ACTION:
____________________________
Clerk/Secretary
00105977 1
Department: City Attorney Item No: PH3
Prepared by: Walter Chung, Assistant City Attorney Meeting Date: March 22, 2022 Approved by:
Darold Pieper, City Attorney
Patrick Johnson, City Manager Agenda Location: Public Hearing SUBJECT: AMENDMENTS TO CHAPTER 7.10, CANNABIS BUSINESS TAX RECOMMENDATION:
1.Open, conduct and close a public hearing and receive testimony regarding amendments to Chapter 7.10 of the Vista Municipal Code.
2.Introduce and adopt City Council Ordinance No. 2022- , adding Section 7.10.040, Debt, Deficiencies and Assessments, Section 7.10.110, Refunds, Section 7.10.120, Apportionment, and Section
7.10.160, Appeals to the Cannabis Business Tax Chapter of the Vista Municipal Code CORRELATION TO CITY COUNCIL GOALS: Relates to but does not directly support the City Council goal of fiscal responsibility.
PRIOR ACTION: Adopted City Council Resolution No. 2018- 96, ordering the submission to the qualified electors of the City an ordinance entitled "An Ordinance of the People of the City of Vista, California, Establishing a Tax on Commercial Marijuana Production and Sales and Amending Title 7 of the Vista Municipal Code to Add Chapter 7.10 Entitled `Cannabis Business Tax" (3- 1, Green opposed, Rigby absent).
The voters of the City of Vista passed Measure AA, the Cannabis Business Tax, in the November 6, 2018, general election. Measure AA imposes a general tax on cannabis businesses to offset their community impacts. The provisions of Measure AA were codified in Vista Municipal Code Chapter 7.10 on or about December 11, 2018.
STATEMENT ON THE SUBJECT: At the time Measure AA, and subsequently Chapter 7.10, was adopted, the provisions of Measure AA intended that some of the mechanics of administering the cannabis tax would be determined by the City Council at a later date. Specifically, section 7.10.070(B) contemplated the City Council, at a future date, adopt administrative rules involving payments and delinquencies, notices, refunds, recordkeeping and audit requirements, apportionment, deficiencies, assessments, and appeals.
As cannabis businesses have been operating in the City for a few years now, the need to adopt administrative rules related to administering the cannabis tax has arisen. The administrative rules that need to be adopted at this time relate to (1) assessing and collecting debts, deficiencies, and assessments, (2) providing a procedure for processing refunds of tax overpayments, (3) preventing double taxation via apportionment, and (4) providing an appeal process for cannabis business taxpayers.
AGENDA
REPORT
CITY COUNCIL
COMMUNITY DEVELOPMENT COMMISSION
SUCCESSOR AGENCY
BUENA SANITATION DISTRICT
JOINT POWERS FINANCING AUTHORITY
03/22/2022 PH3 Page 1 of 7
Approved above recommendation, introduced and adopted City Council Ordinance No. 2022-4.
Vote: 5-0
MEETING DATE: March 22, 2022 PAGE 2
SUBJECT: AMENDMENTS TO CHAPTER 7.10, CANNABIS BUSINESS TAX 00105977 1
The proposed ordinance establishing (a) Section 7.10.040, Debt, Deficiencies and Assessments, (b) Section 7.10.110, Refunds, (c) Section 7.10.120, Apportionment, and (d) Section 7.10.160, Appeals, is attached as Exhibit 1.
FISCAL IMPACT: There is no direct fiscal impact associated with staff recommendation.
EXHIBITS:
1. City Council Ordinance No. 2022- , adding Section 7.10.040, Debt, Deficiencies and Assessments, Section 7.10.110, Refunds, Section 7.10.120, Apportionment, and Section 7.10.160, Appeals to the Cannabis Business Tax Chapter of the Vista Municipal Code
03/22/2022 PH3 Page 2 of 7
00105958 2
ORDINANCE NO. 2022-
AN ORDINANCE OF THE CITY COUNCIL OF THE CHARTERED CITY OF VISTA, CALIFORNIA, ADDING SECTION 7.10.040, DEBT, DEFICIENCIES AND ASSESSMENTS, SECTION 7.10.110, REFUNDS, SECTION 7.10.120, APPORTIONMENT, AND SECTION 7.10.160, APPEALS TO THE
CANNABIS BUSINESS TAX CHAPTER OF THE VISTA MUNICIPAL CODE The City Council of the City of Vista does ordain as follows:
1.Findings. The City Council hereby finds and declares the following:
A.Following the successful passage of Measure AA in the November 6, 2018, general election, the City of Vista (“City”) added Chapter 7.10, the Cannabis Business Tax Ordinance, to the Vista Municipal on or about December 11, 2018.
B.The purpose of adopting Chapter 7.10 was to place a revenue tax on business in the City of Vista engaged in the cannabis business.
C.At the time Chapter 7.10 was adopted, the provisions of Measure AA intended that some sections to Chapter 7.10 would be determined by the City Council at a later date.
Section 7.10.070(B) contemplates the City Council adopting rules related to the administration of the cannabis tax include, if necessary, payments, delinquencies, notices, refunds, recordkeeping, audit requirements, apportionment, deficiencies, assessments, and appeals.
D.At this time, the City Council wishes to address several of the administrative subject matters listed in section 7.10.070(B) by adding four new sections to Chapter 7.10.
E.This Ordinance is enacted pursuant to the powers vested in the City pursuant to Article XI, Sections 5 and 7, of the California Constitution and section 7.10.070(B).
2.Municipal Code Amendments.
A.Section 7.10.040 is added to the Vista Municipal Code to read as follows:
“Section 7.10.040 Debt, Deficiencies and Assessments
A.The amount of any tax, fee, penalties, and/or interest imposed by this chapter shall be deemed a debt to the City.
B.If no statement required under section 7.10.030 is timely filed, if the Tax Administrator is not satisfied that any statement filed under this chapter is accurate, or if the Tax Administrator is not satisfied that the amount due was accurately computed, the Tax Administrator may determine the correct amount and make a deficiency determination upon information available to the Tax Administrator. The Tax Administrator may make one or more deficiency determinations for a period or periods.
03/22/2022 PH3 Page 3 of 7EXHIBIT 1
ORDINANCE NO. 2022-
CITY COUNCIL OF THE CHARTERED CITY OF VISTA
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C. When a Cannabis Business discontinues its business, the Tax Administrator may make a deficiency determination at any time within three (3) years from the date the Cannabis Business discontinued its business as to any liability arising from engaging in such business whether or not a deficiency determination is issued before the date the tax would otherwise be due.
D. Under any of the following circumstances, the Tax Administrator may make and give notice to a Cannabis Business of an assessment of taxes, fees, penalties and/or interest owed under this chapter.
1. If a Cannabis Business has not filed any statement or return required by this chapter.
2. If a Cannabis Business has not paid any tax, fee, penalty, or interest due under this chapter.
3. If a Cannabis Business has not, after demand by the City, filed a corrected statement, or provided adequate information to substantiate the information contained in a statement it previously filed.
4. If a Cannabis Business has not paid any additional amount due under this chapter.
5. If the Tax Administrator determines nonpayment of any amount due under this chapter is due to fraud, a penalty of 25 percent (25%) of the amount otherwise due shall be added thereto in addition to any other allowable penalties and interest.
E. Whenever a deficiency determination is made, a written notice shall be given to the Cannabis Business. The notice shall set forth the amount the Tax Administrator has determined or estimated to be due under this chapter, including any penalties or interest accrued through the date of the notice. A notice of assessment shall be served by personal service or by a deposit in the United States mail, postage prepaid, addressed to the address appearing on the City’s Notice of Completed Registration for the Cannabis Business. If the Cannabis Business has ceased operations, the Tax Administrator can serve notice to the Cannabis Business’s last known address. Service by mail is complete upon deposit in the United States mail.
F. Within fifteen days (15) calendar days after service of a notice of assessment, a Cannabis Business receiving a notice of assessment may appeal the assessment pursuant to the procedures in section 7.10.160. If no appeal is timely filed, the amount assessed shall be final and conclusive.” B. Section 7.10.110 is added to the Vista Municipal Code to read as follows:
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ORDINANCE NO. 2022-
CITY COUNCIL OF THE CHARTERED CITY OF VISTA
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“Section 7.10.110 Refunds
A. No refund shall be made of any tax collected pursuant to this chapter except as provided in this section.
B. No refund of any tax collected pursuant to this chapter shall be made because of the discontinuation, dissolution, or other termination of a Cannabis Business.
C. Whenever any tax, fee, penalty, or interest under this chapter has been overpaid, paid more than once, or has been erroneously or illegally collected or received by the City, such amount shall be refunded to the Cannabis Business who paid the tax upon a timely written claim for refund filed with the City.
D. The City Manager, or the City Manager’s designee, may examine and audit all the books and business records of the Cannabis Business to determine eligibility to the claimed refund. No claim for refund shall be allowed if the Cannabis Business refuses to allow such examination of its books and business records.
E. A sum erroneously paid under this chapter due to an error of the City shall be refunded to the Cannabis Business in full upon a timely claim. If an error, wholly or in part, is attributable to the Cannabis Business, the City may retain an amount established by the City Manager in an amount sufficient to recover the City’s cost to process that specific claim and refund the balance.
F. The City Manager shall initiate a refund of any sum overpaid or erroneously collected under this chapter whenever the overpayment or erroneous collection is disclosed by a City audit for the period for which a timely claim might then be filed under the Government Claims Act.
G. No refunds issued under this section shall bear any interest.”
C. Section 7.10.120 is added to the Vista Municipal Code to read as follows:
“Section 7.10.120 Apportionment
A. No tax imposed by this chapter shall be applied in such a way that it creates an undue burden upon interstate commerce or violates the equal protection and/or the due process clauses of the Constitutions of the United States or the state of California or otherwise exceeds the City’s lawful authority.
B. If a Cannabis Business believes a tax imposed by this chapter creates an undue burden upon interstate commerce or violates a constitutional clause or other applicable law, the Cannabis Business may apply to the City Manager for an adjustment of said tax. It shall be the Cannabis Business’s obligation to request an adjustment, in writing, within one year after the date of payment of said tax. If the Cannabis Business does not make a written request within one year from the date of payment, then the Cannabis Business shall be 03/22/2022 PH3 Page 5 of 7
ORDINANCE NO. 2022-
CITY COUNCIL OF THE CHARTERED CITY OF VISTA
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conclusively deemed to have waived any potential adjustment for that tax payment.
C. It shall be the duty of the Cannabis Business to provide all necessary testimony and documents that the City Manager deems necessary to determine the extent, if any, of any alleged undue burden or alleged violation.
Upon receiving all necessary and relevant information from the Cannabis Business, the City Manager shall conduct an investigation. At the conclusion of the investigation, the City Manager shall fix as the tax for the Cannabis Business an amount that is reasonable, nondiscriminatory, and lawful, or if the tax has already been paid, shall order a refund of the amount over and above the tax so fixed. In fixing the tax to be charged, the City Manager shall have the power to base the tax upon a percentage of the Cannabis Business’ Gross Receipts or any other measure which will ensure that the tax assessed shall be uniform with that assessed on all other Cannabis Businesses and so long as the amount assessed does not exceed the tax as prescribed by this chapter and permitted by applicable law.
D. In the course of any investigation, the City Manager shall have the right to require the Cannabis Business to submit a sworn statement of its Gross Receipts and any other data the City Manager deems is required to calculate the tax and to pay the amount of tax as determined by the City Manager.” D. Section 7.10.160 is added to the Vista Municipal Code to read as follows:
“Section 7.10.160 Appeals
A. Any Cannabis Business aggrieved by any decision of the Tax Administrator with respect to the amount of any tax, interest and/or penalties assessed pursuant to this chapter may appeal the amount of said tax, interest and/or penalty by filing a notice of appeal with the City Clerk within fifteen (15) calendar days of the due date for said tax, interest and/or penalty.
B. If a Cannabis Business timely files an appeal, the City Council shall fix a time and place for a hearing on the appeal. The City Clerk shall give notice of the hearing in writing to the appellant at its last known place of business.
C. Following an appeal hearing by the City Council, the findings and decision of the City Council shall be final and conclusive. The findings and decision of the City Council shall be served upon the appellant in the same manner prescribed in subsection B, above, for service of the notice of hearing.
D. Following the decision of the City Council, any amount determined by the City Council to be owed by appellant shall be immediately due and payable upon service of the decision in subsection C, above.”
3. Interpretation. In interpreting this Ordinance or resolving any ambiguity, this Ordinance shall be interpreted in a manner that effectively accomplishes its stated purposes. 03/22/2022 PH3 Page 6 of 7
ORDINANCE NO. 2022-
CITY COUNCIL OF THE CHARTERED CITY OF VISTA
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4. Severability. If any word, sentence, paragraph, or other portion of this Ordinance is deemed to be invalid or unenforceable for any reason by a court of competent jurisdiction, the City Council declares that it is its intent that all remaining words, sentences, paragraphs or portions of this Ordinance not held to be invalid or unenforceable shall remain in full force and effect and shall be so construed as if the original Ordinance did not contain the invalid or unenforceable language.
5. Effective Date. This Ordinance shall be in full force and effect on the 31st day following the date of adoption.
6. Adoption. INTRODUCED and ADOPTED at a meeting of the City Council of the City of Vista held on March 22, 2022, by the following vote:
AYES:
NOES:
ABSTAIN:
___________________________________
JUDY RITTER, MAYOR
APPROVED AS TO FORM: ATTEST:
DAROLD PIEPER, CITY ATTORNEY KATHY VALDEZ, CITY CLERK
By: ________________________________ By: ________________________________
APPROVED
Darold Pieper
20220307074806
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