Chapter 8.54
MARIJUANA AND MARIJUANA PRODUCT SALES TAX

Sections:

8.54.010    Definitions.

8.54.020    Purpose and intent.

8.54.030    Areawide sales tax levy.

8.54.040    Exemptions.

8.54.050    Certificate of registration for tax collection.

8.54.060    Obligation of seller.

8.54.070    Reporting basis and tax collection.

8.54.080    Prohibited acts and associated penalties.

8.54.090    Procedures and forms.

8.54.100    Submittal of forms and remittance requirements.

8.54.110    Penalties, interest, fees and tax remittance.

8.54.120    Estimated tax.

8.54.130    Lien for tax, interest and penalties.

8.54.140    Administrative appeals.

8.54.150    Refunds.

8.54.160    Record keeping.

8.54.170    Confidentiality of monthly reports and associated documents.

8.54.180    Severability.

8.54.010 Definitions.

For purposes of this chapter, the following definitions apply except where the context clearly indicates a different meaning:

Buyer” or “consumer” means, without limiting the scope thereof, any person or any other entity that purchases and/or contracts to purchase any marijuana or marijuana products for consumption and not resale.

Certificate of registration” means the certificate issued by the director under FNSBC 8.54.050.

Consideration” means anything of value, including but not limited to money, credit, rights, goods, services, and property, received by a seller from a buyer.

Director” means chief financial officer or his/her designee.

Estimated tax” means the tax determined under FNSBC 8.54.120.

Marijuana” means all parts of the plant (genus) Cannabis, whether growing or not, the seed thereof, the resin extracted from any part of the plant, and any compound, manufacture, derivative, mixture, or preparation of the plant, its seeds, or its resin, including marijuana concentrate; marijuana does not include fiber produced from the stalks, oil or cake made from the seeds of the plant, sterilized seed of the plant that is incapable of germination, or the weight of any other ingredient combined with marijuana to prepare topical or oral administrations, food, drink, or other products.

Marijuana and marijuana products tax administrator” means the treasury budget manager or his/her designee.

Marijuana products” means concentrated marijuana products and marijuana products that are comprised of marijuana and other ingredients and are intended for use or consumption, such as, but not limited to, edible products, ointments, and tinctures.

Retail sale” means the transfer of any marijuana or marijuana products to any consumer, for any consideration.

Sale made within the borough” means any retail sale where: (1) the buyer takes possession of, or title to, the purchased marijuana or marijuana product(s) within the borough; and/or (2) the seller receives consideration for the purchased marijuana or marijuana product(s) within the borough.

Seller” means any person or any other entity that sells and/or contracts to sell any marijuana or marijuana product to a buyer.

Selling price” or “price” means the monetary value of any consideration.

Tax” means the marijuana and marijuana product tax as levied under this chapter.

Taxable retail sale” means any sale made within the borough that is not entirely exempt from the tax levied under this chapter.

Unremitted tax” means (1) any tax not remitted to the borough that a seller is required by this chapter to collect from a buyer, notwithstanding whether the seller actually collects such tax from a buyer; and (2) any estimated tax not remitted to the borough.

Wholesale sale (sale for resale)” means the act of selling any marijuana or marijuana product to any person or to any other entity for reselling such marijuana or marijuana product. (Ord. 2016-67 § 2, 2016.)

8.54.020 Purpose and intent.

The purpose and intent of the tax imposed under this chapter is to raise revenues and diversify the borough’s tax base. The scope of the tax levied shall be broadly interpreted and exemptions shall be allowed only when the sales of marijuana or marijuana products clearly fall within an exemption defined in this chapter. Any and all revenues resulting from the imposition and collection of the tax shall be allocated to the general fund. (Ord. 2016-67 § 2, 2016.)

8.54.030 Areawide sales tax levy.

A. There is hereby levied a tax equal to five percent of the sales price, upon buyers of all retail sales of marijuana and marijuana products made within the Fairbanks North Star Borough. This tax is imposed on all retail sales of marijuana and marijuana products unless the sale is specifically exempted herein or by other applicable law.

B. All taxes imposed by this chapter are due and payable by the buyer at the time of sale and are delinquent if not paid at the time of sale.

C. The obligation for the payment of the tax is upon the buyer. Every seller shall collect the taxes imposed by this chapter from the buyer at the time of sale and shall deliver the same to the Fairbanks North Star Borough in accordance with the requirements in this chapter. (Ord. 2016-67 § 2, 2016.)

8.54.040 Exemptions.

The following sales are exempt from the collection of the marijuana and marijuana product tax:

A. Sales within the city of Fairbanks and the city of North Pole are partially exempt from the borough tax by the amount of sales tax the city separately levies on the same item up to five percent of the sales price subject to the following limitations:

1. The borough does not intend to act as a collection agent for city taxes on retail sales.

2. If any municipality within the borough imposes a city tax on retail sales exceeding the tax imposed by the borough, neither the seller nor the buyer is entitled to a refund from the borough from such retail sales.

3. If any municipality within the borough does not impose a city tax on any retail sales, imposes a city tax only on certain retail sales, or imposes a city tax on retail sales that is less than five percent times the selling price, the seller shall:

a. Collect a tax equal to five percent times the selling price minus any city tax imposed by such municipality on that same retail sale; and

b. Remit this tax to the borough in accordance with the requirements of this chapter.

B. Any wholesale sale (sale for resale) of marijuana or marijuana products by a state licensed marijuana cultivation facility or a marijuana product manufacturing facility. (Ord. 2016-67 § 2, 2016.)

8.54.050 Certificate of registration for tax collection.

A. All sellers of marijuana or marijuana products within the borough, except sellers engaged in sales entirely exempt under FNSBC 8.54.040, must possess a current certificate of registration, for the purpose of collecting and remitting the tax under this chapter, prior to engaging in any retail sales.

B. All sellers requiring a certificate of registration under subsection (A) of this section must first possess a current business license as required by AS 43.70 and a current state marijuana license as required by AS 17.38. Such sellers must then submit a certificate of registration application form to the borough as prescribed by the director. The director may then issue a certificate of registration to the seller. A seller shall display the certificate of registration prominently at the place of business with the business and marijuana licenses.

C. A certificate of registration shall bear the name of the seller, the address of the registered place of business, the form of ownership of the seller’s business, and a valid contact name and phone number for the seller.

D. A certificate of registration is neither assignable nor transferable. The seller shall immediately surrender the certificate to the director if the seller ceases to do business at the location named on the certificate, or if the seller otherwise sells, assigns, transfers, conveys, leases, forfeits, or abandons the seller’s business to any person or any other entity.

E. A seller shall submit a new updated application as prescribed by the director upon any change in ownership, business name, location, or contact information. The director, after receipt of the updated application, shall then determine whether a new certificate of registration should issue. If a new certificate of registration issues, the seller must first surrender the prior certificate of registration to the director before taking possession of the new certificate.

F. Any seller who violates any requirement of this section is subject to the penalties provided under this chapter. The borough is also entitled to injunctive relief to prevent the seller from engaging in retail sales until the seller complies with the requirements of this section. (Ord. 2016-67 § 2, 2016.)

8.54.060 Obligation of seller.

It is the obligation of the seller engaging in retail sales not exempt under FNSBC 8.54.040 to collect the taxes imposed by this chapter. All such taxes shall be due and payable by the buyer to the seller at the time of the sale made within the borough. The seller shall hold such taxes in trust for the benefit of the Fairbanks North Star Borough and remit such taxes as this chapter requires. (Ord. 2016-67 § 2, 2016.)

8.54.070 Reporting basis and tax collection.

A. The seller shall report and remit the tax on the same basis, cash or accrual, as the seller uses for reporting federal income tax.

B. Upon collection by the seller of the tax imposed herein, title to the collected tax immediately vests in the borough, and the tax shall be held in trust by the seller until remitted as required by this chapter.

C. The director may conduct audits, investigations, and/or hearings concerning any matters covered by this chapter, and may examine any relevant written or electronic records of any seller. If the director conducts a hearing, the director may issue subpoenas and subpoenas duces tecum and may exercise any other powers not prohibited by law.

D. Any person or any other entity acquiring an ownership interest in an ongoing business or the accounts receivable of a business, whether by purchase, assignment, foreclosure, relinquishment, or otherwise, is jointly and severally liable for any tax not remitted by the business, any violations of this chapter by such business, and any unpaid penalties and accrued interest imposed against such business under this chapter. (Ord. 2016-67 § 2, 2016.)

8.54.080 Prohibited acts and associated penalties.

In addition to the other requirements of this chapter:

A. No buyer shall fail or refuse to pay the tax when it is due and payable as required by this chapter.

B. No seller shall fail or refuse to make and file any reports required by this chapter.

C. No seller shall fail or refuse to remit the tax to the borough as required by this chapter.

D. No seller shall advertise or state to any buyer, directly or indirectly, that the tax or any part of the tax will be assumed or absorbed by the seller, that the tax will not be added to the retail sale, or that the tax will be refunded. No seller shall absorb, fail to add, assume, or refund any of the tax.

E. No seller shall fail to make written and/or electronic records of every sale made within the borough, showing or recording the tax as a separate item distinct from the selling price, at the time of each sale.

F. No seller shall attempt to assign or transfer a certificate of registration.

G. In addition to all other penalties provided under this chapter, any buyer or seller that violates any requirement of this chapter is subject to a penalty of $1,000. (Ord. 2016-67 § 2, 2016.)

8.54.090 Procedures and forms.

A. Every sale made within the borough, unless specifically exempted by this chapter, shall be presumed to be subject to the tax imposed hereunder in any action to enforce the provisions of this chapter.

B. The director shall take all lawful and necessary actions to administer this chapter including, but not limited to, adopting and revising procedures, regulations, fees, and written guidelines for the determination of the taxability of sales.

C. The director may also take other lawful actions to administer this chapter including, but not limited to, issuing written determinations of the taxability of specific sales upon request, contracting services for collection of delinquent accounts, compromising and abating penalties and interest, and/or negotiating and entering into payment plans for delinquent taxes, penalties and interest.

D. With the approval of the director, the marijuana and marijuana product tax administrator shall prepare, implement, and revise forms for the administration of this chapter.

E. The director may modify any reporting and/or remittance requirement(s) under FNSBC 8.54.100 or 8.54.110 in order to coordinate such reporting and/or remittance requirement(s) with any similar requirement(s) of any municipality within the borough. (Ord. 2016-67 § 2, 2016.)

8.54.100 Submittal of forms and remittance requirements.

A. The marijuana and marijuana product tax administrator shall provide monthly report forms to all sellers that possess current certificates of registration. Sellers making any taxable retail sale in any month shall remit to the borough the full amount of the tax collected no later than the fifteenth day of the following month along with a properly completed monthly report form.

B. Every seller possessing a current certificate of registration shall file with the borough a properly completed monthly report form no later than the fifteenth day of the month following the month subject to the report even if the seller has not engaged in taxable retail sales during the reported month.

C. If the fifteenth day of the month is a Saturday, Sunday, or a federal or borough holiday, the due dates under this section shall be extended until the next business day.

D. A report is considered filed, and taxes are considered remitted, on the date received by the borough’s collection office or on the date mailed via certified mail, U.S. Postal Service. (Ord. 2016-67 § 2, 2016.)

8.54.110 Penalties, interest, fees and tax remittance.

A. Any seller that fails to collect and/or remit taxes to the borough as required by this chapter or fails to file a monthly report form as required by this chapter shall incur the following penalties:

 

Month Filing For

Report/Remittance Due Date

Late Report Penalty $50.00 Late Remittance Penalty – 10% of the taxes due

Additional Late Report/Late Remittance Penalty – 25% of taxes due

January

February 15

February 16 – March 15

March 16

February

March 15

March 16 – April 15

April 16

March

April 15

April 16 – May 15

May 16

April

May 15

May 16 – June 15

June 16

May

June 15

June 16 – July 15

July 16

June

July 15

July 16 – August 15

August 16

July

August 15

August 16 – September 15

September 16

August

September 15

September 16 – October 15

October 16

September

October 15

October 16 – November 15

November 16

October

November 15

November 16 – December 15

December 16

November

December 15

December 16 – January 15

January 16

December

January 15

January 16 – February 15

February 16

B. If a seller is required under this chapter to submit a monthly report or remit collected taxes to the borough, such seller shall pay an additional $1,000 penalty if the seller’s report or remittance is not received by the borough within 60 days of the original due date provided under this section.

C. In addition to any other penalties imposed under this chapter, a seller shall pay any administrative fees, outside collection agency fees, attorney fees, and other costs and fees incurred by the borough or its agent(s) in connection with any collection, or attempted collection, from the seller of any unremitted tax, unpaid interest, and/or unpaid penalties due under this chapter.

D. Simple interest at a rate of 15 percent per year, or a lesser rate if required by state law, shall accrue on all unremitted taxes, not including penalty and administrative fees, from the original due date provided under this section until remitted in full.

E. The borough will apply a seller’s payment to the most delinquent monthly report in the following order: first, to any unpaid administrative fees, outside collection agency fees, attorney fees, and other collection costs and fees; second, to any unpaid penalties; third, to any unpaid interest that has accrued on unremitted taxes; and fourth, to the principal of any unremitted taxes.

F. Any person who holds an ownership interest in a seller, or any other person who is a seller, is personally liable for all taxes, penalties and interest due from such seller under this chapter.

G. Failure to comply with the provisions of this chapter is a violation punishable by a fine of $500.00. (Ord. 2016-67 § 2, 2016.)

8.54.120 Estimated tax.

If the borough is unable to ascertain the tax due from a seller because the seller failed to file a monthly report as required under this chapter, remit collected taxes, collect taxes, keep accurate books, allow inspection, or maintain the records required by this chapter, or has falsified records, the borough shall estimate the tax due based on any available evidence. Notice of the borough’s estimate shall be mailed to the seller. Unless the seller files an accurate monthly report covering the time period subject to the borough’s estimate or files an appeal within 30 days of the mailing of the borough’s estimate, the borough’s estimate shall become final for the purpose of determining the seller’s tax liability. (Ord. 2016-67 § 2, 2016.)

8.54.130 Lien for tax, interest and penalties.

A. In addition to any other remedies and administrative procedures provided under this chapter, the borough may file a civil action against any seller and/or buyer for recovery of any tax, unremitted tax, penalties, interest, costs, and fees, that have not been paid or remitted when due. The borough must file any such civil action within six years of the date that such tax, unremitted tax, penalties, interest, costs, and fees were due under this chapter.

B. Any tax, unremitted tax, penalties, interest, costs and fees that this chapter requires a seller and/or buyer to pay or remit shall constitute a lien in favor of the borough upon all assets, earnings, revenue, and property of such seller and/or buyer. This lien arises when any such payment or remittance is not made when due and continues until the payment or remittance is fully satisfied through execution, foreclosure sale, or any other legal means. This lien is not valid as against a mortgagee, pledgee, purchaser, or judgment creditor until notice of the lien is filed in the recorder’s office of the Fairbanks recording district. Upon such filing, the lien is superior to all other liens except as otherwise provided by state or federal law. (Ord. 2016-67 § 2, 2016.)

8.54.140 Administrative appeals.

A. A seller or buyer may appeal to the director any estimated tax, penalties, costs, fees, or other decision under this chapter made by a borough employee other than the director. Any appeal must be filed within the earlier of 30 days after the notice of any decision is mailed to the seller or buyer, or 30 days after the notice of any decision is otherwise communicated to the seller or buyer.

B. The appeal must state the legal and factual basis for the appeal and include all written evidence relevant to the appeal within the appellant’s possession. If the appeal raises relevant questions of fact, the director shall conduct a hearing. At the hearing, the parties shall have the right to present testimony and cross-examine witnesses. The director shall then issue a written or recorded decision that includes findings of fact.

C. An administrative appeal decision by the director is a final decision that shall be enforced under this chapter unless stayed by court order or by agreement of the borough and appellant. The director’s final decision may be appealed to Superior Court in the Fourth Judicial District as provided by state law. (Ord. 2016-67 § 2, 2016.)

8.54.150 Refunds.

A. A seller may within 60 days of filing a monthly report form submit an amended monthly report form along with a written claim for a refund. The seller claiming the refund bears the burden of proving, by clear and convincing evidence, any overpayment to the borough.

B. The marijuana and marijuana product tax administrator shall investigate all refund claims and shall present findings and recommendations to the director within 60 days of a seller’s filing of a written claim for refund. If the director determines that clear and convincing evidence supports the seller’s refund claim, the director shall issue a refund to the seller. Within 120 days of seller’s filing of a written claim for refund, the director shall issue a refund, or notify the seller that no refund shall issue. The borough shall not pay, and shall not otherwise be held liable for, any interest on any refund. (Ord. 2016-67 § 2, 2016.)

8.54.160 Record keeping.

A. A seller shall keep complete and accurate books, records, and accounts, showing all inventory purchases and the gross receipts for all sales made within the borough, for a period of six years from the date of each sale. In addition to all other record keeping requirements under this chapter, a seller shall maintain all written and electronic records relating to any marijuana or marijuana product sale, for a period of six years after such marijuana or marijuana product sale, including but not limited to:

1. All local, state, and federal tax reports and forms;

2. All accounting records;

3. All sales receipts; and

4. All documentary evidence supporting any exemption provided under this chapter.

B. Upon reasonable notice, a seller shall make all records and materials specified in subsection (A) of this section available for the director’s and/or the marijuana and marijuana product tax administrator’s inspection during customary business hours.

C. The director may conduct random audits of seller’s monthly reports by examining any of the records and materials specified in subsection (A) of this section. (Ord. 2016-67 § 2, 2016.)

8.54.170 Confidentiality of monthly reports and associated documents.

A. Documents in the possession of the borough by operation of this chapter are available to the public for inspection and copying subject to subsection (B) of this section and Chapter 1.16 FNSBC.

B. If a seller makes a showing satisfactory to the director that a report, record, application or other information submitted by the seller would, if made public, divulge information entitled to protection as trade secrets under state law, the borough will treat the record, report, application, or other information as confidential. This showing requires, but is not limited to, the seller’s certification under oath that:

1. Public disclosure would tend to affect adversely the seller’s competitive position; and

2. The records, reports, application or other information submitted would divulge sales figures, processes, techniques or other financial data of the seller that are entitled to protection as trade secrets under state law.

C. It is unlawful for any person to divulge to another any documents or information obtained from any records or documents filed with the borough that have been determined by the director to be confidential unless otherwise provided by state law or this chapter.

D. The director shall maintain all records and information deemed confidential under this section secure from public inspection and release.

E. The director shall not destroy any materials submitted to the borough under this chapter until at least six years have elapsed since the submission of such materials.

F. Notwithstanding other provisions of this chapter, the borough may, even for records deemed confidential:

1. Compile and publish general statistical records concerning the data submitted by seller;

2. Release names, owners, mailing addresses, any past penalty or interest assessments under this chapter, and the filing status of seller to the public. Filing status for this purpose includes whether a seller is exempt, delinquent, or current in remittal of taxes;

3. Provide any records to an auditor, collection agency or attorney, acting as an agent of the borough, for the review and use in performing services for the borough;

4. Exchange confidential information about a seller with another jurisdiction, which has a similar tax, if that other jurisdiction has similar provisions protecting the confidentiality of the seller’s records;

5. Release records with the permission of the seller; and

6. Use any records in any criminal or civil action brought under this chapter.

G. Hearings conducted by the director are public. (Ord. 2016-67 § 2, 2016.)

8.54.180 Severability.

If any section, subsection, paragraph, sentence, clause, or phrase of this chapter is held to be unconstitutional or in violation of law, then that holding shall not affect the validity of the remainder of this chapter. (Ord. 2016-67 § 2, 2016.)