Amended in Assembly January 4, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 26

Introduced by Assembly Member Jones-Sawyer

December 1, 2014

begin delete 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. end delete begin insert An act to amend Sections 19322 and 19323 of, and to add Section 19326.5 to, the Business and Professions Code, relating to medical cannabis. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 26, as amended, 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 begin delete 6, end delete begin insert 5, end insert 1996, statewide general election, authorizes the use of marijuana for medical purposes. begin delete 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. end delete begin insert Existing law, the Medical Marijuana Regulation and Safety Act (MMRSA), enacted by the Legislature, establishes within the Department of Consumer Affairs the Bureau of Medical Marijuana Regulation, and provides for the state licensure and regulation of certain commercial medical marijuana activities by the Department of Consumer Affairs, the Department of Food and Agriculture, or the State Department of Public Health, as specified. MMRSA requires an applicant for state licensure to provide specified information and a statement, signed by the applicant under penalty of perjury, that the information is complete, true, and accurate. MMRSA authorizes a state licensing authority to deny an application if specified conditions are met, and requires a state licensee, among other things, to obtain applicable local licenses prior to commencing commercial cannabis activity and to keep accurate records of commercial cannabis activity. end insert

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This bill would require a state licensee to institute and maintain a training program for the licensee’s agents and employees regarding compliance with MMRSA, as specified, and would require that an application for state licensure include a detailed description of the applicant’s program, thereby modifying the crime of perjury and imposing a state-mandated local program. The bill would make the bureau the sole state agency responsible for approving and regulating the programs and would prohibit the bureau from approving a program provided by or through certain apprenticeship programs. The bill would require a state licensing authority to deny the application of an applicant that does not have, or revoke the license of a state licensee that fails to institute or maintain, a program approved by the bureau.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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(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%.

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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.

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(3)

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begin insert (2) end insert   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:  begin delete yes end delete begin insert no end insert . Fiscal committee: yes. State-mandated local program: yes.

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

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 19322 of the end insert begin insert Business and Professions
Code end insert begin insert is amended to read: end insert

19322.  

(a) A person or entity shall not submit an application
for a state license issued by the department pursuant to this chapter
unless that person or entity has received a license, permit, or
authorization by a local jurisdiction. An applicant for any type of
state license issued pursuant to this chapter shall do all of the
following:

(1) Electronically submit to the Department of Justice fingerprint
images and related information required by the Department of
Justice for the purpose of obtaining information as to the existence
and content of a record of state or federal convictions and arrests,
and information as to the existence and content of a record of state
or federal convictions and arrests for which the Department of
Justice establishes that the person is free on bail or on his or her
own recognizance, pending trial or appeal.

(A) The Department of Justice shall provide a response to the
licensing authority pursuant to paragraph (1) of subdivision (p) of
Section 11105 of the Penal Code.

(B) The licensing authority shall request from the Department
of Justice subsequent notification service, as provided pursuant to
Section 11105.2 of the Penal Code, for applicants.

(C) The Department of Justice shall charge the applicant a fee
sufficient to cover the reasonable cost of processing the requests
described in this paragraph.

(2) Provide documentation issued by the local jurisdiction in
which the proposed business is operating certifying that the
applicant is or will be in compliance with all local ordinances and
regulations.

(3) Provide evidence of the legal right to occupy and use the
proposed location. For an applicant seeking a cultivator, distributor,
manufacturing, or dispensary license, provide a statement from
the owner of real property or their agent where the cultivation,
distribution, manufacturing, or dispensing commercial medical
cannabis activities will occur, as proof to demonstrate the
landowner has acknowledged and consented to permit cultivation,
distribution, manufacturing, or dispensary activities to be conducted
on the property by the tenant applicant.

(4) If the application is for a cultivator or a dispensary, provide
evidence that the proposed location is located beyond at least a
600-foot radius from a school, as required by Section 11362.768
of the Health and Safety Code.

(5) Provide a statement, signed by the applicant under penalty
of perjury, that the information provided is complete, true, and
accurate.

(6) (A) For an applicant with 20 or more employees, provide
a statement that the applicant will enter into, or demonstrate that
it has already entered into, and abide by the terms of a labor peace
agreement.

(B) For the purposes of this paragraph, “employee” does not
include a supervisor.

(C) For purposes of this paragraph, “supervisor” means an
individual having authority, in the interest of the licensee, to hire,
transfer, suspend, lay off, recall, promote, discharge, assign,
reward, or discipline other employees, or responsibility to direct
them or to adjust their grievances, or effectively to recommend
such action, if, in connection with the foregoing, the exercise of
that authority is not of a merely routine or clerical nature, but
requires the use of independent judgment.

(7) Provide the applicant’s seller’s permit number issued
pursuant to Part 1 (commencing with Section 6001) of Division 2
of the Revenue and Taxation Code or indicate that the applicant
is currently applying for a seller’s permit.

(8) Provide any other information required by the licensing
authority.

(9) For an applicant seeking a cultivation license, provide a
statement declaring the applicant is an “agricultural employer,” as
defined in the Alatorre-Zenovich-Dunlap-Berman Agricultural
Labor Relations Act of 1975 (Part 3.5 (commencing with Section
1140) of Division 2 of the Labor Code), to the extent not prohibited
by law.

(10) For an applicant seeking licensure as a testing laboratory,
register with the State Department of Public Health and provide
any information required by the State Department of Public Health.

(11) Pay all applicable fees required for licensure by the
licensing authority.

(b) For applicants seeking licensure to cultivate, distribute, or
manufacture medical cannabis, the application shall also include
a detailed description of the applicant’s operating procedures for
all of the following, as required by the licensing authority:

(1) Cultivation.

(2) Extraction and infusion methods.

(3) The transportation process.

(4) Inventory procedures.

(5) Quality control procedures.

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(c) For all applicants, the application shall also include a
detailed description of the agent and employee training program
that the applicant has instituted, or will institute, pursuant to
Section 19326.5. A licensing authority shall not approve an
application unless the applicant’s training program is approved
by the bureau. The bureau shall not approve a training program
provided, or proposed to be provided, by or through an
apprenticeship program approved by the Chief of the Division of
Apprenticeship Standards.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 19323 of the end insert begin insert Business and Professions Code end insert
begin insert is amended to read: end insert

19323.  

(a) The licensing authority shall deny an application
if either the applicant or the premises for which a state license is
applied do not qualify for licensure under this chapter.

(b) The licensing authority may deny the application for
licensure or renewal of a state license if any of the following
conditions apply:

(1) Failure to comply with the provisions of this chapter or any
rule or regulation adopted pursuant to this chapter, including but
not limited to, any requirement imposed to protect natural
resources, instream flow, and water quality pursuant to subdivision
(a) of Section 19332.

(2) Conduct that constitutes grounds for denial of licensure
pursuant to Chapter 2 (commencing with Section 480) of Division
1.5.

(3) A local agency has notified the licensing authority that a
licensee or applicant within its jurisdiction is in violation of state
rules and regulation relating to commercial cannabis activities,
and the licensing authority, through an investigation, has
determined that the violation is grounds for termination or
revocation of the license. The licensing authority shall have the
authority to collect reasonable costs, as determined by the licensing
authority, for investigation from the licensee or applicant.

(4) The applicant has failed to provide information required by
the licensing authority.

(5) The applicant or licensee has been convicted of an offense
that is substantially related to the qualifications, functions, or duties
of the business or profession for which the application is made,
except that if the licensing authority determines that the applicant
or licensee is otherwise suitable to be issued a license and granting
the license would not compromise public safety, the licensing
authority shall conduct a thorough review of the nature of the
crime, conviction, circumstances, and evidence of rehabilitation
of the applicant, and shall evaluate the suitability of the applicant
or licensee to be issued a license based on the evidence found
through the review. In determining which offenses are substantially
related to the qualifications, functions, or duties of the business or
profession for which the application is made, the licensing authority
shall include, but not be limited to, the following:

(A) A felony conviction for the illegal possession for sale, sale,
manufacture, transportation, or cultivation of a controlled
substance.

(B) A violent felony conviction, as specified in subdivision (c)
of Section 667.5 of the Penal Code.

(C) A serious felony conviction, as specified in subdivision (c)
of Section 1192.7 of the Penal Code.

(D) A felony conviction involving fraud, deceit, or
embezzlement.

(6) The applicant, or any of its officers, directors, or owners, is
a licensed physician making patient recommendations for medical
cannabis pursuant to Section 11362.7 of the Health and Safety
Code.

(7) The applicant or any of its officers, directors, or owners has
been subject to fines or penalties for cultivation or production of
a controlled substance on public or private lands pursuant to
Section 12025 or 12025.1 of the Fish and Game Code.

(8) The applicant, or any of its officers, directors, or owners,
has been sanctioned by a licensing authority or a city, county, or
city and county for unlicensed commercial medical cannabis
activities or has had a license revoked under this chapter in the
three years immediately preceding the date the application is filed
with the licensing authority.

(9) Failure to obtain and maintain a valid seller’s permit required
pursuant to Part 1 (commencing with Section 6001) of Division 2
of the Revenue and Taxation Code.

begin insert

(c) The licensing authority shall deny an application unless the
applicant’s agent and employee training program is approved by
the bureau pursuant to subdivision (c) of Section 19322.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 19326.5 is added to the end insert begin insert Business and
Professions Code end insert begin insert , to read: end insert

begin insert

begin insert 19326.5. end insert   

(a) A licensee shall institute and maintain a training
program to educate, inform, and train the licensee’s agents and
employees on compliance with this chapter. The training program
must be approved by the bureau and must include, but is not limited
to, training on applicable substantive legal requirements, industry
best practices, occupational health and safety standards, and
individual organizational or company policies.

(b) (1) The bureau shall adopt standards for the approval of
training programs and shall be the sole state agency responsible
for approving and regulating the training programs.

(2) The bureau shall not approve a training program provided,
or proposed to be provided, by or through an apprenticeship
program approved by the Chief of the Division of Apprenticeship
Standards.

(c) A state licensing authority shall revoke the license of any
licensee that fails to institute or maintain a training program
approved by the bureau pursuant to this section.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert begin insert

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

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SECTION 1.  

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

SEC. 2.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 3.  

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

2220.05.  

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

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

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

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

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

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

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

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

SEC. 4.  

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

2242.  

(a) Prescribing, dispensing, or furnishing dangerous
drugs as defined in Section 4022, or recommending marijuana to
a patient for a medical purpose, without an appropriate prior
examination and a medical indication, including an in-person
examination when recommending marijuana, or recommending
marijuana for a nonmedical purpose, constitutes unprofessional
conduct.

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

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

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

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

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

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

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

SEC. 5.  

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

2264.  

The employing, directly or indirectly, the aiding, or the
abetting of any unlicensed person or any suspended, revoked, or
unlicensed practitioner to engage in the practice of medicine,
including employment by, other agreement with, a mandatory
commercial registrant acting pursuant to the Medical Cannabis
Regulation and Control Act or a dispensary to provide
recommendations for medical marijuana, or any other mode of
treating the sick or afflicted which requires a license to practice
constitutes unprofessional conduct.

SEC. 6.  

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

 

Chapter  18. Medical Cannabis Regulation

 

Article 1.  General Provisions

 

26000.  

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

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

26001.  

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

26002.  

For the purpose of this chapter:

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

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

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

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

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

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

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

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

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

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

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

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

(1) Potency.

(2) Chemical residue.

(3) Microbiological contaminants.

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

(5) Handling, care, and storage.

(6) Date and location of production and manufacturing.

26010.  

This chapter and Article 2 (commencing with Section
11357) and Article 2.5 (commencing with Section 11362.7) of
Chapter 6 of Division 10 of the Health and Safety Code do not
prevent a city or county from doing any of the following:

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

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

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

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

 

Article 2.  Administration

 

26020.  

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

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

26022.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

26024.  

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

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

26028.  

(a) The Medical Cannabis Regulation Fund is hereby
established within the State Treasury. Notwithstanding Section
16305.7 of the Government Code, the fund shall include any
interest and dividends earned on the money in the fund.

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

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

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

26030.  

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

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

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

26034.  

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

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

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

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

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

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

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

 

Article 3.  Mandatory Commercial Registration

 

26040.  

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

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

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

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

(4) Qualifications for registrants.

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

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

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

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

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

(10) Advertising restrictions and requirements.

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

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

(B) Require that edible cannabis products produced, distributed,
provided, donated, or sold by mandatory commercial registrants
shall be limited to nonpotentially hazardous food as established
by the State Department of Public Health pursuant to Section
114365.5 of Health and Safety Code.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

26042.  

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

26043.  

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

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

26044.  

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

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

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

(1) The purposes and intent of the Compassionate Use Act of
1996 to ensure an adequate supply of medical cannabis while
endeavoring to prevent an oversupply of cannabis that may result
in diversion.

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

26045.  

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

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

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

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

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

(e) A renewal application shall not be deemed filed within the
meaning of this section unless the document itself has been actually
delivered to, and the required renewal fee has been paid at, any
office of the department during office hours, or unless both the
document and fee have been filed and remitted pursuant to Section
11003 of the Government Code.

26046.  

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

(a) For all applicants:

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

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

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

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

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

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

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

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

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

26047.  

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

26048.  

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

26049.  

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

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

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

26050.  

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

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

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

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

(e) In the event that the registrant or any employee of the
registrant refuses, impedes, obstructs, or interferes with an
inspection pursuant to this chapter or local ordinance, or if the
registrant fails to maintain or provide the books and records
required by this section, the registration may be summarily
suspended pursuant to paragraph (2) of subdivision (i) of Section
26022 and the department shall directly commence proceedings
for the revocation of the registration in accordance with this
chapter.

26052.  

(a) This chapter shall not apply to, and shall have no
diminishing effect on, the rights and protections granted to a patient
or a primary caregiver pursuant to the Compassionate Use Act of
1996.

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

(2) A primary caregiver who cultivates, possesses, stores,
manufactures, transports, or provides cannabis exclusively for the
personal medical purposes of a specified qualified patient for whom
he or she is the primary caregiver within the meaning of Section
11362.7 of the Health and Safety Code and who does not receive
remuneration for these activities except for compensation in full
compliance with subdivision (c) of Section 11362.765 of the Health
and Safety Code is not considered a commercial registrant and is
exempt from mandatory commercial registration under this chapter.

26054.  

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

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

(b) The department shall issue a provisional registration to
individuals and entities that the department determines were, during
the six months prior to January 1, 2016, regularly cultivating or
distributing medical cannabis collectively or cooperatively in full
compliance with paragraphs A and B of Section IV of the
Guidelines for Security and Non-Diversion of Marijuana Grown
for Medical Use, issued by the Department of Justice in August
2008, and any applicable local ordinance, to continue to do so until
such time as the registrant’s application for mandatory commercial
registration has been approved or denied under this chapter, but
no later than 90 days after the department begins accepting
applications for mandatory commercial registration. To qualify,
provisional registrants shall be required to disclose to the
department the following information in writing on or before
January 20, 2016, in order to obtain provisional registration:

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

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

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

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

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

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

26055.  

Entities that are provided immunity under Measure D,
approved by the voters of the City of Los Angeles at the May 21,
2013, general election, shall be considered the equivalent of entities
that are registered, permitted, or licensed as a medical marijuana
business, dispensary, or other entity involved in providing medical
marijuana to patients under a local ordinance and shall be
considered in compliance with a local ordinance for the purposes
of the implementation of the act adding this section and any
regulations promulgated by the department.

26056.  

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

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

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

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

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

(e) Maximum hours of operation for every dispensary.

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

26057.  

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

 

Article 4.  Enforcement

 

26060.  

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

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

26062.  

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

26063.  

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

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

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

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

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

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

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

26064.  

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

26066.  

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

26068.  

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

26070.  

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

26072.  

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

 

Article 5.  Transportation of Medical Cannabis

 

26100.  

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

26102.  

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

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

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

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

26104.  

(a) Transported medical cannabis products shall:

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

(2) Not be visible from outside the vehicle.

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

26106.  

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

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

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

26107.  

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

SEC. 7.  

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

23028.  

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

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

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

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

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

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

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

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

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

SEC. 8.  

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

11362.7.  

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

(a) “Attending physician” means an individual who possesses
a license in good standing to practice medicine or osteopathy issued
by the Medical Board of California or the Osteopathic Medical
Board of California and who has taken responsibility for an aspect
of the medical care, treatment, diagnosis, counseling, or referral
of a patient and who has performed an appropriate prior
examination, found that the patient has a medical indication, and
recommends marijuana for medical purposes to treat a serious
medical condition.

(b) “Department” means the State Department of Public Health.

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

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

(1) In any case in which a qualified patient or person with an
identification card receives medical care or supportive services,
or both, from a clinic licensed pursuant to Chapter 1 (commencing
with Section 1200) of Division 2, a health care facility licensed
pursuant to Chapter 2 (commencing with Section 1250) of Division
2, a residential care facility for persons with chronic life-threatening
illness licensed pursuant to Chapter 3.01 (commencing with Section
1568.01) of Division 2, a residential care facility for the elderly
licensed pursuant to Chapter 3.2 (commencing with Section 1569)
of Division 2, a hospice, or a home health agency licensed pursuant
to Chapter 8 (commencing with Section 1725) of Division 2, the
owner or operator, or no more than three employees who are
designated by the owner or operator, of the clinic, facility, hospice,
or home health agency, if designated as a primary caregiver by
that qualified patient or person with an identification card.

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

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

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

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

(g) “Identification card” means a document issued by the State
Department of Public Health that document identifies a person
authorized to engage in the medical use of marijuana and the
person’s designated primary caregiver, if any.

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

(1) Acquired immune deficiency syndrome (AIDS).

(2) Anorexia.

(3) Arthritis.

(4) Cachexia.

(5) Cancer.

(6) Chronic pain.

(7) Glaucoma.

(8) Migraine.

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

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

(11) Severe nausea.

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

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

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

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

SEC. 9.  

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

11362.775.  

(a)  Qualified patients, persons with valid
identification cards, and the designated primary caregivers of
qualified patients and persons with identification cards, who
associate within the State of California in order collectively or
cooperatively to cultivate marijuana for medical purposes, shall
not solely on the basis of that fact be subject to state criminal
sanctions under Section 11357, 11358, 11359, 11360, 11366,
11366.5, or 11570.

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

SEC. 10.  

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

SEC. 11.  

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

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

SEC. 12.  

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

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