O-12. Imposing an Excise Tax of Five Percent (5%) upon the Sale of Transfer of Unprocessed Retail Marijuana

Palisade Board of Trustees
Date of Vote: Tue, May 23rd 2017
Polls (closed):
Yay (0)    Nay (0)

Summary

                    An Ordinance of the Town of Palisade, Colorado, Imposing an Excise Tax of Five Percent (5%) upon the
Sale of Transfer of Unprocessed Retail Marijuana.

WHEREAS, subsection (2)(a) of Section 29-2-114, C.R.S. provides that in addition to
any sales tax imposed pursuant to Section 29-2-102, C.R.S. and Articles 26 and 28.8 of Title 39,
C.R.S., and in addition to the State excise tax imposed pursuant to Article 28.8 of Title 39,
C.R.S., a statutory municipality in Colorado is authorized to levy, collect and enforce a
municipal excise tax on the first sale or transfer of unprocessed retail marijuana by a retail
marijuana cultivation facility; and
WHEREAS, said municipal excise tax is imposed at the time when the retail marijuana
cultivation facility first sells or transfers unprocessed retail marijuana from the retail cultivation
facility to a retail marijuana product manufacturing facility, a retail marijuana store, or another
retail marijuana cultivation facility; and
WHEREAS, a municipal excise tax imposed by a statutory municipality may not exceed
five percent (5%) of the average market rate, as determined by the Colorado Department of
Revenue pursuant to Section 39-28.8-101(1), C.R.S. of the unprocessed retail marijuana; and
WHEREAS, any municipal excise tax cannot be collected, administered or enforced by
the Colorado Department of Revenue, but instead must be collected, administered, and enforced
by the municipality imposing the tax; and
WHEREAS, no municipal excise tax shall be levied pursuant to the provisions of
subsection (2)(a) of Section 29-2-114, C.R.S. until the proposal has been referred to and
approved by the eligible electors of the municipality in accordance with the provisions of Article
10 of Title 31, C.R.S.; and
WHEREAS, the Palisade Board of Trustees submitted a ballot issue to the vote of the
registered electors of the Town of Palisade at the coordinated election held on November 8, 2016
concerning the imposition of a municipal excise tax of five percent (5%) on the first sale or
transfer of unprocessed retail marijuana by a retail marijuana cultivation facility and such tax
was approved by the registered electors voting thereon.
NOW, THEREFORE, BE IT ORDAINED BY THE BOARD OF TRUSTEES OF
THE TOWN OF PALISADE, COLORADO:
Section 1. That a new Article VII of Chapter 6 concerning imposing an excise tax
upon the sale or transfer of unprocessed retail marijuana is hereby enacted to read as follows:
ARTICLE VII Marijuana Excise Tax
6-145. Purpose.
6-146. Definitions.
6-147. Imposition and Rate of Tax.
6-148. Vendor Liable for Tax.
6-149. Taxes Collected are Held in Trust.
6-150. Licensing and Reporting Procedures.
6-151. Collection of Tax.
6-152. Audit of Records.
6-153. Tax Overpayments and Deficiencies.
6-154. Tax Information Confidential.
6-155. Forms and Regulations.
6-156. Enforcement and Penalties.
6-157. Tax Lien.
6-158. Recovery of Unpaid Tax.
6-159. Status of Unpaid Tax in Bankruptcy and Receivership.
6-160. Hearings, Subpoenas and Witness Fees.
6-170. Depositions.
6-171. Statute of Limitations.
6-172. Exemption from Revenue Limitation.
Sec. 6-145. Purpose.
The Board of Trustees of the Town of Palisade, Colorado intends that a municipal excise
tax be imposed on the first sale or transfer of unprocessed retail marijuana by a retail marijuana
cultivation facility to a retail marijuana store or retail marijuana products manufacturer within
the Town. The purpose of this tax is to increase the revenue base for the Town of Palisade to
fund the enforcement of regulations on the retail marijuana industry, other costs related to
enforcement of marijuana laws, education and public health programs associated with marijuana
consumption, and other Town expenses. All revenues from the tax shall be deposited in the
Town’s general fund. The excise tax levied by this Article was approved by a majority vote of
registered Palisade electors voting at the November 8, 2016 coordinated election.
Sec. 6-146. Definitions.
The following words and phrases used in this Article shall have the following meanings
unless the context clearly indicates otherwise:
Average market rate means the amount determined by the State of Colorado pursuant to
Section 39-28.8-101(1), C.R.S. as the average price of unprocessed retail marijuana that is sold
or transferred from a retail marijuana cultivation facility to a retail marijuana store or retail
marijuana products manufacturer. All other terms in this Article shall have the same meaning as
set forth in Article V of Chapter 6 of the Palisade Municipal Code, Licensing and Regulation of
Recreational Marijuana Businesses.
Sec. 6-147. Imposition and Rate of Tax.
There is hereby levied an excise tax of five percent (5%) upon the average market rate of
unprocessed retail marijuana that is sold or transferred from a retail marijuana cultivation facility
located in the Town of Palisade to a retail marijuana store or retail marijuana products
manufacturer.
Sec. 6-148. Vendor Liable for Tax.
Each retail marijuana cultivation facility within the Town of Palisade shall collect the tax
imposed by this Article upon every sale or transfer of unprocessed retail marijuana from the
cultivation facility. The person charged with the duty to collect taxes also has the burden of
proving that any transaction is not subject to the tax imposed by this Article.
Sec. 149. Taxes Collected are Held in Trust.
All sums of money paid by any person or facility to a cultivation facility as excise taxes
pursuant to this Article are public monies that are the property of the Town of Palisade. The
person required to collect and remit municipal retail marijuana excise taxes shall hold such
monies in trust for the sole use and benefit of the Town of Palisade until paying them to the
Town’s Treasurer.
Sec. 6-150. Licensing and Reporting Procedures.
(a) Every person with the duty to collect the excise tax imposed by this Article shall obtain
an excise tax license from the Town Clerk and shall report such taxes collected on forms
prescribed by the Town Clerk and remit such taxes to the Town on or before the tenth
(10
th) day of the month for the preceding month or months under the report. An excise
tax license shall be valid so long as:
(1) The business remains in continuous operation, and
(2) The license is not cancelled by the licensee or revoked by the Town, and
(3) The business holds a valid retail marijuana license pursuant to Article V of the
Palisade Municipal Code.
The excise tax license may be cancelled or revoked by the Town as provided in this Article.
(b) Whenever a business entity that is required to be licensed under this Article is sold,
purchased, or transferred, so that the ownership interest of the purchaser or seller changes
in any respect, the purchaser shall obtain a new excise tax license.
(c) Every person engaged in a retail marijuana cultivation business in the Town of Palisade
shall keep books and records according to the standards of the Town Clerk and this
Article and subject to the Town Treasurer’s right to audit as set forth in this Article.
Sec. 6-151. Collection of Tax.
(a) If the accounting methods regularly employed by the Vendor in the transaction of
business, or other conditions, are such that the returns aforesaid made on a calendar
month basis will impose unnecessary hardship, the Town Clerk may, upon request of the
Vendor, accept returns at such intervals as will, in the Town Clerk’s opinion, better suit
the convenience of the Vendor and will not jeopardize the collection of the tax; provided,
however, the Town Clerk may by rule permit a Vendor whose monthly tax obligation is
less than one hundred dollars ($100.00) to make returns and pay taxes at intervals not
greater than three (3) months.
(b) It shall be the duty of every Vendor to maintain, keep and preserve suitable records of all
sales made by the Vendor and such other books or accounts as may be required by the
Town Clerk in order to determine the amount of the tax of which the Vendor is liable
under this Article. It shall be the duty of every such Vendor to keep and preserve for a
period of three (3) years all such books, invoices and other records and the same shall be
open for examination by the Town Clerk, Town Treasurer or their designees.
Sec. 6-152. Audit of Records.
(a) For the purpose of ascertaining the correct amount of the excise tax due and owing to the
Town, the Town Treasurer or an authorized agent, may conduct an audit by examining
any relevant books, accounts and records of such person.
(b) All books, invoices, accounts and other records shall be made available within the Town
limits and be open at any time during regular business hours for examination by the
Town Clerk, Town Treasurer or an authorized agent. If any taxpayer refuses to
voluntarily furnish any of the foregoing information when requested, the Town Clerk
may issue a subpoena to require that the taxpayer or its representative attend a hearing or
produce any such books, accounts and records for examination. Any such subpoena may
be enforced by the Palisade Municipal Court.
(c) Any person claiming an exemption under the provisions of this Article is subject to audit
in the same manner as any other person engaged in the sale or transfer of unprocessed
retail marijuana in the Town.
Sec. 6-153. Tax Overpayments and Deficiencies.
An application for refund of tax monies paid in error or by mistake shall be made within
three (3) years after the date of payment for which the refund is claimed. If the Town Clerk
determines that within three (3) years of the due date, a Vendor overpaid the excise tax upon the
sale or transfer of unprocessed retail marijuana, she shall process a refund or allow a credit
against a future remittance from the same taxpayer. If at any time the Town Clerk determines
the amount paid is less than the amount due under this Article, the difference together with 
interest shall be paid by the retail marijuana cultivation facility within ten (10) days after
receiving written notice and demand from the Town Clerk. The Town Clerk may extend that
time for good cause.
Sec. 6-154. Tax Information Confidential.
(a) All specific information gained under the provisions of this Article which is used to
determine the tax due from a taxpayer, whether furnished by the taxpayer or obtained
through audit, shall be treated by the Town and its officers, employees or legal
representatives as confidential. Except as directed by judicial order or as provided in this
Article, no Town officer, employee, or legal representative shall divulge any confidential
information. If directed by judicial order, the officials charged with the custody of such
confidential information shall be required to provide only such information as is directly
involved in the action or proceeding. Any Town officer or employee who shall
knowingly divulge any information classified herein as confidential, in any manner,
except in accordance with proper judicial order, or as otherwise provided in this Article
or by law, shall be guilty of a violation hereof.
(b) The Town Clerk may furnish to officials of any other governmental entity who may be
owed sales tax or excises taxes any confidential information, provided that said
jurisdiction enters into an agreement with the Town to grant reciprocal privileges to the
Town.
(c) Nothing contained in this Section shall be construed to prohibit the delivery to a taxpayer
or its duly authorized representative a copy of such confidential information relating to
such taxpayer, the publication of statistics so classified as to prevent the identification of
particular taxpayers, or the inspection of such confidential information by an officer,
employee, or legal representative of the Town.
Sec. 6-155. Forms and Regulations.
The Town Clerk is hereby authorized to prescribe forms and promulgate rules and
regulations to aid in the making of returns, the ascertainment, assessment and collection of said
excise tax on the sale or transfer of unprocessed retail marijuana and in particular and without
limiting the general language of this Article, to provide for:
(a) A form of report on the sale or transfer of unprocessed retail marijuana to be supplied to
all Vendors;
(b) The records which retail marijuana cultivation facilities are to keep concerning the tax
imposed by this Article.
Sec. 6-156. Enforcement and Penalties.
(a) It shall be unlawful for any person to intentionally, knowingly, or recklessly fail to pay
the tax imposed by this Article, or to make any false or fraudulent return, or for any
person to otherwise violate any provisions of this Article. Any person convicted of a
violation of this Article shall be deemed guilty of a municipal offense, punishable by a
fine of up to $300.00 and 90 days imprisonment or by both such fine and imprisonment.
Each day, or portion thereof, that any violation of this Article continues shall constitute a
separate offense.
(b) A penalty in the amount of ten percent (10%) of the tax due or the sum of ten dollars
($10.00), whichever is greater, shall be imposed upon the retail marijuana cultivation
facility and become due in the event the tax is not remitted by the tenth (10th) day of the
month as required by this Article, or such other date as prescribed by the Town Clerk,
and one and one-half percent (1.5%) interest shall accrue each month on the unpaid
balance. The Town Clerk is hereby authorized to waive, for good cause shown, any
penalty assessed.
(c) If any part of a deficiency is due to negligence or intentional disregard of regulations, but
without intent to defraud, there shall be added ten percent (10%) of the total amount of
the deficiency, and interest, from the retail marijuana cultivation facility required to file a
return. If any part of the deficiency is due to fraud with the intent to evade the tax, then
there shall be added fifty percent (50%) of the total amount of the deficiency together
with interest and in such case, the whole amount of the unpaid tax, including the
additions, shall become due and payable ten (10) days after written notice and demand by
the Town Clerk.
(d) If any retail marijuana cultivation facility fails to make a return and pay the tax imposed
by this Article, the Town may make an estimate, based upon available information of the
amount of tax due and add the penalty and interest provided above. The Town shall mail
notice of such estimate, by certified mail, to the retail marijuana cultivation facility at its
address as indicated in the Town records. Such estimate shall thereupon become an
assessment, and such assessment shall be final and due and payable from the taxpayer to
the Town Clerk ten (10) days from the date of service of the notice or the date of mailing
by certified mail; provided, however, that within the ten (10) day period such delinquent
taxpayer may petition the Town Clerk for a revision or modification of such assessment
and shall, within such ten (10) day period, furnish the Town Clerk the documents, facts
and figures showing the correct amount of such taxes due and owing.
(e) Such petition shall be in writing and the facts and figures submitted shall be submitted in
writing, and shall be given by the taxpayer under penalty of perjury. Thereupon, the
Town Clerk may modify such assessment in accordance with the facts submitted in order
to effectuate the provisions of this Article. Such assessment shall be considered the final
order of the Town Clerk, and may be reviewed by a Court of competent jurisdiction
under the Rule 106(a)(4) of the Colorado Rules of Civil Procedure, provided that the
taxpayer gives written notice to the Town Clerk of such intention within ten (10) days
after receipt of the final order of assessment.
Sec. 6-157. Tax Lien..
(a) The tax imposed by this Article, together with the interest and penalties herein provided
and the costs of collection which may be incurred, shall be, and until paid, remain a first
and prior lien superior to all other liens on all of the tangible personal property of a
taxpayer within the Town and may be foreclosed by seizing under distraint warrant and
selling so much thereof as may be necessary to discharge the lien. Such distraint warrant
may be issued by the Town Clerk whenever the taxpayer is in default in the payment of
the tax, interest, penalty or costs. Such warrant may be served and the goods subject to
such lien seized by any Town police officer, the Mesa County Sheriff or any duly
authorized employee of the Town. The property so seized may be sold by the agency
seizing the same or by the Town Clerk at public auction after ten (10) days have passed
following an advertised notice in a newspaper published in the Town, in the same manner
as is prescribed by law in respect to executions against property upon judgment of a court
of record, and the remedies of garnishment shall apply.
(b) The tax imposed by this Article shall be, and remain, a first and prior lien superior to all
other liens on the real property and appurtenant premises at which the taxable
transactions occurred.
Sec. 6-158. Recovery of Unpaid Tax.
(a) The Town Clerk may also treat any such taxes, penalties, costs or interest due and unpaid
as a debt due the Town from the taxpayer.
(b) In case of failure to pay the taxes, or any portion thereof, or any penalty, costs or interest
thereon, when due, the Town Clerk may recover at law the amount of such taxes,
penalties, costs, the reasonable value of any salaried attorney’s time, including legal
assistant’s time, or the reasonable attorney’s fees, including legal assistant’s fees,
charged, plus interest, in any county or district court of the county wherein the taxpayer
resides or had a principal place of business (at the time the tax became due) having
jurisdiction of the amount sought to be collected.
(c) The return of the taxpayer or the assessment made by the Town Clerk shall be prima facie
proof of the amount due.
(d) Such actions may be actions in attachment, and writs of attachment may be issued to the
Mesa County Sheriff, as the case may be, and in any such proceeding no bond shall be
required of the Town Clerk, nor shall any Town police officer or sheriff require of the
Town Clerk an indemnifying bond for executing the writ of attachment or writ of
execution upon any judgment entered in such proceedings. The Town Clerk may
prosecute appeals in such cases without the necessity of providing a bond therefor.
(e) It shall be the duty of the Town Attorney, when requested by the Town Clerk, to
commence an action for the recovery of taxes due under this Article and this remedy shall
be in addition to all other existing remedies, or remedies provided in this Article.
(f) The Town may certify the amount of any delinquent tax, plus interest, penalties and the 
costs of collection, as a charge against the property at which the taxable transaction
occurred to the Mesa County Treasurer for collection in the same manner as delinquent
ad valorem taxes pursuant to Section 31-20-105, C.R.S.
Sec. 6-159. Status of Unpaid Tax in Bankruptcy and Receivership.
Whenever the business or property of a taxpayer subject to this Article shall be placed in
receivership, bankruptcy or assignment for the benefit of creditors, or seized under distraint for
taxes, all taxes, penalties and interest imposed by this Article and for which the taxpayer is in
any way liable under the terms of this Article shall be a prior and preferred lien against all the
property of the taxpayer, except as to other tax liens which have attached prior to the filing of the
notice, and no sheriff, receiver, assignee or other officer shall sell the property of any person
subject to this Article under process or order of any court, without first ascertaining from the
Town Clerk the amount of any taxes due and payable under this Article, and if there be any such
taxes due, owing and unpaid, it shall be the duty of such officer to first pay the amount of the
taxes out of the proceeds of such sale before making payment of any monies to any judgment
creditor or other claimants of whatsoever kind or nature, except the costs of the proceedings and
other preexisting tax liens as above provided.
Sec. 6-160. Hearings, Subpoenas and Witness Fees.
(a) Hearings before the Town Clerk pursuant to provisions in this Article shall be held in a
manner that provides due process of law. Any subpoena issued pursuant to this Article
may be enforced by the Palisade Municipal Judge pursuant to Section 13-10-112(2),
C.R.S. The fees of witnesses for attendance at hearings shall be the same as the fees of
witnesses before the district court, such fees to be paid when the witness is excused from
further attendance. When the witness is subpoenaed at the instance of the Town Clerk,
such fees shall be paid in the same manner as other expenses under the terms of this
Article, and when a witness is subpoenaed at the instance of any party to any such
proceeding, the Town Clerk may require that the cost of service of the subpoena and the
fee of the witness be borne by the party at whose instance the witness is summoned. In
such case, the Town Clerk, at her discretion, may require a deposit to cover the cost of
such service and witness fees. A subpoena issued as aforesaid shall be served in the same
manner as a subpoena issued out of a court of record.
(b) The Palisade Municipal Judge, upon the application of the Town Clerk, may compel the
attendance of witnesses, the production of books, papers, records or memoranda, and the
giving of testimony before the Town Clerk or any duly authorized hearing officers, by an
action for contempt, or otherwise, in the same manner as production of evidence may be
compelled before the Court.
Sec. 6-161. Depositions.
The Town Clerk or any party in an investigation or hearing before the Town Clerk may
cause the deposition of witnesses residing within or without the State to be taken in the manner 
prescribed by law for like depositions in civil actions in courts of this State and to that end
compel the attendance of witnesses and the production of books, papers, records or memoranda.
Sec. 6-162 Statute of Limitation.
(a) Except as otherwise provided in this Section, the taxes for any period, together with
interest thereon and penalties with respect thereto, imposed by this Article shall not be
assessed, nor shall notice of lien be filed, or distraint warrant be issued, or suit for
collection be instituted, or any other action to collect the same be commenced, more than
three (3) years after the date on which the tax was or is payable, nor shall any lien
continue after such period, except for taxes assessed before the expiration of such three
(3) year period when the notice of lien with respect to which has been filed prior to the
expiration of such period.
(b) In case of a false or fraudulent return with intent to evade taxation, the tax, together with
interest and penalties thereon, may be assessed, or proceedings for the collection of such
taxes may be commenced at any time.
(c) Before the expiration of such period of limitation, the taxpayer and the Town Clerk may
agree in writing to an extension thereof, and the period so agreed on may be extended by
subsequent agreements in writing.
Sec. 6-163. Exemption from Revenue Limitation.
In accordance with the approval of the registered electors voting at the November 8, 2016
coordinated election, the revenues derived from the tax imposed by this Chapter shall be
collected and spent as a voter approved revenue change, notwithstanding any revenue or
expenditure limitations contained in Article X, Section 20, of the Colorado Constitution.
Section 2. Severability. The Sections, sentences, clauses and provisions of this
Ordinance are intended to be severable; if any such Section, sentence, clause or provision is
declared unconstitutional, invalid or unenforceable by the valid judgment of a court of competent
jurisdiction, such unconstitutionality, invalidity or unenforceability shall not affect the remaining
portions of this Ordinance.
Section 3. Effective Date of Tax. The tax imposed by this Ordinance shall become
effective upon the effective date of this Ordinance.
                

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