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Home My WebLink About2022-078 - Adding Commercial Cannabis Business Activity Tax RateRESOLUTION NO. 2022-078 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTAANAADDING COMMERCIAL CANNABIS BUSINESS ACTIVITY TAX RATE CATEGORIES FOR: ADULT -USE CANNABIS RETAIL BUSINESS (INCLUDING DELIVERY, BUT NOT INCLUDING CONSUMPTION LOUNGE AND TEMPORARY CONSUMPTION AND/OR SPECIAL EVENTS); ADULT -USE CANNABIS RETAIL BUSINESS (INCLUDING DELIVERY AND CONSUMPTION LOUNGE); ADULT -USE CANNABIS RETAIL BUSINESS (TEMPORARY CONSUMPTION AND/OR SPECIAL EVENTS); QUALIFIED SOCIAL EQUITY ADULT -USE CANNABIS RETAIL BUSINESS (INCLUDING DELIVERY AND INCLUDING CONSUMPTION LOUNGE); SOCIAL EQUITY ADULT -USE CANNABIS RETAIL BUSINESS (TEMPORARY CONSUMPTION AND/OR SPECIAL EVENTS); SHARED MANUFACTURING; AND ESTABLISHING RELATED GROSS RECEIPTS AND SQUARE FOOTAGE TAX RATES BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS FOLLOWS: Section 1. The City Council of the City of Santa Ana hereby finds, determines and declares as follows: A. In November2016, the California Marijuana Legalization Initiative, also known as the Adult Use of Marijuana Act (AUMA or Proposition 64) was approved by the voters of the State of California. The AUMA legalized specified personal use and cultivation of marijuana for adults 21 years of age or older. B. In 2017, the Governor signed into law Senate Bill 94 also known as Medicinal and Adult -Use Cannabis Regulation and Safety Act (MAUCRSA) establishing state regulations and licensing for retail sales, manufacturing, distribution, delivery and testing of adult -use (also called recreational) marijuana. C. On November 21, 2017, the City Council created Chapter 40 of the Santa Ana Municipal Code, allowing adult -use commercial cannabis retail businesses in the city, and amended certain sections of Chapters 18 and 21 of the Santa Ana Municipal Code to ensure consistency with State law and Chapter 40. Since 2014, the City has allowed medicinal marijuana collectives/cooperatives to operate within the City pursuant to regulations set forth in Chapter 18 and Chapter 21 of the Santa Ana Municipal Code. Resolution No. 2022-078 Page 1 of 6 D. In 2018, the City Council adopted Ordinance Nos. NS-2941 and NS-2942, allowing and regulating commercial cannabis businesses. E. A general business license tax based on the gross receipts derived from commercial cannabis businesses and where applicable gross square footage serves to generate essential funds for protecting vital City services and facilities and places such businesses on more equal footing with existing City businesses, including medical marijuana collective/cooperative (medicinal cannabis retail) businesses. F. The City Council is authorized to impose general and special taxes in order to fund municipal services and facilities, subject to requisite voter approval as set forth in Government Code section 53720 et seq. G. The voters of the City of Santa Ana approved Measure Y (Ordinance No. NS- 2962) on November 6, 2018, for the purpose of fixing the rate of taxation for commercial cannabis businesses including delivery, distribution, manufacturing, cultivation, testing and retail sales of cannabis and related products. The taxes required to be paid under this article are declared to be required pursuant to the taxing power of the City of Santa Ana solely for the purpose of obtaining revenue and are not regulatory permit fees. H. On September 3, 2019, the City Council adopted Ordinance No. NS-2972 amending certain sections of chapters 21 of the Santa Ana Municipal Code allowing vertical and horizontal integration of cannabis businesses; updating ownership transfers procedural standards and requirements, security deposits, and various administrative processes; updating and streamlining regulatory- components; reducing cannabis testing taxes to greater amount of one (1 %) percent of gross receipts or $1.50 per square foot; and adopting a canopy measurement and square footage allocation service fee. I. The City of Santa Ana desires to remain at the forefront of commercial cannabis by allowing and regulating commercial cannabis business activities, routinely updating and amending its ordinances, and establishing commercial cannabis gross receipts tax rates and square footages tax rates that are competitive and provide for the needs of the Santa Ana community. J. The City of Santa Ana has a compelling interest in ensuring that cannabis is not sold in an illicit manner, in protecting the public health, safety and welfare of its residents and businesses, in preserving the peace and quiet of the neighborhoods in which these businesses may operate, and in providing access to safe and tested cannabis to residents. To ensure safe and tested cannabis, the City desires to see the establishment and successful operation of cultivation, distribution, and manufacturing (including shared manufacturing and microbusiness) facilities in the City. K. Section 21-133(d) of Article XIII of Chapter 21 of the Santa Ana Municipal Code establishes initial, current, and scheduled commercial cannabis gross receipts tax and square footage tax rates by reference to the authorizing ordinances and resolutions, the content of which are presented in condensed tabular format as follows: Resolution No. 2022-078 Page 2 of 6 Commercial Cannabis Business Gross Receipts Tax Gross Square Activity Rate Footage Tax Rate Adult -use Cannabis Retail Business (including Delivery) (effective beginning December 21, 2018 8% $ 25.00 through December 31, 2022) Adult -use Cannabis Retail Business (including Delivery, but not including Consumption Lounge and 7% $ 25.00 Temporary Consumption and/or Special Events) (effective beginning January 1, 2023) Adult -use Cannabis Retail Business (including Delivery and Consumption Lounge) 7% $ 25.00 (effective beginning January 1, 2023) Adult -use Cannabis Retail Business (Temporary Consumption and/or Special Events) 7% $ 0.00 (effective beginning January 1, 2023) Qualified Social Equity Adult -use Cannabis Retail Business (including 5% $ 25.00 Delivery and Consumption Lounge) (effective beginning January 1, 2023) Qualified Social Equity Adult -use Cannabis Retail Business (Temporary 5% $ Consumption and/or Special Events) 0.00 (effective beginning January 1, 2023) Cultivation (effective December 21, 2018 6% $ 10.00 through December 31, 2022) Cultivation (effective beginning January 1, 2023) 1% $ 7.00 Distribution (effective December 21, 2018 6% $ 4.00 through December 31, 2022) Distribution (effective beginning January 1, 2023) 1% $ 3.00 Resolution No. 2022-078 Page 3 of 6 Manufacturing (effective December 21, 2018 6% $ 10.00 through December 31, 2022) Manufacturing 1% $ 3.00 (effective beginning January 1, 2023) Shared Manufacturing 1% $ 0.00 (effective beginning January 1, 2023) Testing Facility or Testing Laboratory (effective December 21, 2018 5% $ 1.50 through June 30, 2019) Testing Facility or Testing Laboratory 1% $ 1.50 (effective July 1, 2019) L. Section 21-133(b)(2) of Article XIII of Chapter 21 of the Santa Ana Municipal Code allows the City Council by resolution to implement any lower commercial cannabis tax rate it deems appropriate. Section 2. The City Council hereby establishes: (1) the adult -use cannabis retail business (including delivery, but not including consumption lounge and temporary consumption and/or special events) gross receipts tax rate at seven (7%) percent, lowering it from eight (8%) percent; (2) the adult -use cannabis retail business (including delivery and consumption lounge) and the adult -use cannabis retail business (temporary consumption and/or special events) gross receipts tax rates at seven (7%) percent; and (3) the qualified social equity adult -use cannabis retail business (including delivery and consumption lounge) and the qualified social equity adult -use cannabis retail business (temporary consumption and/or special events) gross receipts tax rates at five (5%) percent. The reduced seven (7%) percent gross receipts tax rate for adult -use cannabis retail business (including delivery, but not including consumption lounge and temporary consumption and/or special events), and the (7%) percent gross receipts tax rates for adult -use cannabis retail business (including delivery and consumption lounge) and adult - use cannabis retail business (temporary consumption and/or special events), plus the five (5%) percent qualified social equity adult -use cannabis retail business (including delivery and consumption lounge) and qualified social equity adult -use cannabis retail business (temporary consumption and/or special events) activities shall all become effective January 1, 2023. Section 3. The City Council hereby establishes: (1) the square footage tax rates for adult -use cannabis retail business (including delivery, but not including consumption lounge and temporary consumption and/or special events), plus adult -use cannabis retail business (including delivery and consumption lounge), together with qualified social equity adult -use cannabis retail business (including delivery and consumption lounge) business activities at twenty-five ($25) dollars per square foot; (2) the square footage tax rates for Resolution No. 2022-078 Page 4 of 6 adult -use cannabis retail business (temporary consumption and/or special events) and qualified social equity adult -use cannabis retail business (temporary consumption and/or special events) activities at zero ($0) dollars per square foot. The (1) twenty-five ($25) dollars per square foot, square footage tax rates for adult -use cannabis retail business (including delivery, but not including consumption lounge and temporary consumption and/or special events), plus adult -use cannabis retail business (including delivery and consumption lounge), together with qualified social equity adult -use cannabis retail business (including delivery and consumption lounge) business activities; and (2) the zero ($0) dollars per square foot, square footage tax rates for adult -use cannabis retail business (temporary consumption and/or special events) and qualified social equity adult -use cannabis retail business (temporary consumption and/or special events) activities shall all become effective January 1, 2023. Section 4. The City Council hereby establishes: (1) the commercial cannabis cultivation gross receipts tax rate; (2) the manufacturing (including shared manufacturing) gross receipts tax rate; and (3) the distribution gross receipts tax rate at one (1 %) percent. The reduced one (1%) percent gross receipts tax rate for cultivation activities, manufacturing (including shared manufacturing) activities, and distribution activities shall become effective January 1, 2023. Section S. The City Council hereby establishes: (1) the commercial cannabis square footage tax rate for cultivation activities at seven ($7) dollars per square foot and for manufacturing activities at three ($3) dollars per square foot (lowering both from ten ($10) dollars per square foot); (2) the commercial cannabis square footage tax for distribution activities at three ($3) per square foot (lowering it from four ($4) per square foot); and (3) the shared manufacturing square footage tax at zero ($0) per square foot. The reduced seven ($7) per square foot tax rate for cultivation activities, the reduced three ($3) per square foot tax rate for manufacturing activities, the reduced three ($3) per square foot tax rate for distribution activities, and the zero ($0) per square foot tax rate for shared manufacturing shall all become effective January 1, 2023. Section 6. This Resolution, upon its adoption by the City Council, shall take effect January 1, 2023, and the Clerk of the Council shall attest to and certify the vote adopting this Resolution. ADOPTED this 4'h day of October. 2022. Vicente Sarmiento Mayor Resolution No. 2022-078 Page 5 of 6 APPROVED AS TO FORM: Sonia R. Carvalho, City Attorney By:. Jog M. Funk Chief Assistant City Attorney AYES: Councilmembers Hernandez, Lopez, Mendoza, Penaloza. Phan Bacerra, Sarmiento (7) NOES: Councilmembers None (0) ABSTAIN: Councilmembers None (0) NOT PRESENT: Councilmembers None (0) CERTIFICATE OF ATTESTATION AND ORIGINALITY I, Clerk of the Council, do hereby attest to and certify the attached Resolution No. 2022- 078 to be the original Resolution adopted by the City Council of the City of Santa Ana on October 4. 2022. Date: Io ICI 202 z Zl&of Council City of Santa Ana Resolution No. 2022-078 Page 6 of 6