OFFICE OF TREASURER-TAX COLLECTOR

CALAVERAS COUNTY
GOVERNMENT CENTER
891 MOUNTAIN RANCH ROAD
SAN ANDREAS, CA. 95249-9709
(209) 754-6350
BARBARA SULLIVAN, TREASURER-TAX COLLECTOR

Treasurer- Tax Collector Staff Report

Hearing Date: November 1, 2017

Registrant Number: 2016-839 APN: 016-025-097

Registered Grow Size: 18,000 sq. ft. First Installment: $18,000

Plus Late Penalties: 1,800
Taxes Paid: $19,800

Applicant/Appellant Landowner Counsel

O’Malley Farms Robert Fuller & Unknown
Robert Fuller Jimmie Jean
PO Box 714
San Andreas, CA 95249

BACKGROUND
Chapter 3.56 of the Calaveras County Code was enacted after the passage of Measure C in November of
2016. Measure C was a tax imposed pursuant to Business and Professions Code §19348 1. It is a tax on
the privilege to engage in commercial cannabis activity.

Robert Fuller on behalf of O’Malley (“Appellant”), applied for and received a certificate of pending
registration which granted him the privilege to cultivate cannabis in the amount of 18,000 square feet of
canopy.

The Tax Collector, pursuant to Chapter 3.56 has a statutory, non-discretionary obligation to assess excise
taxes upon commercial cannabis cultivators according to the criteria provided in that chapter.

On May 8, 2017 the Treasurer-Tax Collector’s office received a list of all commercial cannabis cultivators
whose applications for commercial cannabis registration had been validated, verified, or issued. Everyone
on the list had been granted the privilege of cultivating cannabis by virtue of their participation in the
County’s regulatory program and were, therefore, billed for the first installment of Excise taxes pursuant
to Chapter 3.56 of the County Code. Robert Fuller’s name appeared on the list and the Planning
Department has confirmed that Mr. Fuller (“Appellant’’) had registered for and had the privilege to
cultivate 18,000 square feet of cannabis at the time the taxes were assessed.

The first installment of taxes is based on the square footage that the Appellant listed on his own
application and on the status of his application as of May 8, 2017.

The first installment of Excise taxes was late paid by the Appellant on July 26, 2017.

1 Business and Professions Code §19348 was repealed by Senate Bill 94 but was, in substance moved to Revenue and
Taxation Code §34021.5. It allows Counties to impose taxes upon
APPLICABLE LAW
This tax is not incidental to property ownership and, until the state implements its “track and trace”
program, the amount due is not determined by the volume of cannabis produced or sold. The tax imposed
pursuant to Chapter 3.56 is a tax on the privilege to cultivate cannabis commercially. All commercial
cannabis cultivators who possessed a certificate of pending registration or an actual certificate of
registration owe the tax whether or not they were cultivating the full measure of canopy allowed under
their permit, or even if they were not cultivating cannabis at all.

“A privilege tax, although also passed to raise revenue, and as such is to be distinguished from the
license tax or regulatory charge imposed under the state's police powers, is imposed upon the right to
exercise a privilege.” Douglas Aircraft v. Johnson (1939)13 Cal 2d 545 at 550 (emphasis added).

“The obligation to pay an excise tax is based upon the voluntary action of the person taxed in
performing the act, enjoying the privilege, or engaging in the occupation which is subject of the
excise” 71 AM Jur 2d, State and Local Taxation §28 (emphasis added).

See also Pesola v. City of Los Angeles (1975) 54 CA3d 479 and City of Berkeley v. Cukierman 14
Cal.Ap.4th 1331.

Assessment of Taxes
The cannabis activity tax is imposed, under §3.56.030(a), upon “the privilege of cultivating . . . medical
cannabis by a licensee legally operating within the County.”
§3.56.030(B) states the following:
Every person engaged in commercial cannabis activity, as defined in this Chapter, shall pay a commercial
cannabis tax in the following sums:
(1) For Outdoor and Mixed Light Licensees or Registrants: $2.00 per square foot of registered or
permitted canopy area. . .
Section 3.56.120 deals with determination by Tax Collector upon Failure to Report and Pay Tax Notice
and Hearing. Because the track and trace program is not in place, the only reporting to be done is the
amount of square footage applied for and that the appellant was authorized to grow. Subsection (A) states
that the “Tax Collector shall, based on the facts and information obtained from the Planning Department,
proceed to determine and assess against such person the tax and penalties provided for by this Chapter.”
The tax collector received a spreadsheet of information from the Planning Department.

Assessment of Penalties
§ 3.56.110 of the County Code, entitled “Penalties for Failure to Remit tax When Due,” provides that a
10% penalty shall be assessed on the original tax obligation of anyone who fails to pay the taxes when
due. §3.56.110(B) provides that an additional penalty an additional 10% penalty on the aggregate total of
the amount of taxes and penalties due if the cultivator has failed to pay their tax within 30 days after it
becomes due.

DISCUSSION

All applicants for commercial cannabis registration certificates sign a declaration under penalty of perjury
that all of the statements made in their applications are true. Among the averments that must be made in
order to qualify for a registration is that the cultivator was growing or preparing to grow the amount
applied for prior to May 10, 2016 (See §17.95.165.N). In this case, Mr. Fuller represented to the County
that he had previously cultivated or prepared to grow 18,000 square feet of cannabis. The Planning
Department and subsequently the tax collector’s office presumed that the statements made under penalty
of perjury, including statements about the canopy size found in the application are true. Applicants are
responsible for the contents of their applications and it was incumbent upon them to amend their
applications prior to the assessment of taxes, if they wished to reduce amount of canopy that they have the
privilege to grow under the County Code that is between them and the Planning Department.

Based upon the application submitted to the Planning Department (attached hereto as Exhibit 1), the
County of Calaveras conferred upon the Appellant the “privilege of cultivating” cannabis commercially
and provided him with a certificate of pending registration.

The Appellant, in this case, received a tax bill for the amount of canopy he registered for. At the time that
Mr. Fuller submitted an appeal to the County Administrative Office on June 1, 2017 requesting a
reduction he was still registered 18,000 square feet. However, on October 23, 2017 Mr. Fuller requested
and received a change in status for his commercial cannabis registration. He is now permitted only to
grow 7,500 feet of canopy and will be taxed as such for the next installment.

Administration denied the appeal because, as is stated above, cannabis activity tax will be imposed based
on the registered or permitted canopy area. Since, as of May 8, 2017, the Appellant had the privilege of
cultivating 18,000 square feet of cannabis pursuant to the certificate of pending registration he had been
issued, the first installment of his canopy excise tax was determined to be $18,000.

CONCLUSION:
The tax bill mailed May 15, 2017, is based on information received from the Appellant in the application
that was received by The Planning Department. Mr. Fuller’s appeal was denied by the County
Administrative Office and the applicant is responsible for first installment of taxes.

Since Planning did receive a request to reduce the canopy on June 21, 2017, the second installment of
taxes will be adjusted and no tax bill will be mailed. No refund should be issued on the first installment
of taxes or for the penalties.

REQUESTED ORDER

Staff respectfully requests that original assessment be deemed correct and that the decision of the CAO to
reject the appellant’s request for reassessment and reduction of the total tax amount due be upheld.

ATTACHMENTS
Exhibit 1. Application, Certificate of Pending Registration of appellant, and relevant
Planning Department documents.
Exhibit 2. The tax bill issued by the Calaveras County Tax Collectors Office
Exhibit 3. The Appellants request for reassessment.
Exhibit 4. Letter of Decision from the County Administrative Office
EXHIBIT 1
EXHIBIT 2
 OFFICE OF TREASURER-TAX COLLECTOR
Yer](M(A,
CALAVERAS COUNTY
GOVERNM13NT CENTER
891 MOUNTAIN RANCH ROAD
SAN ANDREAS, CA. 95249-9709
(209)754-6350
BARBARA SULLIVAN,TREASURER-TAX COLLEG i

CANNABISTAX BILL
JANUARY 1 TO MAY 15, 2017
May 15,2017
O'Malley Farms
Robert Fuller
pO Box 714
SAN ANDREAS CA 95249

AP Number: 2016-839

APN: 16025097

Lt Source Sq Footage Tax per Ft Total Tax

MIXED LIGHT 18000 $18000

Total Tax Due By June 15, 2017: $ 18000

Please remit payment to: Calaveras County Tax Collector

891 Mountain Ranch Rd
San Andreas, CA 95249

Include the payment stub below with your payment by June 15, 2017. Failure to do so will result in a 10% penalty
on the total tax for the period ending June 15, 2017. Appeals must be filed with the Calaveras County
Administration Office no later than 7 days after the tax due date to be considered timely. Please reference FAQ
sheet provided with this tax bill.

AP Number Owner Total Tax Due

2016-839 Robert Fuller $18000

 OFFICE OF TREASURER-TAX COLLECTOR
CALAVERAS COUNTY
GOVERNMENT CENTER
891 MOUNTAIN RANCH ROAD
SAN ANDREAS, CA. 95249-9709
(209)754-6350
BARI3A1U SULLIVAN,TREASURER-TAX COLLECTOR

CANNABIS TAX BILL

JANUARY 1 TO MAY 15, 2017
May 15,2017

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O'Maliey Farms
Robert Fuller 1 8 •00 u • X
pO Box 714 o k! 10'%
SAN ANDREASCA95249
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AP Number: 2016-839
1 * 8 C) 0 - 0 i-i +
(;ALWERASCOUNTr
1 9 5 8 0 0 ■ i l l : .ic
treasurer & TAX COaHCTOR
APN: 16025097

Lt Source Sq Footage Tax per Ft Total Tax

MIXED LIGHT 8000

Total Tax Due By June 15, 2017: $18,000

Please remit payment to: Caiaveras County Tax Collector

891 Mountain Ranch Rd
San Andreas, CA 95249

Include the payment stub below with your payment by June 15, 2017. Failure to do so will result in a 10% penalty on the lota! tax for
the period endirtg June 15, 2017. Appeals must be filed with the Caiaveras County Administration Office no later than 7 days aOer the
tax due date to be considered timely. Please reference FAQ sheet provided with this tax bill.

AP Number Owner Total Tax Due

2016-839 Robert Fuller $18,000