Recommendation for Council action, SUBJECT TO THE APPROVAL OF THE MAYOR:

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1 Los Angeles City Council, Supplemental Agenda Tuesday, January 19, 2016 JOHN FERRARO COUNCIL CHAMBER ROOM 340, CITY HALL 200 NORTH SPRING STREET, LOS ANGELES, CA :00 AM Click here for the entire agenda packet / documents Items for which Public Hearings Have Been Held ITEM NO. (26) S2 BUDGET AND FINANCE COMMITTEE REPORT and ORDINANCE FIRST CONSIDERATION relative to discontinuing the issuance of Business Tax Registration Certificates (BTRC) to medical marijuana dispensaries not in compliance with Proposition D. Recommendation for Council action, SUBJECT TO THE APPROVAL OF THE MAYOR: PRESENT and ADOPT the accompanying ORDINANCE dated January 8, 2016 amending Subsection (b) of Section of Article 1, Chapter II of the Los Angeles Municipal Code to limit taxation of medical marijuana collectives to those that attest to compliance with Proposition D; adding Subsection (g) to Section to require medical marijuana collectives to attest to compliance with Proposition D when submitting their annual renewals; and adding Subsection (h) to Section to make posting an invalid BTRC a misdemeanor and to similarly prohibit any medical marijuana collective from displaying a BTRC of a different classification. Fiscal Impact Statement: None submitted by the City Attorney. Neither the City Administrative Officer nor the Chief Legislative Analyst has completed a financial analysis of this report. Community Impact Statement: Yes. For: West Los Angeles Neighborhood Council (URGENCY CLAUSE - 12 VOTES REQUIRED) Tuesday - January 19, PAGE 1

2 Council File Number S2 Item: (26) BUDGET AND FINANCE COMMITTEE REPORT and ORDINANCE FIRST CONSIDERATION relative to discontinuing the issuance of Business Tax Registration Certificates (BTRC) to medical marijuana dispensaries not in compliance with Proposition D. Recommendation for Council action, SUBJECT TO THE APPROVAL OF THE MAYOR: PRESENT and ADOPT the accompanying ORDINANCE dated January 8, 2016 amending Subsection (b) of Section of Article 1, Chapter II of the Los Angeles Municipal Code to limit taxation of medical marijuana collectives to those that attest to compliance with Proposition D; adding Subsection (g) to Section to require medical marijuana collectives to attest to compliance with Proposition D when submitting their annual renewals; and adding Subsection (h) to Section to make posting an invalid BTRC a misdemeanor and to similarly prohibit any medical marijuana collective from displaying a BTRC of a different classification. Fiscal Impact Statement: None submitted by the City Attorney. Neither the City Administrative Officer nor the Chief Legislative Analyst has completed a financial analysis of this report. Community Impact Statement: Yes. For: West Los Angeles Neighborhood Council (URGENCY CLAUSE - 12 VOTES REQUIRED) Tuesday - January 19, PAGE 2

3 mmk IP j-\ e fujuiju') 6 Sjlfl Pi A M Is? R1 - Jrj/sm t&> ii it hi S j? CBSSWv5»»» ILI rp -^#i» II II 11 o h in 1 *«iii ii»ri& % iy&k S33K! E hi: a I jmm[tt y ii it c 7 / :d \ V :^C <5r MICHAEL N. FEUER CITY ATTORNEY REPORT RE: REPORT NO. R JAN REVISED DRAFT ORDINANCE DISCONTINUING THE ISSUANCE OF BUSINESS TAX REGISTRATION CERTIFICATES TO MEDICAL MARIJUANA DISPENSARIES NOT IN COMPLIANCE WITH PROPOSITION D The Honorable City Council of the City of Los Angeles Room 395, City Hall 200 North Spring Street Los Angeles, California Honorable Members: Council File No S2 On December 14, 2015, the Office of the City Attorney (City Attorney) and the Office of Finance (Finance) issued a joint report responding to the City Council s actions taken on October 28, 2015, relating to medical marijuana collectives/dispensaries (MMDs) not in compliance with Proposition D, together with a proposed draft ordinance. The City Attorney now transmits for your consideration the enclosed revised draft ordinance, approved as to form and legality, which includes the following: 1. No new business tax registration certificate (BTRC) shall be issued for any MMD business activity; 2. An MMD seeking to file its annual business tax renewal for 2016 shall complete an affidavit in a form approved by Finance attesting to the business compliance with Proposition D; > City Hall East 200 N. Main Street Room 800 Los Angeles, CA (213) Fax (213) Tuesday - January 19, PAGE 3

4 The Honorable City Council of the City of Los Angeles Page A person who makes a false statement or representation in the affidavit is guilty of a misdemeanor; All existing MMD BTRCs in their current form shall be invalid March 31,2016, and businesses that filed their 2016 MMD business tax renewal and completed the affidavit before March 31 will receive from Finance a new form of MMD BTRC which shall also make clear that the BTRC is not a permit to operate a business; and An MMD that filed its 2016 MMD business tax renewal before the effective date of this ordinance must, before March 31, complete the affidavit attesting to its compliance with Proposition D. A business that pays its 2016 MMD business taxes and does not attest to compliance with Proposition D may claim a refund of the paid MMD 2016 business tax. Council Rule 38 Referral Pursuant to Council Rule 38, a copy of the revised draft ordinance was provided to Finance. Finance concurs with the revised draft ordinance. If you have any questions regarding this matter, please contact Assistant City Attorney Beverly Cook at (213) She or another member of this Office will be present when you consider this matter to answer any questions you may have. Very truly yours, MICHAEL N. FEUER, City Attorney DM/BC:pj Transmittal MDAVID MICHAELSON Chief Assistant City Attorney m:\econ dev_pub finance\public finance\pj shemtoob\mmb\supplemental transmittal report to council re mmbs and btrcs amending ordinance v1 dm.doc Tuesday - January 19, PAGE 4

5 ORDINANCE NO. An ordinance amending Subsection (b) of Section of Article 1, Chapter II of the Los Angeles Municipal Code to limit taxation of medical marijuana collectives to those that attest to compliance with Proposition D; adding Subsection (g) to Section to require medical marijuana collectives to attest to compliance with Proposition D by March 31,2016, and, thereafter, when submitting their annual renewals; and adding Subsection (h) to Section to make posting an invalid BTRC a misdemeanor and to similarly prohibit any medical marijuana collective from displaying a BTRC of a different classification. THE PEOPLE OF THE CITY OF LOS ANGELES DO ORDAIN AS FOLLOWS: Section 1. Subsection (b) of Section of Article 1, Chapter II of the Los Angeles Municipal Code is amended to read as follows: (b) Every person engaged in operating or otherwise conducting a medical marijuana collective that attests under penalty of law to compliance with Proposition D and not otherwise specifically taxed by other business tax provisions of this Chapter, shall pay a business tax of $60.00 for each $1, of gross receipts or fractional part thereof. No new business tax registration certificates shall be issued for any medical marijuana collective business activity. Any medical marijuana collective that does not attest to compliance with Proposition D shall not be taxed under any Section of this Article for any medical marijuana collective business activity for tax year 2016 and forward. It shall be the burden of the medical marijuana collective to determine and accurately represent to the Office of Finance whether it complies with Proposition D. Sec. 2. A new Subsection (g) is added to Section of Article 1, Chapter II of the Los Angeles Municipal Code read as follows: (9) Every medical marijuana collective taxed by this section shall remit with its annual renewal of business taxes an affidavit in a form approved by the Director of Finance attesting to its compliance with Proposition D and such affidavit shall be subject to public disclosure. Any person who makes a false statement or representation in the affidavit is guilty of a misdemeanor. An updated business tax registration certificate in a form approved by the Director of Finance, further clarifying that such certificate is not a permit to operate a business, shall be issued to all medical marijuana collectives subject to tax as set forth in Section 21.50(b). All medical marijuana collective business tax registration certificates in their current form shall be invalid effective March 31, A medical marijuana collective that remitted its annual payment of business taxes in 2016, before the effective date of this ordinance shall, before March 31, 2016, complete the affidavit attesting to its compliance with Proposition D. 1 Tuesday - January 19, PAGE 5

6 Sec. 3. A new Subsection (h) is added to Section of Article 1, Chapter II of the Los Angeles Municipal Code to read as follows: (h) It shall be a misdemeanor for any person operating a medical marijuana collective as defined by Section 21.50(c) to maintain or display a business tax registration certificate for any classification other than that set forth in Section 21.50(b) for medical marijuana collective business activity or to maintain or display an expired, suspended or otherwise invalid business tax registration certificate. Sec. 4. Urgency Clause. The City Council finds and declares that this ordinance is required for the immediate protection of the public peace, health and safety for the following reason: In order to protect the public from being misled by medical marijuana collectives that display City business tax registration certificates to give the impression to the public, and even to courts of law, that the City endorses their businesses or certifies that they are in compliance with Proposition D, as has been reported regarding many such businesses found not to be in compliance with Proposition D and prosecuted by the City Attorney. Sec. 5. Severability Clause. If any provision of this ordinance is found to be unconstitutional or otherwise invalid by any court of competent jurisdiction, that invalidity shall not affect the remaining provisions of this ordinance which can be implemented without the invalid provisions, and to this end, the provisions of this ordinance are declared to be severable. The City Council hereby declares that it would have adopted this ordinance and each provision thereof irrespective of whether any one or more provisions are found invalid, unconstitutional or otherwise unenforceable. I 2 Tuesday - January 19, PAGE 6

7 Sec. 6. The City Clerk shall certify to the passage of this ordinance and have it published in accordance with Council policy, either in a daily newspaper circulated in the City of Los Angeles or by posting for ten days in three public places in the City of Los Angeles: one copy on the bulletin board located at the Main Street entrance to the Los Angeles City Hall; one copy on the bulletin board located at the Main Street entrance to the Los Angeles City Hall East; and one copy on the bulletin board located at the Temple Street entrance to the Los Angeles County Hall of Records. I hereby certify that this ordinance was passed by the Council of the City of Los Angeles, by a vote of not less than three-fourths of all of its members, at its meeting of. HOLLY L. WOLCOTT, City Clerk By Deputy Approved Mayor Approved as to Form and Legality MICHAEL N. FEUER, City Attorney \ By Date T5AVID michaelson Chief Assistant City Attorney \l M File No. CF S2 m:\econ dev_pub finance\public finance\pj shemtoob\mmb\revised draft ordinance re btrc mmd michaelson final doc 3 Tuesday - January 19, PAGE 7