BILL ANALYSIS Ó AB 26 Page 1 Date of Hearing: January 12, 2016 ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS Susan Bonilla, Chair AB 26 Jones-Sawyer - As Amended January 4, 2016 SUBJECT: Medical cannabis. SUMMARY: Requires a licensee under the Medical Marijuana Regulation and Safety Act (MMRSA) to institute and maintain a training program to educate, inform, and train the licensee's agents and employees regarding compliance with the MMRSA, and requires the Bureau of Medical Marijuana Regulation (Bureau) to approve and regulate the training programs. EXISTING LAW: 1)Prohibits the possession, possession with intent to sell, cultivation, sale, transportation, importation, or furnishing of marijuana, except as otherwise provided by law. (Health and Safety Code (HSC) Sections 11357, 11358, 11359, and 11360) 2)Prohibits prosecution of a patient or a patient's primary caregiver, under the Compassionate Use Act of 1996 (CUA), an initiative measure, for possessing or cultivating marijuana for personal medical purposes of the patient upon the written or oral recommendation or approval of a physician. (HSC Section 11362.5) AB 26 Page 2 3)Provides that qualified patients, persons with valid identification cards, and their designated primary caregivers who associate in order to collectively or cooperatively to cultivate marijuana, are not subject to criminal liability solely on that basis, until one year after the Bureau begins issuing licenses under the MMRSA. (HSC Section 11362.775) 4)Enacts the MMRSA, which provides for the state licensure and regulation of commercial cannabis activities, including cultivation, possession, manufacture, processing, storing, laboratory testing, labeling, transporting, distribution, and sale of medical cannabis or medical cannabis products. (Business and Professions Code (BPC) Section 19300 et seq.) 5)Establishes the Bureau within the Department of Consumer Affairs (DCA), and requires the Bureau, the California Department of Public Health (CDPH), and the California Department of Food and Agriculture (CDFA) to administer the MMRSA and promulgate regulations for implementation of the act. (BPC Section 19300 et seq.) 6)Vests in the DCA the sole authority to create, issue, renew, discipline, suspend, or revoke licenses for medical marijuana activities, including licenses for dispensaries, distributors, and transporters. Prohibits a licensee from holding more than one license except as specified. (BPC Sections 19302.1, 19328) 7)Allows the Bureau to convene an advisory committee to advise the Bureau and licensing authorities on the development of standards and regulations, including best practices and guidelines to ensure qualified patients have adequate access to MM and MM products. (BPC Section 19306) AB 26 Page 3 8)Provides that the actions of a licensee permitted pursuant to both a state license and a license or permit issued by the local jurisdiction following the requirements of the applicable local ordinances, and conducted in accordance with the MMRSA are not unlawful under state law. (BPC Section 19317) 9)Prohibits a person from engaging in commercial cannabis activity without possessing both a state license and a local permit or other authorization upon the date of implementation of regulations by the licensing authority. (BPC Section 19320) 10)Requires an applicant for a state license to, among other things, submit fingerprints to the Department of Justice, and provide documentation, issued by the local jurisdiction, certifying that the applicant is in compliance with all local ordinances and regulations; evidence of the legal right to occupy the proposed location; for applicants with 20 or more employees, provide a statement that the applicant will enter into, or already has entered into, a labor peace agreement; a seller's permit number; and other specified information. (BPC Section 19322) 11)Requires applicants seeking licensure to cultivate, distribute, or manufacture medical cannabis, to 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) transportation procedures; 4) inventory procedures; and 5) quality control procedures. (BPC Section 19322) AB 26 Page 4 12)Requires the Bureau to deny an application if the applicant or the premises do not qualify for licensure or fail to comply with the MMRSA. (BPC Section 19323) 13)Allows licensing authorities to take disciplinary action against a licensee for any violation of any provision in this bill, and requires a licensing authority to inform the Bureau upon suspension or revocation of a license. (BPC Sections 19313, 19313.5) 14)Provides that nothing shall be interpreted to supersede or limit existing local authority for law enforcement activity, enforcement of local zoning requirements or local ordinances, or enforcement of local permit or licensing requirements. (BPC Section 19315) 15)Requires the CDPH to administer the provisions of the Act related to the manufacturing and testing of medical cannabis and to promulgate regulations governing the licensing of manufacturers and testing laboratories. Requires the CDPH to develop standards for the production and labeling of all edible medical cannabis products. (BPC Sections 19332, 19341) 16)Requires all licensed cultivators and manufacturers to package all medical cannabis and medical cannabis products in tamper-evident packaging and to use a unique identifier to identify and track the product, and requires the product to be labeled as specified. (BPC Section 19326) AB 26 Page 5 17)Requires all licensees holding cultivation or manufacturing licensees to send all medical cannabis and medical cannabis products to a distributor for quality assurance and inspection by the distribution licensee and for batch testing by a testing licensee prior to distribution to a dispensary. (BPC Section 19326) 18)Requires the CDFA to administer the provisions of the MMRSA related to the cultivation of medical cannabis; to create, issue, and suspend or revoke cultivation licenses for violations of the Act; and to promulgate regulations governing the licensing of indoor and outdoor cultivation sites. (BPC Sections 19302.1, 19332) 19)Requires the CDFA, in consultation with the Bureau, to establish a track and trace program for reporting the movement of medical marijuana items throughout the distribution chain that use a unique identifier and secure packaging, and is capable of providing specified information, including the licensee receiving the product, the transaction date, and the cultivator from which the product originates. (BPC Section 19335) 20)Requires the CDFA to create an electronic database containing the electronic shipping manifests which shall include the quantity, or weight, and variety of products shipped and received; estimated and actual times of departure and arrival; and license number and unique identifiers issued by the licensing authority for all licensees involved in the shipping process. (BPC Section 19335) AB 26 Page 6 21)Requires the Bureau to establish minimum security requirements for the commercial transportation and delivery of medical cannabis and products. (BPC Section 19334) 22)Authorizes a county to impose a tax on the privilege of cultivating, dispensing, producing, processing, preparing, storing, providing, donating, selling, or distributing medical cannabis or medical cannabis products by a licensee operating pursuant to the MMRSA, as specified. (BPC Section 19348) 23)Provides for a General Fund or special fund loan, including up to $10 million from the General Fund, to the Bureau to support the initial regulatory activities authorized by MMRSA. (BPC Section 19351) 24)Requires the Bureau to establish a grant program to fund activities by state and local law enforcement to remedy the environmental effects of cannabis cultivation, payable from fines and penalties charged pursuant to the MMRSA after all outstanding loans for the program are repaid. (BPC Section 19351) 25)Directs the State Board of Equalization (BOE) to adopt a system, in consultation with the CDFA, to report the movement of commercial cannabis and cannabis products throughout the distribution chain, which must not duplicate CDFA's track and trace program. (Revenue and Taxation Code Section 31020) AB 26 Page 7 26)Requires, beginning March 1, 2023, and on or before March 1 of each following year, each licensing authority to prepare and submit to the Legislature an annual report on the authority's activities and post it on its Internet Web site, as specified. (BPC Section 19353) 27)By January 1, 2017, requires the Division of Occupational Safety and Health to convene an advisory committee to evaluate whether there is a need to develop industry-specific regulations related to the activities of licensed facilities. (Labor Code Section 147.5) THIS BILL: 1)Requires a licensee to institute and maintain a training program to educate, inform, and train the licensee's agents and employees regarding compliance with the MMRSA. 2)Requires the Bureau to adopt standards for the approval of training programs and to be the sole state agency responsible for approving and regulating the training programs. 3)Prohibits the Bureau from approving 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. 4)Requires an application for state licensure to include a detailed description of the applicant's training program. 5)Requires a state licensing authority to deny the application of an applicant that does not have or revoke the license of a AB 26 Page 8 state licensee that fails to institute or maintain a program approved by the Bureau. FISCAL EFFECT: Unknown. This bill is keyed fiscal by the Legislative Counsel. COMMENTS: Purpose. This bill is sponsored by the United Food and Commercial Workers Union, Western States Council (UFCW) . According to the author, "It is essential that everyone working in the medical marijuana industry be trained. Whether they are working with patients in a dispensary, cultivating at farms or assisting in the manufacture and processing of products for consumption, they must be given training. These workers, patients and the public need to know that those in the medical marijuana industry are educated in the health, safety and security standards set by the state." The MMRSA. The MMRSA consisted of three separate bills which were enacted together on Sept 11, 2015, to bring licensure and regulation to the medical marijuana industry nearly 20 years after the passage of Proposition 215 in 1996, which legalized the use of medical marijuana. The bills created a comprehensive state licensing system for the commercial cultivation, manufacture, retail sale, transport, distribution, delivery, and testing of medical cannabis. In addition, the bills affirm local control and require licensure by both a local government and the state in order for a licensee to operate. The MMRSA went into effect on January 1, 2016, although licensure requirements will not go into effect until the regulatory entities responsible for implementing the act pass necessary regulations. AB 26 Page 9 Among other things, the MMRSA establishes the new Bureau under the DCA, which is responsible for licensing and regulating dispensaries, transporters, and distributors. In addition, the CDPH is responsible for regulating manufacturers, testing laboratories, and the production and labeling of edible medical marijuana products. The CDFA is responsible for regulating cultivation, and other state agencies, such as the Department of Pesticide Regulation and the State Water Resources Control Board, are responsible for developing environmental standards. Under the MMRSA, applicants seeking licensure to cultivate, distribute, or manufacture medical cannabis are required to include a detailed description of the applicant's operating procedures for cultivation, extraction and infusion methods, transportation process, inventory procedures, and quality control procedures. This bill would additionally require all applicants, including dispensaries and testing laboratories, to include a detailed description of a training program for its agents and employees, to be approved by the Bureau, as a condition of licensure. Under the bill, the licensee would institute and maintain the training program for its agents and employees on compliance with the MMRSA. The training program must also include training on legal requirements, best industry practices, occupational health and safety standards, and company policies. The Bureau would be required to adopt standards to approve these training programs, and to regulate these training programs. Medical Marijuana Training and Education. Currently, there is a small offering of voluntary education and training for persons in the medical marijuana industry, ranging from schools that provide a complete curriculum and certification program on cannabis, to individual seminars and courses about the industry. However, because this industry has not previously been regulated, there are no statewide standards for what this type of training should include. AB 26 Page 10 While this bill would impose mandatory training for a licensee's employees and agents, at least one state, Colorado, has adopted a similar albeit voluntary approach to training. Under Colorado's Responsible Vendor Training Program, a licensee may receive a responsible vendor designation if all of its employees who sell or handle medical marijuana, managers, and resident owners complete a medical marijuana training program offered by a state approved provider. While the program is voluntary, the benefit of such designation is that if a local or state licensing authority initiates an administrative action against a designated licensee, the licensing authority may consider the designation as a mitigating factor when imposing sanctions or penalties on the licensee. The training programs are required to be at least two hours long, and must have a core curriculum of relevant statutory and regulatory requirements, including information on proper identification of patients, age requirements, record maintenance, liability, and enforcement. The training is also required to include information about marijuana's effects on the human body based on type of marijuana product, the amount of time to feel impairment, and health and safety standards. Currently, Colorado has approved four state approved responsible vendor training programs, with training programs costing roughly $150 per person per course. Current Related Legislation. AB 567 (Gipson) of the current legislative session would prohibit mobile, vehicular, or technology platforms that enable qualified patients or primary caregivers to arrange for any delivery with a third party; would provide that a dispensary that employs or uses the services of any person under 21 years of age for the sale or delivery of medical cannabis or medical cannabis products is subject to suspension or revocation of certain state or local licenses; and would require tax penalty amnesty programs, for medical cannabis-related businesses, as provided. AB 26 Page 11 AB 1548 (Wood) of the current legislative session would impose a tax in specified amounts on the distribution in this state by a cultivator of marijuana to a licensed distributor, as specified; require the licensed distributor to collect the tax from the cultivator and remit it to the BOE; and require all moneys, less refunds and costs of administration, to be deposited into the Marijuana Production and Environment Mitigation Fund, as specified. Prior Related Legislation. AB 266 (Bonta, Cooley, Jones-Sawyer, Lackey, and Wood), Chapter 689, Statutes of 2015, enacted the MMRSA for the licensure and regulation of medical marijuana and established the Bureau within the DCA, under the supervision and control of the Director of the DCA, and required the Director to administer and enforce the provisions of the Act. AB 266 also required the CDFA to administer the provisions of the act related to cultivation, and required the CDPH to administer the provisions of the Act related to manufacturing and testing of medical cannabis. The bill also required the BOE, in consultation with the CDFA, to adopt a system for reporting the movement of commercial cannabis and cannabis products. AB 243 (Wood), Chapter 688, Statutes of 2015, required the CDFA, the DPR, the CDPH, the DFW, and the SWRCB to promulgate regulations or standards relating to medical marijuana and its cultivation, as specified, required various state agencies to take specified actions to mitigate the impact that marijuana cultivation has on the environment, and established the MMRSA Fund. SB 643 (McGuire), Chapter 719, Statutes of 2015, set forth standards for a physician and surgeon prescribing medical cannabis, required the Medical Board of California to prioritize its investigative and prosecutorial resources to identify and discipline physicians and surgeons that have repeatedly recommended excessive cannabis to patients for medical purposes or repeatedly recommended cannabis to patients for medical purposes without a good faith AB 26 Page 12 examination, as specified, authorized counties to impose a tax upon specified cannabis-related activity, and set forth standards for the licensed cultivation of medical cannabis. ARGUMENTS IN SUPPORT: The United Food and Commercial Workers Union, Western States Council (UFCW) writes in support, "With the passage of the Medical Marijuana Regulation and Safety Act, UFCW strongly supports the creation of a robust program to train cannabis workers in the industry at the [DCA]. Professional licensing and safety standards are widely accepted norms throughout the State of California for a variety of occupations and we should do the same for workers employed in the cannabis industry. Cannabis workers need vital knowledge of their product and how best to serve the needs of people suffering from serious diseases. UFCW Western States Council is committed to support a regulatory framework that will protect and enhance cannabis workers and consumers?.Moreover, a "Cannabis Worker Training Certification Program" will ensure the rights of workers are protected, health and safety standards are maintained and ongoing product knowledge and skills development are sustained with consistency throughout the cannabis industry similar to pharmacy laboratory technicians, nurse assistants, dental hygienists, physical therapists and cosmetologists." POLICY ISSUES FOR CONSIDERATION: California has only recently enacted the MMRSA, which goes into effect January 1, 2016. Because there were previously no requirements for the population to be licensed under the Act, no statewide standards have been developed regarding compliance with the MMRSA, or best practices for various parts of the industry. While this bill would require licensees to develop and have training programs for their employees, it is unclear exactly what that training would consist of, or how each licensee would be able to determine what type of training would meet this requirement. And, while the Bureau would be required to develop standards to approve these training programs, this approval process may be onerous for the AB 26 Page 13 Bureau. As a result, the author may wish to consider specifying that the Bureau work to develop minimum standards for training programs, taking into account various license types. For example, dispensary licensees and employees may benefit from information regarding the various types and amounts of active ingredients in medical marijuana and how those ingredients affect patients, while manufacturers may benefit from specialized information on health and safety standards relating to production of edible products. The author may also wish to consider requiring the Bureau to approve training course providers, as state regulatory entities typically do for trainings and required courses in other licensed categories, and authorizing licensees to incorporate the use of training providers so that licensees do not have to develop or provide their own training and curriculum, and can instead rely on a third party to provide such training. In addition, while the bill currently requires the Bureau to approve all training programs, the author may wish to clarify that the Bureau or the appropriate licensing authority, e.g., the CDFA or the CDPH, may also adopt standards for and approve training programs in order to take advantage of a licensing authority's expertise with regards to licensees and standards under their jurisdiction. Lastly, the author may wish to specify which types of employees and agents are required to complete this training, and include a timeframe for new hires to complete this training. AMENDMENTS: The author has agreed to the following technical amendments: On page 10, line 4, strike "must" and insert "shall". AB 26 Page 14 On page 10, line 4, after "and" strike "must" and insert "shall". Add a coauthor. REGISTERED SUPPORT: United Food and Commercial Workers Union, Western States Council (sponsor) REGISTERED OPPOSITION: None on file. Analysis Prepared by:Eunie Linden / B. & P. / (916) 319-3301