SEC. 21.52. TAXATION OF MEDICAL CANNABIS.

(Added by Ord. No. 184,841, Eff. 4/4/17.)

[Editor's note: Section enacted pursuant to Proposition M, adopted by the voters at the election on March 7, 2017.]

Nothing in this Section shall be construed as requiring the City to allow, permit, license, authorize, or otherwise regulate medical cannabis or any business related to medical cannabis.

(a) For the purpose of this Section, the following words and phrases shall be defined as follows:

1. “Cannabis” shall have the same meaning as set forth in Section 21.51(a)(1) of this Article.

2. “Cannabis products” shall have the same meaning as set forth in Section 21.51(a)(2) of this Article.

3. “Gross receipts” shall have the same meaning as set forth in Section 21.51(a)(4) of this Article.

4. “License” shall have the same meaning as set forth in Section 21.51(a)(5) of this Article.

5. “Medical cannabis” shall mean a product containing cannabis or cannabis products sold for use by medical cannabis patients in California pursuant to the Compassionate Use Act of 1996, found at Section 11362.5 of the California Health and Safety Code.

(b) For purposes of this Section, the business tax to be imposed shall be as follows:

1. Every person with a license engaged in business of conducting the sale of medical cannabis shall pay a business tax of $50.00 for each $1,000.00 of gross receipts or fractional part thereof.

(c) The Office of Finance shall file quarterly reports summarizing the amount of business taxes collected from the persons described in subsection (b) of this Section with the City Council, Mayor, Controller, and City Administrative Officer beginning April 1, 2018.

(d) All business taxes shall be due and payable quarterly as provided under Section 21.04(b) of this Article beginning July 1, 2018, which shall include any taxes owed from January 1, 2018, and then monthly as provided under Section 21.04(c) of this Article beginning July 1, 2019.

(e) The Office of Finance shall prescribe and implement a reasonable process, including set times and secure conditions, whereby every person subject to business tax under this Section is allowed to pay, in cash, the amount of business tax reported on their written statement, as prescribed under 21.04 of this Article.

(f) The Director of Finance may prescribe such additional requirements or conditions, as provided under Section 21.15(h), as may be necessary when granting a business tax registration certificate under Section 21.08 of this Article with respect to a business subject to this Section, which may include an affidavit of compliance and proof of License. Any person who makes a false statement or misrepresentation in any required affidavit under this Section is guilty of a misdemeanor.

(g) It shall be a misdemeanor for any person operating a medical cannabis business to maintain or display a business tax registration certificate for any classification other than that set forth herein for medical cannabis business activity or to maintain or display an expired, suspended or otherwise invalid business tax registration certificate.

(h) No business tax registration certificate issued for purposes of this Section or the payment of any tax required under this Section shall be construed as authorizing the conduct or continuance of any illegal business or of a legal business in an illegal manner. Nothing in this Section implies or authorizes that any activity in connection with cannabis and/or cannabis products is legal unless otherwise authorized by federal and any other applicable law.

(i) Every person subject to this Section must pay the full tax imposed by this Section regardless of any rebate, exemption, incentive, or other reduction set forth elsewhere in the Municipal Code, except as required by state or federal law. No provision in the Municipal Code shall lower the tax rate set forth in this Section or otherwise reduce the amount of taxes paid hereunder unless the provision specifically states that the reduction applies.

(j) The City Council may impose the tax authorized by this Section at a lower rate and may establish exemptions, incentives or other reductions as otherwise allowed by the Charter and state law. No action by the Council under this paragraph shall prevent it from later increasing the tax or removing any exemption, incentive, or reduction and restoring up to the maximum tax specified in this Section.

(k) The provisions of this Section shall be effective January 1, 2018, at which time the language of this Section shall govern in the event of any conflict between this Section and Section 21.50 regarding taxation of medical marijuana collectives.