BILL ANALYSIS Ó
AB 473
Page 1
ASSEMBLY THIRD READING
AB 473 (Ammiano)
As Amended May 24, 2013
Majority vote
PUBLIC SAFETY 5-2 APPROPRIATIONS 11-6
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|Ayes:|Ammiano, Jones-Sawyer, |Ayes:|Bocanegra, Bradford, Ian |
| |Mitchell, Quirk, Skinner, | |Calderon, Campos, Eggman, |
| | | |Gomez, Hall, Ammiano, |
| | | |Pan, Quirk, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Melendez, Waldron |Nays:|Gatto, Harkey, Bigelow, |
| | | |Donnelly, Linder, Wagner |
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SUMMARY : Enacts the Medical Marijuana Regulation and Control
Act (Act), and creates the Division of Medical Marijuana
Regulation and Enforcement in order to regulate the cultivation,
manufacture, testing, transportation, distribution, and sale of
medical marijuana. Specifically, this bill :
1)Makes legislative findings and declarations regarding the
Compassionate Use Act of 1996 (CUA) and the Medical Marijuana
Program Act of 2003 (MMPA), the need for greater certainty and
uniformity regarding the rights and obligations of medical
marijuana facilities, and the need for the imposition and
enforcement of regulations to prevent unlawful cultivation and
diversion of marijuana for non-medical use while at the same
time not preempting local government ordinances.
2)States that the provisions of this Act are enacted under the
powers reserved to the state in the Tenth Amendment to the
United States Constitution.
3)States legislative intent to provide for the comprehensive
regulation of the cultivation, manufacturing, testing,
transportation, distribution, and sale of medical marijuana
and the enforcement of laws relating to these activities.
4)Creates the Division of Medical Marijuana Regulation
(division) in the Department of Alcoholic Beverage Control
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(ABC).
5)Defines the following terms:
a) "Division" is the Division of Medical Marijuana
Regulation and Enforcement.
b) "Identification program" is "the universal
identification card program for mandatory commercial
registrants."
c) "Mandatory commercial registrant" is "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,
or any employee thereof, that operates any facility,
building, structure, or location where medical marijuana is
grown, possessed, stored, manufactured, tested, or sold,
other than a location or building in which a patient or
patient's primary caregiver, as defined by the
Compassionate Use Act of 1996, is growing medical marijuana
exclusively for patient medical use and not for sale."
d) "Testing and labeling" means mandatory labeling and a
quality assurance plan in place that addresses: dosage,
microbiological contaminants, random sample testing,
handling, care, and storage.
e) "Fund" is the Medical Marijuana Fund established under
Business and Professions Code Section 26028.
6)Specifies that this chapter does not prevent a city or county
from doing any of the following:
a) Adopting local ordinances that regulate the location,
operation, or establishment of a medical marijuana
cooperative or collective;
b) Enforcing those ordinances civilly or criminally; and,
c) Enacting other laws consistent with this chapter.
7)Requires the division to be administered by a chief executive
to be appointed by the director.
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8)Mandates that the chief executive be the appointing authority
of all employees within the division.
9)States that all heads of subdivisions or advisory commissions
within the division are responsible to the chief executive.
10)Confers on the division all power necessary for the
administration of this chapter, including, but not limited to:
a) Establishing statewide standards for the cultivation,
manufacturing, testing, transportation, distribution, and
sales of medical marijuana and medical marijuana products;
b) Establishing a scale of state-imposed fees for the
cultivation, manufacture, testing, transportation,
distribution, and sale of medical marijuana and medical
marijuana products;
c) Adopting, amending, and rescinding reasonable
regulations, special rulings, and necessary findings for
the regulation and control of the cultivation, manufacture,
testing, transportation, distribution, and sale of medical
marijuana, and to govern the procedures of the division to
exercise the powers and perform the duties conferred upon
it;
d) Approving or denying mandatory registration application
for cultivation, manufacturing, testing, labeling,
transportation, distribution, and sale of medical
marijuana;
e) Suspending, fining, restricting, or revoking mandatory
commercial registration upon a violation of a rule or
regulation adopted by the division;
f) Imposing penalties;
g) Taking any reasonable action with respect to a mandatory
commercial registration application;
h) Hearing and determining, at a public hearing, any
appeals of application denials and any complaints against a
mandatory commercial registrant;
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i) Administering oaths and issuing subpoenas to require the
presence of individuals and the production of documents
necessary to the determination of a hearing;
j) Maintaining the confidentiality of any information
obtained from a mandatory commercial registrant related to
medical marijuana patients and caregivers in strict
compliance with the federal Health Insurance Portability
and Accountability Act and other specified laws;
aa) Developing any necessary forms, identification cards,
and applications;
bb) Overseeing the operation of the Medical Marijuana Fund;
and,
cc) Establishing reasonable fees.
11)Allows the division to charge separate fees for each
mandatory commercial registrant application but limits the
total fees imposed to the total costs of administering this
regulatory scheme.
12)Requires the division to assist in the development of uniform
policies for the taxation of medical marijuana businesses.
13)Requires the division to identify successful regulatory
structures for the purpose of supporting cities and counties
in appropriately governing activities related to medical
marijuana.
14)Establishes the Medical Marijuana Fund within the State
Treasury. The fund shall include any interest and dividends
earned on money in the fund.
15)Specifies that all fees collected pursuant to this regulatory
scheme shall be deposited into the fees account, that all
monies are continuously appropriated without regard to fiscal
year to the division.
16)Establishes the Medical Marijuana Penalties Account and
specifies that all penalties collected shall be deposited into
it. All monies available in the penalties account are
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available for purpose of this chapter, upon appropriation by
the Legislature.
17)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 and medical
marijuana products, and make available mandatory commercial
registration forms.
18)Specifies that a mandatory commercial registration
application or renewal shall be approved unless the division
determines any of the following:
a) The applicant fails to meet the established requirements
or any regulation adopted;
b) The applicant, or any of its officers or directors, is
under 21 years of age;
c) The applicant has knowingly answered a question or
request for information falsely on the form;
d) The applicant, or any of its officers or directors, has
been convicted in the past five years of a serious or
violent felony, as specified, a felony involving fraud or
deceit, or any other felony that, in the division's
estimation, would impair the applicant's ability to
appropriately operate medical marijuana cultivation,
manufacturing, testing, distribution or sales;
e) The applicant is a licensed physician making medical
marijuana recommendations for patients; or,
f) The applicant, or any of its officers or directors, had
been sanctioned by the division for operating unregistered
commercial medical marijuana activities, or has had a
registration revoked in the previous three years.
19)Allows the division to establish various classes or types of
registration, including distinguishing between operators and
employees, for specific medical marijuana-related activities.
20)States that each mandatory commercial registration
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application approved by the division is separate and distinct.
21)Allows an applicant to apply for registration in multiple
classes of specified medical marijuana activities.
22)States that an approved application is valid for a period not
to exceed two years from the date of approval, unless revoked
or suspended.
23)Requires the division to notify the registrant 90 days prior
to expiration.
24)Requires the registrant to apply for renewal not less than 60
days prior to expiration, but allows the division to waive
this requirement in its discretion.
25)Requires the division to act upon a renewal application
within 10 days before expiration of the registration.
26)Requires an application for mandatory commercial registration
to include, but not be limited to, all of the following:
a) A plan for conformance with testing and labeling
requirements;
b) A plan to address security for the premises where
marijuana cultivation, manufacturing, testing,
distribution, or sales will occur;
c) A showing that any facility proposed in the application
has received local zoning approval;
d) Protocols to prevent the unlawful diversion of
marijuana; and,
e) Evidence that the applicant has received a business
license from the locality in which the facility will be
located.
27)Requires the division to approve and to contract with one or
more laboratories that can document compliance with industry
best practices to provide plan-consulting services and testing
services to determine compliance.
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28)Allows the division to approve cultivation registration only
in conjunction with the city, county, or city and county land
use authority in which the cultivation occurs, where the city,
county, or city and county address compliance with relevant
state and federal environmental impact laws and regulations,
including, but not limited to clear-cutting, road building,
water diversion, and use of chemicals.
29)Exempts all mandatory commercial registrants from arrest,
prosecution, or sanctions, as specified, unless the registrant
does not possess a valid registration or the conduct in
question is not within the scope of the registration.
30)States that this chapter does not apply to and has no
diminishing effect on the rights and protections granted to
individual patients and primary caregivers under the CUA.
31)Exempts individual patients and caregivers cultivating
marijuana at their private residences who do not sell or
charge for the cultivation of marijuana from mandatory
commercial registration.
32)Allows a facility, building, structure, or location operating
in conformance with local zoning requirements as of the
effective date of this chapter to continue to operate until
such time as its application for registration is approved or
denied.
33)Requires the division to work with law enforcement entities
throughout California in order to implement and to enforce the
rules and regulations regarding medical marijuana, and to take
appropriate action against businesses and individuals who do
not comply.
34)States that nothing in this chapter prevents a city, county,
or city and county from enforcing a local zoning ordinance or
law of general application.
35)Requires, commencing on January 1, 2015, that any product
containing marijuana offered for sale be subject to testing
and labeling requirements.
36)Makes it a misdemeanor, commencing on January 1, 2015, for
any person, except a mandatory commercial registrant, to offer
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for sale any product containing marijuana, or to operate any
facility where medical marijuana is grown, processed, stored,
manufactured, tested, or sold, other than a place where a
patient or his or her primary caregiver, as defined by the
CUA, is growing marijuana exclusively for patient use and not
for sale.
37)Makes it a misdemeanor for a person to steal or fraudulently
use a registrant's identification card or status to acquire,
possess, cultivate, transport, use, produce, or distribute
marijuana, or to tamper with or fraudulently produce an
identification card or registration status.
38)Establishes the following penalties for the misdemeanor
crimes:
a) For the first offense, imprisonment in the county jail
for no more than six months, or a fine up to $1,000, or
both.
b) For a second or subsequent offense, imprisonment in the
county jail for no more than one year, or a fine up to
$1,000, or both.
39)Subjects a person operating an unregistered medical marijuana
facility to civil penalties of up to $25,000, which shall be
deposited in the Penalties Account.
40)Authorizes the division to destroy any marijuana being
cultivated, manufactured, or possessed in violation of this
chapter.
41)Prohibits the spending of funds by state or local officials
to assist federal authorities in enforcing federal marijuana
prohibitions with regard to activities carried out by
mandatory 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 mandatory commercial registrant.
42)States that the provisions of this Act are severable, and
that if one is held invalid, the invalidity will not affect
other provision which can still be given effect.
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FISCAL EFFECT : According to the Assembly Appropriations
Committee:
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
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
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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.
COMMENTS : "The people of California overwhelmingly enacted the
Compassionate Use Act of 1996 with the passage of Proposition
215. The people declared that their purpose in enacting the
measure was, among other things, '[to] ensure that seriously ill
Californians have the right to obtain and use medical marijuana
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 marijuana in the treatment of cancer, anorexia, AIDS, chronic
pain, spasticity, glaucoma, arthritis, migraine, or any other
illness for which marijuana provides relief.'
"The Compassionate Use Act of 1996 called on state government to
implement a plan for the safe and affordable distribution of
marijuana to all patients in medical need of marijuana.
"In 2003, the Legislature enacted the Medical Marijuana Program
Act (MMPA). Under the guidance of the MMPA, approximately 60
California cities and counties have created medical marijuana
access ordinances that can act as a guide for the state.
However, many other cities and counties are calling for more
guidance and regulation from the state and have passed bans or
moratoria on medical marijuana cultivation and distribution
while awaiting such guidance.
"Greater certainty and uniformity are urgently needed regarding
the rights and obligations of medical marijuana facilities, and
for the imposition and enforcement of regulations to prevent
unlawful cultivation and the diversion of marijuana to
nonmedical use."
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Please see the policy committee analysis for a full discussion
of this bill.
Analysis Prepared by : Sandy Uribe / PUB. S. / (916) 319-3744
FN: 0000887