Measure U, the San Jose 10% Marijuana Tax

Tell the City of San Jose, before you tax medical cannabis, let them exist!

San Jose has been discussing creating permits for cannabis clubs for almost a year. To date, San Jose has not put ANY regulations for medical cannabis in place.

The city attorney claims “having a San Jose business tax permit does not make your business legal.” and “Cannabis clubs are illegal in San Jose”.

If the San Jose Tax passes it would ADD 10% tax to ANY cannabis sold in San Jose. When added to the 9.25% the state board of equalization requires we pay, it will be taxing cannabis at OVER 19%. Suppliers to collectives would also pay 10%. In the end taxing cannabis at near 30%! and yet the city still considers it be illegal!

This tax is not designed to help the budget, but to chase cannabis out of San Jose!

If the city wants to tax medical cannabis, they need to create a way to allow them to be legal businesses FIRST.

A few of the concerns with the San Jose Tax Initiative:

• Paying the Measure U tax does not make your business legal. Section 4.66.220
• Section 4.66.600- Creates a new class of criminals out of existing operators, growers, vendors, and potentially even patient caregivers. Which is punishable by a fine of $500 or “six (6) months, or by BOTH such fine and imprisonment.”
• Section 4.66.530 – Allows “the Director” and the Chief of Police to violate HIPPA by investigating “all equipment, of any person engaged in marijuana business in the City”
• Measure U has no separation between Medical Cannabis and “Adult Use” Cannabis. Medication should not be taxable, but if must be taxed, it should be taxed LESS for medical users then Prop19 users.
• Section 4.66.510 Rules and Regulations- Allows “the Director” (of the Finance Department or other director designated by the City Manager) to change the “rules and regulations”, “from time to time” WITHOUT vote of the council!
• Measure U taxes both legal and illegal sales!
  
• Section 4.66.550 Deficiency Determinations- Is completely unnecessary and potentially grants the Director more powers then the IRS.

Some of the most concerning parts of Measure U:

4.66.220 Payment of Tax Does Not Authorize Unlawful Business

A. The payment of a business tax required by this Chapter, and its acceptance by the City, shall not entitle any person to carry on any marijuana business…, nor to carry on any marijuana business in any building…

B. No tax paid under the provisions of this Chapter shall be construed as authorizing the conduct or continuance of any illegal or unlawful business, or any business in violation of any ordinance of the City.

4.66.550 Deficiency Determinations

If the Director is not satisfied that any statement filed as required under the provisions of this Chapter is correct, or that the amount of tax is correctly computed, he or she may compute and determine the amount to be paid and make a deficiency determination upon the basis of the facts contained in the statement or upon the basis of any information in his or her possession or that may come into his or her possession. One or more deficiency determinations of the amount of tax due for a period or periods may be made. When a person discontinues engaging in a business, a deficiency determination may be made at any time within three (3) years thereafter as to any liability arising from engaging in such business whether or not a deficiency determination is issued prior to the date the tax would otherwise be due. Whenever a deficiency determination is made, a notice shall be given to the person concerned in the same manner as notices of assessment are given under Sections 4.66.560 through 4.66.580.

4.66.600 Violation Deemed Misdemeanor – Penalty

Any person violating any of the provisions of this Chapter or any regulation or rule passed in accordance herewith, or knowingly or intentionally misrepresenting to any officer or employee of the City any material fact in procuring the business tax certificate provided for in Chapter 4.76 shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punishable by a fine of not more than five hundred dollars ($500) or by imprisonment for a period of not more than six (6) months, or by both such fine and imprisonment.

4.66.110 Marijuana Business

The term “marijuana business” means business activity including but not limited to, planting, cultivation, harvesting, transporting, manufacturing, compounding, converting, processing, preparing, storing, packaging, wholesale, and/or retail sales of marijuana and any ancillary products in the City, whether or not carried on for gain or profit.

4.66.070 Engaged in Business

A. “Engaged in business” means the commencing, conducting, operating, managing or carrying on of a marijuana business and the exercise of corporate or franchise powers, whether done as owner, or by means of an officer, agent, manager, employee, or otherwise, whether operating from a fixed location in the City or coming into the City from an outside location to engage in such activities.

B. A person shall be deemed engaged in business within the City if:

1. Such person or person’s employee maintains a fixed place of business within the City for the benefit or partial benefit of such person;
2. Such person or person’s employee owns or leases real property within the City for business purposes;
3. Such person or person’s employee regularly maintains a stock of tangible personal property in the City for sale in the ordinary course of business;
4. Such person or person’s employee regularly conducts solicitation of business within the City;
5. Such person or person’s employee performs work or renders services in the City on a regular and continuous basis involving more than five (5) working days per year;
6. Such person or person’s employee utilizes the streets within the City in connection with the operation of motor vehicles for business purposes.
   
   The foregoing specified activities shall not be a limitation on the meaning ofengaged in business.

Don’t let San Jose chase medical cannabis out of town!

Please vote NO on San Jose Measure U

and YES on Prop 19

Best Regards,
Dave Hodges
Founder
SJCBC LLC