BILL ANALYSIS Ó AB 2312 Page 1 Date of Hearing: April 10, 2012 Consultant: Jesse Stout ASSEMBLY COMMITTEE ON PUBLIC SAFETY Tom Ammiano, Chair AB 2312 (Ammiano) - As Introduced: February 24, 2012 SUMMARY : Authorizes local taxes on medical cannabis up to 2.5%. Creates a nine-member Board of Medical Marijuana Enforcement (BMME) to regulate the medical cannabis industry and collect fees from medical cannabis businesses to be deposited in a new Medical Marijuana Fund. Specifically, this bill : 1)Establishes the Medical Marijuana Regulation and Control Act. 2)Declares legislative intent to accomplish all of the following: a) To establish a statewide system for regulating and controlling medical marijuana activities by creating a state board to enact and enforce regulations governing the cultivation, processing, manufacturing, testing, transportation, distribution, and sale of medical marijuana. b) To allow cities and counties to enact reasonable zoning regulations or other restrictions applicable to the cultivation, processing, manufacturing, testing, and distribution of medical marijuana based on local needs. c) To prohibit the issuance and use of fraudulent or forged physician's recommendations for medical marijuana. d) To establish the BMME to be located within the Department of Consumer Affairs to provide a governmental agency that will ensure the strict, honest, impartial, and uniform administration and enforcement of the medical marijuana laws throughout California. e) To fulfill the promise of the Compassionate Use Act of 1996 to "implement a plan for the safe and affordable distribution of marijuana to all patients in medical need AB 2312 Page 2 of marijuana." f) To support the creation of a more appropriate schedule for marijuana that recognizes its medical use in the State of California. g) To reduce the cost of medical marijuana enforcement by providing law enforcement guidelines to more easily determine whether or not a person is acting in conformance with the state's medical marijuana laws and by providing courts and prosecutors flexibility in the punishment of minor marijuana offenses. 3)Provides that qualified patients, persons with valid identification cards, and the designated primary caregivers of qualified patients and persons with identification cards, may associate within the State of California as collectives, cooperatives, and other business entities to cultivate, acquire, process, possess, transport, test, sell and distribute marijuana for medical purposes and shall not be subject to arrest, prosecution, or sanctions under provisions of law related to unauthorized possession, cultivation, possession for sale, transportation, sale, import, giving away, manufacturing, opening or maintaining unlawful places, renting or leasing real property for the unlawful manufacture or sale of controlled substances, or nuisance and abatement on the basis of that fact, unless those persons are not in compliance with the registration requirements provided in this bill. 4)States that the provisions in this bill apply to all members of an entity formed pursuant to these provisions regardless of whether those members contribute to any of the activities of the entity. 5)Adds a person who knowingly produces, issues, utilizes, or sells a falsified, forged, or fraudulent physician's recommendation for medical marijuana to the list of persons subject to misdemeanor penalties under the Compassionate Use Act. 6)Clarifies that nothing in this bill shall prevent a city or other local governing body from adopting local ordinances that regulate the location, operation, or establishment of a medical marijuana cooperative or collective, consistent with AB 2312 Page 3 the provisions of this bill. 7)Establishes the Medical Marijuana Regulation and Control Act. 8)Defines the following: a) "Board" is the BMME. b) "Executive director" is the Executive Director of the BMME. c) "Financial institution" is a bank, savings and loan association, or credit union chartered under the laws of California or the United States. d) "Fund" is the Medical Marijuana Fund. e) "Mandatory registrant" is a person required to register with the BMME pursuant to the provisions of this article. f) "Mandatory registration" is a registration issued by the BMME pursuant to this article. g) "Medical marijuana dispensary" is any facility, building, structure, or location where medical marijuana is sold to qualified patients, primary caregivers, or persons with identification cards issued by the State Department of Health Services identifying a person to engage in medical use of marijuana. h) "Medical marijuana facility" is any facility, building, structure, or location where medical marijuana is grown, processed, stored, manufactured, tested, or sold, other than a private residence where medical marijuana is grown for personal use and not for sale. i) "Person" includes any individual, partnership, joint venture, association, limited liability company, corporation, estate, trust, receiver, syndicate, or any other group or combination thereof acting as a unit. 9)States that this article shall not apply to, and shall have no diminishing effect on, the rights and protections currently granted to individual patients and primary caregivers pursuant to the Compassionate Use Act. AB 2312 Page 4 10)Requires a medical marijuana facility to operate in accordance with this article. Individual patients and caregivers cultivating marijuana at their private residences in accordance with local zoning and building codes who do not sell or charge for the cultivation of marijuana are not considered medical marijuana facilities, and are exempt from mandatory registration. 11)Declares legislative intent that each city, county, and city and county permit the development of sufficient numbers and types of medical marijuana facilities as are commensurate with local needs, consistent with the provisions of this article. 12)States that the provisions of this article shall preempt all local ordinances or regulations relating to the regulation and control of medical marijuana and shall apply equally to a charter city or county, and a city or county shall not prohibit the operation of persons registered pursuant to this article or restrict their location or operation to frustrate the provisions of this article, to render the application or enforcement of this article impractical or impossible, or to restrict the location of medical marijuana dispensaries so as to authorize fewer than one medical marijuana dispensary per 50,000 residents, except: a) A city or county with a population of at least 50,000 may prohibit the establishment of medical marijuana dispensaries within its jurisdiction, or limit the number of allowed medical marijuana dispensaries to a number below one per 50,000 residents, if an ordinance or regulation authorizing that restriction has been approved by the voters of the city, county, or city and county. In no event may a city, county, or city and county enact legislation that impairs the rights granted to qualified patients and their caregivers. b) A city or county with a population of less than 50,000 residents may prohibit the establishment of a medical marijuana dispensary within its jurisdiction provided that the legislative body of a city or county make a written finding to the board supported by evidence adduced during at least one public hearing that medical marijuana is reasonably available to its residents by other means. AB 2312 Page 5 c) A legislative body of a city or county with existing medical marijuana regulations may provide to the BMME a list of regulated persons that it finds to be in good standing under its local medical marijuana regulations in force as of the effective date of the act adding this article, which shall be accompanied by a certified copy of any ordinance regulating the location or operation of medical marijuana facilities in that jurisdiction. These persons shall automatically be deemed successful mandatory registrants for purposes of this article, and shall be exempt from renewal procedures for three years from the effective date of the act adding this article. Any person found to not be in good standing shall not be deemed successful mandatory registrants for purposes of this bill. 13)States that if a city or county does not enact a medical marijuana dispensary zoning ordinance, medical marijuana dispensaries in that jurisdiction shall be wholly regulated by the BMME pursuant to this article, and medical marijuana dispensaries that are mandatory registrants may locate in that jurisdiction in any location that the BMME finds to be appropriately zoned, subject to the restrictions on proximity to schools. 14)Creates within the Department of Consumer Affairs a BMME, administered by a governing body as prescribed, and a civil executive officer appointed by the Director of Consumer Affairs who shall be known as the "Executive Director of the BMME". 15)Provides that the funds for the establishment and support of the BMME shall be advanced as a loan by the Department of Consumer Affairs and shall be repaid by the initial proceeds from fees collected from processing applications, registrations, notices or reports required to be submitted to the BMME. 16)Requires the governing body of the BMME to consist of the following nine members: one licensed physician appointed by the Governor, one full-time peace officer appointed by the Governor, three California residents appointed by the Governor, one California resident appointed by the Speaker of the Assembly, one California resident appointed by the Senate Committee on Rules, one medical marijuana patient advocate appointed by the Speaker of the Assembly, and one qualified AB 2312 Page 6 medical marijuana patient appointed by the Senate Rules Committee. 17)States that in making these appointments, the Senate Committee on Rules and the Speaker of the Assembly shall make good-faith efforts to ensure that their appointments reflect the economic, social, and geographic diversity of California. 18)Provides that the authority responsible for appointing a member of the governing body of the BMME shall appoint each member within 90 days of the effective date of this bill. 19)States that a majority of the total appointed membership of the governing body of the BMME shall constitute a quorum. Any action taken by the governing body of the BMME requires a majority vote of the members present at the meeting of the governing body of the BMME, with a quorum being present, unless otherwise specifically provided. 20)Mandates the governing body of the BMME to elect a chairperson and vice chairperson from among its members and meet at least quarterly on call of the executive director, the chairperson, or three members of the governing body of the BMME. 21)States that the terms of the members of the governing body of the BMME shall be three calendar years. No member shall serve more than two consecutive full terms. If a vacancy occurs prior to the expiration of the term for the vacated seat, the appointing authority of that vacant seat shall appoint a replacement member for the remainder of the unexpired term on or before 30 days after the occurrence of the vacancy. 22)Requires the BMME to perform all of the following: a) Approve or deny mandatory registration applications for the cultivation, processing, manufacturing, testing, transportation, distribution, and sale of medical marijuana as provided by state law; b) Suspend, fine, restrict, or revoke registration based upon a violation of these provisions, or a rule or regulation promulgated pursuant to them; c) Impose penalties authorized by this article or by any AB 2312 Page 7 rule or regulation promulgated pursuant to this article; d) Adopt, amend, and rescind reasonable regulations, special rulings, and findings as necessary for the regulation and control of the cultivation, processing, manufacturing, testing, transportation, distribution, and sale of medical marijuana, and to govern the procedures of the BMME to exercise its powers and perform its duties; e) Hold public hearings to hear and decide any appeals from denials of a mandatory registration application, and any complaints against a registered person; f) Administer oaths and issue subpoenas to require the presence of individuals and the production of papers, books, and records necessary to the determination of any hearing. Any such hearing shall be conducted in accordance with Government Code Section 11500 et seq.; g) Maintain the confidentiality of any information obtained from a registered person related to medical-marijuana patients or caregivers in compliance with the federal Health Insurance Portability and Accountability Act (HIPPA), the Confidentiality of Medical Information Act (Civil Code Section 56 et seq.) , and the Insurance Information and Privacy Protection Act (Insurance Code Section 791 et seq.); h) Develop any necessary forms, identification cards, and applications for the administration of this article or any of the rules or regulations promulgated pursuant it; i) Develop zoning standards that shall be applicable if a city or county does not enact a medical marijuana dispensary zoning ordinance; j) Oversee operation of the Medical Marijuana Fund; and aa) Establish processing fees for all applications, registrations, notices, or reports required to be submitted to the BMME. Such fees shall be deposited into the Medical Marijuana Fund. The amount of fees shall reflect the BMME's direct and indirect costs to administer and enforce the provisions of this article, and shall be assessed on a sliding-fee scale to reflect the projected revenue of the AB 2312 Page 8 particular registrant. 23)Requires the regulations to be promulgated by the BMME to include: a) Procedures and grounds for issuing, renewing, denying, suspending, issuing fines in connection with, restricting, or revoking a mandatory registration; b) Civil penalties, including fines, for violating the provisions of this article; c) Prohibition of misrepresentation and unfair practices; d) Best practices guiding advertisements promoting the purchase of medical marijuana, and relating to its labeling, packaging, and testing; e) Security requirements for premises subject to mandatory registration; f) Regulations for the storage and transportation of medical marijuana; g) Requirements for waste disposal and recycling; h) Guidelines regarding cultivation, including use of pesticides and fungicides and the reduction of environmental impacts; i) Establishment of exemptions from registration or reduced fees for non-commercial collectives, non-profit registrants, and other qualified persons; j) Protocols to prevent unlawful diversion of marijuana; and aa) Any other regulations in furtherance of this article. 24)States that the BMME is not authorized to set prices for medical marijuana. 25)Creates the Medical Marijuana Fund within the State Treasury, and specifies that all moneys collected under these provisions shall be deposited into the fund, as well as any interest and AB 2312 Page 9 dividends earned on the money in the fund. 26)Establishes the Medical Marijuana Enforcement Penalty Account (MMEPA) within the Medical Marijuana Fund, which is to receive the fines collected when a medical marijuana facility operates without an approved mandatory registration, and any other penalty amounts levied under these provisions. 27)Appropriates moneys in the fund, except for moneys in the MMEPA, continuously and without regard to fiscal year to the BMME solely to fully fund all costs associated with implementing, enforcing, and administering this bill. 28)Requires the BMME to reimburse the Department of Consumer Affairs for administrative expenses. 29)States that the BMME is subject to all applicable provisions of Division 1 of the Business and Professions Code. 30)Provides that the executive director shall appoint the BMME's employees, except as specified. All heads of divisions and committees and other employees shall be responsible to the executive director for the proper carrying out of their duties and responsibilities. 31)Allows the executive director to bring an action to enjoin a violation or threatened violation of any provision of this bill in the county of the violation. 32)Prohibits a medical marijuana facility from operating without state-approved registration. Operation of a medical marijuana facility without an approved mandatory registration may result in fines of up to $25,000, and the destruction of any marijuana being cultivated or possessed. 33)Authorizes the BMME to establish various classes or types of registrations for specific medical marijuana-related activities. 34)Requires that a mandatory registration application or renewal be approved unless the BMME determines that any of the following are true: a) An applicant, or the medical marijuana facility location for which the applicant is applying for mandatory AB 2312 Page 10 registration, fails to meet the requirements of this bill or any regulation promulgated pursuant it; b) An applicant is under 21 years of age; c) An applicant has failed to provide information reasonably necessary for completion of registration or has knowingly provided false information on the application form; d) An applicant, or any of its officers or directors, has been convicted in the previous five years of a violent felony, as specified in Penal Code Section 667.5, a serious felony, as specified in Penal Code Section 1192.7, a felony involving fraud or deceit, or any other felony that, in the BMME's estimation, would impair the applicant's ability to appropriately operate a medical marijuana facility; e) An applicant is a licensed physician making patient recommendations for medical marijuana; or f) An applicant, or any of its officers or directors, has been sanctioned by the BMME for operating an unregistered medical marijuana facility or has had a mandatory registration revoked in the previous three years. 35)Mandates the BMME to make mandatory registration applications available by July 1, 2013. 36)Requires the BMME to thoroughly investigate to determine whether the applicant or the premises meets specified criteria. 37)Requires the BMME to deny an application for registration if either the applicant or the premises do not meet the specified eligibility criteria. 38)Requires the BMME to approve or deny applications within 180 days after its filing; and if the BMME fails to act within this time the application shall be deemed approved. 39)Provides that each mandatory registration application approved by the BMME is separate and distinct, and that an applicant may apply for a mandatory registration in more than one class of specific medical marijuana activities. AB 2312 Page 11 40)Provides that approved registrations are valid for a period not to exceed two years unless suspended or revoked. 41)Requires the BMME to notify a registrant 90 days before a registration's expiration by first class mail. 42)Requires persons applying for the renewal of existing registrations to apply at least 60 days before expiration; the BMME has discretion to waive this time requirement. 43)Requires the BMME to act on timely renewal applications at least 10 days prior to expiration. 44)Allows a medical marijuana facility operating in conformance with local zoning requirements as of this bill's effective date to continue its operations until its application for mandatory registration has been approved or denied. 45)States that a person whose registration application has been approved shall not be subject to arrest, prosecution, or other criminal, civil, or administrative sanctions under state or local law for approved actions in accordance with his or her registration application. 46)Provides that nothing in this bill shall prevent a city, county, or city and county from enforcing a zoning ordinance or law of general application, except as specified in this bill. 47)Prohibits state or local officials from spending any funds to assist federal authorities in enforcing marijuana prohibitions with regard to activities carried out by persons complying with this bill. Nothing in this bill shall be construed to limit a law enforcement agency's ability to investigate unlawful activity related to a mandatory registrant. 48)Authorizes a financial institution to provide lending services to persons who mandatory registration applications have been approved and to secure any such loans to those persons with assets of those persons. Any financial institution owning or possessing medical cannabis or warehouse receipts as security for an obligation or as a result of enforcement of a security interest may, after the BMME has given permission, sell the medical cannabis or warehouse AB 2312 Page 12 receipts to a registrant authorized to sell for resale that medical cannabis or those warehouse receipts. 49)Authorizes county board of supervisors to levy, increase, or extend one or more transactions and use taxes on the sale of medical marijuana or medical marijuana-infused products at a rate of ____%, or a multiple thereof, if approved by two-thirds of the members of the BMME of supervisors and by a majority of the voters of that county. The authority of a city to impose transactions and use taxes under this section shall not exceed the rate of 2.5%. 50)Authorizes governing bodies of cities to levy, increase, or extend a transaction and use tax at a rate of ____%, or a multiple thereof, if approved by two-thirds of the members of the governing body and by a majority of the voters of that city. The authority of a city to impose transactions and use taxes under this section shall not exceed the rate of 1%. 51)Provides that the provisions of this bill are severable. If any provision of this bill or its application is held invalid, this invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application. EXISTING LAW : 1)States that the People of the State of California hereby find and declare that the purposes of the Compassionate Use Act of 1996 are as follows: a) To ensure that seriously ill Californians have the right to obtain and use cannabis for medical purposes where that medical use is deemed appropriate and has been recommended by a physician who has determined that the person's health would benefit from the use of cannabis in the treatment of cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis, migraine, or any other illness for which cannabis provides relief. b) To ensure that patients and their primary caregivers who obtain and use cannabis for medical purposes upon the recommendation of a physician are not subject to criminal prosecution or sanction. AB 2312 Page 13 c) To encourage the Federal and State governments to implement a plan to provide for the safe and affordable distribution of cannabis to all patients in medical need of cannabis. İHealth and Safety Code (HSC) Sections 11362.5(b)(1)(A) to (C).] 2)States that nothing in this section shall be construed to supersede legislation prohibiting persons from engaging in conduct that endangers others, nor to condone the diversion of cannabis for nonmedical purposes. İHSC Section 11362.5(b)(2).] 3)Provides that, notwithstanding any other provision of law, no physician in California shall be punished, or denied any right or privilege, for having recommended cannabis to a patient for medical purposes. İHSC Section 11362.5(c).] 4)Defines "primary caregiver" as the individual designated by a patient who has consistently assumed responsibility for the housing, health, or safety of that person. İHSC Section 11362.5(e).] 5)States existing law, relating to the possession and the cultivation of cannabis, shall not apply to a patient, or to a patient's primary caregiver, who possesses or cultivates cannabis for the personal medical purposes of the patient upon the written or oral recommendation or approval of a physician. İHSC Section 11362.5(d).] 6)Requires the Department of Public Health to establish and maintain a voluntary program for qualified patients to apply for identification cards, and county health departments to issue identification cards to qualified patients and their caregivers. İHSC Sections 11362.71(a) and (b)]. 7)Provides that persons with valid identification cards shall not be subject to arrest for possession, transportation, delivery, or cultivation of cannabis, absent evidence of fraud. İHSC Section 11362.71(e).] 8)Provides that patients and caregivers may possess and cultivate an amount of cannabis reasonably necessary for the patient's current medical needs, notwithstanding any limits set by the Legislature that impermissibly amend the Compassionate Use Act. İPeople v. Kelly (2010) 47 Cal.4th AB 2312 Page 14 1008, 1043.] 9)Requires a person who seeks an identification card to pay a fee and provide to the county health department the person's: name, proof of residency, written doctor's recommendation, doctor's name and contact information, caregiver's name and duties, and patient's and caregiver's government-issued photo identification card. İHSC Section 11362.715(a).] 10)Requires county health departments to issue serially numbered identification cards to patients and caregivers containing: a unique user identification number, an expiration date, the county health department's name and telephone number, photo identification of the cardholder, and a toll-free Department of Public Health telephone number enabling state and local law enforcement officers to immediately verify the card's validity. İHSC Section 11362.735(a).] 11)Prohibits state or local law enforcement officers from refusing to accept an identification card unless the officer has reasonable cause to believe that the card is being used fraudulently or its information is false or fraudulent. İHSC Section 11362.78.] 12)Provides that qualified patients, persons with valid identification cards, and their designated primary caregivers who associate in order collectively or cooperatively to cultivate cannabis are not subject to criminal liability on that basis. İHSC Section 11362.775.] 13)Prohibits medical cannabis dispensaries that possess, cultivate, or distribute cannabis from being located within a 600-foot radius of a school, and authorizes cities and counties to further restrict the locations of medical cannabis collectives. (HSC Section 11362.768.) 14)Provides a legal defense for medical cannabis collectives and cooperatives to charges of cannabis distribution. İPeople v. Urziceanu (2005) 132 Cal.App.4th 747.] FISCAL EFFECT : Unknown COMMENTS : 1)Author's Statement : According to the author, "Just over 15 AB 2312 Page 15 years ago, the voters of California spoke loud and clear through the passage of Prop. 215 that they wanted to establish and ensure the safe, affordable access of medical cannabis to patients. It was the first such law of its kind in the nation but since 1996, fifteen other states and the District of Columbia have joined California and passed medical cannabis laws. But while the initiative called for an effective regulatory framework, the Legislature has only enacted SB 420, which calls for voluntary patient and caregiver identification cards with certain limits, leaving may areas undefined; this ambiguity is causing a lot of confusion and problems. Many counties with an active medical cannabis community, such as San Francisco and Alameda, have had strong regulatory systems in place for some time; but unfortunately, not every county or jurisdiction has enacted them. It is now time to end this public policy grey area with statewide regulation for medical cannabis. "AB 2312 creates an oversight body within the Department of Consumer Affairs to oversee all parts of this industry, except for individual patients. Growers, processors, manufactures, testing and labeling providers, transporters, retailers, and delivery services will all be required to register with the state. This information will ensure that every aspect of this chain will be tracked, from growers all the way to storefront dispensaries, creating a network of accountability and transparency that does not exist today. Providers who are engaged in above-board operations will have nothing to fear as this will allow law enforcement to effectively utilize their limited resources by focusing their efforts on the remaining bad actors. "There is no doubt that an industry exists around medical cannabis but the point of regulation is to bring these activities above board to ensure safe and effective access with clear rules for those engaged in this industry. Only by regulating it through AB 2313 will California be able to regain control. Strict regulation of medical cannabis benefits everyone - patients, providers, doctors and law enforcement. "The worst public policy choice for California is to sit idly by doing nothing and let this failed 'war on medical cannabis' continue unchecked. Failed prohibition policies have been proven time and again to cause more harm than good, draining AB 2312 Page 16 our limited public resources and encouraging black market problems, such as robberies and violence. "It is time for the Legislature to fix these ambiguities, provide the safe and effective access to medical cannabis that Prop. 215 intended, prevent diversion for non-medical uses, and regulate and control an industry that has the clear support of the people of California." 2)Medical Cannabis Law at Present : California voters passed Proposition 215, the Compassionate Use Act (CUA), in 1996. The CUA prohibits prosecution for growing or using cannabis of Californians who have the oral or written recommendation of their doctors and these patients' caregivers. The Legislature sought to clarify this initiative in 2003 with SB 420, the Medical Marijuana Program Act (MMPA). The MMPA offered a voluntary identification card which patients and caregivers could obtain that would additionally protect them from arrest, and set limits on the amounts of cannabis to be legally grown and possessed. In 2010, the California Supreme Court ruled in People v. Kelly supra that the MMPA section limiting quantities of cannabis is unconstitutional because it amends a voter initiative. Additionally, the U.S. Supreme Court ruled in Gonzales v. Raich (2005) 545 U.S. 1 that the Federal Government can enforce cannabis prohibition despite state medical cannabis laws. Now, California patients who obtain a physician's oral or written recommendation are protected from prosecution for possessing or cultivating an amount of cannabis reasonably related to their current medical needs, as are these patients' caregivers. Patients and caregivers who obtain a state MMP identification card from their county health department are protected from arrest and prosecution for possessing, transporting, delivering, or cultivating cannabis. Patients and caregivers who engage in these activities remain liable for federal arrest and prosecution, and those who operate dispensaries face frequent federal enforcement actions. Meanwhile, many city and county officials have expressed confusion about the scope of state medical cannabis law, and some have passed ordinances that have been overturned by the courts. For example, the City of Fresno bans dispensaries altogether; although last month in Fresno County a permitting structure went into effect that is so strict no dispensaries AB 2312 Page 17 have applied. The new county ordinance bans dispensaries in unincorporated areas, greatly limits cultivation locations, and requires cultivators to disclose patient information and comply with law enforcement searches. Two lawsuits are currently pending in Fresno County Superior Court to challenge the ordinance, one claiming it is preempted by state law and the other claiming it is preempted by federal law. İTwo lawsuits challenge Fresno Co. medical marijuana rules, The Fresno Bee (March 20, 2012).] 3)This Bill Would Have the Effect of Creating Uniform Regulations : First, this bill expressly authorizes patients to associate to sell medical cannabis, immunize them from arrest for doing so, and defines a "dispensary" as a place where medical cannabis is sold. This change would resolve most of the confusion and controversy in Fresno, San Francisco, and other cities and counties where elected officials have expressed contradictory opinions about the legality of activities related to medical cannabis. Second, this bill creates a regulatory board centralized in the state government and specifically task the board with approving and denying dispensaries' registration applications, and preempting local medical cannabis regulations. This change would have the effect of turning California's patchwork of medical cannabis ordinances into a unified, blanket law. This bill provides specificity on whether local governments can prohibit dispensaries altogether: cities and counties must permit no fewer than one dispensary per 50,000 residents absent explicit voter disapproval. Thus, large cities such as Fresno will be granted clarity on whether or not state law allows dispensary bans. Third, this bill speaks to the question of disparate taxation levels levied by cities and counties. Currently, some cities do not tax medical cannabis separately from their regular municipal sales taxes. Some cities have taxes rates similar to the one proposed in this bill (such as Berkeley at 2.5%), whereas some cities have much higher taxes (such as San Jose, currently at 7% and authorized to rise as high as 10%). This bill establishes a uniform, statewide maximum for a 2.5% transactions and use tax on medical cannabis and medical cannabis-infused products, clearing up discrepancies among medical cannabis tax rates across city and county lines. AB 2312 Page 18 4)This Bill Does Not Conflict with Proposition 215 : The voters who approved the CUA endorsed the drafters' intent "to ensure that patients and their primary caregivers who obtain and use cannabis for medical purposes upon the recommendation of a physician are not subject to criminal prosecution or sanction." (HSC Section 11362.5.) The Legislature previously sought to regulate medical cannabis by passing SB 420 (Vasconcellos), Chapter 93, Statutes of 2003, which limited the quantities of cannabis patients may possess. In People v. Kelly, the Supreme Court found that a law placing a greater burden on cannabis patients than the CUA did has an unconstitutional amendment of the CUA. However, no part of this bill places a greater burden on patients than the CUA did. Rather, by providing for the uniform regulation of medical cannabis, this bill makes the rules clearer for both law enforcement and the medical cannabis community, resulting in fewer arrests. 5)Pending Litigation Could Conflict with this Bill : The California Supreme Court has recently granted review in four cases related to the rights of medical cannabis patients and dispensaries: Pack v. City of Long Beach (S197169) review granted Jan. 18, 2012, formerly at (2011) 199 Cal.App.4th 1070; City of Riverside v. Inland Empire Patient's Health and Wellness Ctr. (S198638), review granted Jan. 18, 2012, formerly at (2011) 200 Cal.App.4th 885; Traudt v. City of Dana Point (S197700) review granted Jan. 18, 2012, formerly at (2011) 199 Cal.App.4th 886; and People v. G3 Holistic (S198395), review granted Jan. 18, 2012, (non-published opinion E051663). These cases present issues concerning preemption, under federal or state law, of local ordinances regulating or banning the operation of medical marijuana dispensaries and related activities, and standing to challenge such ordinances. Since the Supreme Court will soon rule on the legality of regulations governing dispensaries, parts of this bill could possibly be preempted. 6)Arguments in Support : According to Americans for Safe Access , "Research conducted by ASA and our experience to date show us that sensible regulations preserve safe access to medical cannabis, while reducing crime and complaints around storefront facilities maintained by legally organized and operated patient cooperatives and collectives. By establishing uniform standards and facilitating reasonable local regulations, AB 2312 will help propagate the proven AB 2312 Page 19 benefits of regulation statewide. Additionally, the bill will provide overdue clarity for local lawmakers, law enforcement, and patients who cultivate or provide medical cannabis." 7)Arguments in Opposition : According to the California Taxpayers Association , "CalTax is opposed to AB 2312 because it is proposed as a majority vote bill, in violation of Proposition 26's two-thirds vote requirement. The state constitution requires a super majority vote whenever a proposal may result in an individual or entity paying a higher tax. Also, this bill has the potential to allow local governments to impose transactions (sales) and use taxes beyond the two percent local rate limitation currently authorized by existing law. Each county and city could impose a tax that exceeds the tax rate limit." 8)Related Legislation : a) AB 2465 (Campos) makes medical cannabis patient and caregiver identification cards mandatory, requires patients and caregivers to report where they intend to cultivate cannabis, and requires medical cannabis dispensaries to keep copies of members' identification cards. AB 2465 is being heard by this Committee today. b) AB 1975 (Halderman) requires the Department of Pesticide Regulation to develop guidelines to enforce state pesticide regulations on medical cannabis cultivation. AB 1975 is pending referral by the Assembly Rules Committee. c) AB 1300 (Blumenfield), Chapter 196, Statutes of 2011, authorizes local governments to adopt ordinances regulating the location, operation, or establishment of medical cannabis dispensaries. d) SB 847 (Correa) would have prohibited medical cannabis dispensaries from being located within 600 feet of a residential zone and authorized cities and counties to enact different standards for dispensaries' distances from residential zones. SB 847 was vetoed. 9)Prior Legislation : a) AB 2650 (Buchanan), Chapter 603, Statutes of 2010, prohibits any medical cannabis dispensary from being AB 2312 Page 20 located within 600 feet of a school, and authorizes local governments to further restrict dispensaries' locations. b) People v. Kelly, 47 Cal.4th 1008 (2010), found unconstitutional SB 420's restriction on the amount of cannabis a patient may possess and cultivate, and found that patients and caregivers may possess and cultivate an amount of cannabis reasonably necessary for the patient's current medical needs. c) AB 2743 (Saldana), of the 2007-08 Legislative Session, would have stated that it is the policy of California that its agencies and agents not cooperate in federal raids and prosecutions for cannabis related offenses if the target is a qualified patient. AB 2743 died on the Assembly's Inactive File. d) SB 420 (Vasconcellos), Chapter 875, Statutes of 2003, established a voluntary registry identification card system for patients and their caregivers, and limited the amount of cannabis patients and caregivers may possess. e) SB 847 (Vasconcellos), Chapter 750, Statutes of 1999, established the Marijuana Research Act of 1999 and provided that the Regents of the University of California, if they elect to do so, may implement a three-year program, the "California Marijuana Research Program", under which funds would be provided for studies intended to ascertain the general medical safety and efficacy of cannabis and, if found valuable, to develop medical guidelines for the appropriate administration and use of cannabis. f) Proposition 215, of the November 1996 General Election, prohibits prosecution for the possession and cultivation of cannabis by a patient or a patient's primary caregiver with a physician's written or oral recommendation or approval. REGISTERED SUPPORT / OPPOSITION : Support American Federation of State, County and Municipal Employees (AFSCME), AFL-CIO Americans for Safe Access California NORML (National Organization for the Reform of AB 2312 Page 21 Marijuana Laws) Drug Policy Alliance Legal Services for Prisoners with Children United Food & Commerical Workers Western States Council Opposition California District Attorneys Association California Narcotic Officers Association California Police Chiefs Association California State Sheriffs' Association California Taxpayers Association International Faith Based Coalition Analysis Prepared by : Jesse Stout / PUB. S. / (916) 319-3744