California: City of Vista clean-up ordinance returns tax funds to cannabis businesses

VISTA — To alleviate pressures on cannabis businesses, the City of Vista cleaned up its rules to return hundreds of dollars in overpayments back to local dispensaries, and to collect some missing fees.

When voters passed Measure AA in 2018, several sections in the Cannabis Business Tax Code — relating to refunds, apportionment and appeals — were left out for later consideration.

During its regular meeting last Tuesday, the Vista City Council adopted an ordinance that adds four sections to its cannabis business tax, including an administrative process for businesses to collect overpayments.

In its annual audit, the city found a need for those parameters as there were several instances of miscalculated tax payments from cannabis businesses. Many overpaid the city, while there were some underpayments.

“The measure intended the mechanics of the tax would be observed and later enacted on by the council,” said Vista City Attorney Darold Pieper. “Now that we’ve had a couple of years of actual operations, we are in need of having some of those mechanics set forward.”

Cannabis business owners must pay an annual tax in order to operate in the city of Vista. However, the series of taxation in place isn’t always straightforward. There is a series of federal and state taxes owed — which includes an excise tax of 15% to distributors — and locally enforced costs on cannabis and cannabis-related products.

In Vista, there is a marijuana cultivation tax at $14 per square foot, and gross receipts of marijuana businesses at 6% on manufacturing and distribution, 7% on medicinal retail, 7% on adult-use retail, and 1% on testing.

Products that are not cannabis-related, such as a battery, are not taxed at a city level. This is one area payments start to get tricky, as not all points-of-sale machines can differentiate between these items.

Flora Verde, one of the first dispensaries to receive businesses permits in Vista, applauds the council for taking action. Co-owner Justin Christman said that Flora Verde intentionally overpaid, but that isn’t the advice every business is getting from advisors.

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