk will attest and certify to the passage and adoption of this Ordinance if a majority of the voters voting in the City's general election on March 7, 2017 approve the Proposition.

I HEREBY CERTIFY MEASURE _ (ORDINANCE NO. 1324) WAS PASSED,

APPROVED, AND ADOPTED BY THE VOTE OF THE PEOPLE OF THE CITY OF BELLFLOWER ON ______ _
Mayor
Attest:

City Clerk
APPROVED AS TO FORM:

City Attorney
112

STATE OF CALIFORNIA )

COUNTY OF LOS ANGELES )SS

CITY OF BELLFLOWER )
I, Mayra Ochiqui, City Clerk of the City of Bellflower, California, do hereby certify under penalty of perjury that the foregoing Resolution No. 16-80 was duly passed, approved, and adopted by the City Council of the City of Bellflower at its Regular Meeting of November 28, 2016, by the following vote to wit AYES: Council Members -Garza, Santa Ines, Schnablegger, Dunton, and Mayor Koops
Dated: November 29, 2016
-~~ &Lfo-r Mayra Ooiqui, City Cieri<
City of Bellflower, Caliiornia
(SEAL)
113

Impartial analysis
The following impartial analysis of Measure B was provided by the office of the Bellflower city attorney:l~l
,c. Measure B is a proposition placed on the ballot by the Bellflower City Council. If approved by voters, Measure B would impose a new general tax upon cannabis businesses operating within the City of Bellflower including commercial cultivation, distribution, manufacturing, and retail sales. All tax revenue derived from the tax would be deposited in the City's General Fund.

Measure B itself does not authorize or permit cannabis business activities. Rather, beginning July 1, 2017, it authorizes imposition of an annual tax upon all commercial cannabis activities authorized by separate City Council action and state law.

For commercial cannabis cultivation (except for nurseries) the tax would be $15.00 per fiscal year, per square foot of authorized space. Commencing July 1, 2020, this tax will increase each fiscal year by $2.50 per square foot until it reaches a maximum annual tax rate of $25.00 per square foot. For nurseries, the tax would be $2.00 per square foot of authorized space.

Beginning July 1, 2020, this tax will increase each fiscal year by $1.50 per square foot until it reaches a maximum annual tax rate of $5.00 per square foot.

Every person transporting cannabis or cannabis products from one permitted business location of one permittee to another must pay an annual tax of $1,500.00 per year.

Every person who operates a dispensary, manufacturing facility, testing laboratory, or distribution facility, or engages in delivery of cannabis in the City must pay an initial annual tax of 5% of the gross receipts per fiscal year. That rate would increase on July 1, 2020 (and for each fiscal year thereafter) by 2.5% until it reaches an annual maximum tax rate of 10%.

Beginning July 1, 2024, and continuing each July 1st thereafter, non-gross receipt based cannabis taxes (cultivation, nurseries, and transportation) would increase based upon. the consumer price index.

There ls no sunset clause on the taxes. All the. taxes implemented by Measure B may be suspended or reduced by City Council action. Any other increase of the tax would require voter approval.

Measure B would impose a "general tax." Therefore, all tax revenue would be available for use by the City to pay for general City operations and services. The City would not be legally bound in any way to use the tax monies for any special purpose or for any particular facilities or programs. Since this ballot measure proposes a "general tax" rather than a "special tax," it requires approval by a simple majority of the City's voters.

A "yes'' vote on Measure B favors the Measure. A "no" vote on Measure B opposes the Measure.Iii
114

Mayra Ochiqui
From:

Sent:

To:

Cc:

Subject:

Attachments:

Follow Up Flag:

Flag Status:

Ms. McGrath -
Berger, Karl H.

Sunday, May 10, 2026 6:51 PM
Jennifer McGrath
Campen, Timothy E.; Ryan Smoot; Wangsu Lee; Mayra Ochiqu1; Anna Garan BF -Response to TMW Letter of 5-10-26
20260510BF -TMW Response to 5-1 0.pdf
Flag for follow up
Flagged
Please see attached, responding to your letter from earlier today. The City Council is blind copied on this email.

Thank you.

Karl H. Berger I Partner
Burke, Williams & Sorensen, LLP
444 South Flower Street, 40th Floor, Los Angefes, CA 90071 o 213.236.2729 I o 213.236.0600 I F 213.236.2700 I M 661,644.5476 The information contained in this e-mail message is intended only for the CONFIDENTIAL use of the designated addressee named above. The information transmitted is subj prlVilege and/or represents confidential attorney work product. Recipienls should not file copies of this email with publicly accessible records. If you are not the designated adc the authorized agent responsible for delfvering it to the designated addressee, you received this document through inadvertent error and any further review, dissemination, dis this communication by you or anyone else is strictly prohibited, IF YOU RECEIVED THIS COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY BY TELEPHC NAMED ABOVE AT 800.333.4297. Thank; you.

From: Jennifer McGrath
Date: Sunday, May 10, 2026 at 2:03 PM
To: "[email protected]" , "[email protected]" , "[email protected]" ,
"[email protected]" , "[email protected]" , Mayra Ochiqui , City Clerk

Cc: "[email protected]" , TMW , Charis
Burrett , "[email protected]" , Brandon
Scadron , "Berger, Karl H." , "Campen, Timothy E."
, Ryan Smoot , Wangsu Lee
Subject: Re: Late Communication for meeting of May 11, 2026 / Request for Continuance to May 25, 2026 1 115

Please see the additional Late Communication attached to this email.

Jennifer McGrath
Law Offices of Jennifer McGrath
7755 Center Avenue, Suite 1100
Huntington Beach CA 92647
(714) 231-2124
htt ps:/ / www..,Le no [f exm cgr ath,_c9 mt
On Thu, May 7, 2026 at 6:13 PM Campen, Timothy E. wrote:

Sincerely,
Timothy E. Campen I Partner
Burke, Williams & Sorensen, LLP
501 West Broadway-Suite 1600. San Diego, CA 92101
o 619.814.5810 I 0 619.814.5800 I F 619.814.6799 I M 619.861.7707 tca1np,[email protected] I vCard I 810 I 1:1wslaw.com
The information contained in this e-mail message is intended only for the CONFIDENTIAL use of the designated addressee named above. The information transmitted is subject to the attorney-client privilege and/or represents confidential attorney work product. Recipients should not file copies of this email with publicly accessible records. If you are not the designated addressee named above or the authorized' agent responsible for delrvering it to the designated addressee. you received this document through inadvertent error and any further review, dissemination, distribution or copying of this communication by you or anyone else Is strictly prohibited. IF YOU RECEIVED THIS COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY BY T!:LEPHONING THE SENDER NAMED ABOVE AT 800.333.4297. Thank you .
•
From: Jennifer McGrath
Sent: Thursday, May 7, 2026 5:29 PM
To: [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; Mayra Ochiqui ; City Clerk

Cc: [email protected]: TMW ; Charis Burrett ; [email protected]; Brandon Scadron ; Berger, Karl H. ; Campen, Timothy E. ; Ryan Smoot ;
Wangsu Lee
Subject: Late Communication for meeting of May 11, 2026 / Request for Continuance to May 25, 2026 3 117

Honorable Mayor Santa Ines and Member of the City Council - I am writing on behalf of our client, The Medicine Woman Group, LLC, regarding a public hearing scheduled for your regularly scheduled City Council meeting of May 11, 2026 entitled "CITY OF

The Bellflower Municipal Code 3.37.180(C) specifically contemplates a continuance based on mutual consent.

After unsuccessful attempts with both internal staff and your City Attorney to have the hearing continued to May 25, 2026, I am contacting you directly with this request.

In the absence of a continuance, The Medicine Woman Group, LLC, will not be afforded the fair hearing to which it is entitled.

Please advise if a continuance can be facilitated in advance of the meeting through the City Manager's Office.

Jennifer McGrath
Law Offices of Jennifer McGrath
7755 Center Avenue, Suite 1100
Huntington Beach CA 92647
4 118

(714) 231-2124
b.llps:// www.j~c..runL
s
119

The City of Bellflower
7a.m,fies. ~us;nesfeS. 7ulure.s.
16600 Civic Center Drive, 8ellAower, CA 90706
·rel 562.804.1424 fax 562.925.8660 w,vw.bellflower.org
May 10, 2026

VIA EMAIL ONLY
Jennifer McGrath, Esq.

Law Offices of Jennifer McGrath
9114 Adams A venue #264
Huntington Beach, CA 92646
jrncgrath [email protected]
RE: Response to Late Communication Dated May 10, 2026
Dear Ms. McGrath:

Thank you for your letter dated May I 0, 2026 sent on behalf of The Medicine Woman Group, LLC ("TMW"). In short, your letter adds nothing new to your. argument; the controlling language regarding the City's cannabis tax may be found in the Bellflower Municipal Code ("BMC"). While your letter includes Resolution No. 16-80 and the Impartial Analysis of Measure B prepared by the City Attorney, these documents do not alter the City's position.

Accordingly, refer to my letter of April 28, 2026 for a response to TMW's arguments.

While l will not repeat what was already stated in my April 28th letter (and before that dat.e by the Finance Director), I reiterate that the City's cannabis tax under BMC § 3.37 .060(D){l) is a di.rect tax on the business for the privilege of conducting commercial cannabis operations within the City. It is not a tax imposed on the consumer or purchaser. The fact that TMW voluntarily chooses to collect tb.is amount from its customers and itemize it on receipts does not transfonn a privilege tax on the business into a pass-through tax on the consumer. When TMW collects the tax from customers and lists it on receipts, those amounts constitute part of TM W's gross receipts for purposes of calculating the cannabis tax.

Note that the City Attorney's hnpartiaJ Analysis of Measure B does what is intended: it describes the Measure in general terms for the benefit of voters. The BMC -which is the only relevant authority for this matter -defines "cannabis business" or "commercial cannabis business" to mean "any commercial business activity relating to cannabis including, without limitation., cultivating, transporting, distributing, manufactming, compounding, converting, processing, preparing, storing, packaging, delivering, and selling (wholesale and/or retail sales) of cannabis and any ancillary products and accessories in the City, whether or not carried on for gain or profit." The express inclusion of"ancillary products and accessories" in the definition of "commercial cannabis business" under BMC§ 3.37.020 is controlling.

So,my R. Sautn Ines
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120

The City of Bellflower
Jo,au/ies. '7ius.ines ses . ./ulures.
16600 Civic Center Drive, 8ellAower, CA 90706
'fel 562.804.1424 fo.x :562-925.8660 www.bellflower.org TM W's May 10 letter references "procedural defects in the tax assessment and notice of the tax assessment detailed in the Hearing Brief' and states that TMW "has not and does not waive any procedural defects." The City has reviewed TMW's Hearing Brief and does not concur that any procedural defects exist. The Tax Administrator's Determination Letter of April 15, 2026, was issued following the adminjstrative hearing held on February 24, 2026, and a thorough review of all documentation submitted for consideration, in accordance with BMC Chapter 3.37. All procedw·al requirements were satisfied.

The City's demand for payment of $55,056.11 (net of payment received to date), plus accruing interest at 0.75% per month and audit examination costs of $9,000.00, remains in full force and effect. TMW is again urged to remit payment immediately to avoid further accrual of penalties and interest and to preserve the status of its cannabis business permit.

C: Council
City Manager
City Clerk
Finance Director
Som,y R. Santa lnCB
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121

. ~
o,-:,.i1vr,-;o 1,x,f-"·,W,\'-
TO:

FROM:

SUBJECT:

DATE:

SUPPLEMENTAL MATERIAL
staf 12-A eport ___ _
Honorable Mayor and Members of the City Council
Anna Garan, Director of Finance
Consideration and possible action to conduct a public hearing to consider The Medicine Woman Group, LLC's appeal of the Tax Administrator's final determination related to the audit of dispensary operations for calendar years 2022-2024.

May 11, 2026

The Taxpayer was given the opportunity to be heard at an administrative hearing on February 24, 2026, and to submit additional documentation, which the City reviewed.

The appeal contests the inclusion of (1) amounts labeled as "City Cannabis Tax" and (2) revenues from non-cannabis sales in taxable gross receipts.

Page 1 of 5 ends

122

Staff Report -The Medicine Woman Group, LLC's Appeal of Tax Administrator's Final Determination Related to the Audit of Dispensary Operations for Calendar Years 2022-2024
May 11, 2026

Page 2 of 5 ends

FISCAL IMPACT
The total outstanding amount resulting from the audit of the Taxpayer's dispensary operations for calendar years 2022 through 2024 is $57,9&7284.0-140. This amount consists of $60,985.42 in tax, $12,892.93 in penalties, $13,92-§253.W-05 in interest, $9,000.00 for the Taxpayer's proportionate share of audit examination costs and is net of the $38,847 payment made in January 2026.

The increase in interest of $2,000228.~29 reflects additional accrual resulting from the Taxpayer's failure to remit the assessed amount within 10 business days of the tax assessment letter. The original interest calculation included in the Tax Administrator's letter was accrued only through November 2025, when the audit report was finalized; interest is now calculated through May 2026.

Staff Report -The Medicine Woman Group, LLC's Appeal of Tax Administrator's Final Determination Related to the Audit of Dispensary Operations for Calendar Years 2022-2024
May 11, 2026

Page 3 of 5 ends

The original audit report included estimated delivery revenues because the Taxpayer did not provide the requested documentation or clarification by the established audit deadline.

With respect to the first issue on appeal, the record shows that the Taxpayer collected amounts from customers identified as "City Cannabis Tax" but excluded those amounts from reported gross receipts. The Taxpayer contends these amounts are excludable under BMC§ 3.37.020 as taxes required by law to be included in or added to the purchase price ancf collected from the consumer, or amounts collected on behalf of others where the business is acting as an agent or trustee.

Instead, amounts collected under this label represent consideration received in the course of business operations and are includable in gross receipts under the BMC.

The uagent or trustee" exclusion also does not apply. The Taxpayer is not collecting funds on behalf of a third party but is recovering its own tax obligation as the licensed permittee.

Because no agency or fiduciary relationship exists under the ordinance, the statutory exclusion is inapplicable.

3.37.020 states in relevant part as follows:
"Cannabis businessH or .. commercial cannabis businessH means any commercial business activity relating to cannabis including, without limitation, cultivating, transporting, distributing, manufacturing, compounding, converting, processing, preparing, storing, packaging, delivering, and selling (wholesale and/or retail sales) of cannabis and any ancillary products and accessories in the City, whether or not carried on for gain or profit.
124

Staff Report -The Medicine Woman Group, LLC.'s Appeal of Tax Administrator's Final Determination Related to the Audit of Dispensary Operations for Calendar Years 2022-2024
May 11, 2026

Page 4 of 5 ends

BACKGROUND AND DISCUSSION -Continued
"Gross receipts,·•
except as otherwf se specifically provided, means the total amount actually received or receivable from all sales; the total amount or compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed, whether or not such act or service is done as a parl of or in connection with the sale of materials, goods, wares or merchandise; discounts, rents, royalties, fees, commissions, dividends, and gains realized from trading in stocks or bonds, however designated. Included in "gross receipts" is all receipts, cash, credits and properly of any kind or nature, without any deduction there from on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever, except that the following is excluded:

1. Cash discounts where allowed and taken on sales:

2. Credit allowed on properly accepted as part of the purchase price and which property may later be sold, at which time the sales price is included as gross receipts;

3. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;

4. Such parl 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;

6. 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;

7. Whenever there are included within the gross receipts amounts which reflect sales for which credit is extended and such amount proved uncolfectible 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 are included in the amount of gross receipts for the period when they are recovered;

8. Receipts of refundable deposits, except that such deposits when forfeited and taken into income of the business must not be excluded when in excess of one dollar ($1.00);

Staff Report -The Medicine Woman Group, LLC's Appeal of Tax Administrator's Final Determination Related to the Audit of Dispensary Operations for Calendar Years 2022-2024
May 11, 2026

Page 5 of 5 ends

Staff concludes that the Tax Administrator's Determination Letter is legally sound, supported by substantial evidence, and consistent with the Bellflower Municipal Code.

Bellflower City CouncilJune 22, 2026

Bellflower City Council
June 22, 2026