BILL ANALYSIS Ó
AB 2312
Page 1
ASSEMBLY THIRD READING
AB 2312 (Ammiano)
As Amended May 25, 2012
Majority vote
PUBLIC SAFETY 4-2 APPROPRIATIONS 9-5
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|Ayes:|Ammiano, Cedillo, |Ayes:|Fuentes, Bradford, |
| |Mitchell, Skinner | |Charles Calderon, Campos, |
| | | |Davis, Ammiano, Hill, |
| | | |Lara, Mitchell |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Knight, Hagman |Nays:|Harkey, Donnelly, Gatto, |
| | | |Nielsen, Wagner |
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SUMMARY : Authorizes local taxes on medical cannabis up to 5%.
Creates a nine-member Board of Medical Marijuana Enforcement
(BMME) to regulate the medical cannabis industry and to 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;
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d) To establish the BMME to be located within the
Department of Consumer Affairs (DCA) 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
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 establish a statewide registration process to
identify for law enforcement which individuals and entities
are exempt from state law criminal penalties; and,
h) 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
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of an entity formed pursuant to these provisions regardless of
whether those members contribute to any of the activities of
the entity, and regardless of whether the statewide
registration procedure is being implemented.
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
the provisions of this bill.
7)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,
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structure, or location where medical marijuana is grown,
processed, stored, manufactured, tested, or sold, other
than a location or building where medical marijuana is
grown by a patient or his or her primary caregiver for the
patient's personal use and not for sale;
i) "Medical marijuana industry union" is a labor union
which has at its core retail, agriculture, food and
processing, or textiles, and whose members work in the
medical marijuana industry; and,
j) "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.
8)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.
9)Requires a medical marijuana facility to operate in accordance
with this article. Individual patients and caregivers
cultivating marijuana at their private residences for the
patient's use who do not sell or charge for the cultivation of
marijuana are not considered medical marijuana facilities, and
are exempt from mandatory registration.
10)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.
11)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:
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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 lawfully enacted by
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 BMME supported by evidence adduced during at
least one public hearing that medical marijuana is
reasonably available to its residents by other means; and,
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. Persons
found to not be in good standing shall not automatically be
deemed successful mandatory registrants for purposes of
this bill.
12)States that if a city or county does not enact a medical
marijuana dispensary zoning ordinance, medical marijuana
dispensaries and facilities in that jurisdiction shall be
wholly regulated by the BMME pursuant to this article, and
medical marijuana dispensaries and facilities 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.
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13)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."
14)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.
15)Requires the governing body of the BMME to consist of the
following nine members: two licensed physician having
experience with clinical applications of medical marijuana
appointed by the Governor, one full-time peace officer
appointed by the Governor, one 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, one
qualified medical marijuana patient appointed by the Senate
Rules Committee, and one representative from a medical
marijuana industry union appointed by the Speaker of the
Assembly.
16)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.
17)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.
18)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.
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19)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.
20)States that the terms of the members of the governing body of
the BMME shall be three calendar years, beginning on January 1
of the year of appointment. The terms shall be staggered as
specified, and 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. Each member shall be paid $100 per
day, plus travel, lodging, and meal expenses which are
incurred for attending BMME meetings or in conducting BMME
business.
21)Requires the BMME to perform all of the following:
a) Beginning on September 1, 2013, 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) Take any reasonable action with respect to a mandatory
registration application;
d) Impose penalties authorized by this article or by any
rule or regulation promulgated pursuant to this article;
e) 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,
beginning on July 1, 2013;
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f) Hold public hearings to hear and decide any appeals from
denials of a mandatory registration application, and any
complaints against a registered person;
g) 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.;
h) 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
(HIPAA), 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.);
i) Develop any necessary forms, identification cards, and
applications for the administration of this article or any
of the rules or regulations promulgated pursuant it;
j) Develop zoning standards that shall be applicable if a
city or county does not enact a medical marijuana
dispensary zoning ordinance, beginning on July 1, 2013;
aa) Oversee operation of the Medical Marijuana Fund; and,
bb) Establish reasonable 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 particular registrant.
22)Requires the regulations to be promulgated by the BMME to be
reasonable and to include:
a) Procedures and grounds for issuing, renewing, denying,
suspending, issuing fines in connection with, restricting,
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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;
aa) Establishment of a committee to advise the Legislature
on the rescheduling of marijuana under federal law and the
California Health and Safety Code; and,
bb) Any other regulations in furtherance of this article.
23)States that the BMME is not authorized to set prices for
medical marijuana.
24)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
dividends earned on the money in the fund.
25)Establishes the Medical Marijuana Enforcement Penalty Account
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(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.
26)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.
27)Requires the BMME to reimburse the DCA for administrative
expenses.
28)States that the BMME is subject to all applicable provisions
of Division 1 of the Business and Professions Code.
29)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.
30)Allows the Executive Director, with the vote of a majority of
the BMME members, to bring an action to enjoin a violation or
threatened violation of any provision of this bill in the
county of the violation.
31)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.
32)Authorizes the BMME to establish various classes or types of
registrations for specific medical marijuana-related
activities.
33)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
registration, fails to meet the requirements of this bill
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or any regulation promulgated pursuant it;
b) An applicant or any of its officers or directors is
under 21 years of age;
c) An applicant 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.
34)Mandates the BMME to make mandatory registration applications
available by July 1, 2013.
35)Requires the BMME to thoroughly investigate to determine
whether the applicant or the premises meets specified
criteria.
36)Requires the BMME to deny an application for registration if
either the applicant or the premises do not meet the specified
eligibility criteria.
37)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.
38)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.
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39)Provides that approved registrations are valid for a period
not to exceed two years unless suspended or revoked.
40)Requires the BMME to notify a registrant 90 days before a
registration's expiration by first class mail.
41)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.
42)Requires the BMME to act on timely renewal applications at
least 10 days prior to expiration.
43)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.
44)Provides that if at any time after July 1, 2013, the BMME has
not formed, is not accepting applications for mandatory
registration, or is not granting mandatory registrations in
response to valid applications, then a medical marijuana
facility or dispensary operating in compliance with applicable
city or county ordinances may continue to do so without a
mandatory registration.
45)States that a person whose registration application has been
approved, and its agents, officers, directors, and employees
acting on its behalf, 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.
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48)Prohibits penalizing under state law any financial
institution which provides lending services to persons whose
mandatory registration applications have been approved,
secures loans to those persons, or owns, possesses, or sells
medical cannabis or warehouse receipts as security for an
obligation or as a result of enforcement of a security
interest.
49)Authorizes county board of supervisors to levy, increase, or
extend one or more transactions and use taxes on medical
marijuana or medical marijuana-infused products, if approved
by two-thirds of the members of the board of supervisors and
by a majority of the voters of that county. Provides that the
combined rate of all taxes imposed in any county pursuant to
this bill shall not exceed the combined rate of 5%.
50)Authorizes governing bodies of cities to levy, increase, or
extend a transaction and use tax, 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 2%.
51)Provides that, notwithstanding the "combined tax rate
provision" of the Revenue and Taxation Code, the tax rate
authorized by this bill will not be considered for the
combined tax rate.
52)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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee,
1)One-time startup and ongoing administrative costs, likely in
the hundreds of thousands of dollars, to the Board of
Equalization (BOE), potentially in excess of revenues.
BOE would incur one-time costs related to the startup of a new
tax program, in addition to ongoing costs to administer the
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program. As BOE notes, one-time start-up costs will be the
same, regardless how many cities or counties levy the tax.
Therefore, if only a few cities or counties impose the tax,
BOE administrative costs would be paid from a smaller revenue
base that may prove insufficient to cover administrative
costs, which creates General Fund pressure to cover the
difference.
2)Significant annual costs, likely in the millions of dollars,
to support a nine-member BMME within DCA to regulate the
medical marijuana industry. It is not clear these costs
would be covered by the application fees created by this bill,
as the BMME will be created regardless of the number of
applications.
For purposes of comparison, DCA administers 23 boards, such as
the 8-Personnel Years (PY), $2.8 million Acupuncture Board;
the 14-PY, $3.3 million Physical Therapy Board; and, the
12-PY, $2.8 million Veterinary Medical Board. Given the
detailed charges of the proposed BMME, however, the costs may
be more comparable to the 58-PY, $11.6 million 7-member Horse
Racing Board, charged with protecting the public's interests,
licensing racing associations and participants, enforcing
rules and regulations, acting as a quasi-judicial body, and
collecting revenues.
This bill would establish unspecified registration application
fees, assessed on a sliding scale to "reflect the projected
revenue of the particular registrant," to "reflect the direct
and indirect costs of the board." This bill would also
authorize fines of up to $25,000 for operating a medical
marijuana facility without the appropriate registration. The
costs of the BMME would require significant application
renewal fees and fines. For purpose of illustration, the
average fee to cover the cost of an $11 million board, if
there were 1,500 annual applications and renewals, would be
about $7,500.
3)This bill creates a continuous appropriation from the Medical
Marijuana Fund (created by this bill) for purposes of
supporting the BMME. Continuous appropriations are contrary
to the general practice of the Legislature, which prefers
annual budget review of expenditures.
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4)Moderate local revenue increase, potentially in the millions
of dollars, from an unspecified Transactions and Use Tax (TUT)
increase of up to 5% per county. Based on a 2009 BOE estimate
that the potential sales and use tax on marijuana would be
about $400 million, based on a 9% rate (6% state, 2% local,
0.75% special district, and 0.25% for fiscal recovery fund),
if 20% of the taxable sales amount was medicinal marijuana,
and if one-half of the state's counties, representing 50% of
the state's population, levied an average 4% TUT, the local
revenue increase would be in the range of $28 million.
5)Unknown, nonreimbursable local election costs to the extent
cities and counties opt to hold elections on proposed tax
increases. Unconsolidated elections generally cost in the
hundreds of thousands of dollars, depending on the
jurisdiction.
6)Unknown, minor local savings from prohibiting local law
enforcement from spending any funds to assist federal law
enforcement in enforcing marijuana prohibitions.
COMMENTS : According to the author, "Just over 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 many 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
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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 2312 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 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."
Please see the policy committee analysis for a full discussion
of this bill.
Analysis Prepared by : Sandy Uribe / PUB. S. / (916) 319-3744
FN: 0003898