CITY OF OF SILICON VALLEY March 9, 2015 Medimarts, Inc. c/o David James 1851 Little Orchard Street San Jose, CA 95125 RE: NOTICE OF DISQUALIFICATION FROM REGISTRATION TO OPERATE AS A MEDICAL MARIJUANA COLLECTIVE IN THE CITY OF SAN JOSE Dear Mr. This letter is to advise that for the reasons set forth below, MEDIMARTS has been disquali?ed from the City?s process to Register as a Medical Marijuana Collective and must immediately cease all operations related to the cultivation, processing, manufacturing, transporting and dispensing of medical marijuana Within the City of San Jos?. I Pursuant to San Jos? Municipal Code (Code) Section 6.88.300A, ?No Collective shall operate in the City of San Jose unless and until it has ?rst ?led a registration form in accordance with the provisions of this Chapter, has paid all fees required by this Chapter, and has received a Notice of Completed Registration from the City Manager.? Section 6.88.300C further provides, ?To be eligible to register a Collective must be able to provide a Marijuana Business Tax Return evidencing payment of any applicable taxes due to the City pursuant to Chapter 4.66 of this Code and have no outstanding compliance orders under Chapter 1.14.? Chapter 4.66 of the Code requires every person engaged in marijuana business in the City to pay a business tax at a rate of ten percent of gross receipts. It has come tothe attention of the City Manager?s Of?ce that although MEDIMARTS has operated since August 2011and continues to operate to present day, it has not paid the Marijuana Business Tax due to the City under Chapter 4.66 of the Code since April 2012. Consequently, MEDIMARTS is not able to and has not produced a Marijuana Business Tax Return evidencing payment of taxes due to the City since April 2012. In fact, taxes owed by MEDIMARTS have been assessed by the City and remain delinquent. In addition, pursuant to Section 6.88.330Elc of the Code, ?Any Collective may be disquali?ed from the registration process?. . .if . . .?The Collective violates or has violated the terms and conditions of any requirement of this Code related to the operation of a Collective, other than solely because of its existence after the effective date of this Chapter.? As indicated above, MEDIMARTS has failed to pay the City?s required Marijuana Business Tax, has failed to submit "200 East Santa Clara Street San jos?,CA 95-113 (61(4081535?8100 fax (408) 920?7007 wunvsanjosecagov O?ice of the City Adm-(agar Medimarts, lnc. Re: Disquali?cation from Registration Process March 9, 2015 Page 2 of 2 returns evidencing payment of the City?s Marijuana Business Tax since April 2012, and remains delinquent on taxes assessed on MEDIMARTS by the City. As such, MEDIMARTS is in violation of the terms and conditions of Chapter 4.66 of the Code. Lastly, pursuant to Section 6.88.330E1h of the Code, ?Any Collective may be disquali?ed from the registration process?. . .if . . .?The Collective has conducted itself in a manner that creates or results in a public nuisance, as de?ned in Section 1.13.050 of this Section 1.13.050A3 and A4 of the Code de?ne public nuisance as: The maintenance or use of property in the city in a manner that violates, or real property that has been the situs of a violation of, any provision of this code or any other city, state or federal law or regulation; or 4. Without limiting the generality of Subsection A.3., the conduct of business on property in the city for which the director of ?nance has issued an assessment of taxes owed to the city pursuant to Section 4.66.580, Section 4.76.870 or Section 4.77.160 of this Code and the taxes assessed remain Again, as mentioned above, MEDIMARTS has failed to pay the City?s Marijuana Business Tax since April 2012. As a result, MEDIMARTS has conducted itself in violation of Chapter 4.66 of the Code and has taxes which remain delinquent under Chapter 4.66 of the Code; both, conduct that creates or results in a public nuisance and is grounds for disquali?cation from the registration process. Because MEDIMARTS has been disqualified from the City?s process to Register as a Medical Marijuana Collective, it must immediately cease all operations related to the cultivation, processing, manufacturing, transporting and dispensing of medical marijuana within the City of San Jose. Sincerely, 1gelique Gaeta Assistant to the City Manager City Manager?s Of?ce cc: Rick Doyle, City Attorney Larry Esquivel, Chief of San Jose Police Department Julia Cooper, Director of Finance 200 East Santa Clara Street San Jos?, CA 951 13 re! (408)535-8100 (408) 920-7007 PROOF OF SERVICE MATTER NAME: MEDIMARTS, INC. the undersigned declare as follows: I am a citizen of the United States, over 18 years of age, am employed in Santa Clara County, and not a party to the within action. My business address is 200 East Santa Clara Street; San Jose, CA 95113, and is located in the county where the service described below occurred. On March 9, 2015 I caused to be served the within: NOTICE OF DISQUALIFICATION FROM REGISTRATION TO OPERATE AS A MEDICAL MARIJUANA COLLECTIVE IN THE CITY OF SAN JOSE by MAIL, with a copy of this declaration, by depositing them into a sealed envelope, with postage fully prepaid, and causing the envelope to be deposited for collection and mailing on the date indicated above. I further declare that I am readily familiar with the business? practice for collection and processing of correspondence for mailing with the United States Postal Service. Said correspondence would be deposited with the United States Postal Service that same day in the ordinary course of business. I further declare that the name and address as shown on the envelope is as follows: Medimarts, lnc. clo: David 1851 Little Orchard San Jose, CA 95125 I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on March 9, 2015 at San Jose, California. We ssica Lowry taff Technician City Manager?s Office Proof of Service