BILL ANALYSIS Ó
AB 473
Page 1
Date of Hearing: May 15, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 473 (Ammiano) - As Amended: April 15, 2013
Policy Committee: Public
SafetyVote: 5-2
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill creates the Division of Medical Marijuana Regulation
and Enforcement within the Department of Alcoholic Beverage
Control (ABC) to regulate cultivation, manufacture, testing,
transportation, distribution, and sale of medical marijuana.
FISCAL EFFECT
1)Significant annual costs, potentially in the range of $15
million, to create the Division of Medical Marijuana
Regulation and Enforcement within the ABC to regulate the
medical marijuana industry. It is not clear these costs would
be fully covered by the registration fees authorized by this
bill, as the division will be created regardless of the number
of applications. It is also not clear from what source the
division would fund what would be significant start-up costs
for the division.
The entire budget of the ABC is $57 million, with 428
positions. The ABC is charged with licensing and regulating
persons and businesses engaged in the manufacture, importation
and distribution of alcoholic beverages in, and with
administering the provisions of the ABC Act to protect the
health, safety, welfare and economic well-being of the state.
In addition to the ABC, there is also the ABC Appeals Board,
with eight positions and a $1 million budget.
Based on funding and staffing levels of the ABC and the
Appeals Board, and considering the significant start-up costs
of any new entity (adoption of regulations and fee schedules,
office equipment and expenses, etc), it seems reasonable to
AB 473
Page 2
assume the costs of providing statewide regulation of the
cultivation, manufacture, testing, transportation,
distribution, and sale of medical marijuana, along with
associated hearings, appeals and litigation, would at least be
in the range of one-quarter of the ABC budget.
2)This bill would establish unspecified registration application
fees. The costs of creating and maintaining the division, as
specified, within the ABC would require significant
application fees and fines. For purpose of illustration, the
average fee to cover the cost of a $15 million entity, if
there were 2,000 annual applications, would be about $7,500
per application.
Given the current legal environment surrounding medical
marijuana, with the California Supreme Court ruling last week
that local governments can ban medical marijuana production
and distribution, and given the federal government's interest
in shutting down dispensaries, will there be a sufficient
number of applications and penalties to fully fund the
division?
3)This bill creates a continuous appropriation from the Medical
Marijuana Fees Account created by this bill to support the
division. Continuous appropriations are contrary to the
general practice of this committee, which prefers annual
budget review of expenditures.
4)Unknown, minor local savings from prohibiting the expenditure
of state or local funds to assist federal law enforcement in
enforcing marijuana prohibitions.
SUMMARY CONTINUED
1)Creates the Division of Medical Marijuana Regulation
(division) in the ABC charged with:
a) Establishing statewide standards for the cultivation,
manufacturing, testing, transportation, distribution, and
sales of medical marijuana.
b) Establishing a schedule of fees for the cultivation,
manufacture, testing, transportation, distribution, and
sale of medical marijuana and medical marijuana products.
AB 473
Page 3
c) Approving or denying registration applications for
cultivation, manufacturing, testing, labeling,
transportation, distribution, and sale of medical
marijuana.
d) Suspending, fining, restricting, or revoking commercial
registration upon a violation of a rule or regulation
adopted by the division.
e) Imposing penalties.
f) Hearing and determining, at a public hearing, any
appeals of application denials and any complaints against a
mandatory commercial registrant.
g) Identifying successful regulatory structures for the
purpose of supporting cities and counties in appropriately
governing activities related to medical marijuana.
2)Creates the Medical Marijuana Fund within the State Treasury.
All fees collected pursuant to this regulatory scheme shall be
deposited into the Medical Marijuana Fees Account within the
Fund, and are continuously appropriated to fund this chapter.
Any penalties are deposited into the Medical Marijuana
Penalties Account, which requires an appropriation.
3)Requires, by July 1, 2014, the division to establish a
mandatory commercial registration program and a fee structure
for the cultivation, manufacture, testing, transportation,
distribution, and sale of medical marijuana.
4)Requires a commercial registration application must be
approved absent any of the following:
a) The applicant fails to meet the established requirements
and/or is under 21.
b) The applicant has knowingly provided false information.
c) The applicant, or any officers or directors, has been
convicted in the past five years of a serious or violent
felony, or any felony the division contends would impair
the applicant's ability to appropriately operate medical
marijuana-related efforts.
d) The applicant is a physician making medical marijuana
patient recommendations.
e) The applicant, or any officers or directors, has been
AB 473
Page 4
sanctioned by the division for operating unregistered
commercial medical marijuana activities.
5)Requires an application for commercial registration to include
all of the following:
a) A plan for testing, to assure conformance with required
labeling and quality assurance.
b) A plan to address security for the premises where
marijuana cultivation, manufacturing, testing,
distribution, or sales will occur.
c) A plan for conformance with local zoning requirements.
d) Protocols to prevent the unlawful diversion of
marijuana.
6)Allows the division to approve cultivation registration only
in conjunction with the city or county land use authority, and
with relevant state and federal environmental impact laws and
regulations, including clear-cutting, road building, water
diversion, and use of chemicals.
7)Exempts commercial registrants from arrest, prosecution, or
sanctions, as specified.
8)Exempts individual patients and caregivers cultivating
marijuana at their private residences, who do not sell or
charge for marijuana, from mandatory commercial registration.
9)Allows a facility operating in conformance with local zoning
requirements to continue operating until its registration
application is approved or denied.
10)Requires the division to work with law enforcement entities
throughout California to implement and enforce rules and
regulations regarding medical marijuana.
11)Specifies nothing in this chapter prevents a city or county,
or city from enforcing a local zoning ordinance or law of
general application.
12)Makes it a misdemeanor, effective January 1, 2015, for any
person, except a mandatory commercial registrant, to offer for
sale any product containing marijuana, or to operate any
facility where medical marijuana is grown or sold, other than
a place where a patient or primary caregiver, is growing
AB 473
Page 5
marijuana exclusively for patient use and not for sale, or to
steal or fraudulently use a registrant's identification card or
status to acquire, cultivate, transport, use, or distribute
marijuana.
13)Subjects a person operating an unregistered medical marijuana
facility to civil penalties of up to $25,000.
14)Authorizes the division to destroy any marijuana being
cultivated, manufactured, or possessed in violation of this
chapter.
15)Prohibits state or local officials from spending funds to
assist federal authorities in enforcing federal marijuana
prohibitions with regard to activities carried out by
commercial registrants in compliance with these provisions.
Nothing in this chapter shall be construed to limit law
enforcement's ability to investigate unlawful activity in
relation to a commercial registrant.
COMMENTS
1)Rationale . The author's intent is to create statewide
regulation and a model to resolve the considerable confusion
and controversy in cities and counties where elected officials
have expressed contradictory opinions about the legality of
activities related to medical marijuana. The author states
that it is not his intention to preempt local ordinances.
2)Current Law . In 1996, California voters passed Prop 215, the
Compassionate Use Act (CUA), which prohibits prosecution for
growing or using marijuana if a person has an oral or written
recommendation of a physician.
a) In 2003, SB 420 (Vasconcellos, Statutes of 2003), the
Medical Marijuana Program Act (MMP), created a voluntary
identification card that patients and caregivers could
obtain to protect them from arrest, and limited the amount
of marijuana that could be legally grown and possessed.
b) In 2005, the U.S. Supreme Court ruled in Gonzales v.
Raich (2005) that the federal government can enforce
marijuana prohibitions despite state medical marijuana law.
AB 473
Page 6
c) In 2010, the California Supreme Court ruled in People v.
Kelly that the MMP section limiting quantities of cannabis
is unconstitutional because it amends a voter initiative.
3)This bill will not/cannot clear the confusion and disagreement
between federal, state and local governments . The possession
and sale of marijuana is a crime under federal law, and
federal law preempts state law. In addition, the California
Supreme Court has granted review
in several cases related to the rights of medical marijuana
patients and dispensaries.
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, however, remain
liable to 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. Some
localities have passed ordinances that have been overturned by
the courts (Los Angeles), others have been upheld (Riverside).
4)Last week, the CA Supreme Court ruled in support of
Riverside's local marijuana ordinance : "The issue in this case
is whether California's medical marijuana statutes preempt a
local ban on facilities that distribute medical marijuana. We
conclude they do not."
In its ruling regarding Riverside v Inland Empire Patients
Health and Wellness Center the court noted the MMP "merely
removes state law criminal and nuisance sanctions from the
conduct described therein. By this means, the MMP has signaled
that the state declines to regard the described acts as
nuisances or criminal violations, and that the state's
enforcement mechanisms will thus not be available against
these acts. Accordingly, localities in California are left
AB 473
Page 7
free to accommodate such conduct, if they choose, free of
state interference.?
"We thus conclude that neither the CUA nor the MMP expressly
or impliedly preempts the authority of California cities and
counties, under their traditional land use and police powers,
to allow, restrict, limit, or entirely exclude facilities that
distribute medical marijuana, and to enforce such policies by
nuisance actions. Accordingly, we reject defendants' challenge
to Riverside's MMD ordinances.
5)This Supreme Court ruling, however, leaves the medicinal
marijuana waters muddy .
The ruling concludes, "As we have noted, the CUA and the MMP
are careful and limited forays into the subject of medical
marijuana, aimed at striking a delicate balance in an area
that remains controversial, and involves sensitivity in
federal-state relations. We must take these laws as we find
them, and their purposes and provisions are modest. They
remove state-level criminal and civil sanctions from specified
medical marijuana activities, but they do not establish a
comprehensive state system of legalized medical marijuana; or
grant a "right" of convenient access to marijuana for
medicinal use; or override the zoning, licensing, and police
powers of local jurisdictions; or mandate local accommodation
of medical marijuana cooperatives, collectives, or
dispensaries.
"Of course, nothing prevents future efforts by the
Legislature, or by the People, to adopt a different approach.
In the meantime, however, we must conclude that Riverside's
ordinances are not preempted by state law."
6)Support includes the defense bar, the ACLU, Drug Policy
Alliance and others. According to the ACLU, "By creating the
Division of Medical Marijuana Enforcement within the
Department of Alcoholic Beverage Control, businesses operating
as growers, processors, manufactures, and all other retailers,
will be identified, licensed, and regulated in a fair,
unbiased, and uniform manner. It will also create a greater
sense of stability and safety in the operation of storefronts
- decreasing the likelihood that local governments will ban
dispensaries. Moreover, other states with rigid regulatory
schemes for the sale of medical marijuana do not suffer from
AB 473
Page 8
the same rate of federal intervention. AB 473 also ensures
that the marijuana sold complies with the highest standards
for safety and quality. This is crucial to protecting
patients, and ensuring that the marijuana purchased is safe
and effective.
7)Opponents include the CA District Attorneys Association
(CDAA), the CA Narcotics Officers' Association, the CA Police
Chief's Association, the League of Cities, and others.
According to CDAA, "Our first concern is that this bill grants
to persons who are registered pursuant to this bill blanket
immunity from arrest, prosecution, or sanctions for the
offenses of possession, cultivation, and sale of marijuana. It
is inappropriate to remove prosecutorial and judicial
discretion from determinations as to whether the law is being
violated.
"Additionally, we are dismayed by the provision of this
measure that prohibits state or local officials from assisting
federal authorities in enforcing marijuana laws. This
provision hamstrings peace officers and prosecutors from
assisting their federal partners and creates a dangerous
precedent of non-cooperation, particularly as it regards
activity that is still illegal under federal law."
8)Suggested amendments . While recognizing this measure remains
a substantive work in progress, the author may wish to (a)
clarify that the bill is not intended to preempt local
ordinances; (b) require local zoning approval, rather than
conformance; and (c) specify a source for start-up costs.
9)Related Legislation .
a) SB 439 (Steinberg) exempts marijuana collectives and
cooperatives from criminal acts and abatement of certain
nuisance provisions. SB 439 is pending on the Senate floor.
b) AB 2312 (Ammiano), 2012, would have established the
Medical Marijuana Regulation and Control Act, authorizing
local taxes on medical cannabis and creating a board to
regulate the medical cannabis industry. AB 2312 passed off
of this committee's Suspense File, but was never heard in
the Senate Committee on Business, Professions and Economic
Development.
AB 473
Page 9
c) SB 626 (Calderon), 2011, would have required the Board
of Equalization (BOE) to establish a nine-member task force
to conduct a study to determine ways to enhance collections
of sales and use taxes on retail sales of marijuana and
ensure proper regulation of the cultivation,
transportation, and distribution of marijuana. SB 626 was
held on Senate Appropriations's Suspense File.
d) AB 390 (Ammiano), 2009, would have legalized the
possession, sale, cultivation and other conduct relating to
marijuana, and required ABC to administer and enforce the
terms of legalized marijuana. AB 390 was never heard by
the Assembly Committee on Health.
Analysis Prepared by : Geoff Long / APPR. / (916) 319-2081