BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON GOVERNANCE AND FINANCE
                         Senator Robert M. Hertzberg, Chair
                                2015 - 2016  Regular 

                              
          
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          |Bill No:  |AB 21                            |Hearing    |1/13/2016|
          |          |                                 |Date:      |         |
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          |Author:   |Bonta                            |Tax Levy:  |No       |
          |----------+---------------------------------+-----------+---------|
          |Version:  |1/4/16                           |Fiscal:    |No       |
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          |Consultant|Favorini-Csorba                                       |
          |:         |                                                      |
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                       MEDICAL MARIJUANA:  CULTIVATION LICENSES



          Repeals a March 1, 2016 deadline by which cities and counties  
          must act on ordinances to regulate or ban medical marijuana  
          cultivation.


           Background and Existing Law

           Federal and state law prohibits the possession, possession with  
          intent to sell, cultivation, sale, transportation, importation,  
          or furnishing of marijuana.  However, in 1996, California voters  
          approved Proposition 215, known as the Compassionate use Act of  
          1996 (CUA).  Under CUA, qualified patients with specified  
          illnesses or their primary caregivers cannot be prosecuted for  
          possessing or cultivating medical marijuana upon the written or  
          oral recommendation or approval of an attending physician.   
          Thus, CUA allowed qualified patients and primary caregivers to  
          obtain and use medical marijuana.  

          The Legislature clarified CUA in 2003 by enacting SB 420  
          (Vasconcellos, 2003).  SB 420 exempted qualified patients and  
          caregivers from prosecution for using or from collectively or  
          cooperatively cultivating medical marijuana and established a  
          medical marijuana card program for patients to use on a  
          voluntary basis.  SB 420 provides a safe harbor for qualified  
          patients as to the amount of marijuana they may possess and the  
          number of plants they may maintain.  It also protects patients  







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          with valid identification cards from both arrest and criminal  
          liability for possession, transportation, delivery, or  
          cultivation of marijuana.  Thus, California's estimated $1  
          billion medical marijuana industry exists amid a conflict  
          between federal and state law, and within state law itself. The  
          industry remained largely unregulated until 2015.  
          
          Local Authority Over Medical Marijuana. By exempting qualified  
          patients and caregivers from prosecution for using or from  
          collectively or cooperatively cultivating medical marijuana, the  
          CUA and SB 420 effectively authorized the cultivation and use of  
          medical marijuana.  These laws have triggered the growth of  
          medical marijuana dispensaries in many localities, and in  
          response, local governments have sought to exercise their police  
          powers to regulate or ban activities relating to medical  
          marijuana.  The police power is granted by the California  
          Constitution and allows a city to "make and enforce within its  
          limits, all local, police, sanitary and other ordinances and  
          regulations not in conflict with general laws, known as the  
          police power of cities."  It is from this fundamental power that  
          local governments derive their authority to regulate land  
          through planning, zoning, and building ordinances, thereby  
          protecting public health, safety and welfare.  Local agencies  
          also use this police power to abate nuisances to protect public  
          health.  Under this power, many cities in California permanently  
          banned dispensary operations, while others have adopted  
          temporary land use moratoria, adopted regulations permitting a  
          limited number of dispensaries, or otherwise regulated the sale,  
          storage, and delivery of medical marijuana.  Some local agencies  
          limit felons from appearing on property that houses a dispensary  
          operation.  Additionally, many other local agencies in  
          California ban, limit, or otherwise regulate both outdoor and  
          indoor cultivation of medical marijuana.  Other jurisdictions  
          have established "permissive" zoning ordinances, whereby any  
          land use-such as cultivation of medical marijuana-that is not  
          explicitly authorized by the ordinance is prohibited.

          State law, including initiatives, generally preempt local  
          ordinances when the two conflict.  However, courts have  
          generally supported local agencies against claims that  
          ordinances regulating or banning medical marijuana activities  
          conflict with the CUA or SB 420.  In particular, the California  
          Supreme Court upheld local dispensary bans in City of Riverside  
          v. Inland Empire Patients Health and Welfare Center (Case  








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          S198638, 2013).  In addition, the Third Appellate District Court  
          upheld local cultivation bans in Maral v. City of Live Oak (Case  
          C071822, 2013).  In general, courts have reasoned that nothing  
          in the CUA or SB 420 expressly or impliedly limited the inherent  
          authority of a local jurisdiction, by its own ordinances, to  
          regulate the use of its land, including the authority to provide  
          that facilities for the distribution of medical marijuana will  
          not be permitted to operate within its borders.  Accordingly,  
          many California jurisdictions, roughly estimated by the League  
          of California Cities at 50% pending completion of a statewide  
          survey, ban the cultivation and sale of medical marijuana  
          altogether.  

          Medical Marijuana Regulation and Safety Act.  In 2015, the  
          Legislature enacted the Medical Marijuana Regulation and Safety  
          Act (MMRSA), a package of legislation that comprehensively  
          regulates many aspects of medical marijuana including  
          cultivation, manufacturing, transportation, distribution, sale,  
          and product safety. The MMRSA comprises three bills-SB 643  
          (McGuire, 2015), AB 243 (Wood, 2015), and AB 266 (Bonta, 2015).  
          Among other provisions, MMRSA: 
                 Creates the Bureau of Medical Marijuana Regulation (the  
               Bureau) within the Department of Consumer Affairs to  
               oversee and enforce the state's medical marijuana  
               regulations, in collaboration with the Board of  
               Equalization (BOE), the California Department of Public  
               Health, and the California Department of Food and  
               Agriculture (CDFA);
                 Establishes categories of licenses for various medical  
               marijuana activities, such as cultivation, manufacturing,  
               distribution, transportation, and sale, and provides  
               certain state agencies with the authority to issue those  
               licenses and enforce their terms;
                 Requires BOE and CDFA to implement a program that allows  
               regulators to uniquely identify each legally cultivated  
               medical marijuana plant and trace that plant throughout the  
               distribution chain;
                 Prohibits licensees from commencing activity under the  
               authority of a state license until the applicant has  
               obtained a license or permit pursuant to the applicable  
               local ordinance;
                 Includes protections of the ability of local governments  
               to pass and enforce laws, licensing requirements, and  
               zoning ordinances.








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          Under MMRSA, in addition, MMRSA explicitly authorizes local  
          governments to establish a licensing system for the cultivation  
          of medical marijuana through their current or future land use  
          authority, and prohibits the cultivation of medical marijuana  
          without obtaining both a state license-issued by CDFA-and a  
          local license.  However, MMRSA also designates CDFA as the sole  
          licensing authority for medical marijuana cultivation in cities  
          or counties that have not developed regulations or banned  
          medical marijuana cultivation by March 1, 2016.  

          On September 11, 2015, Assemblymember Wood wrote a letter in the  
          Assembly Journal stating his intent to introduce cleanup  
          legislation to address three errors in MMRSA, including to  
          remove the March 1, 2016 deadline by which cities and counties  
          must regulate or ban cultivation in order to prevent CDFA from  
          becoming the sole licensing authority in that jurisdiction.

          Faced with the prospect of permanently losing their authority to  
          regulate medical marijuana cultivation, many cities and counties  
          are moving quickly to ban medical marijuana cultivation.  At  
          least 19 cities have banned cultivation following the passage of  
          AB 243, and according to a December 31, 2015 San Francisco  
          Chronicle article, at least 40 cities and counties across the  
          state were currently considering bans of medical marijuana  
          cultivation or have a ban pending approval.  Some local  
          officials want more time to consider the best way to regulate  
          medical marijuana cultivation in their jurisdictions and adopt  
          appropriate zoning ordinances.


           Proposed Law

           AB 21 deletes the provision of MMRSA that makes CDFA the sole  
          licensing authority for medical marijuana cultivation in a city  
          or county that has not developed regulations that license or ban  
          cultivation, either expressly or otherwise under principles of  
          permissive zoning, by March 1, 2016.


           State Revenue Impact

           No estimate.









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           Comments

           1.  Purpose of the bill.  The MMRSA contains an inadvertent error  
          made at the close of the 2015 legislative session that imposes a  
          significant burden on local governments and has resulted in  
          hurried consideration of medical marijuana bans and restrictions  
          at the local level.  By permanently making CDFA the sole  
          regulator of medical marijuana cultivation in cities and  
          counties that do not have regulations in place by March 1, 2016,  
          this provision of MMRSA undermines the principle of local  
          control that exists throughout the remainder of the act. It also  
          creates a very real risk of a state agency imposing uniform  
          regulations on cultivation that do not consider the needs and  
          unique circumstances of local communities.  As a result, cities  
          and counties throughout California are rushing to develop  
          regulations or bans on medical marijuana cultivation by the  
          March 1, 2016 deadline, simply so they don't permanently lose  
          their ability to regulate the cultivation of marijuana in their  
          jurisdiction.  But this process deprives local officials and  
          their constituents of the ability to carefully consider how  
          marijuana should be cultivated in their communities.  There are  
          no similar deadlines in MMRSA for local officials to act on  
          licensing of other medical marijuana activities, such as the  
          licensing of dispensaries.  Instead, local officials are given  
          the necessary time and flexibility to determine what additional  
          local licensing requirements may be necessary.  AB 21 provides a  
          straightforward solution to these issues by removing the  
          deadline and the related risk of a state takeover of cultivation  
          licensing.  

          2.  Let's be clear. AB 21 introduces ambiguity into the legality  
          of new medical marijuana cultivation in some local  
          jurisdictions.  Currently, MMRSA prohibits cultivation of  
          medical marijuana without both a state and a local license.   
          However, MMRSA designates CDFA as the sole licensing authority  
          for cultivation if the local jurisdiction does not have  
          regulations in place by March 1, 2016. AB 21 deletes the  
          provision that contains both the deadline and the designation of  
          CDFA as sole licensing authority.  Thus, AB 21 raises the  
          question of whether medical marijuana can be cultivated in a  
          jurisdiction that has not implemented medical marijuana  
          regulations, since a cultivator would not be able to receive a  
          local license.  Although another provision of MMRSA- subdivision  








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          (c) of Section 19321 of the Business and Professions Code-allows  
          medical marijuana facilities that were in compliance with local  
          ordinances prior to January 1, 2018 to continue to operate, it  
          is not clear whether this provision trumps the requirement to  
          obtain both a state and local license in order to cultivate.   
          Accordingly, deleting this provision may result in de facto bans  
          on new cultivations of medical marijuana in cities and counties  
          that delay their development of regulations.  If the purpose of  
          MMRSA is to eliminate the regulatory uncertainty that has  
          historically surrounded medical marijuana cultivation, the  
          Committee may wish to consider clarifying whether medical  
          marijuana can be cultivated with only a state license in  
          jurisdictions that have not passed an ordinance.

          3.  Unfinished business  . AB 21 addresses a provision in MMRSA  
          that was identified as an error in the letter to the Assembly  
          Journal, and AB 1575 (Bonta, 2016) addresses a second error  
          relating to certain fees charged by the Department of Fish and  
          Wildlife (DFW).  However, neither bill addresses the third  
          error, regarding qualified patients' and primary caregivers'  
          exemption from the cultivation licensing requirements in MMRSA.  
          Specifically, MMRSA states that an exemption for a qualified  
          patient or primary caregiver from the act's cultivation  
          licensing requirements does not limit or prevent a city or  
          county from regulating or banning any medical marijuana  
          activities, including cultivation, storage, manufacture, and  
          transport, by that person. The letter to the Journal indicated  
          the intent to remove this sentence.  Importantly, whether a city  
          or county may ban cultivation by qualified patients and primary  
          caregivers through its land use authority was the subject of  
          recent litigation in the Fifth Appellate District Court of  
          Appeal (Byrd v. County of Fresno [2015]).  The City of Fresno, a  
          respondent in the case, cited this provision of MMRSA as  
          granting the city new authority to ban cultivation by any entity  
          within its jurisdiction.  In an unpublished opinion, the Court  
          of Appeal upheld the cultivation ban.  The American Civil  
          Liberties Union is petitioning the Supreme Court to review this  
          decision and a decision in a related case.  The Supreme Court  
          has not ruled on whether local jurisdictions may completely ban  
          cultivation by qualified patients or caregivers or considered  
          the impact of MMRSA on medical marijuana, so the outcome of  
          future cases may be affected by the continued inclusion of this  
          provision.  









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          4.  Related legislation.   AB 1575 (Bonta) was introduced in  
          January 2016 to address some additional drafting errors in  
          MMRSA, including an error raised in Assemblymember Wood's letter  
          to the Journal.  Specifically, AB 1575 would clarify that  
          increased fees for remediation of environmental impacts of  
          marijuana cultivation shall be levied on only medical marijuana  
          cultivation activities that require a permit to alter a lake or  
          streambed, instead of increasing fees on any entity that  
          requires that type of permit.  AB 1575 also requires the  
          Department of Public Health to establish uniform safety  
          standards on packaging of medical marijuana, allows the Bureau  
          to issue temporary permits for businesses to perform medical  
          marijuana-related activities, requires the Bureau to establish  
          standards for the delivery of medical marijuana and for  
          dispensary employees, and exempts commercial medical marijuana  
          activity by a licensed person from criminal penalties associated  
          with the transportation, sale, or administration of controlled  
          substances in the state.  In addition, two bills address the  
          taxation of medical marijuana cultivation.  SB 297 (McGuire,  
          2015), currently pending in the Senate Appropriations Committee,  
          states the legislature's intent to impose an excise tax on  
          medical marijuana at the point of sale.  AB 1548 (Wood, 2015),  
          currently pending in the Assembly Revenue and Taxation  
          Committee, would establish a tax on the cultivation of medical  
          marijuana to fund environmental restoration and law enforcement  
          activities related to illegal marijuana cultivation.

          5.  Urgency.  Regular statutes take effect on January 1 following  
          their enactment; bills passed in 2016 take effect on January 1,  
          2017.  The California Constitution allows bills with urgency  
          clauses to take effect immediately if they're needed for the  
          public peace, health, and safety.  AB 21 contains an urgency  
          clause declaring that it is necessary for its provisions to go  
          into effect immediately to enable local governments to protect  
          the health of their citizens by regulating marijuana at the  
          earliest possible date.

          6.  New Bill, Prior Votes Not Relevant  .  As passed by the  
          Assembly, AB 21 contained provisions relating to Global Warming  
          Solutions Act of 2006.  The Senate Governance & Finance  
          Committee never heard that version of the bill.  The January 4  
          amendments deleted AB 21's contents, changed the author of the  
          bill, and inserted the current language relating to medical  
          marijuana cultivation.








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          7.  Double referred.  The Senate Rules Committee ordered a  
          double-referral of AB 21-first to the Senate Governance and  
          Finance Committee, which has jurisdiction over bills relating to  
          local agencies' regulatory and taxing authority, and then to the  
          Senate Health Committee, which has jurisdiction over bills  
          relating to public health and safety.


           Assembly Actions

           Not relevant to the January 4, 2016 version of the bill.


           Support and  
          Opposition   (1/7/2016)


           Support  :  California Police Chiefs Association; California State  
          Association of Counties; City of Modesto; County Counsel, County  
          of Siskiyou; County of Del Norte; County of Humboldt; County of  
          Marin; County of Merced; County of Sacramento; County of Shasta;  
          County of Solano; County of Sonoma; League of California Cities;  
          Rural County Representatives of California; Supervisor Mike  
          Ennis, County of Tulare; Urban Counties of California.

           Opposition  :  American Civil Liberties Union of California; Drug  
          Policy Alliance.



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