California Legislature—2015–16 Regular Session

Assembly BillNo. 26


Introduced by Assembly Member Jones-Sawyer

December 1, 2014


An act to amend Sections 2220.05, 2242, and 2264 of, and to add Chapter 18 (commencing with Section 26000) to Division 9 of, the Business and Professions Code, to add Section 23028 to the Government Code, and to amend Section 11362.7 of, and to amend and repeal Section 11362.775 of, the Health and Safety Code, relating to medical cannabis, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

AB 26, as introduced, Jones-Sawyer. Medical cannabis.

(1) Existing law, the Compassionate Use Act of 1996, an initiative measure enacted by the approval of Proposition 215 at the November 6, 1996, statewide general election, authorizes the use of marijuana for medical purposes. Existing law enacted by the Legislature, commonly referred to as the Medical Marijuana Program Act, requires the establishment of a program for the issuance of identification cards to qualified patients so that they may lawfully use marijuana for medical purposes, and requires the establishment of guidelines for the lawful cultivation of marijuana grown for medical use.

The Medical Practice Act provides for the regulation and licensing of physicians and surgeons by the Medical Board of California and requires the board to prioritize investigations and prosecutions of physicians and surgeons representing the greatest threat of harm, as specified. Existing law identifies the cases that are to be given priority, which include cases of repeated acts of excessively prescribing, furnishing, or administering controlled substances without a good faith prior examination of the patient. Existing law makes it unprofessional conduct for a physician and surgeon to prescribe, dispense, or furnish dangerous drugs without an appropriate prior examination and medical indication. Existing law also makes it unprofessional conduct to employ, aid, or abet an unlicensed person in the practice of medicine. Existing law generally makes any person who violates these provisions guilty of a misdemeanor.

This bill would enact the Medical Cannabis Regulation and Control Act and would create the Division of Medical Cannabis Regulation and Enforcement within the Department of Alcoholic Beverage Control, to be administered by a person exempt from civil service who is appointed by the Director of Alcoholic Beverage Control. The bill would grant the department the power to register persons for the cultivation, manufacture, testing, transportation, storage, distribution, and sale of medical cannabis within the state provided that the authority of a city or county to adopt ordinances inconsistent with the requirements of the act that ban, regulate, or tax medical cannabis activities, and to enforce those ordinances, would not be affected by the act. The bill would provide that the director and persons employed by the department to administer and enforce its provisions are peace officers. The bill would prescribe requirements for the issuance, renewal, suspension, and revocation of mandatory commercial registrations and fees in relation to these activities. The bill would permit the department to assist statewide taxation authorities in the development of uniform policies for state taxation of mandatory commercial medical cannabis registrants and to assist in the development of regulation in connection with work safety in this industry. The bill would authorize the division to establish a grant program for the purpose of funding medical cannabis regulation and enforcement.

The bill would establish the Medical Cannabis Regulation Fund and would require deposit of fees into the fund. The bill would continuously appropriate moneys within the fund to the division for the purposes of administering the program. The bill would require the deposit of penalty money into the General Fund.

The bill would require the department, on or before January 1, 2017, to issue regulations as necessary for the implementation and enforcement of mandatory commercial medical cannabis registration, as specified, including requirements analogous to statutory environmental, agricultural, consumer protection, and food and product safety requirements. The bill would require the department to administer and enforce these requirements. The bill would prescribe requirements for provisional registrations to be operative January 1, 2016. The bill would prohibit approval of a mandatory commercial registration for specified reasons, including if a licensed physician making patient recommendations for medical cannabis is an interested party in the proposed operation, and would prohibit a physician from recommending medical cannabis to a patient while he or she is a mandatory commercial registrant, or associated, as specified, with a mandatory commercial registrant. The bill would prohibit a registrant from holding a registration in more than one class of medical cannabis activities.

The bill would require a registrant to keep various records in connections with medical cannabis activities and would prescribe requirements for making records available to the department and any state or local agency. The bill would provide that certain patient and caregiver information is excluded from disclosure to the public. The bill would provide that the act does not apply to the protections granted to a patient or primary caregiver acting pursuant to the Compassionate Use Act of 1996 and would exempt these parties from the application of the act, provided they act consistently with specified requirements. The bill would provide that the actions of a mandatory commercial registrant or provisional registrant, its employees, and its agents that are permitted pursuant to a valid mandatory commercial registration issued by the division and that are conducted in accordance with the requirements of the act are not unlawful under state law, as specified. The bill would provide a similar state law immunity for a property owner who allows his or her property to be used by a mandatory commercial registrant or provisional registrant.

The bill would require the department to work in conjunction with law enforcement entities throughout the state to implement and enforce the rules and regulations regarding medical cannabis and to take appropriate action against businesses and individuals that fail to comply with the law. The bill would prohibit, on and after January 1, 2017, a person other than a mandatory commercial registrant from selling cannabis or cannabis products or performing other actions related to cannabis, except as specified. The bill would provide that its provisions do not prevent specified city or county actions, including zoning ordinances banning or regulating the location, operation, or establishment of a commercial registrant. The bill would make certain violations of its provisions a crime, thereby imposing a state-mandated local program. The bill would establish requirements for the transportation of medical cannabis. The bill would specify that its provisions are severable.

The bill would specify that recommending marijuana to patients without a good faith examination and medical reason or recommending marijuana for nonmedical purposes is unprofessional conduct. The bill would provide that specified acts of recommending marijuana without a good faith examination are among the types of cases that should be given priority for investigation and prosecution by the Medical Board of California, as described above. The bill would also specify that employment by, or an agreement with, a mandatory medical cannabis registrant to provide recommendations for medical marijuana constitutes unprofessional conduct. By broadening the definition of a crime, the bill would impose a state-mandated local program. The bill would repeal, 90 days after the department posts a specified notice on its Internet Web site, the provisions described above prohibiting prosecution of qualified patients, persons with valid identification cards, and designated primary caregivers who associate in California, collectively or cooperatively, to cultivate marijuana for medical purposes.

(2) Existing law authorizes the board of supervisors of a county and the governing body of a city to impose various taxes, including a transactions and use tax at a rate of 0.25%, or a multiple thereof, if approved by the required vote of the board or governing body and the required vote of qualified voters, and limits the combined rate of transactions and use taxes within a city or county to 2%.

This bill would authorize the board of supervisors of a county to impose, by ordinance, a tax on the privilege of cultivating, dispensing, producing, processing, preparing, storing, providing, donating, selling, or distributing cannabis or cannabis products, including a transactions and use tax at any rate specified by the board. The bill would authorize the tax to be imposed for either general or specific governmental purposes. The bill would require a tax imposed pursuant to this authority to be subject to any applicable voter approval requirement.

(3)  The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P5    1

SECTION 1.  

This act shall be known, and may be cited, as the
2Medical Cannabis Regulation and Control Act.

3

SEC. 2.  

(a) The Legislature finds and declares all of the
4following:

5(1) In 1996, the people of the State of California enacted the
6Compassionate Use Act of 1996, codified in Section 11362.5 of
7the Health and Safety Code. The people of the State of California
8declared that their purpose in enacting the measure was, among
9other things, “to ensure that seriously ill Californians have the
10right to obtain and use marijuana for medical purposes where that
11medical use is deemed appropriate and has been recommended by
12a physician who has determined that the person’s health would
13benefit from the use of marijuana in the treatment of cancer,
14anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis,
15migraine, or any other illness for which marijuana provides relief.”

16(2) The Compassionate Use Act of 1996 called on state
17government to implement a plan for the safe and affordable
18distribution of marijuana to all patients in medical need of
19marijuana.

20(3) In 2003, the Legislature enacted the Medical Marijuana
21Program Act (MMPA), codified in Article 2.5 (commencing with
22Section 11362.7) of Chapter 6 of Division 10 of the Health and
23Safety Code.

24(4) Greater certainty and minimum statewide standards are
25urgently needed regarding the obligations of medical marijuana
26facilities and for the imposition and enforcement of regulations to
27prevent unlawful cultivation and the diversion of marijuana to
28nonmedical use.

29(5) Despite the passage of the Compassionate Use Act of 1996
30and the MMPA, because of the lack of an effective statewide
31system for regulating and controlling medical marijuana, local law
32enforcement officials have been confronted with uncertainty about
33the legality of some medical marijuana cultivation and distribution
34activities. The current system of collectives and cooperatives makes
35law enforcement difficult and endangers patient safety because of
36an inability to monitor the supply of medical marijuana in the state
37and the lack of quality control, testing, and labeling requirements.

P6    1(6) For the protection of all Californians, the state must act to
2regulate and control medical marijuana and not preempt local
3government ordinances. Cities and counties should be allowed to
4impose local taxes and enact zoning regulations and other
5restrictions, including bans, applicable to the commercial
6cultivation and distribution of medical marijuana based on a local
7governing body’s determination of local needs. In order to provide
8patients with access to safe medical marijuana products, while at
9the same time preventing diversion of marijuana to nonmedical
10uses and protecting the public, it is necessary to amend the MMPA
11and to establish a comprehensive structure for regulating the
12cultivation, production, and distribution of medical marijuana
13products.

14(7) A state entity shall be created to regulate and control the
15mandatory registration of all entities involved in the commercial
16cultivation, processing, manufacturing, testing, transportation,
17distribution, provision, donation, and sale of medical marijuana
18in this state. Patients and their primary caregivers who cultivate
19medical marijuana for the personal medical purposes of individual
20patients shall not be subject to the statewide system of regulation
21established by this act but only medical marijuana produced in
22compliance with this act may be sold or commercially distributed.

23(8) This act is not intended to prevent cities and counties from
24imposing local taxes and enacting zoning regulations and other
25restrictions, including bans, applicable to the commercial
26cultivation and distribution of medical marijuana based on a local
27governing body’s determination of local needs.

28(9) It is the intent of the Legislature that the state entity created
29to regulate and control medical marijuana solicit input from cities
30and counties in the process of promulgating standards and
31regulations pursuant to this act.

32(10) It is the intent of the Legislature that entities provided
33immunity under Measure D, approved by the voters of the City of
34Los Angeles at the May 21, 2013, general election, shall be
35considered the equivalent of entities that are registered, permitted,
36or licensed as a medical marijuana business, dispensary, or other
37entity involved in providing medical marijuana to patients under
38a local ordinance and shall be considered in compliance with a
39local ordinance for the purposes of the implementation of this act
P7    1and any regulations promulgated by the Department of Alcoholic
2Beverage Control.

3(11) The provisions of this act are enacted pursuant to the
4powers reserved to the State of California and its people under the
5Tenth Amendment to the United States Constitution.

6(12) Nothing in this act is intended to require any individual or
7entity to engage in any conduct that violates federal law or to
8exempt anyone from any requirement of federal law or to pose
9any obstacle to federal enforcement of federal law.

10(b) It is therefore the intent of the Legislature, in enacting this
11act, to accomplish all of the following:

12(1) To establish a statewide system for regulating and controlling
13commercial medical cannabis activities by creating a state entity
14to enact and enforce regulations governing the cultivation,
15processing, manufacturing, testing, transportation, distribution,
16provision, donation, and sale of commercial medical cannabis.

17(2) To allow cities and counties to enact zoning regulations or
18other restrictions, including bans, applicable to the cultivation,
19processing, manufacturing, testing, and distribution of commercial
20medical cannabis based on a local governing body’s determination
21of local needs.

22(3) To establish the Division of Medical Cannabis Regulation
23and Enforcement to be located within the Department of Alcoholic
24Beverage Control to provide a governmental agency that will
25ensure the strict, honest, impartial, and uniform administration and
26enforcement of the statewide regulatory system established by this
27act throughout the state.

28(4) To enact legislation in furtherance of the Compassionate
29Use Act of 1996, which provides for the Legislature to “implement
30a plan for the safe and affordable distribution of marijuana to all
31patients in medical need of marijuana.”

32(5) To establish a statewide registration process for commercial
33medical cannabis activities to identify for law enforcement which
34entities are exempt from state criminal penalties for the cultivation,
35processing, manufacturing, testing, transportation, distribution,
36provision, donation, and sale of medical cannabis solely on the
37basis of their activities conducted in compliance with this act.

38(6) To reduce the cost of commercial medical cannabis
39 enforcement by controlling commercial medical cannabis
40production and distribution through comprehensive statewide
P8    1regulation and providing law enforcement guidelines to more easily
2determine whether or not a person is acting in conformance with
3the state’s medical cannabis laws.

4

SEC. 3.  

Section 2220.05 of the Business and Professions Code
5 is amended to read:

6

2220.05.  

(a) In order to ensure that its resources are maximized
7for the protection of the public, the Medical Board of California
8shall prioritize its investigative and prosecutorial resources to
9ensure that physicians and surgeons representing the greatest threat
10of harm are identified and disciplined expeditiously. Cases
11involving any of the following allegations shall be handled on a
12priority basis, as follows, with the highest priority being given to
13cases in the first paragraph:

14(1) Gross negligence, incompetence, or repeated negligent acts
15that involve death or serious bodily injury to one or more patients,
16such that the physician and surgeon represents a danger to the
17public.

18(2) Drug or alcohol abuse by a physician and surgeon involving
19death or serious bodily injury to a patient.

20(3) Repeated acts of clearly excessive prescribing, furnishing,
21or administering of controlled substances, or repeated acts of
22prescribing, dispensing, or furnishing of controlledbegin delete substancesend delete
23begin insert substances, or recommending marijuana to patients for medical
24purposes,end insert
without a good faith prior examination of the patient
25and medical reason therefor. However, in no event shall a physician
26and surgeon prescribing, furnishing, or administering controlled
27substances for intractable pain consistent with lawful prescribing,
28including, but not limited to, Sections 725, 2241.5, and 2241.6 of
29this code and Sections 11159.2 and 124961 of the Health and
30Safety Code, be prosecuted for excessive prescribing and prompt
31review of the applicability of these provisions shall be made in
32any complaint that may implicate these provisions.

33(4) Sexual misconduct with one or more patients during a course
34of treatment or an examination.

35(5) Practicing medicine while under the influence of drugs or
36alcohol.

37(b) The board may by regulation prioritize cases involving an
38allegation of conduct that is not described in subdivision (a). Those
39cases prioritized by regulation shall not be assigned a priority equal
40to or higher than the priorities established in subdivision (a).

P9    1(c) The Medical Board of California shall indicate in its annual
2report mandated by Section 2312 the number of temporary
3restraining orders, interim suspension orders, and disciplinary
4actions that are taken in each priority category specified in
5subdivisions (a) and (b).

6

SEC. 4.  

Section 2242 of the Business and Professions Code is
7amended to read:

8

2242.  

(a) Prescribing, dispensing, or furnishing dangerous
9drugs as defined in Sectionbegin delete 4022end deletebegin insert 4022, or recommending
10marijuana to a patient for a medical purpose,end insert
without an
11appropriate prior examination and a medical indication,begin insert including
12an in-person examination when recommending marijuana, or
13recommending marijuana for a nonmedical purpose,end insert
constitutes
14unprofessional conduct.

15(b) No licensee shall be found to have committed unprofessional
16conduct within the meaning of this section if, at the time the drugs
17were prescribed, dispensed, or furnished, any of the following
18applies:

19(1) The licensee was a designated physician and surgeon or
20podiatrist serving in the absence of the patient’s physician and
21 surgeon or podiatrist, as the case may be, and if the drugs were
22prescribed, dispensed, or furnished only as necessary to maintain
23the patient until the return of his or her practitioner, but in any case
24no longer than 72 hours.

25(2) The licensee transmitted the order for the drugs to a
26registered nurse or to a licensed vocational nurse in an inpatient
27facility, and if both of the following conditions exist:

28(A) The practitioner had consulted with the registered nurse or
29licensed vocational nurse who had reviewed the patient’s records.

30(B) The practitioner was designated as the practitioner to serve
31in the absence of the patient’s physician and surgeon or podiatrist,
32as the case may be.

33(3) The licensee was a designated practitioner serving in the
34 absence of the patient’s physician and surgeon or podiatrist, as the
35case may be, and was in possession of or had utilized the patient’s
36records and ordered the renewal of a medically indicated
37prescription for an amount not exceeding the original prescription
38in strength or amount or for more than one refill.

39(4) The licensee was acting in accordance with Section 120582
40of the Health and Safety Code.

P10   1

SEC. 5.  

Section 2264 of the Business and Professions Code is
2amended to read:

3

2264.  

The employing, directly or indirectly, the aiding, or the
4abetting of any unlicensed person or any suspended, revoked, or
5unlicensed practitioner to engage in the practice ofbegin delete medicineend deletebegin insert end insert
6begin insertmedicine, including employment by, other agreement with, a
7mandatory commercial registrant acting pursuant to the Medical
8Cannabis Regulation and Control Act or a dispensary to provide
9recommendations for medical marijuana,end insert
or any other mode of
10treating the sick or afflicted which requires a license to practice
11constitutes unprofessional conduct.

12

SEC. 6.  

Chapter 18 (commencing with Section 26000) is added
13to Division 9 of the Business and Professions Code, to read:

14 

15Chapter  18. Medical Cannabis Regulation
16

 

17Article 1.  General Provisions
18

 

19

26000.  

(a) It is the intent of the Legislature in enacting this
20chapter to provide for the comprehensive regulation of the
21commercial cultivation, manufacturing, testing, transportation,
22distribution, provision, donation, and sale of medical cannabis and
23the enforcement of laws relating to commercial medical cannabis
24activities without preempting city or county ordinances regulating
25or banning these activities.

26(b) This chapter is an exercise of the police powers of the state
27for the protection of the safety, welfare, health, peace, and morals
28of the people of the state.

29

26001.  

Without limiting the authority of a city or county
30pursuant to Section 7 of Article XI of the California Constitution
31or any other provision of law, and subject to that authority, the
32state shall have the right and power to regulate and register persons
33for the cultivation, manufacture, testing, transportation, storage,
34distribution, provision, donation, sale, purchase, and possession
35of medical cannabis within the state. In the exercise of these rights
36and powers, the Legislature shall not constitute the state or any of
37its agencies as a cultivator, manufacturer, transporter, tester, or
38seller of medical cannabis.

39

26002.  

For the purpose of this chapter:

P11   1(a) “Cannabis” means all parts of the plant Cannabis sativa,
2cannabis indica, or cannabis ruderalis, whether growing or not;
3the seeds thereof; the resin, whether crude or purified, extracted
4from any part of the plant; and every compound, manufacture, salt,
5derivative, mixture, or preparation of the plant, its seeds, or resin.
6It does not include the mature stalks of the plant, fiber produced
7from the stalks, oil or cake made from the seeds of the plant, any
8other compound, manufacture, salt, derivative, mixture, or
9preparation of the mature stalks (except the resin extracted
10therefrom), fiber, oil, or cake, or the sterilized seed of the plant
11which is incapable of germination. “Cannabis” also means
12marijuana as defined by Section 11018 of the Health and Safety
13Code as enacted by Chapter 1407 of the Statutes of 1972.

14(b) “Commercial” means any cultivation, processing, possession,
15storage, manufacturing, testing, transportation, distribution,
16provision, donation, or sale of cannabis or cannabis product,
17whether or not gratuitous, except as provided in subdivision (b)
18of Section 26052.

19(c) “Department” means the Department of Alcoholic Beverage
20Control.

21(d) “Dispensary” means a mandatory commercial registrant that
22dispenses cannabis or medical cannabis products through a retail
23storefront.

24(e) “Division” means the Division of Medical Cannabis
25Regulation and Enforcement.

26(f) “Edible cannabis product” means a cannabis product that is
27used or intended for use in whole or in part for human consumption
28and includes chewing gum.

29(g) “Fund” means the Medical Cannabis Regulation Fund
30established pursuant to Section 26028.

31(h) “Identification program” means the universal identification
32certificate program for mandatory commercial registrants.

33(i) “Mandatory commercial registrant” or “registrant” means
34any individual, partnership, joint venture, association, limited
35liability company, corporation, estate, trust, receiver, syndicate,
36or any other group or combination thereof acting as a unit to
37cultivate, process, possess, store, manufacture, test, transport,
38distribute, provide, donate, or sell medical cannabis in compliance
39with this chapter, other than a patient or a patient’s primary
40caregiver, as defined by the Compassionate Use Act of 1996,
P12   1growing, possessing, storing, manufacturing, transporting, or
2providing medical cannabis exclusively for the personal medical
3purposes of individual patients as defined in subdivision (b) of
4Section 26052.

5(j) “Medical cannabis product” or “cannabis product” means
6any product containing cannabis, including concentrates and
7extractions, that is cultivated, manufactured, processed, packaged,
8and distributed in full compliance with the requirements of this
9chapter and with any regulations adopted by the department
10pursuant to its rulemaking authority. “Medical cannabis product”
11includes products that contain medical cannabis and are intended
12for oral or topical consumption by a qualified patient.

13(k) “Person” includes any individual, firm, copartnership, joint
14venture, association, corporation, estate, trust, business trust,
15receiver, syndicate, or any other group or combination acting as a
16unit and includes the plural as well as the singular number.

17(l) “Testing and labeling” means mandatory labeling and a
18quality assurance plan in place that addresses all of the following:

19(1) Potency.

20(2) Chemical residue.

21(3) Microbiological contaminants.

22(4) Random sample testing of medical cannabis and medical
23cannabis products.

24(5) Handling, care, and storage.

25(6) Date and location of production and manufacturing.

26

26010.  

This chapter and Article 2 (commencing with Section
2711357) and Article 2.5 (commencing with Section 11362.7) of
28Chapter 6 of Division 10 of the Health and Safety Code do not
29prevent a city or county from doing any of the following:

30(a) Adopting local ordinances inconsistent with this chapter that
31ban or regulate the location, operation, or establishment of a
32mandatory commercial registrant or other individual, partnership,
33joint venture, association, limited liability company, corporation,
34estate, trust, receiver, syndicate, or any other group or combination
35thereof acting as a unit, that cultivates, processes, possesses, stores,
36manufactures, tests, transports, distributes, provides, donates, or
37sells medical cannabis.

38(b) The civil or criminal enforcement of the ordinances described
39in subdivision (a).

P13   1(c) Establishing a fee or tax for the operation of a mandatory
2commercial registrant within its jurisdiction.

3(d) Enacting and enforcing other laws or ordinances pursuant
4to the authority granted by Section 7 of Article XI of the California
5Constitution.

6 

7Article 2.  Administration
8

 

9

26020.  

(a) There is hereby created in the Department of
10Alcoholic Beverage Control the Division of Medical Cannabis
11Regulation and Enforcement. The division shall be administered
12by a person exempt from the civil service who is appointed by the
13director.

14(b) The department shall have the power, consistent with the
15provisions of this chapter, to register persons for the cultivation,
16manufacture, testing, transportation, storage, distribution, and sale
17of medical cannabis within the state and to collect registration fees
18in connection with these actions.

19

26022.  

The department shall have all power necessary for
20administration of this chapter, including, but not limited to, the
21following:

22(a) Establishing statewide minimum standards for the
23commercial cultivation, manufacturing, testing, transportation,
24storage, distribution, provision, donation, and sale of medical
25cannabis and medical cannabis products and procedures for the
26issuance, renewal, suspension, and revocation of registrations of
27mandatory commercial registrants.

28(b) Establishing a scale of application, registration, and renewal
29fees, to be imposed by the state, for mandatory commercial
30registrants for the cultivation, manufacturing, testing,
31transportation, distribution, and sale of medical cannabis and
32medical cannabis products. The department may charge separate
33fees for each mandatory commercial registration application for
34cultivation, manufacturing, transportation, distribution, and sale.
35The total fees imposed pursuant to this chapter shall be based on
36the actual costs of administering and enforcing this chapter.

37(c) The department shall make and prescribe those rules as may
38be necessary or proper to carry out the purposes and intent of this
39chapter and to enable it to exercise the powers and perform the
40duties conferred upon it by this chapter and in accordance with
P14   1Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
23 of Title 2 of the Government Code. For the performance of its
3duties, the department has the powers as set forth in Article 2
4(commencing with Section 11180) of Chapter 2 of Part 1 of
5Division 3 of Title 2 of the Government Code.

6(d) Approving or denying mandatory commercial registration
7applications for cultivation, manufacturing, testing and labeling,
8transportation, distribution, provision, donation, and sale of medical
9cannabis pursuant to this chapter.

10(e) The department shall have the power, in its discretion, to
11deny, suspend, revoke, or fine any registration issued pursuant to
12this chapter if the department determines that the granting or
13continuance of the registration would be contrary to public welfare
14or morals or that a person holding or seeking a registration has
15violated any law prohibiting conduct involving moral turpitude or
16an applicable local ordinance.

17(f) Imposing any penalty authorized by this chapter or any rule
18or regulation adopted pursuant to this chapter.

19(g) Taking any action with respect to a mandatory commercial
20registration application in accordance with procedures established
21pursuant to this chapter.

22(h) Upon the denial of any application for a registration, the
23department shall notify the applicant in writing. After service of
24the notice and within the time prescribed by the department, the
25applicant may present his or her written petition for a registration
26to the department. Upon receipt by the department of a petition
27for a registration in proper form, the petition shall be set for
28hearing.

29(i) (1) For any hearing held pursuant to this chapter, the
30department may delegate the power to hear and decide to an
31administrative law judge appointed by the director. Any hearing
32before an administrative law judge shall be pursuant to the
33procedures, rules, and limitations prescribed in Chapter 5
34(commencing with Section 11500) of Part 1 of Division 3 of Title
352 of the Government Code.

36(2) Prior to suspending, revoking, or fining any registration, the
37department shall file an accusation as provided for in Section 11503
38of the Government Code, and the registrant may request a hearing.
39If the department determines that the public interest requires that
40a registration be summarily suspended pending hearing on charges
P15   1of misconduct that include any of the causes for suspension or
2revocation specified in this chapter, or if the department has
3information that leads it to believe that a registrant has violated
4any law prohibiting conduct involving moral turpitude or any
5applicable local ordinance, the department may, without hearing,
6temporarily suspend the registration for a period not exceeding 60
7days pending a hearing and decision on the charges.

8(j) Developing any forms, identification certificates, and
9applications that are necessary or convenient in the discretion of
10the department for the administration of this chapter or any of the
11rules or regulations adopted pursuant to this chapter.

12(k) Overseeing the operation of the Medical Cannabis Regulation
13Fund established pursuant to Section 26028.

14(l) Establishing fees for processing all applications, registrations,
15notices, or reports required to be submitted to the department. The
16amount of the fees shall reflect, but shall not exceed, the direct
17and indirect costs of the department for the administration of this
18chapter and the rules or regulations adopted pursuant to this
19chapter.

20(m) The department may consult with other state agencies,
21departments, or public or private entities for the purposes of
22establishing statewide standards and regulations.

23

26024.  

(a) The department may assist state taxation authorities
24in the development of uniform policies for the state taxation of
25mandatory commercial registrants.

26(b) The department shall assist the Division of Occupational
27Safety and Health in the Department of Industrial Relations in the
28development of industry-specific regulations related to commercial
29medical cannabis activities.

30

26028.  

(a) The Medical Cannabis Regulation Fund is hereby
31established within the State Treasury. Notwithstanding Section
3216305.7 of the Government Code, the fund shall include any
33interest and dividends earned on the money in the fund.

34(b) All fees collected pursuant to this chapter shall be deposited
35into the Medical Cannabis Regulation Fund. Notwithstanding
36Section 13340 of the Government Code, all moneys within the
37fund are hereby continuously appropriated, without regard to fiscal
38year, to the department solely for the purposes of fully funding
39and administering this chapter, including, but not limited to, the
40costs incurred by the department for its administrative expenses.

P16   1(c) All moneys collected pursuant to this chapter as a result of
2penalties imposed under this division shall be deposited directly
3into the General Fund, to be available upon appropriation.

4(d) The department may establish and administer a grant
5program to allocate moneys from the Medical Cannabis Regulation
6Fund to state and local entities for the purpose of assisting with
7medical cannabis regulation and the enforcement of this chapter
8and other state and local laws applicable to registrants.

9

26030.  

(a) The director and the persons employed by the
10department for the administration and enforcement of this chapter
11are peace officers in the enforcement of the penal provisions of
12this chapter, the rules of the department adopted under the
13provisions of this chapter, and any other penal provisions of law
14of this state prohibiting or regulating the cultivation, processing,
15storing, manufacturing, testing, transporting, or selling of medical
16cannabis, and these persons are authorized, while acting as peace
17officers, to enforce any penal provisions of law while in the course
18of their employment.

19(b) The director, the persons employed by the department for
20the administration and enforcement of this chapter, peace officers
21listed in Section 830.1 of the Penal Code, and those officers listed
22in Section 830.6 of the Penal Code while acting in the course and
23scope of their employment as peace officers may, in enforcing the
24provisions of this chapter, visit and inspect the premises of any
25mandatory commercial registrant at any time during which the
26registrant is acting pursuant to the registration.

27(c) Peace officers of the Department of the California Highway
28Patrol, members of the University of California and California
29State University police departments, and peace officers of the
30Department of Parks and Recreation, as defined in subdivisions
31(a), (b), (c), and (f) of Section 830.2 of the Penal Code, may, in
32enforcing this chapter, visit and inspect the premises of any
33mandatory commercial registrant located on state property at any
34time during which the registrant is acting pursuant to the
35registration.

36

26034.  

(a) Information identifying the names of patients, their
37medical conditions, or the names of their primary caregivers
38received and contained in records kept by the department for the
39purposes of administering this chapter are confidential and exempt
40from the California Public Records Act (Chapter 3.5 (commencing
P17   1with Section 6250) of Division 7 of Title 1 of the Government
2Code) and are not subject to disclosure to any individual or private
3entity, except as necessary for authorized employees of the State
4of California to perform official duties pursuant to this chapter:

5(b) (1) Nothing in this section precludes the following:

6(A) Division employees notifying state or local agencies about
7information submitted to the division that the employee suspects
8is falsified or fraudulent.

9(B) Notifications from the division to state or local agencies
10about apparent violations of this chapter or any applicable local
11ordinance.

12(C) Verification of requests by state or local agencies to confirm
13registrants and certificates issued by the division or other state
14agency.

15(D) Provision of information requested pursuant to a court order
16or subpoena issued by a court or an administrative agency or local
17governing body authorized by law to issue subpoenas.

18(2) Information shall not be disclosed beyond what is necessary
19to achieve the goals of a specific investigation or notification or
20the parameters of a specific court order or subpoena.

21 

22Article 3.  Mandatory Commercial Registration
23

 

24

26040.  

(a) On or before January 1, 2017, the department shall
25promulgate regulations necessary for the implementation and
26enforcement of this chapter. These regulations shall include:

27(1) Procedures for the issuance, renewal, suspension, and
28revocation of mandatory commercial registrations.

29(2) Application, registration, and renewal forms and fees
30consistent with this act.

31(3) Time periods, not to exceed 90 days, by which the
32department shall approve or deny an application for medical
33cannabis registration.

34(4) Qualifications for registrants.

35(5) Security requirements, including, but not limited to,
36procedures for limiting access to facilities and for the screening
37of employees. The department shall require all registrants to
38maintain an accurate roster of any employee’s name, date of birth,
39and relevant personally identifying information, which shall be
P18   1available for inspection by the department or state or local law
2enforcement upon demand.

3(6) Testing and labeling requirements, including, but not limited
4to, disclosure of the active cannabinoid profile, constituent
5elements, active ingredients, and results of testing for contaminants.

6(7) Health and safety requirements, including, but not limited
7to, prohibitions on shipping or distribution of products containing
8microbiological, bacterial, pathogenic yeast or mold counts, or
9any adulterant or contaminant, that exceed levels to be determined
10by the department.

11(8) Inspection and tracking requirements, including, but not
12limited to, an electronic production and inventory tracking system
13that will allow the department to monitor inventory data at every
14level of the cultivation, processing, and distribution system through
15a secure, Internet Web site-based portal.

16(9) Storage, packaging, and transportation procedures and
17protocols.

18(10) Advertising restrictions and requirements.

19(11) Requirements to ensure conformance with standards
20analogous to state statutory environmental, agricultural, consumer
21protection, and food and product safety requirements. These
22standards shall be administered and enforced by the department
23and shall be in addition to, and not limit, any other state
24requirements. At a minimum, these standards shall:

25(A) Prescribe sanitation standards analogous to the California
26Retail Food Code for food preparation, storage, and handling and
27sale of edible cannabis products.

28(B) Require that edible cannabis products produced, distributed,
29provided, donated, or sold by mandatory commercial registrants
30shall be limited to nonpotentially hazardous food as established
31by the State Department of Public Health pursuant to Section
32114365.5 of Health and Safety Code.

33(C) Provide standards for labeling edible cannabis products to
34ensure that the products cannot be mistaken as food not containing
35cannabis.

36(D) Require that facilities where edible cannabis products are
37prepared shall be constructed in accordance with applicable
38building standards, health and safety standards, and other state
39laws.

P19   1(E) Ensure that edible products distributed or sold by
2dispensaries are not produced or stored in private homes.

3(F) Provide that any weighing or measuring devices used in
4connection with the sale or distribution of cannabis are required
5to meet standards analogous to Division 5 (commencing with
6Section 12001).

7(G) Require that any application of pesticides or other pest
8control in connection with the indoor or outdoor cultivation of
9cannabis shall meet standards analogous to Division 6
10(commencing with Section 11401) of the Food and Agricultural
11Code and its implementing regulations.

12(H) Protect the state’s clean water and environment, including,
13but not limited to, protections related to land conversion, grading,
14water diversion and pond development, and agricultural discharges.

15(12) Requirements to prevent the diversion of cannabis to
16nonmedical use, including procedures and protocols for disposal
17of excess, contaminated, adulterated, or deteriorated products.

18(13) Civil penalties for the failure to comply with regulations
19adopted pursuant to this chapter.

20(b) A mandatory commercial registration application or renewal
21shall not be approved if the department determines any of the
22following:

23(1) The applicant fails to meet the requirements of this chapter
24or any regulation adopted pursuant to this chapter or any applicable
25city or county ordinance or regulation.

26(2) The applicant, or any of its officers, directors, owners,
27members, or shareholders is under 21 years of age.

28(3) The applicant has knowingly answered a question or request
29for information falsely on the application form or failed to provide
30information requested.

31(4) The applicant, or any of its officers, directors, owners,
32members, or shareholders has been convicted in the previous five
33years of a violent felony, as specified in subdivision (c) of Section
34667.5 of the Penal Code, a serious felony as specified in
35subdivision (c) of Section 1192.7 of the Penal Code, a felony
36offense involving fraud or deceit, or any other felony that, in the
37department’s estimation, would impair the applicant’s ability to
38appropriately operate as a mandatory commercial registrant.

P20   1(5) The applicant, or any of its officers, directors, owners,
2members, or shareholders is a licensed physician making patient
3recommendations for medical cannabis.

4(6) The applicant, or any of its officers, directors, owners,
5members, or shareholders has been sanctioned by the department,
6a city, or a county for cannabis activities conducted in violation
7of this chapter or any applicable local ordinance or has had a
8mandatory commercial registration revoked in the previous three
9years.

10(7) A sufficient number of mandatory commercial registrants
11already exists in the state, a city, or a county to provide a sufficient
12amount of medical cannabis to satisfy patients’ medical use in that
13jurisdiction.

14(8) The proposed cultivation, processing, possession, storage,
15manufacturing, testing, transporting, distribution, provision,
16donation, or sale of medical cannabis will violate any applicable
17local law or ordinance.

18(c) (1) In order to protect the public safety and provide patients
19with prompt, safe access to medical cannabis during
20implementation of this chapter, within 180 days of January 1, 2016,
21the department shall issue emergency regulations consistent with
22this chapter that allow a qualified applicant for mandatory
23commercial registration to apply, be reviewed, and be registered
24to cultivate, process, manufacture, store, and transport medical
25cannabis so as to ensure an adequate supply of medical cannabis
26upon full implementation of this chapter.

27(2) The department shall establish appropriate fees as part of
28its emergency regulations adopted pursuant to this chapter.

29

26042.  

For the purpose of regulating the commercial
30cultivation, manufacturing, testing, transportation, distribution,
31provision, donation, and sale of medical cannabis, the department
32shall establish various classes or types of registration for specific
33commercial medical cannabis-related activities, as set forth in this
34chapter. At a minimum, registrants engaged in the cultivation and
35processing of cannabis shall be in a different class from those
36registrants operating dispensaries.

37

26043.  

(a) Each mandatory commercial registration application
38approved by the department pursuant to this chapter is separate
39and distinct. A registrant shall not hold a mandatory commercial
40registration in more than one class of specified medical cannabis
P21   1activities. A registrant shall not be an officer, director, member,
2owner, or shareholder registrant in another class. The officers,
3directors, owners, members, or shareholders of a registrant in one
4class may not hold a registration in another class, shall not be an
5officer, director, member, owner, or shareholder of a registrant in
6another class.

7(b) A mandatory commercial registration application approved
8by the department pursuant to this chapter shall be valid for a
9period not to exceed one year from the date of approval unless
10revoked or suspended earlier than that date pursuant to this chapter
11or the rules or regulations adopted pursuant to this chapter.

12

26044.  

(a) The department shall limit the number of
13registrations statewide for the cultivation, processing, extraction,
14packaging, and transportation of medical cannabis to a number no
15greater than what is necessary to meet statewide need. In
16determining the appropriate number of registrations, the department
17may take into account information obtained from sources that
18include, but need not be limited to, municipalities, patients, and
19registrants.

20(b) The department shall ensure that the number of registrations
21that it approves does not exceed the ability of the department to
22enforce the provisions of this chapter, particularly with respect to
23ensuring patient safety and preventing illegal diversion of cannabis.

24(c) In establishing limits pursuant to this section, the department
25shall consider the following:

26(1) The purposes and intent of the Compassionate Use Act of
271996 to ensure an adequate supply of medical cannabis while
28endeavoring to prevent an oversupply of cannabis that may result
29in diversion.

30(2) The number of applicants for mandatory commercial
31registrations whose application demonstrates that they will be able
32to produce consistent products with strict quality controls, in full
33compliance with this chapter and with all applicable state and local
34regulations, and the amount of medical cannabis those applicants
35will be able to provide.

36

26045.  

Every mandatory commercial registration is renewable
37unless the registration has been revoked if the renewal registration
38is made and the fee for it is paid. A registration that has been
39suspended, but not revoked, may be renewed under this section,
40provided that the suspension shall remain in effect upon renewal.
P22   1All registrations expire at 12 midnight on the last day of the month
2posted on the registration. All registrations issued shall be renewed
3as follows:

4(a) The application to renew the registration may be filed before
5the registration expires upon payment of the annual fee.

6(b) For 60 days after the registration expires, the registration
7may be renewed upon payment of the annual renewal fee plus a
8penalty fee that shall be equal to 50 percent of the annual fee.

9(c) Unless otherwise terminated, or unless renewed pursuant to
10subdivision (a) or (b), a registration that is in effect on the month
11posted on the registration continues in effect through 12 midnight
12of the 60th day following the month posted on the registration, at
13which time it is automatically canceled.

14(d) A registration that has been canceled pursuant to subdivision
15(c) may be reinstated during the 30 days immediately following
16cancellation upon payment by cashier’s check or money order of
17the annual renewal fee, plus a penalty fee that shall be equal to
18100 percent of the annual fee. A registration that has been canceled
19pursuant to subdivision (c) and that has not been reinstated within
2030 days pursuant to this subdivision is automatically revoked on
21the 31st day after the registration has been canceled.

22(e) A renewal application shall not be deemed filed within the
23meaning of this section unless the document itself has been actually
24delivered to, and the required renewal fee has been paid at, any
25office of the department during office hours, or unless both the
26document and fee have been filed and remitted pursuant to Section
2711003 of the Government Code.

28

26046.  

An application for mandatory commercial registration
29shall include, but shall not be limited to, all of the following:

30(a) For all applicants:

31(1) The legal name and proposed physical addresses of the
32mandatory commercial registrant.

33(2) The name, address, and date of birth of each principal officer
34and board member.

35(3) Operating and inventory control procedures to ensure
36security and prevent diversion.

37(4) Detailed operating procedures for the proposed facility,
38which shall include, but not be limited to, provisions for facility
39and operational security, prevention of diversion, employee
P23   1screening, storage of medical cannabis, personnel policies, and
2recordkeeping procedures.

3(5) A list of all persons or entities having an ownership interest
4other than a security interest, lien, or encumbrance on any property
5that will be used by the applicant.

6(6) Evidence of the legal right to occupy and use an established
7location, or an immunity from prosecution for that occupancy or
8use pursuant to a local ordinance or ordinances, including, but not
9limited to, Measure D, approved by the voters of the City of Los
10Angeles at the May 21, 2013, general election, for the activities
11to be conducted if the desired registration is granted consistent
12with the provisions of this chapter and the regulations developed
13by the department.

14(7) Documentation that the applicant will be in compliance with
15all local ordinances and regulations, including an entity granted
16immunity under Measure D, approved by the voters of the City of
17Los Angeles at the May 21, 2013, general election.

18(8) Evidence that officers and owners of the applicant
19organization are citizens of the United States and residents of the
20State of California.

21(b) For applications for cultivation and processing, in addition
22to the requirements of subdivision (a), the application shall also
23include detailed operating procedures for cultivation, extraction
24and infusion methods, transportation of products, inventory
25procedures, procedures for quality control, and onsite testing of
26product for potential contaminants.

27

26047.  

Upon receipt of an application for a registration and
28the applicable fee, the department shall make a thorough
29investigation to determine whether the applicant and the premises
30for which a registration is applied qualify for the registration and
31whether the provisions of this chapter have been complied with,
32and shall investigate all matters connected therewith which may
33affect the public welfare and morals. The department shall deny
34an application for a registration if either the applicant or the
35premises for which a registration is applied do not qualify for a
36registration under this chapter. The department further shall deny
37an application for a registration if the department finds that issuance
38of that registration would create a law enforcement problem. The
39department may place conditions upon registrations if grounds
40 exist for denial of the registration, and the department finds those
P24   1grounds may be removed by the imposition of those conditions,
2provided that the requirements set forth in paragraphs (6) and (8)
3of subdivision (b) of Section 26040 shall not be waived.

4

26048.  

A physician shall not recommend medical cannabis to
5a patient while the physician is a mandatory commercial registrant,
6or an officer, director, owner, member, shareholder, employee, or
7financial beneficiary of a mandatory commercial registrant.

8

26049.  

(a) The actions of a mandatory commercial registrant
9or provisional registrant, its employees, and its agents, permitted
10pursuant to a mandatory commercial registration or provisional
11registration issued by the department or otherwise permitted by
12this chapter, that are conducted in accordance to the requirements
13of this chapter and regulations adopted pursuant to the authority
14granted by this chapter, are not unlawful under state law and shall
15not be an offense subject to arrest, prosecution, or other sanction
16under state law, or be subject to a civil fine or be a basis for seizure
17or forfeiture of assets under state law.

18(b) The actions of a person who, in good faith and upon
19investigation, allows his or her property to be used by a mandatory
20commercial registrant or provisional registrant, its employees, and
21its agents, as permitted pursuant to a mandatory commercial
22registration or provisional registration issued by the department
23or otherwise permitted by this chapter, are not unlawful under state
24law and shall not be an offense subject to arrest, prosecution, or
25other sanction under state law, or be subject to a civil fine or be a
26basis for seizure or forfeiture of assets under state law.

27(c) This section shall not be deemed to limit the authority or
28remedies of a city or county under any provision of law, including,
29without limitation, Section 26010 or 26060 of this code or Section
307 of Article XI of the California Constitution.

31

26050.  

(a) A registrant shall not cultivate, process, store,
32manufacture, test, transport, or sell medical cannabis in the state
33unless accurate records are kept at the registered premises of the
34growing, processing, storing, manufacturing, testing, transporting,
35or selling by the registrant in the state. These records shall include
36the name and address of the supplier of any cannabis or cannabis
37products received or possessed by the registrant, the location at
38which the cannabis was cultivated, the amount of cannabis
39received, the form in which it is received, the name of the employee
40receiving it, and the date of receipt. These records shall further
P25   1include receipts for all expenditures incurred by the registrant and
2banking records, if any, for all funds obtained or expended in the
3performance of any activity under the authority of the registration,
4provided that a registrant registered to act at more than one
5premises may keep all records at one of the registered premises.
6Required records shall be kept for a period of seven years from
7the date of the transaction.

8(b) The department and any state or local agency may make any
9examination of the books and records of any registrant and may
10visit and inspect the premises of any registrant that the department
11may deem necessary to perform its duties under this chapter.

12(c) Any books or records requested by the department or any
13state or local agency shall be provided by the registrant no later
14than at the end of the next business day after the request is made.

15(d) The department or any state or local agency may enter and
16inspect the premises of any facility operated by a registrant between
17the hours of 8 a.m. and 8 p.m. on any day that the facility is open,
18or at any reasonable time, to ensure compliance and enforcement
19of the provisions of this chapter or any local ordinance.

20(e) In the event that the registrant or any employee of the
21registrant refuses, impedes, obstructs, or interferes with an
22inspection pursuant to this chapter or local ordinance, or if the
23registrant fails to maintain or provide the books and records
24required by this section, the registration may be summarily
25suspended pursuant to paragraph (2) of subdivision (i) of Section
2626022 and the department shall directly commence proceedings
27for the revocation of the registration in accordance with this
28chapter.

29

26052.  

(a) This chapter shall not apply to, and shall have no
30diminishing effect on, the rights and protections granted to a patient
31or a primary caregiver pursuant to the Compassionate Use Act of
321996.

33(b) (1) A patient who cultivates, possesses, stores, manufactures,
34or transports cannabis exclusively for his or her personal medical
35use and who does not sell, distribute, donate, or provide cannabis
36to any other person is not considered a commercial registrant and
37is exempt from mandatory commercial registration under this
38chapter.

39(2) A primary caregiver who cultivates, possesses, stores,
40manufactures, transports, or provides cannabis exclusively for the
P26   1 personal medical purposes of a specified qualified patient for whom
2he or she is the primary caregiver within the meaning of Section
311362.7 of the Health and Safety Code and who does not receive
4remuneration for these activities except for compensation in full
5compliance with subdivision (c) of Section 11362.765 of the Health
6and Safety Code is not considered a commercial registrant and is
7exempt from mandatory commercial registration under this chapter.

8

26054.  

Beginning January 1, 2015, the department shall provide
9for provisional registrations as follows:

10(a) The department shall request that every city or county
11provide the department with a list of approved entities providing
12medical cannabis to qualified patients and caregivers within the
13city or county’s jurisdiction, if any, the location at which the entity
14is operating, and the names of the persons who operate the entity.
15If the jurisdiction represents that the entity has been operating in
16compliance with local laws and regulations, or has limited
17immunity under local laws, including, but not limited to, Measure
18D, approved by the voters of the City of Los Angeles at the May
1921, 2013, general election, the department shall issue a provisional
20registration to the entity until the time that the entity’s application
21for mandatory commercial registration has been approved or denied
22under this chapter, but no later than 90 days after the department
23begins accepting applications for mandatory commercial
24registration.

25(b) The department shall issue a provisional registration to
26individuals and entities that the department determines were, during
27the six months prior to January 1, 2016, regularly cultivating or
28distributing medical cannabis collectively or cooperatively in full
29compliance with paragraphs A and B of Section IV of the
30Guidelines for Security and Non-Diversion of Marijuana Grown
31for Medical Use, issued by the Department of Justice in August
322008, and any applicable local ordinance, to continue to do so until
33such time as the registrant’s application for mandatory commercial
34registration has been approved or denied under this chapter, but
35no later than 90 days after the department begins accepting
36 applications for mandatory commercial registration. To qualify,
37provisional registrants shall be required to disclose to the
38department the following information in writing on or before
39January 20, 2016, in order to obtain provisional registration:

P27   1(1) The names, addresses, and dates of birth of each principal
2officer, owner, or board member.

3(2) The common street address and assessor’s parcel number
4of the property at which the registrant conducts any activity under
5the authority of the registration.

6(3) The common street address and assessor’s parcel number
7of the property at which any cultivation activity was or is to be
8conducted.

9(4) For the six months prior to January 1, 2016, the quantity of
10cannabis cultivated at a location and the quantity expected to be
11cultivated from January 1, 2016, to June 30, 2016, inclusive. The
12registrant shall make its records of current activity and activity for
13the six months prior to January 1, 2016, available to the department
14upon request.

15(c) The department shall charge an application fee of five
16thousand dollars ($5,000) for each provisional registration.

17(d) Notwithstanding any other provision of this section, the
18department shall not issue a provisional registration to any
19individual or entity, or for any premises, against whom there are
20pending state or local administrative or judicial proceedings or
21actions initiated by a city or county under any applicable local
22ordinance or who has been determined through those proceedings
23to have violated any applicable local ordinance.

24

26055.  

Entities that are provided immunity under Measure D,
25approved by the voters of the City of Los Angeles at the May 21,
262013, general election, shall be considered the equivalent of entities
27that are registered, permitted, or licensed as a medical marijuana
28business, dispensary, or other entity involved in providing medical
29marijuana to patients under a local ordinance and shall be
30considered in compliance with a local ordinance for the purposes
31of the implementation of the act adding this section and any
32regulations promulgated by the department.

33

26056.  

In addition to other regulations adopted by the
34department pertaining to mandatory commercial registrants and
35without limiting the authority of a city or a county pursuant to
36Section 7 of Article XI of the California Constitution or any other
37law, the department shall adopt regulations regarding the minimum
38standards for the operation of dispensaries that establish all of the
39following:

P28   1(a) Standards for labeling of products, including the name of
2the mandatory commercial registrant from which the product was
3obtained, and a requirement that dispensaries provide patients with
4detailed written information about the contents of the cannabis
5and medical cannabis products they obtain.

6(b) Requirements for inventory control and reporting that require
7all dispensaries to be able to demonstrate the present location,
8amounts, and descriptions of all medical cannabis products from
9the time of delivery to the dispensary until purchase by a qualified
10patient or primary caregiver.

11(c) The maximum number of dispensaries that may operate in
12a city or county or the unincorporated areas of a county based on
13population, taking into consideration the distances that patients in
14rural areas may need to travel in order to reach a dispensary and
15the availability of public transportation in both rural and urban
16areas. The number established by the department for any city or
17county may not exceed the number of dispensaries allowed by any
18applicable local ordinance.

19(d) Minimum educational and testing requirements for
20dispensary staff, including background checks, and a requirement
21that every dispensary maintain dedicated, licensed security staff
22both inside and outside the dispensary.

23(e) Maximum hours of operation for every dispensary.

24(f) Minimum standards governing signage and advertising for
25dispensaries.

26

26057.  

The department shall make recommendations to the
27Legislature pertaining to the establishment of an appeals and
28judicial review process for persons aggrieved by a final decision
29of the department.

30 

31Article 4.  Enforcement
32

 

33

26060.  

(a) The department shall work in conjunction with law
34enforcement entities throughout the state for the purpose of
35implementing and enforcing the rules and regulations regarding
36commercial medical cannabis and taking appropriate action against
37businesses and individuals who fail to comply with the law.

38(b) Nothing in this chapter or in Article 2 (commencing with
39Section 11357) or Article 2.5 (commencing with Section 11362.7)
40of Chapter 6 of Division 10 of the Health and Safety Code shall
P29   1prevent a city, county, or city and county from adopting or
2enforcing a zoning ordinance or other law, ordinance, or regulation
3that bans or regulates the location, operation, or establishment of
4a mandatory commercial registrant or other individual, partnership,
5joint venture, association, limited liability company, corporation,
6estate, trust, receiver, syndicate, or any other group or combination
7thereof acting as a unit, that cultivates, processes, possesses, stores,
8manufactures, tests, transports, distributes, provides, donates, or
9sells medical cannabis.

10

26062.  

Except for a person identified in Section 26052, a person
11shall not exercise the privilege or perform any act that a registrant
12may exercise or perform under the authority of a registration unless
13the person is acting pursuant to a registration, including a
14provisional registration, issued pursuant to this chapter.

15

26063.  

(a) Commencing January 1, 2017, any product
16containing cannabis that is distributed, except in the case of a
17primary caregiver distributing to a qualified patient, or offered for
18sale shall comply with the testing, labeling, and food safety
19requirements established through regulation by the department.

20(b) No person shall steal or fraudulently use a mandatory
21commercial registrant identification certificate or registration or
22other registrant’s identification card or registration issued by the
23department to acquire, cultivate, transport, produce, possess for
24sale, sell, provide, donate, or distribute cannabis.

25(c) No person shall counterfeit, tamper with, or fraudulently
26produce an identification card or registration status.

27(d) Any person who violates this section, or Section 26062, is
28guilty of a misdemeanor and shall be subject to the following
29penalties:

30(1) For the first offense, imprisonment in a county jail for no
31more than six months or a fine not to exceed five thousand dollars
32($5,000), or both.

33(2) For a second or subsequent offense, imprisonment in a
34county jail for no more than one year or a fine not to exceed eight
35thousand dollars ($8,000), or both.

36(e) Any person who is charged, prosecuted, or subjected to a
37civil penalty under this chapter shall not also be charged or
38prosecuted pursuant to the Health and Safety Code for conduct
39arising from the same set of facts.

P30   1

26064.  

Any person operating an unregistered facility, building,
2structure, or location where cannabis is being commercially
3cultivated, manufactured, or possessed for sale in violation of this
4chapter may be subject to civil penalties of up to twenty-five
5thousand dollars ($25,000) for each violation, and the department
6may order the destruction of any cannabis associated with that
7violation. Each day of operation shall constitute a separate violation
8of this section. Any civil fines collected pursuant to this section
9shall be deposited into the General Fund pursuant to Section 26028.

10

26066.  

The director or any district attorney, county counsel,
11city attorney, or city prosecutor may bring an action in the name
12of the people of the State of California to enjoin a violation or the
13threatened violation of any provision of this chapter, including,
14but not limited to, a registrant’s failure to correct objectionable
15conditions following notice or as a result of any rule promulgated
16pursuant to this chapter. The action shall be brought in the county
17in which the violation occurred or is threatened to occur. Any
18proceeding brought pursuant to this chapter shall conform to the
19requirements of Chapter 3 (commencing with Section 525) of Title
207 of Part 2 of the Code of Civil Procedure.

21

26068.  

A state or local law enforcement agency shall
22immediately notify the department of any arrests made for
23violations over which the department has jurisdiction which involve
24a registrant or registered premises. Notice shall be given within
2510 days of the arrest. The department shall promptly cause an
26investigation to be made as to whether grounds exist for suspension
27or revocation of a registration of the registrant.

28

26070.  

This chapter shall not be construed to limit a law
29enforcement agency’s ability to investigate unlawful activity in
30relation to a mandatory commercial registrant.

31

26072.  

The department shall create and maintain a searchable
32database that will allow state and local law enforcement to verify
33a mandatory commercial registration.

34 

35Article 5.  Transportation of Medical Cannabis
36

 

37

26100.  

To claim the protections of this chapter and to maintain
38a valid mandatory commercial registration, a registrant shall
39transport medical cannabis products only to the registered facilities
P31   1of a mandatory commercial registrant and only in response to a
2request for a specific quantity and variety from that registrant.

3

26102.  

(a) Prior to transporting any medical cannabis product,
4a mandatory commercial registrant shall do the following:

5(1) Complete a shipping manifest using a form prescribed by
6the department.

7(2) Securely transmit a copy of the manifest to the mandatory
8commercial registrant that will receive the medical cannabis
9product and to the department prior to transport.

10(b) The mandatory commercial registrant shipping and the
11registrant receiving shall maintain each shipping manifest and
12make it available to the department upon request.

13

26104.  

(a) Transported medical cannabis products shall:

14(1) Be transported only in a locked, safe and secure storage
15compartment that is securely affixed to the interior of the
16transporting vehicle.

17(2) Not be visible from outside the vehicle.

18(b) Any vehicle transporting medical cannabis products shall
19travel directly from the facilities of the mandatory commercial
20registrant to the registered facilities of the registrant authorized to
21receive the shipment.

22

26106.  

(a) A mandatory commercial registrant shall staff all
23transport vehicles with a minimum of two employees. At least one
24delivery team member shall remain with the vehicle at all times
25that the vehicle contains medical cannabis.

26(b) Each delivery team member shall have access to a secure
27form of communication by which each member can communicate
28with personnel at the mandatory commercial registrant facility at
29all times that the vehicle contains medical cannabis.

30(c) Each delivery team member shall possess documentation of
31mandatory commercial registration and a government-issued
32identification card at all times when transporting or delivering
33medical cannabis and shall produce it to any representative of the
34department or law enforcement official upon request.

35

26107.  

This chapter shall not be construed to authorize or
36permit any registrant to transport, or cause to be transported,
37cannabis or cannabis products outside the state.

38

SEC. 7.  

Section 23028 is added to the Government Code, to
39read:

P32   1

23028.  

(a) (1) In addition to any authority otherwise provided
2by law, the board of supervisors of any county may impose, by
3ordinance, a tax on the privilege of cultivating, dispensing,
4producing, processing, preparing, storing, providing, donating,
5selling, or distributing cannabis or cannabis products by a
6mandatory commercial registrant operating pursuant to Chapter
718 (commencing with Section 26000) of Division 9 of the Business
8and Professions Code. The tax may be imposed for general
9governmental purposes or for purposes specified in the ordinance
10by the board of supervisors.

11(2) The board of supervisors shall specify in the ordinance
12proposing the tax the activities subject to the tax, the applicable
13rate or rates, the method of apportionment, and the manner of
14collection of the tax. A tax imposed pursuant to this section is a
15tax and not a fee or special assessment, and the tax is not required
16to be apportioned on the basis of benefit to any person or property
17or be applied uniformly to all taxpayers or all real property.

18(3) A tax imposed by a county pursuant to this section by a
19county may include a transactions and use tax imposed solely for
20cannabis or cannabis products, which shall otherwise conform to
21Part 1.6 (commencing with Section 7251) of Division 2 of the
22Revenue and Taxation Code. Notwithstanding Section 7251.1 of
23the Revenue and Taxation Code, the tax may be imposed at any
24rate specified by the board of supervisors, and the tax rate
25authorized by this section shall not be considered for purposes of
26the combined tax rate limitation established by that section.

27(4) The tax authorized by this section may be imposed upon
28any or all of the activities set forth in paragraph (1), regardless of
29whether the activity is undertaken individually, collectively, or
30cooperatively, and regardless of whether the activity is for
31compensation or gratuitously, as determined by the board of
32supervisors.

33(5) The board of supervisors shall specify whether the tax applies
34throughout the entire county or within the unincorporated area of
35the county.

36(b) In addition to any other method of collection authorized by
37law, the board of supervisors may provide for collection of the tax
38imposed pursuant to this section in the same manner, and subject
39to the same penalties and priority of lien, as other charges and
40taxes fixed and collected by the county.

P33   1(c) Any tax imposed pursuant to this section shall be subject to
2applicable voter approval requirements imposed by any other law.

3(d) For purposes of this section, “cannabis” and “cannabis
4products” shall have the meanings set forth in Section 26001 of
5the Business and Professions Code.

6(e) This section does not limit or prohibit the levy or collection
7or any other fee, charge, or tax, or any license or service fee or
8charge upon, or related to, the activities set forth in subdivision
9(a) as otherwise provided by law. This section shall not be
10construed as a limitation upon the taxing authority of any county
11as provided by other law.

12

SEC. 8.  

Section 11362.7 of the Health and Safety Code is
13amended to read:

14

11362.7.  

For purposes of this article, the following definitions
15shall apply:

16(a) “Attending physician” means an individual who possesses
17a license in good standing to practice medicine or osteopathy issued
18by the Medical Board of California or the Osteopathic Medical
19Board of California and who has taken responsibility for an aspect
20of the medical care, treatment, diagnosis, counseling, or referral
21of a patient and who hasbegin delete conducted a medical examination ofend delete
22begin insert performed an appropriate prior examination, foundend insert thatbegin delete patient
23before recording inend delete
begin delete the patient’s medical record the physician’s
24assessment of whetherend delete
the patient has abegin delete serious medical condition
25and whether theend delete
begin insert medical indication, and recommends marijuana
26forend insert
medicalbegin delete use of marijuana is appropriate.end deletebegin insert purposes to treat a
27serious medical condition.end insert

28(b) “Department” means the State Department ofbegin delete Health
29Services.end delete
begin insert Public Health.end insert

30(c) “Person with an identification card” means an individual
31who is a qualified patient who has applied for and received a valid
32identification card pursuant to this article.

33(d) “Primary caregiver” means the individual, designated by a
34qualified patient or by a person with an identification card, who
35has consistently assumed responsibility for the housing, health, or
36safety of that patient or person, and may include any of the
37following:

38(1) In any case in which a qualified patient or person with an
39identification card receives medical care or supportive services,
40or both, from a clinic licensed pursuant to Chapter 1 (commencing
P34   1with Section 1200) of Division 2, a health care facility licensed
2pursuant to Chapter 2 (commencing with Section 1250) of Division
32, a residential care facility for persons with chronic life-threatening
4illness licensed pursuant to Chapter 3.01 (commencing with Section
51568.01) of Division 2, a residential care facility for the elderly
6licensed pursuant to Chapter 3.2 (commencing with Section 1569)
7of Division 2, a hospice, or a home health agency licensed pursuant
8to Chapter 8 (commencing with Section 1725) of Division 2, the
9owner or operator, or no more than three employees who are
10designated by the owner or operator, of the clinic, facility, hospice,
11or home health agency, if designated as a primary caregiver by
12that qualified patient or person with an identification card.

13(2) An individual who has been designated as a primary
14caregiver by more than one qualified patient or person with an
15identification card, if every qualified patient or person with an
16identification card who has designated that individual as a primary
17caregiver resides in the same city or county as the primary
18caregiver.

19(3) An individual who has been designated as a primary
20caregiver by a qualified patient or person with an identification
21card who resides in a city or county other than that of the primary
22caregiver, if the individual has not been designated as a primary
23caregiver by any other qualified patient or person with an
24identification card.

25(e) A primary caregiver shall be at least 18 years of age, unless
26the primary caregiver is the parent of a minor child who is a
27qualified patient or a person with an identification card or the
28primary caregiver is a person otherwise entitled to make medical
29decisions under state law pursuant to Sections 6922, 7002, 7050,
30or 7120 of the Family Code.

31(f) “Qualified patient” means a person who is entitled to the
32protections of Section 11362.5, but who does not have an
33identification card issued pursuant to this article.

34(g) “Identification card” means a document issued by the State
35Department ofbegin insert Publicend insert Healthbegin delete Servicesend delete that document identifies a
36person authorized to engage in the medical use of marijuana and
37the person’s designated primary caregiver, if any.

38(h) “Serious medical condition” means all of the following
39medical conditions:

40(1) Acquired immune deficiency syndrome (AIDS).

P35   1(2) Anorexia.

2(3) Arthritis.

3(4) Cachexia.

4(5) Cancer.

5(6) Chronic pain.

6(7) Glaucoma.

7(8) Migraine.

8(9) Persistent muscle spasms, including, but not limited to,
9spasms associated with multiple sclerosis.

10(10) Seizures, including, but not limited to, seizures associated
11with epilepsy.

12(11) Severe nausea.

13(12) Any other chronic or persistent medical symptom that
14either:

15(A) Substantially limits the ability of the person to conduct one
16or more major life activities as defined in the Americans with
17Disabilities Act of 1990 (Public Law 101-336).

18(B) If not alleviated, may cause serious harm to the patient’s
19safety or physical or mental health.

20(i) “Written documentation” means accurate reproductions of
21those portions of a patient’s medical records that have been created
22by the attending physician, that contain the information required
23by paragraph (2) of subdivision (a) of Section 11362.715, and that
24the patient may submit to a county health department or the
25county’s designee as part of an application for an identification
26card.

27

SEC. 9.  

Section 11362.775 of the Health and Safety Code is
28amended to read:

29

11362.775.  

begin insert(a)end insertbegin insertend insert Qualified patients, persons with valid
30identification cards, and the designated primary caregivers of
31qualified patients and persons with identification cards, who
32associate within the State of California in order collectively or
33cooperatively to cultivate marijuana for medical purposes, shall
34not solely on the basis of that fact be subject to state criminal
35sanctions under Section 11357, 11358, 11359, 11360, 11366,
3611366.5, or 11570.

begin insert

37(b) This section shall remain in effect only until 90 days after
38the Department of Alcoholic Beverage Control posts a notice on
39its Internet Web site that it began accepting applications for
40mandatory commercial registration pursuant to Article 3
P36   1(commencing with Section 26040) of Chapter 18 of Division 9 of
2the Business and Professions Code, and as of that date is repealed.

end insert
3

SEC. 10.  

The provisions of this act are severable. If any
4provision of this act or its application is held invalid, that invalidity
5shall not affect other provisions or applications that can be given
6effect without the invalid provision or application.

7

SEC. 11.  

The Legislature finds and declares that Section 3 of
8this act imposes a limitation on the public’s right of access to
9documents in the possession of a public agency within the meaning
10of Section 3 of Article I of the California Constitution. Pursuant
11to that constitutional provision, the Legislature makes the following
12finding to demonstrate the interest protected by this limitation and
13the need for protecting that interest:

14It is necessary to maintain the confidentiality of patient and
15physician information provided to the Division of Medical
16Cannabis Regulation and Enforcement in order to protect the
17private medical information of patients who use medical cannabis
18and to preserve the essential confidentiality of the physician and
19patient relationship.

20

SEC. 12.  

No reimbursement is required by this act pursuant
21to Section 6 of Article XIII B of the California Constitution because
22the only costs that may be incurred by a local agency or school
23district will be incurred because this act creates a new crime or
24infraction, eliminates a crime or infraction, or changes the penalty
25for a crime or infraction, within the meaning of Section 17556 of
26the Government Code, or changes the definition of a crime within
27the meaning of Section 6 of Article XIII B of the California
28Constitution.



O

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