BILL NUMBER: SB 847 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Correa
FEBRUARY 18, 2011
An act to add Division 8.9 (commencing with Section 22992.10) to
the Business and Professions Code, relating to cannabis, and making
an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
SB 847, as introduced, Correa. Medical Cannabis Licensing Act.
Existing law, the Compassionate Use Act of 1996, an initiative
measure, prohibits prosecution, pursuant to provisions of law
relating to the possession or cultivation of marijuana, of a patient
or a patient's primary caregiver who possesses or cultivates
marijuana for the personal medical purposes of the patient upon the
written or oral recommendation or approval of a physician.
This bill would establish the Medical Cannabis Licensing Act, to
require a producer, distributor, or seller to be licensed by the
State Department of Public Health to engage in the production,
distribution, or sale of medical marijuana, and would require the
license to be renewed every 12 months. This bill would require an
applicant for a license to provide specified information. This bill
would require establishment of an indicia program, to be administered
by the State Board of Equalization, to require traceable, secure
indicia of licensure to be placed on medical marijuana, would require
establishment of a product testing program and a facilities
inspection program administered by the department, and would
authorize assessment of related fees.
This bill would require all moneys collected to be deposited in
the Medical Cannabis Licensing Fund, which would be created in the
State Treasury, and would, except for moneys derived from penalties,
continuously appropriate moneys in the fund solely for the purpose of
implementing, enforcing, and administering the licensing program.
Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Division 8.9 (commencing with Section 22992.10) is
added to the Business and Professions Code, to read:
DIVISION 8.9. MEDICAL CANNABIS LICENSING ACT
CHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS
22992.10. (a) This division shall be known, and may be cited, as
the Medical Cannabis Licensing Act.
(b) The Legislature finds and declares all of the following:
(1) The people enacted the Compassionate Use Act to, in part,
ensure that seriously ill Californians have the right to obtain and
use marijuana for medical purposes where that medical use is deemed
appropriate and has been recommended by a physician, and to provide
related immunities from prosecution for patients, primary caregivers,
and physicians.
(2) However, the lack of an adequate regulatory structure for the
production, distribution, and sale of medical marijuana presents
California with many serious problems, including, but not limited to,
all of the following:
(A) Problems relating to the inability to ensure that the product
is not contaminated with pesticides or other dangerous chemicals.
(B) Problems relating to the security of the cultivation,
packaging, and retail facilities.
(C) Problems relating to the inability to ensure that medical
marijuana product is not diverted for nonmedical uses.
(D) Problems relating to the inability to prevent the introduction
of unauthorized product.
(3) Subsequent legislation, the Medical Marijuana Program,
provided some solutions by establishing a voluntary program for the
issuance of identification cards for persons authorized under the
Compassionate Use Act to protect them from arrest for cultivation or
possession of medical marijuana. However, the program was only a
partial solution.
(4) In enacting the Compassionate Use Act, the people encouraged
state government "to implement a plan to provide for the safe and
affordable distribution of marijuana to all patients in medical need
of marijuana."
(5) By enacting this division the Legislature accepts that
invitation and challenge, and seeks to provide a complete,
functional, licensing scheme that would permit the secure production,
distribution, and sale of uncontaminated and affordable medical
marijuana to meet the needs of eligible patients under the
Compassionate Use Act and the Medical Marijuana Program.
22992.15. For purposes of this division, the following terms have
the following meanings:
(a) "Department" means the State Department of Public Health.
(b) "Board" means the State Board of Equalization.
(c) "Cannabis" or "marijuana" means all parts of the plant
Cannabis sativa L., whether growing or not; the seeds thereof; the
resin extracted from any part of the plant; and every compound,
manufacture, salt, derivative, mixture, or preparation of the plant,
its seeds, or resin. "Cannabis" or "marijuana" does not include the
mature stalks of the plant, fiber produced from the stalks, oil or
cake made from the seeds of the plant, any other compound,
manufacture, salt, derivative, mixture, or preparation of the mature
stalks (except the resin extracted therefrom), fiber, oil, or cake,
or the sterilized seed of the plant which is incapable of
germination.
(d) "Fund" means the Medical Cannabis Licensing Fund established
in subdivision (a) of Section 22993.10.
(e) "Account" means the Medical Cannabis Enforcement Penalties
Account established in subdivision (b) of Section 22993.10.
(f) "License" means a license issued by the department pursuant to
this division.
(g) "Licensee" means any person holding a license issued by the
department pursuant to this division.
(h) "Medical marijuana" or "medical cannabis" means marijuana that
is authorized under Section 11362.5 of the Health and Safety Code or
regulated under the Medical Marijuana Program.
(i) "Medical Marijuana Program" means Article 2.5 (commencing with
Section 11362.7) of Chapter 6 of Division 10 of the Health and
Safety Code.
(j) "Person" means a person as defined in Section 30010 of the
Revenue and Taxation Code.
(k) "Compassionate Use Act" means the Compassionate Use Act of
1996 (Section 11362.5 of the Health and Safety Code) enacted by
initiative measure (Proposition 215) approved by the voters at the
November 5, 1996, general election.
(l) "Primary caregiver" means a person designated by a medical
marijuana patient as his or her primary caregiver under the
Compassionate Use Act.
(m) "Sale," "sell," or "sold" includes any transfer of title or
possession for consideration, barter, or exchange, by any manner or
by any means.
(n) "Seller" means any person making a sale of medical marijuana
in this state.
(o) "Cultivator" means any person cultivating medical marijuana
for sale in this state.
(p) "Distributor" means any person distributing medical marijuana
for sale in this state.
(q) "Producer" means a person cultivating medical marijuana or
packaging it, or both, for sale in this state.
(r) "Indicia" means a mark, sign, stamp, or other evidence of
issuance of a license and payment of applicable fees, as required by
this division.
22992.20. (a) The State Department of Public Health shall
administer this division to establish a statewide program to license
producers, distributors, and sellers of medical cannabis. The
department may adopt and enforce regulations relating to the
administration and enforcement of this division.
(b) No person is subject to the requirements of this division if
that person is exempt from regulation under the United States
Constitution, the laws of the United States, or the California
Constitution.
(c) This division does not apply to activities of a patient under
the Compassionate Use Act who cultivates and uses medical marijuana
exclusively for his or her own personal medical use, as provided for
in the Compassionate Use Act.
CHAPTER 2. LICENSE FOR PRODUCERS, DISTRIBUTORS, AND SELLERS OF
MEDICAL CANNABIS
22992.25. (a) Commencing on the effective date of licensing
regulations adopted by the department relating to the production,
distribution, and sale of medical cannabis pursuant to this division,
a person that produces, distributes, or sells medical marijuana
shall have in place and maintain a license to engage in the
production, distribution, or sale, as appropriate, of medical
cannabis pursuant to this division.
(b) A license is not assignable or transferable. A person that
obtains a license, that ceases to produce, distribute, or sell as
specified in the license, or that never commenced those activities
and decides not to do so, or whose license is suspended or revoked,
shall immediately surrender the license to the department.
(c) A license shall be valid for a 12-month period, and shall be
renewed annually.
22992.30. (a) An application for a license shall be filed on a
form prescribed by the department and shall include all of the
following:
(1) The name, address, and telephone number of the applicant.
(2) The signature of the applicant.
(3) A description of the manner in which the person is authorized
to possess, cultivate, or provide medical marijuana pursuant to the
Compassionate Use Act or the Medical Marijuana Program, or both. This
may include a requirement that the applicant provide copies of
written designations, designating the applicant as primary caregiver,
executed by medical marijuana patients under the Compassionate Use
Act.
(4) A list of all prospective employees, their identifying
information, and a description of their duties.
(5) Any other information the department may require.
(b) The department shall investigate to determine the truthfulness
and completeness of the information provided in the application, and
shall include these costs within the application fee. The department
may deny an application if the applicant knowingly made a false
statement of fact required to be revealed in the license application.
(c) The applicant and each prospective employee shall submit to a
criminal background check conducted by the Department of Justice. The
cost of this background check shall be paid by the applicant.
(d) The department shall provide electronic means for applicants
to download and submit applications.
22992.35. The department may deny the application for licensure
if the application is incomplete or if the department finds that the
applicant has not demonstrated, to the satisfaction of the
department, that the applicant will comply with the requirements of
this division, including, but not limited to, the rules and
regulations of the department and the board.
22992.40. (a) An initial license fee, not to exceed ____ dollars
($____), shall be submitted with each application.
(b) A fee, not to exceed ____ dollars ($____), shall be submitted
for each application for the annual renewal of a license.
(c) If a license is reinstated after its expiration, the licensee,
as a condition precedent to its reinstatement, shall pay a
reinstatement fee not to exceed ____ dollars ($____).
CHAPTER 3. MEDICAL CANNABIS LICENSING INDICIA PROGRAM
22992.45. (a) The board shall administer the indicia program
pursuant to this chapter.
(b) The board, in consultation with the department, shall design a
system requiring the use of indicia upon all medical marijuana using
reasonably available technology to facilitate all of the following
related to the production, distribution, and sale of medical
marijuana pursuant to a license under this division:
(1) Secure production, distribution, and sale of uncontaminated
and affordable medical marijuana product.
(2) Effective enforcement of applicable state laws.
(3) Effective tracking and tracing of medical marijuana products.
(4) Field auditing and inspections.
(5) Elimination and apprehension of counterfeit marijuana product
and indicia.
(6) Collection of all applicable fees for the purposes of this
division.
(7) Prevention of marijuana sales that are not authorized under
this division, the Compassionate Use Act, or the Medical Marijuana
Program.
(c) The board shall design, develop, and produce, or may procure,
indicia meeting the requirements of this chapter of designs and
denominations, as determined by the board, that are suitable to be
affixed to product in bulk during production, and affixed to
standardized retail medical marijuana packages for distribution and
sale.
(d) The board, in consultation with the department, shall adopt
regulations to determine the standardized design and size of the
package, and location of the indicia.
22992.50. (a) Commencing on the effective date of the regulations
adopted by the board pursuant to this chapter, no licensee shall
engage in the production, distribution, or sale of medical marijuana
pursuant to this division without complying with this chapter.
(b) The regulations shall provide for the distribution of the
indicia to licensees for placement on all medical marijuana produced,
distributed, and sold in this state, and shall establish the indicia
fee to be paid by the licensee, not to exceed ____ dollars ($____)
per indicium for bulk product in production, and not to exceed ____
dollars ($____) per indicium for standardized retail medical
marijuana packages for distribution and sale.
(c) The fee imposed and levied pursuant to this section shall be
paid, and the indicia shall be used, in a manner determined by
regulations adopted by the board. The indicia fee shall not exceed
the cost of administering and enforcing the indicia component of this
division including, but not limited to, all administrative costs of
the board and the department.
22992.55. (a) The indicia shall have tracking and tracing
capabilities utilizing high-security encrypted coding, similar to
that in use on tobacco commercialized in California, to reasonably
ensure and monitor that all medical marijuana produced, distributed,
and sold in California is in compliance with applicable law.
(b) The indicia shall be secure, counterfeit resistant, and
encrypted with certain information to identify, at a minimum, all of
the following:
(1) The name and address of the party affixing the indicia to the
final units of sale.
(2) The date the indicia are affixed to the final units of sale.
(3) The denominated value of the indicia.
(c) The indicia shall be readable and traceable from the point of
production to the point of sale and shall be readable by a scanner or
similar device that may be utilized by the department, the board, or
licensed medical marijuana product producers, distributors, sellers,
and others, as determined by regulations adopted by the board.
(d) The indicia shall be produced in a secure facility certified
in accordance with accepted industry security assistance standards,
shall incorporate overt, semicovert, and covert data, and shall
capture encrypted data in real time. The encrypted data collected
shall be provided by producers, distributors, and sellers, and shall
be retained by the state in a secure data collection, management, and
decision support system.
(e) Only parties approved by the regulations of the board shall
affix and cancel the indicia. The regulations shall not authorize any
person to sell indicia except duly constituted agents and assistants
of the board or the department.
(f) Licensees shall maintain records in regard to medical
marijuana products and the associated indicia, as prescribed by the
board, in consultation with the department, and those records shall
be available to the department and the board for inspection and
audit.
CHAPTER 4. MEDICAL CANNABIS PRODUCT SAFETY INSPECTION
22992.60. (a) In order to ensure patient safety, the department
shall establish a program of medical marijuana testing with the goal
of ensuring that medical marijuana distributed under the
Compassionate Use Act is free from contamination and not otherwise
adulterated.
(b) The program shall take random, periodic, and focused samples
of product from producers, distributors, and sellers for the purposes
of conducting laboratory testing of the product to ensure that the
product is not contaminated by pesticides or other dangerous
chemicals, or otherwise adulterated.
(c) The department shall pay the producer, distributor, and seller
for samples taken pursuant to this chapter in a manner established
by regulations of the department. Moneys in the fund may be used for
this purpose.
22992.65. The department shall, in consultation with the
California State Board of Pharmacy, establish a facilities inspection
program to inspect licensee cultivation, packaging, distribution,
and retail facilities to ensure hygienic conditions and product
safety.
22992.70. (a) The department shall establish a product testing
and facilities inspection fee not to exceed ____ dollars ($____) to
be assessed to producers, distributors, and sellers of medical
marijuana, and to be collected as a component of the annual licensing
fee. The fees shall be deposited into the fund. The total fee
pursuant to this chapter shall not exceed the costs of the sampling,
testing, and inspection program, including, but not limited to, all
costs of administration, including, but not limited to, the costs of
the California State Board of Pharmacy.
(b) The department may directly perform, or may contract with a
private or public entity for performance of, its product sampling,
laboratory testing, and facilities inspection duties pursuant to this
chapter.
CHAPTER 5. MEDICAL CANNABIS FACILITIES SECURITY
22992.75. (a) The department, in consultation with the Attorney
General, shall establish a medical cannabis facilities security
program.
(b) The program shall have as a primary goal to ensure that
licensee facilities meet all of the following requirements:
(1) They do not become magnets for increased violence or theft
because of the cannabis located therein.
(2) They adopt and follow stringent internal safeguards to ensure
security of the medical marijuana product and the facilities.
(3) They are not located in inappropriate community settings where
traffic safety, incompatible land use, proximity to schools, and
other safety issues are raised.
22992.80. (a) The department shall establish facility security
standards applicable to all licensed facilities, and shall conduct a
security inspection of all licensed facilities to ensure compliance.
The facilities security inspections may be combined with the product
safety inspections conducted under Chapter 4 (commencing with Section
22992.60).
(b) If a licensed facility experiences extraordinary security
breaches, in number or severity, the department may order the
licensee to enhance the security for that facility, including, but
not limited to, upgrading electronic or other security systems or
hiring additional security personnel.
22992.85. (a) Within five business days, a licensee shall notify
the department and the board of any employee who no longer is
employed by the licensee, and any other personnel changes, as
determined by the regulations of the department or board.
(b) The names and other identifying information of all prospective
new employees shall be provided to the department for a criminal
background check and approval prior to commencing their employment.
22992.90. (a) The department shall establish an advisory
committee comprised of local health officers, land use officials, and
law enforcement officers to discuss local facility security and
related land use issues, and to assist committee members in resolving
their local facility security and related land use problems.
(b) The department may provide annual grants to cities, counties,
or cities and counties for the establishment of increased local
security measures that are directly related to assisting the effort
to ensure the security of licensed facilities. The grants shall be
made from moneys in the fund, and shall not exceed an annual
statewide total of _____dollars ($____).
(c) The department shall assess an annual fee to each licensee not
to exceed the cost to the department, including, but not limited to,
the costs of the Attorney General and the committee, of implementing
this chapter. The fee shall be assessed as a component of the
license or renewal fee.
CHAPTER 6. FISCAL PROVISIONS: MEDICAL CANNABIS LICENSING FUND
22993.10. (a) All moneys collected pursuant to this division
shall be deposited in the Medical Cannabis Licensing Fund, which is
hereby established within the State Treasury.
(b) There is hereby established the Medical Cannabis Enforcement
Penalties Account within the fund, to receive the penalty amounts
collected pursuant to 22993.40.
(c) Notwithstanding Section 16305.7 of the Government Code, the
fund shall also include any interest and dividends earned on money in
the fund.
(d) Notwithstanding Section 13340 of the Government Code, all
moneys in the fund, except for moneys in the Medical Cannabis
Enforcement Penalties Account, are hereby continuously appropriated,
without regard to fiscal year, to the department solely for the
purpose of fully funding all costs associated with implementing,
enforcing, and administering this division with respect to the
purpose for which those moneys were collected.
(e) Moneys in the Medical Cannabis Enforcement Penalties Account
shall be available, upon appropriation by the Legislature, for the
purposes of this division.
(f) The department and the board shall enter into an interagency
agreement relating to the allocation of moneys in the fund from the
department to the board for costs incurred in the performance of the
board's duties under this division.
22993.15. (a) The setting of fees pursuant to this division is
exempt from the rulemaking provisions of the Administrative Procedure
Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code).
(b) All maximum fee levels pursuant to this division shall be
adjusted to reflect annual increases, if any, in the California
Consumer Price Index, as recorded by the California Department of
Industrial Relations for the most recent year available.
(c) The total fees collected pursuant to this division, exclusive
of any penalties, shall not exceed the total costs of implementing
this division.
CHAPTER 7. MEDICAL CANNABIS LICENSING ENFORCEMENT AND
IMMUNITIES
22993.20. (a) The department, the board, and their authorized
agents shall be the sole agencies for the enforcement of this
division and regulation of activity authorized pursuant to this
division.
(b) A licensee in good standing performing any activities related
to the cultivation, packaging, distribution, or sale of medical
marijuana within the scope of the license pursuant to this division
shall be subject only to the enforcement provisions of this division,
and shall be immune from arrest or prosecution for violation of
Section 11357, 11358, 11359, or 11360 of the Health and Safety Code,
or any other provision of law related to the possession, cultivation,
packaging, distribution, or sale of marijuana.
22993.25. (a) If a licensee fails to comply with this division or
any rule or regulation of the department or the board adopted under
this division, the department, in consultation with the board, as
appropriate, upon hearing, after giving the licensee at least 10 days'
notice in writing specifying the time and place of hearing and
requiring the licensee to show cause why the license should not be
suspended or revoked, may suspend or revoke the license.
(b) The notice may be served personally or by United States mail,
postage prepaid, to the licensee at the licensee's last known address
or place of business in this state.
(c) The department shall not restore a suspended license, or issue
a new license to a person whose license has been revoked, unless the
department is satisfied that the person has made a satisfactory good
faith showing that the person will comply with this division,
including, but not limited to, the rules and regulations of the
department and the board.
22993.30. (a) Except as set forth in subdivision (c), the
immunities set forth in this chapter apply only to activities of a
licensee in good standing that are within the scope of the license.
(b) The immunities set forth in this chapter do not apply to
activities that are knowingly beyond the scope of the license, or
that occur while the license is suspended or revoked.
(c) (1) If a license is suspended, the order suspending the
license shall specify the conduct, including, but not limited to,
possession of the product in secure facilities, that remains subject
to the immunities set forth in this chapter, pending resolution of
the issues upon which the suspension is based.
(2) If the license is revoked, the order revoking the license
shall specify the manner in which the former licensee shall dispose
of the product and close down its operations.
(3) Activities authorized under an order suspending or revoking a
license are protected by the immunities set forth in this chapter.
22993. 35. (a) If, upon inspection of the licensee's facilities,
or after laboratory testing of the sample product, the department
determines that there is cause to believe that either conditions
relating to production, or conditions at the facilities, or
adulteration or contamination of the product, present a risk of harm
to patients, the department shall so notify the licensee.
(b) The department shall require that the licensee take immediate
steps to protect patients. The department shall also require the
licensee to develop and, after approval by the department, implement
an immediate plan of correction designed to resolve, within 30 days,
the problems that are the underlying cause of the risk of harm.
(c) The department shall establish a focused inspection or product
testing schedule to ensure compliance with the plan.
(d) Pending full and satisfactory implementation of a plan of
correction, the department may temporarily suspend the license
pursuant to this section if any of the following apply:
(1) The nature of the public health risk warrants a suspension
until the problem is corrected.
(2) Implementing the plan of correction would require more than 30
days.
(3) The correction plan proposed by the licensee is not approved
because it does not propose a satisfactory solution.
(4) The problem is a recurring problem with the licensee.
(e) The licensee shall reimburse the department for the costs of
implementing this section. These fees shall be collected at the time
of approval of the correction plan. All costs reimbursed pursuant to
this subdivision shall be deposited into the fund.
22993.40. (a) The department may assess a civil penalty in an
amount not to exceed ____ dollars ($____) per violation against any
licensee for knowing or willful failure to comply with any provision
of this division, including, but not limited to, any regulation
adopted by the department or the board pursuant to this division. The
penalty shall be in addition to any other enforcement provisions or
remedies that may apply.
(b) The penalties received pursuant to this section shall be
deposited into the Medical Cannabis Enforcement Penalties Account.