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HomeMy WebLinkAbout08760ORDINANCE NO. 8760 AN ORDINANCE SUBMITTING TO THE ELIGIBLE ELECTORS OF THE CITY OF PUEBLO, COLORADO AT THE SPECIAL MUNICIPAL ELECTION TO BE HELD ON NOVEMBER 4, 2014, A BALLOT QUESTION TO INCREASE TAXES BY IMPOSING AN EXCISE TAX OF 8.0 % WHEN UNPROCESSED RETAIL MARIJUANA IS FIRST SOLD OR TRANSFERRED BY A RETAIL MARIJUANA CULTIVATION FACILITY AND BY IMPOSING AN ADDITIONAL SALES TAX OF 4.3 % ON THE SALE OF RETAIL MARIJUANA AND RETAIL MARIJUANA PRODUCTS AND THE ADOPTION OF ORDINANCE NO. 8754 TO IMPLEMENT THE NEW TAXES BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The question of adopting Ordinance No. 8754 and thereby imposing a retail marijuana excise tax and an additional sales tax on the sale and purchase of retail marijuana and retail marijuana products shall be submitted to a vote of the eligible electors of the City at the City's special municipal election to be held on November 4, 2014. The ballot question (submission clause and title) therefore shall be as follows: Question No. 2A (Retail Marijuana Taxes) SHALL THE CITY OF PUEBLO'S TAXES BE INCREASED BY $ 986,249 ANNUALLY (FIRST FULL FISCAL YEAR INCREASE) BEGINNING JANUARY 1, 2015 AND BY WHATEVER AMOUNTS ARE RAISED ANNUALLY THEREAFTER, THROUGH THE ADOPTION OF ORDINANCE NO. 8754 IMPOSING AN EXCISE TAX OF 8.0 % WHEN UNPROCESSED RETAIL MARIJUANA IS FIRST SOLD OR TRANSFERRED BY A RETAIL MARIJUANA CULTIVATION FACILITY AND BY IMPOSING AN ADDITIONAL SALES TAX OF 4.3 % ON THE SALE OF RETAIL MARIJUANA AND RETAIL MARIJUANA PRODUCTS WITH THE RATE OF EITHER OR BOTH TAXES BEING ALLOWED TO BE DECREASED OR INCREASED WITHOUT FURTHER VOTER APPROVAL SO LONG AS THE RATE OF EITHER TAX DOES NOT EXCEED 15.0 % AND SHALL ALL REVENUES DERIVED FROM SUCH TAXES BE COLLECTED, RETAINED AND SPENT, NOTWITHSTANDING ANY LIMITATIONS PROVIDED BY LAW, AS A VOTER APPROVED REVENUE CHANGE AND AN EXCEPTION TO THE LIMITS WHICH WOULD OTHERWISE APPLY PURSUANT TO ARTICLE X, SECTION 20 OF THE COLORADO CONSTITUTION OR ANY OTHER LAW AND ALLOWING SUCH REVENUE TO BE EXPENDED AS THE CITY COUNCIL SHALL DETERMINE? YES _____ NO _____ The text of Ordinance No. 8754 is as follows: BE IT ORDAINED BY THE PEOPLE OF THE CITY OF PUEBLO, that (brackets indicate matter being deleted; underscoring indicates new matter being added): SECTION 1. Title XIV of the Pueblo Municipal Code, as amended, is amended by the addition of a new Chapter 13 thereto, to read as follows: CHAPTER 13 Retail Marijuana Taxes Sec. 14-13-1. Definitions. (a) The following definitions shall apply to the words and phrases used in this Chapter: (1) means the amount determined by the Average market rate State of Colorado pursuant to C.R.S. 39-28.8-101(1), or such alternate amount as may be determined by the Director of Finance as the average price of unprocessed retail marijuana that is sold or transferred from a retail marijuana cultivation facility to a retail marijuana products manufacturer or retail marijuana store. (2) shall mean a natural person, partnership, sole- Person proprietorship, association, corporation, limited liability company, estate, receiver, trustee, assignee, lessee or any individual acting in a representative capacity or any other combination of individuals by whatever name known. (3) means all or parts of the plant of the genus Retail marijuana cannabis whether growing or not, the seeds thereof, the resin extracted from any part of the plant and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or its resin, including marijuana concentrate. “Retail marijuana” does not include industrial hemp, nor does it include fiber produced from the stalks, oil, cake made from the seeds of the plant, sterilized seed of the plant that is incapable of germination, or the weight of any other ingredient combined with marijuana to prepare topical or oral administrations, food, drink, or other product. (4) has the same meaning as Retail marijuana cultivation facility defined in Section 12-43.4-103 (16), C.R.S. (5) means concentrated retail Retail marijuana products marijuana products and retail marijuana products that are comprised of retail marijuana and other ingredients and are intended for use or consumption such as but not limited to, edible products, ointments, and tinctures. (6) has the same meaning as defined in Retail marijuana store Section 12-43.4-103 (20), C.R.S. (7) means the excise tax and the sales tax Retail marijuana tax imposed by this Chapter. (8) means any exchange or barter, in any manner or by any Sale means whatsoever, for consideration. (9) means to grant, convey, hand over, assign, sell, Transfer exchange, or barter, in any manner or by any means, with or without consideration. (b) All other words and phrases used in this Chapter shall have the meaning set out in the City Charter, in Chapter 1 of Title I, or Chapter 4 of this Title. Sec. 14-13-2. Intent. The People of Pueblo hereby declare that, on and after January 1, 2015, an additional excise tax be imposed on the first sale or transfer of unprocessed retail marijuana by a retail marijuana cultivation facility within the City and an additional sales tax be imposed on every retail sale of retail marijuana or retail marijuana products within the City. Sec. 14-13-3. Imposition and Rate of Tax. (a) Excise Tax. In addition to any other tax imposed by law including the sales and use tax levied in Chapter 4 of this Title, there is levied and shall be paid and collected an excise tax of 8.0 percent or such other rate as may be established pursuant to Section 14-13-13 of this Chapter on the average market rate of unprocessed retail marijuana that is first sold or transferred from a retail marijuana cultivation facility located within the City. The excise tax shall be levied and owed irrespective of where delivery takes place. (b) Sales Tax. In addition to any other tax imposed by law including the sales and use tax levied in Chapter 4 of this Title, there is hereby levied and there shall be collected and paid a sales tax of 4.3 percent or such other rate as may be established pursuant to Section 14-13-14 of this Chapter on the full purchase price paid or charged upon all sales of retail marijuana or retail marijuana products. Sec. 14-13-4. Vendor Liable for Tax. (a) Excise Tax. Each retail marijuana cultivation facility shall collect, remit and pay the tax imposed in subsection 14-13-3(a) on the first sale or transfer of unprocessed retail marijuana. (b) Sales Tax. Each retail marijuana store shall collect, remit and pay the tax imposed in subsection 14-13-3(b) on every sale of retail marijuana or retail marijuana products. (c) The burden of proving that any transaction is not subject to the taxes imposed by this chapter shall be upon the person upon whom the duty to collect the taxes is imposed. Sec. 14-13-5. Taxes Collected are Held in Trust. All sums of money paid by a person as the additional excise or sales tax on retail marijuana imposed by this Chapter are public monies that are the property of the City. The person required to collect and remit the additional retail marijuana excise tax or sales tax shall hold such monies in trust for the sole use and benefit of the City until paying them to the Finance Director. Sec. 14-13-6. Reports and remittance. (a) The Director of Finance may require any person subject to this Chapter to maintain and furnish such returns, statements and records as the Director deems necessary to a determination of the retail marijuana tax liability of such person from the best information reasonably available to him or her. (b) Every person required to collect retail marijuana taxes hereunder shall remit the full amount of such tax to the City within five (5) calendar days after the date such tax was collected, provided that the Director of Finance may authorize persons collecting retail marijuana taxes on a regularly continuing or recurring basis to file monthly reports and remittances, which shall be due on the twentieth day of the month following each month in which retail marijuana taxes were collected. (c) Persons collecting retail marijuana taxes may either add the tax to the retail marijuana charge as a separate and distinct item or may add the retail marijuana tax to the sales tax without separately identifying it as a retail marijuana tax, but no person shall represent directly or indirectly that the tax will be assumed, absorbed or refunded, and addition of the retail marijuana tax to the sales tax shall not relieve any person collecting the tax from liability for payment of the full amount of the taxes levied hereunder. Sec. 14-13-7. Penalty and interest for failure to collect or remit tax. (a) A taxpayer who fails to collect or remit any retail marijuana taxes shall be personally liable to the City for the amount of the tax and all interest and additional amounts imposed under this Chapter. (b) A taxpayer who fails to pay the full amount of the retail marijuana taxes when due shall be assessed interest on the amount of deficiency from the date due to the date paid at a rate equal to the current annual adjusted rate of interest determined under Section 39-21-110.5, C.R.S., as amended. (c) If any part of the deficiency is due to negligence or intentional disregard of authorized rules and regulations, but without intent to defraud, there shall be added ten percent (10%) of the amount of the deficiency and interest shall be assessed on the total amount of the deficiency at a rate equal to one and one- half (1-1/2) times the rate specified in subsection (b) above. If any part of the deficiency is due to fraud with intent to evade the tax, fifty percent (50%) of the amount of the deficiency and interest shall be assessed on the total amount of the deficiency at a rate equal to twice the rate specified in subsection (b) above. Interest and additional amounts assessed under this subsection (c) shall be paid by the taxpayer within ten (10) days after notice and demand. (d) The Director of Finance is hereby authorized to waive, for good cause shown, all or any part of the additional amounts assessed, or any interest in excess of the current annual adjusted rate of interest determined under Section 39-21-110.5, C.R.S., as amended. Sec. 14-13-8. Licenses to be obtained. In addition to all other permits or licenses which may be required by law, every person required to collect or remit retail marijuana taxes hereunder shall obtain a sales and use tax license from the Director of Finance. The issuance of such license does not authorize, and shall not be construed to authorize, the sale of retail marijuana by any person. Each application for a sales and use tax license shall be accompanied by a cash deposit or bond in such amount and in such form as is determined by the Director of Finance to be sufficient to secure compliance with all provisions of this Chapter. Sec. 14-13-9. Rules and regulations. The Director of Finance is hereby authorized to adopt rules and regulations not inconsistent with the provisions of this Chapter, regarding the payment, collection and remittance of retail marijuana taxes. A copy of all such rules and regulations shall be available for public inspection in the office of the Director of Finance. Failure or refusal to comply with any such rules or regulations shall constitute a violation of this Chapter. Sec. 14-13-10. Provisions incorporated by reference. Except where the context otherwise requires, all definitions and provisions contained in Chapter 4 of this Title are incorporated into this Chapter 13 by reference as if fully set forth herein, except that any reference therein to sales tax shall be deemed to refer to retail marijuana sales tax. All procedural and enforcement powers and remedies conferred in said Chapter 4 of this Title on the Director or on the City shall also apply to and be available for the enforcement of the provisions of this Chapter, and all rights and remedies granted to taxpayers thereunder shall also apply to and be available for persons subject to this Chapter, provided that in case of conflict between this Chapter and said Chapter 4, the provisions of this Chapter shall control. Sec. 14-13-11. Judicial review. Any person aggrieved by a final determination of the Director of Finance under this Chapter may obtain judicial review under the same terms and conditions set out in Section 14-4-33 of this Title. Sec. 14-13-12. Criminal penalties for violation. Any person who violates any provision of this Chapter shall, upon conviction, be punished by a fine not exceeding One Thousand Dollars ($1,000) or imprisonment not exceeding one (1) year, or by both such fine and imprisonment, in addition to any civil remedies or penalties provided herein. Sec. 14-13-13. Maximum rate for retail marijuana excise tax. The maximum retail marijuana excise tax rate that may be imposed pursuant to this Chapter is fifteen (15) percent. At any time on or after January 1, 2015, the City may, by Ordinance: (a) Establish another retail marijuana excise tax rate to be imposed pursuant to this Chapter that is equal to or less than the maximum fifteen (15) percent tax rate provided in this Chapter; or (b) After establishing a retail marijuana excise tax rate that is lower than fifteen (15) percent, increase the tax rate to be imposed pursuant to this Section; except that, in no event shall the City increase the retail marijuana excise tax rate above fifteen (15) percent. Sec. 14-13-14. Maximum rate for retail marijuana sales tax. The maximum retail marijuana sales tax rate that may be imposed pursuant to this Chapter is fifteen (15) percent. At any time on or after January 1, 2015, the City may, by Ordinance: (a) Establish another retail marijuana sales tax rate to be imposed pursuant to this Chapter that is equal to or less than the maximum fifteen (15) percent tax rate provided in this Chapter; or (b) After establishing a retail marijuana sales tax rate that is lower than fifteen (15) percent, increase the tax rate to be imposed pursuant to this Section; except that, in no event shall the City increase the retail marijuana sales tax rate above fifteen (15) percent. Sec. 14-13-15. Exclusion of medical marijuana. Nothing in this Chapter shall be construed to impose a tax on the sale of medical marijuana or medical marijuana products to any person by a medical marijuana center licensed by the Colorado Department of Revenue to sell medical marijuana and medical marijuana-infused products pursuant to the Colorado Medical Marijuana Code, Article 43.3 of Title 12, C.R.S., and licensed by the City pursuant to Section 11-10-101 et seq. of the Pueblo Municipal Code. Taxes owed on the sale of medical marijuana or medical marijuana products are governed by Chapter 11 of this Title. To the extent any retail marijuana store exists at the same location and under common ownership with a licensed medical marijuana center, the retail store shall strictly segregate and account for sales of retail marijuana distinct from medical marijuana in accordance with all applicable state and city laws and regulations governing collocation of retail marijuana stores and medical marijuana facilities. Sec. 14-13-16. Revenue and spending limitations. Notwithstanding any limitations on revenue, spending, or appropriations contained in Section 20 of Article X of the Colorado Constitution or any other provision of law, any revenues generated by the retail marijuana taxes imposed pursuant to this Chapter, may be collected, retained and spent as a voter- approved revenue change and shall not require further voter approval to modify the tax rates as provided in this Chapter or to collect, retain and spend any revenue derived from the modified tax rates. Sec. 14-13-17. Severability. If any section, subsection, paragraph, clause or other provision of this Chapter for any reason is invalid or unenforceable, the invalidity or unenforceability of such section, subsection, paragraph or clause or other provision shall not affect any of the remaining provisions of this Chapter. SECTION 2. This Ordinance shall become effective upon the majority vote in favor thereof by the registered electors of the City voting thereon at the Special Municipal Election to be held Tuesday, November 4, 2014. The tax levies of this Chapter shall take effect beginning January 1, 2015. SECTION 3. The officers and staff of the City are authorized and directed to take all action necessary, appropriate or required to effectuate the provisions of this Ordinance. SECTION 4. This Ordinance shall become effective upon final passage and approval. INTRODUCED: July 28, 2014 BY: Chris Kaufman COUNCILPERSON PASSED AND APPROVED: August 11, 2014 City Clerk’s Office Item # R-1 Background Paper for Proposed Ordinance COUNCIL MEETING DATE: July 28, 2014 TO: President Sandra K. Daff and Members of City Council CC: Sam Azad, City Manager VIA: Gina Dutcher, City Clerk FROM: Daniel C. Kogovsek, City Attorney, Law Department SUBJECT: AN ORDINANCE SUBMITTING TO THE ELIGIBLE ELECTORS OF THE CITY OF PUEBLO, COLORADO AT THE SPECIAL MUNICIPAL ELECTION TO BE HELD ON NOVEMBER 4, 2014, A BALLOT QUESTION TO INCREASE TAXES BY IMPOSING AN EXCISE TAX OF 8.0 % WHEN UNPROCESSED RETAIL MARIJUANA IS FIRST SOLD OR TRANSFERRED BY A RETAIL MARIJUANA CULTIVATION FACILITY AND BY IMPOSING AN ADDITIONAL SALES TAX OF 4.3 % ON THE SALE OF RETAIL MARIJUANA AND RETAIL MARIJUANA PRODUCTS AND THE ADOPTION OF ORDINANCE NO. 8754 TO IMPLEMENT THE NEW TAXES SUMMARY: Attached is a proposed Ordinance referring the retail marijuana tax ballot question to the voters of the City of Pueblo at the November 4, 2014 special election. PREVIOUS COUNCIL ACTION: In June 14, 2010, City Council referred a similar ballot measure to the electorate concerning a 4.3% sales tax on medical marijuana and medical marijuana products. Pueblo voters approved said tax on November 2, 2010. BACKGROUND The sale and purchase of retail marijuana and retail marijuana products is subject to City sales and use tax. However, due to the anticipated increased demands upon municipal services associated with retail marijuana facilities, the City Manager has proposed for Council consideration of an additional excise tax of 8.0 % and an additional sales tax of 4.3% on the privilege of purchasing, and retail sale of marijuana and marijuana products. Due to the requirements of the Taxpayers Bill of Rights ("TABOR"), Article X, §20 of the Colorado Constitution, any new tax must be approved by the voters. This measure would present that question to the voters and, if approved, would also "De-Bruce" the revenue derived from the medical marijuana tax (i.e., exempt it from the revenue growth and spending limitations of TABOR). FINANCIAL IMPLICATIONS: The amount of tax revenue that the measure will generate is subject to speculation; however, for the purpose of ballot submission under TABOR, it has been assumed that the taxes in the first year will not exceed $ 986,249. BOARD/COMMISSION RECOMMENDATION: Not applicable to this Ordinance. STAKEHOLDER PROCESS: Members of the public are the primary stakeholders affected by the proposed Ordinance. The issue of allowing Retail Marijuana businesses to operate in the City has been discussed at numerous public Council meetings and work sessions during the past year. ALTERNATIVES: If the Ordinance is not approved, Retail Marijuana cultivators will pay no City sales tax. Marijuana stores, if they are subsequently allowed to operate in the City will only pay the City’s current sales tax of 3.5%. RECOMMENDATION: This Ordinance must be adopted in order to refer the ballot measure to the voters. Attachments: None.