Amended in Assembly April 23, 2015

Amended in Assembly April 20, 2015

Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 34

Introduced by Assembly Members Bonta and Jones-Sawyer

December 1, 2014

An act to amend Sections 2220.05, 2242, and 2264 of, and to add Chapter 18 (commencing with Section 26000) to Division 9 of, the Business and Professions Code, to add Section 23028 to the Government Code, to amend Section 11362.775 of the Health and Safety Code, and to add Sections 147.5 and 3094 to the Labor Code, relating to medical cannabis, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

AB 34, as amended, Bonta. Medical cannabis regulation and enforcement.

(1) Existing law, the Compassionate Use Act of 1996, an initiative measure enacted by the approval of Proposition 215 at the November 5, 1996, statewide general election, authorizes the use of marijuana for medical purposes.

Existing law enacted by the Legislature, commonly referred to as the Medical Marijuana Program Act (MMPA), requires the establishment of a program for the issuance of identification cards to qualified patients so that they may use marijuana for medical purposes without arrest or prosecution under specified state law, and requires the establishment of guidelines for the lawful cultivation of marijuana grown for medical use.

This bill would enact the Medical Cannabis Regulation and Control Act and would establish the Division of Medical Cannabis Regulation and Enforcement within the Department of Alcoholic Beverage begin delete Control. end delete begin insert Control, the Division of Medical Cannabis Manufacturing and Testing within the State Department of Public Health, and the Division of Medical Cannabis Cultivation within the Department of Food and Agriculture and would set end insert begin insert forth the duties of the respective regulatory authorities. end insert

The bill would, 180 days after the division posts a specified notice on its Internet Web site, make those provisions of the MMPA that prohibit 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, inapplicable to licensees. The bill would, thereafter, permit a dispensary to provide patients with medical marijuana and medical marijuana products obtained only from persons licensed under this bill.

The bill would require the begin delete division end delete begin insert regulatory authorities end insert to license persons to engage in the various aspects of commercial cannabis activity, as defined. The bill would designate as peace officers begin delete the Director of the Department of Alcoholic Beverage Control and persons employed by the division to administer and enforce its provisions end delete begin insert specified officers and employees of the regulatory authorities end insert . The bill would prescribe requirements for the issuance, renewal, suspension, and revocation of a mandatory commercial license and would authorize the assessment of related fees.

The bill would not preclude a city or county from adopting a local ordinance, not consistent with this bill, that regulates the location, operation, or establishment of a licensee or prohibits commercial cannabis activity within its jurisdiction. The bill would require state agencies to collaborate with local agencies, and would require local agencies to, within the scope of their jurisdiction, assist state agencies in the enforcement of the bill. By imposing these enforcement duties on local agencies, the bill would impose a state-mandated local program.

The bill would establish the Medical Marijuana Regulation Fund with separate accounts for fees and for penalties, and would require deposit of fees and penalties into their respective accounts within the fund. The bill would continuously appropriate moneys within the fees account to the division for the purposes of administering the program.

The bill would authorize the begin delete division end delete begin insert regulatory authorities end insert to begin insert collaborate to end insert establish a regulation and enforcement assistance grant program and would authorize the Department of Transportation to conduct research and develop protocols regarding determining whether a driver is operating a vehicle under the influence of marijuana to assist law enforcement agencies. The bill would make the fines and penalties deposited into the fund available, upon appropriation by the Legislature, for funding these programs.

The bill would require the begin delete division, end delete begin insert regulatory authorities, end insert as soon as practicable, to allow qualified applicants for licensure to apply for and receive a provisional license to engage in commercial cannabis activity and to adopt emergency regulations for that purpose.

The bill would require the begin delete division end delete begin insert regulatory authorities end insert to adopt regulations necessary for the implementation and enforcement of this bill in consultation with prescribed state agencies relating to environmental, agricultural, consumer protection, worker safety, and food and product safety requirements. The bill would authorize the begin delete division end delete begin insert regulatory authorities end insert to enter into interagency agreements to pay, from fees deposited into the fund, the associated costs incurred by these state agencies.

The bill would establish a cannabis employee certification, training, and apprenticeship program for cultivation sites and dispensaries, as defined. The bill would require the Division of Labor Standards Enforcement to maintain and enforce minimum standards for the competency and training of employees and to certify cannabis employees. The bill would require the Division of Labor Standards Enforcement, by January 1, 2017, to convene an advisory committee to evaluate whether there is a need to develop industry-specific regulations related to the activities of licensed facilities. The bill would require the advisory committee to present to the Occupational Safety and Health Standards Board its findings and recommendations for consideration by the board, and would require the board, by July 1, 2017, to render a decision regarding the adoption of industry-specific regulations.

The bill would require a licensee to keep various records in connections with commercial cannabis activities and would prescribe requirements for making records available to the division and any state or local agency. The bill would prohibit the disclosure of certain patient and caregiver information pursuant to the California Public Records Act.

The bill would declare that it does not apply to, or diminish 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.

The bill would declare that the actions of a licensee or provisional licensee, its employees, and its agents that are within the scope of a valid license are not unlawful under state law, as specified. The bill would provide similar state law immunity for a property owner who allows his or her property to be used by a licensee or provisional licensee.

The bill would require the begin delete division end delete begin insert regulatory authorities end insert 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 authorize the director of begin delete the division, end delete begin insert any regulatory authority, end insert and prescribed local entities, to bring an action to enjoin violations. The bill would require the begin delete division end delete begin insert regulatory authority end insert to establish a digital database and to allow on its Internet Web site to permit state and local law enforcement agencies to verify licenses.

begin delete

The bill would make certain violations of its provisions a crime, thereby imposing a state-mandated local program.

end delete

(2) Existing law, the Medical Practice Act, establishes the Medical Board of California and sets forth its powers and duties, including, but not limited to the licensing and regulation of physicians and surgeons. Existing law sets forth the conduct that would constitute unprofessional conduct for a physician and surgeon, including, but not limited to, prescribing certain drugs without an appropriate examination or medical indication. Existing law generally makes a violation of these provisions a misdemeanor.

This bill would specify that recommending marijuana to patients without an appropriate prior examination and a medical indication 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 deem as unprofessional conduct a physician and surgeon being employed by, or entering into an agreement with, a medical cannabis licensee to provide recommendations for medical marijuana.

By broadening the definition of a crime, the bill would impose a state-mandated local program.

(3) 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 0.125%, or a multiple thereof, if approved by the required vote of the board or governing body and the required vote of qualified voters, and limits the combined rate of transactions and use taxes within a city or county to 2%.

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

(4) This bill would specify that its provisions are severable.

(5) Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

This bill would make legislative findings to that effect.

(6) 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 with regard to certain mandates no reimbursement is required by this act for a specified reason.

With regard to any other mandates, this bill would provide that, if the Commission on State Mandates determines that the bill contains costs so mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

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

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

SECTION 1.  

The Legislature finds and declares all of the
following:

(a) The people of California enacted the Compassionate Use
Act of 1996 to ensure that seriously ill Californians have access
to marijuana for medical purposes. The Compassionate Use Act
of 1996 urged the state and federal governments to implement a
plan to provide for the safe and affordable distribution of medical
marijuana to all patients in medical need of the drug.

(b) Under federal law, marijuana is a Schedule 1 drug. Its
placement in that schedule is based upon a finding that marijuana
has no currently accepted medical use. That finding, if correct at
the time it was made, is no longer accurate. California, exercising
its traditional power to regulate the practice of medicine, has
determined that marijuana has a significant role to play.

(c) California, acting alone, is powerless to change federal law
and to correct this misunderstanding in federal law about the role
that marijuana can and does play in the practice of medicine.
However, federal enforcement authorities have recognized that in
states that have authorized marijuana use and have enacted strong
and effective regulatory and enforcement systems to control the
cultivation, distribution, sale, and possession of marijuana, conduct
in compliance with those regulatory and enforcement systems is
less likely to threaten federal priorities and, thus, less likely to
require federal enforcement intervention (See: Memorandum For
All United States Attorneys--Guidance Regarding Marijuana
Enforcement, by James M. Cole, Deputy Attorney General, August
29, 2013).

(d) The purpose of this act is to establish for California a robust
medical cannabis regulatory and enforcement system to ensure
that conduct in compliance with California’s medical marijuana
laws does not threaten the federal priorities as set forth in the James
M. Cole memorandum, and, therefore, does not require federal
enforcement intervention.

SEC. 2.  

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. 3.  

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 without an appropriate prior
examination and a medical indication, constitutes unprofessional
conduct. Prescribing or recommending marijuana to a patient for
a medical purpose without an appropriate prior examination and
a medical indication 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. 4.  

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 or
any other mode of treating the sick or afflicted which requires a
license to practice constitutes unprofessional conduct. Employment
by, or other agreement with, a mandatory commercial licensee
acting pursuant to the Medical Cannabis Regulation and Control
Act or a dispensary to provide recommendations for medical
marijuana constitutes unprofessional conduct.

SEC. 5.  

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

 

Chapter  18. Medical Cannabis Regulation and Control

 

Article 1.  General Provisions

 

26000.  

(a) This chapter shall be known, and may be cited, as
the Medical Cannabis Regulation and Control Act.

(b) It is the intent of the Legislature in enacting this chapter to
provide for the statewide regulation of the commercial cannabis
activity and the enforcement of laws relating to commercial
cannabis activities without preempting city or county ordinances
regulating or banning these activities. 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 exclusive right and power to regulate and
license persons for the cultivation, manufacture, transportation,
sale, and other related activities regarding medical cannabis within
the state. In the exercise of these rights and powers, the state and
each of its agencies are hereby deemed not to be engaged in
activities requiring licensure under this chapter.

26002.  

For the purpose of this chapter:

begin delete

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

end delete begin delete

(b) “Director” means the Director of the Department of
Alcoholic Beverage Control, unless the context otherwise clearly
indicates.

end delete begin insert

(a) “Regulatory authority” means the Division of Medical
Cannabis Regulation and Enforcement within the Department of
Alcoholic Beverage Control, the Division of Medical Cannabis
Manufacturing and Testing within the State Department of Public
Health, or the Division of Medical Cannabis Cultivation within
the Department of Food and Agriculture, as appropriate to the
context.

end insert begin insert

(b) “Regulatory director” means the Director of the Department
of Alcoholic Beverage Control, the Director of Consumer Affairs,
the Director of the Department of Public Health, or the Director
of the Department of Food and Agriculture.

end insert

(c) “Division” means the Division of Medical Cannabis
Regulation and Enforcement within the begin delete department. end delete begin insert Department
of Alcoholic Beverage Control, unless otherwise specified. end insert

(d) “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.

(e) “Commercial cannabis activity” means any cultivation,
possession, manufacture, processing, storing, laboratory testing,
labeling, transporting, distribution, or sale of cannabis or cannabis
product, except as set forth in subdivision (b) of Section 26052.

(f) “Medical cannabis product,” “medical marijuana product,”
or “cannabis product” means any product containing cannabis,
including, but not limited to, concentrates and extractions intended
to be sold for use by medical marijuana patients in California
pursuant to the Compassionate Use Act of 1996 (Proposition 215).

(g) “Manufactured cannabis” means raw marijuana that has
undergone a process whereby the raw agricultural product has
been transformed into a concentrate, an edible product, or a topical
product.

(h) “Cannabis concentrate” means manufactured cannabis that
has undergone a process to concentrate the begin delete cannabinoid end delete
begin insert tetrahydrocannabinol end insert active ingredient, thereby increasing the
product’s potency.

(i) “Cannabinoid” means a chemical compound that is unique
to and derived from cannabis, also known as phytocannabinoid.

(j) “Edible cannabis product” means manufactured cannabis
that is intended to be used, in whole or in part, for human
consumption, including, but not limited to, chewing gum.

(k) “Topical cannabis” means manufactured product intended
for external use.

(l) “Identification program” means the universal identification
certificate program for licensees.

(m) “Mandatory commercial license” or “license” means a
mandatory commercial license issued pursuant to Article 3
(commencing with Section 26040).

(n) “Licensee” means any person licensed under this chapter to
engage in commercial cannabis activity related to medical cannabis
begin insert or medical cannabis products end insert as set forth in this chapter.

(o) “Dispensary” means a retail location that distributes cannabis
or medical cannabis products and is owned and operated by a
licensee for these activities pursuant to this chapter.

(p) “Testing and labeling” means a labeling and quality
assurance plan that addresses all of the following:

(1) Potency.

(2) Chemical residue.

(3) Microbiological contaminants.

(4) Handling, care, and storage.

(5) Date and location of cultivation, processing, and
manufacturing.

(q) “Fund” means the Medical Cannabis Control Fund
established pursuant to Section 26028.

(r) “Person” means any individual, firm, partnership, joint
venture, association, corporation, limited liability company, 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.

(s) “Cultivation site” means a location that grows cannabis or
medical cannabis products and is owned and operated by a licensee
for these activities pursuant to this begin delete chapter. end delete begin insert chapter, including a
nursery. end insert

(t) “Nursery” means a licensee that produces only clones,
immature plants, seeds, and other agricultural products used
specifically for the planting, propagation, and cultivation of medical
cannabis.

begin insert

(u) “Cultivation” means any activity involving the planting,
growing, harvesting, drying, processing, or trimming of cannabis.

end insert begin insert

(v) “Dispensing” means any activity involving the retail sale
of medical cannabis or medical cannabis products.

end insert

26010.  

This chapter does not, nor does 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, prevent a city or county from doing any of the following:

(a) Adopting local ordinances inconsistent with this chapter that
do the following:

(1) Regulate the location, operation, or establishment of a
licensee or any person that cultivates, processes, possesses, stores,
manufactures, tests, transports, distributes, or sells medical
cannabis.

(2) Prohibit commercial cannabis activity within their
jurisdiction.

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

(c) Establishing a fee or tax for the operation of a licensee 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) The Division of Medical Cannabis Regulation and
Enforcement is hereby established within the Department of
Alcoholic Beverage Control. The begin delete division shall be end delete begin insert Division of
Medical Cannabis Regulation and Enforcement end insert begin insert shall do all of the
following: end insert

begin insert (1) end insert begin insert   end insert begin insert Be end insert administered by a person who is appointed by the begin delete director.
The division shall administer this chapter. end delete begin insert Director of the
Department of Alcholic Beverage Control. end insert

begin insert

(2) Administer this chapter, as it pertains to commercial
cannabis activity relating to dispensaries.

end insert begin insert

(3) Lead all state and local authorities regarding the tracking
of medical cannabis, medical cannabis products, and licensees
pursuant to this chapter.

end insert begin insert

(b) The Division of Medical Cannabis Manufacturing and
Testing is hereby established within the Department of Public
Health. The Division of Medical Cannabis Manufacturing and
Testing shall do all the following:

end insert begin insert

(1) Be administered by a person who is appointed by the State
Health Officer.

end insert begin insert

(2) Administer this chapter, as it pertains to manufacturing,
testing, and certification of testing laboratories for medical
cannabis.

end insert begin insert

(c) The Division of Medical Cannabis Cultivation is hereby
established within the Department of Food and Agriculture. The
Division of Medical Cannabis Cultivation shall do all of the
following:

end insert begin insert

(1) Be administered by a person who is appointed by the
Secretary of the Department of Food and Agriculture.

end insert begin insert

(2) Administer this chapter as it pertains to cultivation of
medical cannabis.

end insert begin insert

(d) The regulatory authorities shall issue licenses to applicants
to engage in commercial cannabis activity pursuant to this chapter.
No person shall engage in commercial cannabis activity unless
the person obtains permission pursuant to section 26045.

end insert begin insert

(e) The division shall maintain a registry of all permit holders
and shall maintain a record of all licenses and commercial
cannabis activity of the permit holder throughout the length of
licensure and for a minimum of seven years following the
expiration of each license.

end insert begin delete

(b) No person shall engage in commercial cannabis activity
unless licensed by the division under this chapter. The division
shall issue licenses to applicants to engage in commercial cannabis
activity pursuant to this chapter.

end delete begin delete

(c) The division

end delete

begin insert (f) end insert begin insert   end insert begin insert Each regulatory authority end insert shall adopt regulations as needed
to implement that licensing program as set forth in Article 3
(commencing with Section 26040) within one year following the
establishment of provisional licenses, pursuant to Section 26054.
The regulations shall not limit the authority of a city or a county
pursuant to Section 7 of Article XI of the California Constitution,
Section 26010 or 26060, or any other law. The regulations shall,
in addition, do all of the following:

(1) Establish a scale of application, licensing, and renewal fees,
based upon the cost of enforcing this chapter, as follows:

(A)  begin delete The division end delete begin insert Each regulatory authority end insert shall charge each
applicant for licensure or renewal an application or renewal fee
that shall be calculated to cover the costs of processing the
application or renewal. This fee may vary depending upon the
varying costs associated with approving the application or renewal
related to the varying activities covered by the license, but shall
not exceed ___dollars ($____) for an initial application, and
____dollars ($____) for a renewal application.

(B)  begin delete Upon the issuance of a license, the division end delete begin insert Each regulatory
authority end insert shall charge each licensee a licensure begin delete fee. end delete begin insert fee upon the
issuance of a license. end insert The licensure fee shall be calculated to cover
the costs of administering this chapter, other than the costs of
processing applications. The licensure fee may vary depending
upon the varying costs associated with administering the various
regulatory requirements of this chapter as they relate to the nature
and scope of the different licensure activities, but shall not be less
than ____ dollars ($____), nor more than ____ dollars ($____).

(C) The total fees assessed pursuant to this chapter, including,
but not limited to, provisional license fees set forth in Section
26054, shall be set at an amount that will fairly and proportionately
generate sufficient total revenue to fully cover the total costs of
administering this chapter, including, but not limited to, costs set
forth in Section 26023.

(2) Establish procedures for approval or denial of applications
for licensure for each and every aspect of commercial cannabis
activity, including, but not limited to, cultivation, possession,
manufacture, processing, storing, laboratory testing, labeling,
transporting, distribution, and sale of cannabis.

(3) Establish applicant qualifications.

(4) Establish licensee employee qualifications, including, but
not limited to, training and screening requirements.

(5) Establish licensee security requirements, including, but not
limited to, procedures to limit access to facilities and to prevent
diversion of product to nonmedical use.

(6) Establish procedures and protocols for identifying, managing,
and disposing of contaminated, adulterated, deteriorated, or excess
product.

(7) Establish advertising, marketing, signage, and labeling
requirements and restrictions.

(8) Establish procedures for the suspension, revocation, or
surrender of a license and establishing related fines and penalties
to be assessed against licensees for violations of this chapter.

(9) Establish procedures for the oversight of the fund established
pursuant to Section 26028.

26021.  

begin delete

(a) The division, in consultation with the Division of
Labor Standards Enforcement, shall adopt regulations establishing
worker safety standards in cultivation sites, manufacturing
facilities, and retail dispensary sites.

end delete

begin delete (b) end delete begin delete   end delete The begin delete division, end delete begin insert Division of Medical Cannabis Cultivation
shall do all of the following: end insert begin delete in end delete

begin insert (a) end insert begin insert   end insert begin insert Adopt regulations, in end insert consultation with the Department of
Water Resources, begin delete shall adopt regulations end delete to ensure that commercial
cannabis activity licensed pursuant to this chapter does not threaten
the state’s clean water and environment.

begin delete

(c)

end delete

begin insert (b) end insert   begin delete The division, in consultation with the Department of Food
and Agriculture, shall adopt end delete begin insert Adopt end insert regulations ensuring that the
cultivation of cannabis under this chapter is in compliance with
standards equivalent to the statutory and regulatory requirements
applicable to the production of a food crop, including, but not
limited to, all of the following:

(1) Regulations regarding the verification of cannabis stock for
the purposes of cultivation.

(2) Cultivation protocols ensuring the quality, availability, and
safety of the cannabis crop, including both indoor and outdoor
cultivation standards and regulations regarding carbon offsets for
indoor cultivation.

(3) Environmentally sound agricultural practices, including all
of the following:

(A) A requirement that any actual, or potential for,
environmental damage be addressed by the relevant state agency,
including, but not limited to, the State Board of Forestry and Fire
Protection, the Department of Fish and Wildlife, California regional
water quality control boards, the Department of the California
Highway Patrol, or the Department of Justice.

(B) A provision authorizing revocation of a licensee if the state
determines that the conduct of the licensee threatens to inflict or
has inflicted significant damage to the environment.

(C) Standards controlling the application of pesticides. These
standards shall, at a minimum, require that if pesticides are to be
used, the use comply with standards equivalent to Division 6
(commencing with Section 11401) of the Food and Agricultural
Code and its implementing regulations.

begin insert

(c) Adopt regulations to establish cultivation labeling and
packaging standards and requirements, including, but not limited
to, cultivation labeling requirements requiring labeling to include,
at a minimum, cannabinoid levels, cannabinoid profile, and active
ingredients.

end insert begin delete

(d) The division, in consultation with the Department of
Consumer Affairs, shall adopt regulations to certify laboratories
for the testing of medical cannabis and medical cannabis products,
as defined in this chapter. Certification of testing laboratories shall
be consistent with general requirements for the competence of
testing and calibration activities, including sampling, using standard
methods established by the International Organization for
Standardization, including, but not limited to, ISO/IEC 17025.

end delete

26021.5.  

(a) State agencies shall collaborate with local
agencies, and local agencies, within the scope of their jurisdiction,
and to the extent that resources are available, shall assist state
agencies in the enforcement of this chapter. This section shall not
limit any other state or local requirements.

(b) No cannabis shall be cultivated on public lands pursuant to
this chapter.

26022.  

The begin delete division, end delete begin insert Division of Medical Cannabis
Manufacturing and Testing, end insert in consultation with the State
Department of Public Health, shall adopt regulations to do all of
the following:

(a) Establish begin insert product end insert labeling and packaging standards and
requirements, including, but shall not be limited to, all of the
following:

begin delete

(1) Cultivation labeling requirements requiring labeling to
include, at a minimum, cannabinoid levels, cannabinoid profile,
and active ingredients.

end delete begin delete

(2)

end delete

begin insert (1) end insert   begin delete Edible, manufactured, and topical cannabis end delete begin insert All manufactured
cannabis end insert product labeling and packaging standards, including, but
not limited to, all of the following:

(A) A requirement that the label include the manufacturing date,
begin insert the end insert begin insert name of the mandatory commercial licensee from which it was
obtained, end insert the active ingredients, net weight, cannabinoid profile,
nutritional facts, dosage in total milligrams of cannabinoids
delivered, and any potential allergens.

(B) A requirement that the label include the warnings: “KEEP
OUT OF REACH OF CHILDREN AND ANIMALS,” and “FOR
MEDICAL USE ONLY.”

(C) A requirement that packaging contain a clear indication in
bold font that the package contains medical cannabis, and that the
package not be designed in a manner that attracts minors.

(D) Standards for labeling food that clearly distinguish edible
cannabis products from non-cannabis products.

begin insert

(E) The name of the mandatory commercial licensee that
manufactured the product.

end insert

(b) Establish consumer protection, food and product safety
requirements, including, but not limited to, all of the following:

(1) Adverse event reporting and product recall systems that
include batch, lot, or control number tracking, the requirement that
employees who manufacture or otherwise handle edible medical
cannabis products thoroughly wash their hands before commencing
production and before handling finished edible medical cannabis
products.

(2) Standards for cannabinoid dosage in edible products.

(3) Sanitation standards equivalent to the California Retail Food
Code (Part 7 (commencing with Section 113700) of Division 104
of the Health and Safety Code) for food preparation, storage,
handling, and sale of medical cannabis products.

(4) A requirement that edible medical cannabis products be
limited to foods that are not potentially hazardous food as set forth
in Section 114365.5 of the Health and Safety Code.

(5) A requirement that facilities in which edible medical
cannabis products are prepared shall be constructed in accordance
with building standards and health and safety standards applicable
to a food production facility, including the requirement that edible
products distributed or sold by dispensaries not be produced or
stored in private homes.

(6) Weighing or measuring standards, including, but not limited
to, the requirement that devices used in connection with the sale
or distribution of cannabis meet standards equivalent to Division
5 (commencing with Section 12001) of the Business and
Professions Code.

(7) Standards controlling the application of pesticides. These
standards shall, at a minimum, require that if pesticides are to be
used, the use comply with standards equivalent to Division 6
(commencing with Section 11401) of the Food and Agricultural
Code and its implementing regulations.

(8) A requirement that all edible medical cannabis products
shall be individually wrapped at the original point of preparation.

(c) Establish testing requirements for all begin insert medical cannabis and end insert
medical cannabis products, including edible cannabis products and
those used, or intended for use, via inhalation, including, but not
limited to:

(1) Testing for the active cannabinoid-profile, constituent
elements, and microbiological, bacterial, pathogenic yeast, and
mold counts.

(2) Testing standards by which to test and measure the potency
of begin insert medical cannabis and end insert medical cannabis products. The division
shall also determine maximum standards in the potency of begin insert medical
cannabis and end insert medical cannabis products.

(3) Testing standards by which to test and measure the quality
of the begin insert medical cannabis and medical end insert cannabis product.

(4) Protocols for begin insert medical cannabis and medical end insert cannabis product
safety testing.

begin insert

(d) Establish procedures for certifying laboratories for the
testing of medical cannabis and medical cannabis products, as
defined in this chapter. Certification of testing laboratories shall
be consistent with general requirements for the competence of
testing and calibration activities, including sampling, using
standard methods established by the International Organization
for Standardization, including, but not limited to, ISO/IEC 17025.

end insert begin insert

(e) Ensure licensed cannabis cultivation entities have access to
existing agricultural incentive and support programs.

end insert

26022.5.  

The regulations shall not limit the authority of a city
or a county pursuant to Section 7 of Article XI of the California
Constitution, Section 26010 or 26060, or any other law.

26023.  

The regulations shall set forth the inspection and
enforcement responsibilities of begin insert the Department of Alcohol and
Beverage Control, the State Department of Public Health end insert begin insert , end insert the
Division of Labor Standards Enforcement, the Department of
Water Resources, the State Department of Public Health, and the
Department of Food and Agriculture associated with this chapter.

26023.5.  

(a) 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 begin delete division end delete begin insert end insert begin insert Division of Medical Cannabis
Regulation and Enforcement end insert shall adopt regulations regarding the
minimum standards for the operation of dispensaries. The
regulations shall establish all of the following:

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

(2) 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.

(3) Minimum educational and testing requirements for licensee
staff, including, but not limited to, background checks and a
requirement that every dispensary maintain dedicated, licensed
security staff both inside and outside the dispensary.

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

(b) Commencing 180 days after the division begins issuing
provisional licenses, a dispensary shall provide patients medical
cannabis and medical cannabis products obtained only from persons
licensed under this chapter.

(c) Out-of-state medical cannabis patients with current, valid
verification that they are allowed to receive medical cannabis
treatment within their home state may receive medical cannabis
treatment, including the ability to purchase medical cannabis from
licensed dispensaries within this state upon verification of the
documents by the dispensary, pursuant to protocols established by
the division.

26024.  

begin delete (a) end delete begin delete   end delete begin delete The division end delete begin insert The regulatory authorities end insert may assist
state taxation authorities in the development of uniform policies
for the state taxation of mandatory commercial licensees.

begin delete

(b) The division 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.

end delete

26028.  

(a) The Medical Cannabis Control 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 moneys in the fund.

(b) All fees collected pursuant to this chapter shall be deposited
into the fees account, which is hereby established within the fund.
Notwithstanding Section 13340 of the Government Code, all
moneys within the fees account are hereby continuously
appropriated, without regard to fiscal year, to the begin delete division end delete begin insert Division
of Medical Cannabis Regulation and Enforcement end insert solely for the
purposes of fully funding and administering this chapter, including,
but not limited to, the costs incurred by the division for its
administrative expenses and costs begin insert and the costs of all regulatory
authorization as end insert set forth in Section 26023.

(c) All moneys collected pursuant to this chapter as a result of
fines or penalties imposed under this chapter shall be deposited
directly into the fines and penalties account, which is hereby
established within the fund, and shall be available, upon
appropriation by the Legislature, for the purposes of funding the
enforcement grant program pursuant to subdivision (d).

(d) The begin delete division end delete begin insert regulatory authorities end insert shall begin insert collaboratively end insert
establish and administer a grant program to allocate moneys from
the fines and penalties account 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 licensees. The costs of the grant program under this
subdivision shall, upon appropriation by the Legislature, be paid
for with moneys in the fines and penalties account.

(e) The Department of Transportation shall conduct research
regarding determining whether a driver is operating a vehicle under
the influence of cannabis, and shall develop protocols setting forth
best practices to assist law enforcement agencies. The costs of the
Department of Transportation under this subdivision shall, upon
appropriation by the Legislature, be paid for with moneys in the
fines and penalties account.

(f) The total fees charged pursuant to this chapter shall be
sufficient to pay the costs associated with the administrative and
enforcement duties of the division and of the associated state
agencies in administering this chapter.

(g) The begin delete division end delete begin insert regulatory authorities end insert shall enter into an
interagency agreement with begin insert the Department of Alcohol and
Beverage Control, the Department of Consumer Affairs, end insert the
Division of Labor Standards Enforcement, the Department of
Water Resources, the State Department of Public Health, and the
Department of Food and Agriculture setting forth the duties of
those agencies under this chapter and providing for reimbursement
begin insert to the appropriate state and local authorities end insert of associated costs
from revenues deposited into the fees account of the fund.

26030.  

(a) The begin delete director end delete begin insert regulatory directors end insert and the persons
employed by the begin delete division end delete begin insert regulatory authorities end insert 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 division adopted under 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 state law while in the course of their employment.

(b) The begin delete director, end delete begin insert regulatory directors, end insert the persons employed by
the begin delete division end delete begin insert regulatory authorities end insert 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 this chapter, visit
and inspect the premises of any licensee at any time during which
the licensee is acting pursuant to the mandatory commercial license.

(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 licensee
at any time during which the licensee is acting pursuant to the
license.

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 begin delete division end delete begin insert regulatory
authorities end insert for the purposes of administering this chapter are
confidential and shall not be disclosed pursuant to the California
Public Records Act (Chapter 3.5 (commencing with Section 6250)
of Division 7 of Title 1 of the Government Code), except as
necessary for authorized employees of the State of California or
any city or county to perform official duties pursuant to this
chapter, or a local ordinance adopted in accordance with Section
26010.

(b) Nothing in this section precludes the following:

(1)  begin delete Division employees end delete begin insert Employees of any of the regulatory
authorities end insert notifying state or local agencies about information
submitted to the division that the employee suspects is falsified or
fraudulent.

(2) Notifications from begin delete the division end delete begin insert any of the regulatory
authorities end insert to state or local agencies about apparent violations of
this chapter or any applicable local ordinance.

(3) Verification of requests by state or local agencies to confirm
licenses and certificates issued by the begin delete division end delete begin insert regulatory
authorities end insert or other state agency.

(4) 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.

(c) Information shall not be disclosed by any state or local
agency beyond what is necessary to achieve the goals of a specific
investigation, a notification, or the parameters of a specific court
order or subpoena.

26035.  

This chapter does not require an employer to permit or
accommodate the use, consumption, possession, transfer, display,
transportation, sale, or growth of cannabis in the workplace or to
affect the ability of employers to have policies restricting the use
of cannabis by employees.

 

Article 3.  Mandatory Commercial License

 

26040.  

(a) The begin delete division end delete begin insert regulatory authorities end insert shall adopt
regulations establishing a tiered licensing scheme to accommodate
the different levels and types of activity to be licensed, begin delete including,
but not limited to, licenses for the cultivation, testing, manufacture,
transportation, and dispensing of medical cannabis and medical
cannabis products. The end delete begin insert as follows: end insert

begin insert

(1) The Division of Medical Cannabis Cultivation shall adopt
regulations for a tiered licensing structure for the cultivation of
medical cannabis.

end insert begin insert

(2) The Division of Medical Cannabis Manufacturing and
Testing shall adopt regulations, in consultation with the
Department of Consumer Affairs, for the tiered licensing structure
of the following:

end insert begin insert

(A) Manufacturing of medical cannabis products.

end insert begin insert

(B) Testing of medical cannabis products.

end insert begin insert

(C) Certification of medical cannabis testing laboratories.

end insert begin insert

(3) The Division of Medical Cannabis Regulation and
Enforcement shall adopt regulations for the tiered licensing
structure for all the following:

end insert begin insert

(A) Wholesale of medical cannabis products, which shall include
large-scale storage and distribution, as defined by the regulatory
authority.

end insert begin insert

(B) Dispensing of medical cannabis products.

end insert

begin insert (b) end insert begin insert   end insert begin insert The end insert regulations shall set forth the application and licensure
process, including, but not limited to, all of the following:

(1) A description of the various specific forms of commercial
cannabis activity to be authorized by the various types of licenses.

(2) The establishment of license application, issuance, renewal,
suspension, surrender, and revocation procedures for the various
types of licenses to be issued.

(3) The procedures for the issuance, renewal, suspension, and
revocation of mandatory commercial licenses.

(4) Time periods, not to exceed 90 days, by which the division
shall approve or deny an application for mandatory commercial
licensure. The failure of the division to act upon an application for
licensure within the time prescribed shall not be deemed approval
of the application.

(5) Qualifications for licensees.

(6) Security requirements, including, but not limited to,
procedures for limiting access to facilities and for the screening
of employees.

begin delete

(b)

end delete

begin insert (c) end insert  Each mandatory commercial license application approved
by the begin delete division end delete begin insert respective licensing authority end insert pursuant to this
chapter is separate and distinct.

begin delete

(c)

end delete

begin insert (d) end insert   A mandatory commercial license application approved by
the begin delete division end delete begin insert respective licensing authority end insert 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

begin insert

(e) Each regulatory authority may adopt regulations for
additional licenses for any cannabis activity within its statutory
jurisdiction pursuant to this chapter, as deemed necessary.

end insert begin insert

(f) Each mandatory commercial license application approved
by the respective regulatory authority shall be reported to the
Division of Medical Cannabis Regulation and Enforcement within
24 hours of its approval.

end insert

26041.  

begin delete An individual licensed pursuant to this chapter shall
do end delete begin insert Regulations adopted by the regulatory authorities shall require,
at a minimum, all of end insert the following, as applicable:

(a)  begin delete A end delete begin insert The regulations on the end insert cultivation begin delete licensee end delete begin insert of medical
cannabis end insert shall begin insert do all of the following end insert :

(1)  begin delete Comply end delete begin insert Require that the cultivation licensee comply end insert with
all regulations of the Department of Food and Agriculture pursuant
to this chapter regarding the cultivation of medical cannabis.

(2)  begin delete Comply end delete begin insert Require that the cultivation licensee comply end insert with
any other applicable requirement of the division pursuant to this
chapter.

begin insert

(3) Establish criteria for different tiers of cultivation licenses,
including, but not limited to small, mid-sized, and large commercial
cultivation licenses, based on the area, in square feet, in cannabis
cultivation.

end insert begin insert

(4) Authorize commercial cultivation licensees to transport and
deliver medical cannabis for commercial purposes to only another
licensee of commercial cannabis activity pursuant to this chapter.
Cultivation licensees, without a separate dispensary license, who
deliver directly to any entity not licensed pursuant to this chapter
shall be fined and be under review for the revocation of licensure
by the Division of Medical Cannabis Cultivation.

end insert begin insert

(5) Require licensees to track all cannabis products and report
to the division, as specified by this chapter and any regulations
promulgated pursuant to this chapter.

end insert begin insert

(6) Require a cultivation licensee to obtain a seller’s permit
from the Board of Equalization to validate the authority of the
licensee to sell commercial cannabis products to another licensee
of commercial cannabis activity.

end insert begin insert

(7) Require a cultivation licensee to obtain a resale certificate
upon the sale of cannabis to another licensee of commercial
cannabis activity, to track the quantities exchanged.

end insert begin insert

(8) Require all medical cannabis to be tested by a laboratory
that has been certified and licensed pursuant to this chapter, prior
to commercial exchange with a dispensary. If the licensee has a
separate dispensary license, all medical cannabis and medical
cannabis products must be tested by a laboratory that has been
certified and licensed pursuant to this chapter, prior to retail
directly to consumers.

end insert begin insert

(9) Ensure licensed cannabis cultivation entities have access
to existing agricultural incentive and support programs.

end insert

(b)  begin delete Testing licensees shall be subject to end delete begin insert The regulations on the
testing of medical cannabis shall do all of end insert the following:

(1)  begin delete A end delete begin insert Prohibit a end insert testing licensee begin delete shall not receive end delete begin insert fr end insert begin insert om receiving end insert
medical cannabis products except through begin delete the division end delete begin insert a regulatory
authority end insert or a medical cannabis licensee.

(2)  begin delete A end delete begin insert Prohibit a end insert testing licensee begin delete shall not be end delete begin insert from being end insert licensed
for any begin insert other end insert activity authorized under this article, and begin delete shall not
hold end delete begin insert end insert begin insert from holding end insert an ownership interest in any real property,
personal property, or other assets associated or used in any other
license category.

(3)  begin delete Any end delete begin insert Require the licensee to follow any end insert other applicable
requirement of the division pursuant to this chapter.

begin delete

(c) A manufacturing licensee shall comply with any applicable
requirement of the division pursuant to this chapter.

end delete begin delete

(d) A transportation licensee of medical cannabis shall:

end delete begin insert

(c) Regulations on the manufacturing of medical cannabis shall
do all of the following:

end insert begin insert

(1) Require the manufacturing licensee comply with all
regulations of the State Department of Public Health pursuant to
this chapter regarding the cultivation of medical cannabis.

end insert begin insert

(2) Require the manufacturing licensee comply with any other
applicable requirement of the Division of Medical Cannabis
Regulation and Enforcement pursuant to this chapter.

end insert begin insert

(3) Establish criteria for different tiers of manufacturing
licenses, including, but not limited to small, mid-sized, and large
commercial manufacturing licenses.

end insert begin insert

(4) Authorize commercial manufacturing licensees to transport
and deliver medical cannabis for commercial purposes to only
another licensee of commercial cannabis activity pursuant to this
chapter. Manufacturing licensees, without a separate dispensary
license, who deliver directly to any entity not licensed pursuant to
this chapter shall be fined and be under review for the revocation
of licensure by the Division of Medical Cannabis Manufacturing
and Testing.

end insert begin insert

(5) Require licensees to track all cannabis products and report
to the Division of Medical Cannabis Regulation and Enforcement,
as specified by this chapter and any regulations promulgated
pursuant to this chapter.

end insert begin insert

(6) Require a manufacturing licensee to obtain a seller’s permit
from the Board of Equalization to validate the authority of the
licensee to sell commercial manufactured cannabis products to
another licensee of commercial cannabis activity.

end insert begin insert

(7) Require a manufacturing licensee to obtain a resale
certificate upon the sale of manufactured medical cannabis
products to another licensee of commercial cannabis activity, to
track the quantities exchanged.

end insert begin insert

(8) Require all manufactured medical cannabis and medical
cannabis products to be tested by a laboratory that has been
certified and licensed pursuant to this chapter, prior to commercial
exchange with a dispensary. If the licensee has a separate
dispensary license, all manufactured cannabis and medical
cannabis products shall be tested by a laboratory that has been
certified and licensed pursuant to this chapter, prior to retail sale
directly to consumers.

end insert begin insert

(d) Regulations for the dispensing of medical cannabis shall do
all of the following:

end insert begin insert

(1) Require the dispensary licensee comply with all regulations
of the division pursuant to this chapter regarding the dispensing
of medical cannabis

end insert begin insert

(2) Require the dispensary licensee comply with any other
applicable requirements of the division pursuant to this chapter.

end insert begin insert

(3) Allow dispensary licensees to store limited quantities of
medical cannabis and medical cannabis products for commercial
purposes pursuant to this chapter, in a manner deemed safe and
secure by the regulatory authority.

end insert begin insert

(4) Allow all non-mobile, non-vehicular, and non-Internet-based
dispensaries to be licensed to transport medical cannabis and
medical cannabis products directly to consumers.

end insert begin insert

(5) Require all mobile, vehicular and Internet-based
dispensaries to maintain a business contract with a non-vehicular
and non-mobile dispensary, and report all records of commercial
activity to said entity.

end insert begin insert

(6) Require licensees to track all medical cannabis and medical
cannabis products and report to the division, as specified by this
chapter and any regulations promulgated pursuant to this chapter.

end insert begin insert

(7) Require all dispensary licensees to obtain a seller’s permit
from the Board of Equalization to validate the authority of the
licensee to sell medical cannabis and medical cannabis products,
and to maintain receipts of all sales transactions.

end insert begin insert

(8) Require that, upon receipt of medical cannabis,
manufactured medical cannabis, and medical cannabis products,
the dispensary licensee shall request and record evidence that the
product has been tested by a laboratory that has been certified
and licensed pursuant to this chapter.

end insert begin insert

(e) Regulations for the wholesale of medical cannabis shall do
all of the following:

end insert begin insert

(1) Require all wholesale licensees to comply with all
regulations of the division pursuant to this chapter regarding the
wholesale storage and distribution of medical cannabis.

end insert begin insert

(2) Require the dispensary licensee comply with any other
applicable requirements of the division pursuant to this chapter.

end insert begin insert

(3) Establish criteria for the qualifications of a wholesale
licensee, including maximum quantities of medical cannabis that
each licensee may store at one time.

end insert begin insert

(4) Authorize all wholesale licensees to do commercial business
with only other licensees of commercial cannabis activity. All other
licensees under this chapter shall not be required to work only
with a wholesale licensee directly.

end insert begin insert

(5) Require that all medical cannabis and medical cannabis
products be tested by the wholesale licensee prior to commercial
exchange with a dispensary.

end insert begin insert

(6) Require licensees to track all medical cannabis and medical
cannabis products and report to the Division on Medical Cannabis
Regulation and Enforcement, as specified by this chapter and any
regulations promulgated pursuant to this chapter.

end insert begin insert

(f) All regulations related to transportation of cannabis shall
require a medical cannabis licensee to do all of the following:

end insert

(1) Maintain intrastate operating authority.

(2) Maintain interstate operating authority, begin insert for the commercial
purposes of the licensee, and only end insert to the extent permitted by federal
law.

(3) Be allowed by local jurisdictions to transport medical
cannabis, if the licensee is in compliance with this chapter.

begin delete

(e) Dispensary licensees shall:

end delete begin delete

(1) Be permitted to store quantities of medical cannabis for
commercial purposes pursuant to this chapter, as deemed safe by
the division.

end delete begin delete

(2) Comply with all applicable requirements of the division
pursuant to this chapter.

end delete

26042.  

begin delete The division end delete begin insert Each regulatory authority end insert shall establish
a scale of application, licensing, and renewal fees, based upon the
cost of enforcing this chapter, as follows:

(a)  begin delete The division end delete begin insert Each regulatory authority end insert shall charge each
applicant for licensure or renewal an application or renewal fee
that shall be calculated to cover the costs of processing the
application or renewal. This fee may vary depending upon the
varying costs associated with approving the application or renewal
related to the varying activities covered by the license, but shall
not exceed ____ dollars ($____) for an initial application, and
____dollars ($____) for a renewal application.

(b) Upon the issuance of a license, the begin delete division end delete begin insert respective end insert
begin insert regulatory authority end insert shall charge each licensee a licensure fee.
The licensure fee shall be calculated to cover the costs of
administering this chapter, other than the costs of processing
applications. The licensure fee may vary depending upon the
varying costs associated with administering the various regulatory
requirements of this chapter as they relate to the nature and scope
of the different licensure activities, but shall not be less than ____
dollars ($____), nor more than ____ dollars ($____).

(c)  begin delete The division end delete begin insert Each regulatory authority end insert shall establish
appropriate fees as part of its emergency regulations for the
issuance of provisional licenses adopted pursuant to Section 26043.

(d) The total fees assessed pursuant to this chapter, including,
but not limited to, provisional license fees set forth in Section
26054, shall be set at an amount that will fairly and proportionately
generate sufficient total revenue to fully cover the total costs of
administering this chapter, including, but not limited to, costs set
forth in Section 26023.

26043.  

begin delete The division end delete begin insert Each regulatory authority end insert shall adopt, as
soon as practicable, emergency regulations consistent with this
chapter to allow a qualified applicant for licensure to apply for
and receive a provisional license to engage in commercial cannabis
activity so as to ensure an adequate supply of medical cannabis
upon full implementation of this chapter as set forth in Section
26054.

begin delete 26045. end delete
begin insert 26044. end insert   

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

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

(b) For 60 days after the license expires, the license 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 license that is in effect on the month posted
on the license continues in effect through 12 midnight of the 60th
day following the month posted on the license, at which time it is
automatically canceled.

(d) A license 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 license 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 license 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 division during office hours, or unless both the
document and fee have been filed and remitted pursuant to Section
11003 of the Government Code.

begin insert

begin insert 26045. end insert   

A person shall engage in commercial cannabis activity
only if the person has complied with all of the following conditions:

(a) The person has obtained permission from local authorities
approving the proposed commercial cannabis activity. This
requirement shall not apply to a person who holds a valid business
license, conditional use permit, or other locally issued permit for
commercial cannabis activity. For the purposes of this subdivision,
the document granting the permission shall include, at a minimum,
all of the following:

(1) The legal name, address and date of birth of the applicant.

(2) The type of license the applicant is requesting a permit for.

(3) Documentation that the applicant has been in compliance
with local ordinances and regulations, including, but not limited
to, an entity granted immunity under Measure D, approved by the
voters of the City of Los Angeles at the May 21, 2013, general
election.

(4) A statement of whether or not the applicant has previously
committed a felony, as described in paragraph (8) of subdivision
(e) of Section 26047.

(5) A statement signed by the applicant under penalty of perjury
that the information provided in the application is true.

(b) The person submits a copy of the permission, or equivalent
qualifying documents, to the division for recordation. Upon receipt
of an approved permission, the division shall provide the applicant
with a certificate of approval for licensure, to be presented to the
relevant regulatory authority under which the person seeks
licensure. No regulatory authority shall grant approval of an
application without a certificate of approval for application of
commercial cannabis licensure for the applicant.

(c) The person applies for licensure for commercial cannabis
activity from a regulatory authority and receives approval for that
licensure.

(d) The person abides by all local and state ordinances and
regulations pursuant to this chapter.

end insert

26046.  

(a) An application for a license shall include, but shall
not be limited to, all of the following:

begin insert

(1) A certificate of approval for licensure by the Division of
Medical Cannabis Regulation and Enforcement.

end insert begin delete

(1)

end delete

begin insert (2) end insert  The legal name and proposed physical addresses of the
mandatory commercial licensee.

begin delete

(2)

end delete

begin insert (3) end insert  The name, address, and date of birth of each principal officer
and board member.

begin delete

(3)

end delete

begin insert (4) end insert  Operating and inventory control procedures to ensure
security and prevent diversion.

begin delete

(4)

end delete

begin insert (5) end insert  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.

begin delete

(5)

end delete

begin insert (6) end insert  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.

begin delete

(6)

end delete

begin insert (7) end insert  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.

begin delete

(7)

end delete

begin insert (8) end insert  Documentation that the applicant will be in compliance with
all local ordinances and regulations, including, but not limited to,
an entity granted immunity under Measure D, approved by the
voters of the City of Los Angeles at the May 21, 2013, general
election.

begin delete

(8)

end delete

begin insert (9) end insert  Evidence that begin delete a minimum of 75 percent end delete begin insert all end insert of the officers
and owners of the applicant organization have been residents of
the State of California for at least three years.

begin delete

(9)

end delete

begin insert (10) end insert  For an applicant with 20 employees or more, 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,”
as defined by the division in consultation with the Division of
Labor Standards Enforcement.

begin delete

(10)

end delete

begin insert (11) end insert  For an applicant seeking a license to cultivate, 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.

begin delete

(11)

end delete

begin insert (12) end insert  A statement signed by the applicant under penalty of perjury
that the information provided in the application is true.

(b) For applicants seeking a license to cultivate and process, the
application shall also include a detailed description of the operating
procedures for all of the following:

(1) Cultivation.

(2) Extraction and infusion methods.

(3) The transportation process.

(4) Inventory procedures.

(5) Quality control procedures.

26047.  

(a) Upon receipt of an application for licensure and
the applicable fee, the begin delete division end delete begin insert respective regulatory authority end insert
shall make a thorough investigation to determine whether the
applicant and the premises for which a license is applied qualify
for the license and whether this chapter has been complied with,
and shall investigate all matters connected therewith that may
affect the public welfare and morals.

(b) The begin delete division end delete begin insert respective regulatory authority end insert shall deny an
application if either the applicant or the premises for which a
license is applied do not qualify for licensure under this chapter.

(c) The begin delete division end delete begin insert respective regulatory authority end insert may, at its
discretion, issue a license to an applicant who has obtained a
certificate of rehabilitation pursuant to Section 4852.13 of the
Penal Code.

(d) The begin delete division end delete begin insert respective regulatory authority end insert may place
reasonable conditions upon licensure if grounds exist for denial
of the license, and the division finds those grounds may be removed
by the imposition of those conditions. However, the limitations
set forth in paragraph (6) of subdivision (b) of Section 26040 shall
not be waived.

(e) The begin delete division end delete begin insert respective regulatory authority end insert shall deny the
application for licensure or renewal if any of the following
conditions apply:

(1) Granting or continuation of a license would be contrary to
the public welfare or morals.

(2) The applicant holding or seeking a license has violated any
law prohibiting conduct involving moral turpitude.

(3) Local agencies have notified the division and provided
evidence that a licensee or applicant within its jurisdiction is in
violation of local ordinances relating to cannabis activities.

(4) The application has failed to state with sufficient specificity
the jurisdiction in which the applicant proposes to establish
operations.

(5) 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.

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

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

(8) The applicant, or any of its officers, directors, or owners has
been convicted of a felony criminal conviction for drug trafficking,
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 division’s
determination, would impair the applicant’s ability to appropriately
operate as a mandatory commercial licensee.

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

(10) The applicant, or any of its officers, directors, or owners
has been sanctioned by the division, a city, or a county for
unlicensed commercial medical cannabis activities or has had a
license revoked under this chapter in the previous three years.

(11) Applicants shall be notified of a denied application in
writing via personal service or mail addressed to the address of
the applicant or licensee set forth in the application. The denial
letter shall contain the detailed reasons for which the application
has been denied. The applicant shall have the right to appeal the
denial and be given a hearing within 30 days of the appeal. On
appeal, the decision shall be upheld unless the applicant
demonstrates that the applicant is in fact eligible for licensure and
the application is in compliance with this chapter.

26048.  

(a) The begin delete division end delete begin insert respective regulatory authority end insert shall
electronically submit to the Department of Justice fingerprint
images and related information for all applicants for cultivation,
dispensing, manufacturing, and transportation licenses for the
purpose of obtaining information as to the existence and content
of a record of state or federal convictions and arrests, and
information regarding whether the person is free on bail, or on his
or her own recognizance, pending trial or appeal.

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

(c) The division shall request from the Department of Justice
subsequent notification service, as provided pursuant to Section
11105.2 of the Penal Code, for persons described in this section.

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

26049.  

(a) The actions of a mandatory commercial licensee
or provisional licensee, its employees, and its agents, permitted
pursuant to a mandatory commercial license or provisional license
issued by the division or otherwise permitted by this chapter, that
are within the scope of the license issued pursuant to this chapter
and the 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 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 licensee or provisional licensee, its employees, and
its agents, as permitted pursuant to a mandatory commercial license
or provisional license issued by the division 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) Conduct that is within the scope of a license issued pursuant
to this chapter but not fully in compliance with this chapter shall
be subject to the enforcement provisions of this chapter and shall
not be subject to the penal provisions generally prohibiting
cannabis-related activity, unless and until the license is revoked.

(d) 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 7 of Article XI of the California
Constitution or Section 26010 or 26060.

26050.  

(a) A licensee shall keep, at the licensed premises,
accurate records of the specific commercial cannabis activity
conducted by the licensee. The records shall include, at a minimum,
all of the following for each batch of product:

(1) The name and address of the supplier.

(2) The dates on which the product was received.

(3) The amounts, form, and batch and lot number.

(4) The location of the cultivation site.

(5) The name of the employee who received the product.

(6) Records demonstrating compliance by the licensee with state
and federal rules and regulations regarding reporting and taxation
of income received.

(b) The records shall be kept for a minimum of seven years.

(c) The division may make any examination of the books and
records of any licensee and may visit and inspect the premises of
any licensee that the division may deem necessary to perform its
duties under this chapter.

(d) If the licensee or any employee of the licensee refuses,
impedes, obstructs, or interferes with an inspection pursuant to
this chapter or local ordinance, or if the licensee fails to maintain
or provide the books and records required by this section, the
license may be summarily suspended and the division shall directly
commence proceedings for the revocation of the license in
accordance with this chapter.

(e) All cultivation, dispensing, and retail sales licensees shall
be subject to an annual audit by the State Auditor in order to ensure
proper documentation is kept at each site or facility.

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 but who does not sell or distribute cannabis to any other person
is not, thereby, engaged in commercial cannabis activity and is,
therefore, exempt from the licensure requirements of this chapter.

(2) A primary caregiver who cultivates, possesses, stores,
manufactures, transports, donates, 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 but 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, thereby, engaged
in commercial cannabis activity and is, therefore, exempt from the
licensure requirements of this chapter.

26054.  

(a)  begin delete The division end delete begin insert Each regulatory authority end insert shall, as
soon as practicable following January 1, 2016, allow a qualified
applicant for licensure to apply for and receive a provisional license
to engage in commercial cannabis activity so as to ensure an
adequate supply of medical cannabis upon full implementation of
this chapter.

(b)  begin delete The division end delete begin insert Each regulatory authority end insert shall establish
appropriate fees not to exceed ____ dollars ($____) for the issuance
of a provisional license begin insert under its jurisdiction end insert pursuant to this
chapter.

begin delete

(c) The division shall accept applications for provisional
commercial licenses for medical cannabis activity as follows:

end delete begin delete

(1) The division shall request that every city or county provide
the division 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 division shall issue a provisional
license to the entity until the time that the entity’s application for
mandatory commercial licensure has been approved or denied
under this chapter, but no later than 90 days after the division
begins accepting applications for mandatory commercial licensure.

end delete begin delete

(2) The division

end delete

begin insert (c) end insert begin insert   end insert begin insert Each regulatory authority end insert shall issue a provisional license
to individuals and entities that begin delete the division end delete begin insert the regulatory authority end insert
determines were, during the begin delete 12 end delete begin insert 3 end insert months prior to January 1, 2016,
regularly cultivating, processing, manufacturing, transporting, or
distributing medical cannabis collectively or cooperatively in full
compliance with begin delete 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 end delete any applicable local ordinance, to continue to do so until
the licensee’s application for mandatory commercial licensure has
been approved or denied under this chapter, but no later than 90
days after the begin delete division end delete begin insert regulatory authority end insert begins accepting
applications for regular mandatory commercial licenses. The
begin delete division end delete begin insert regulatory authority end insert may consult with relevant local
agencies in making a determination on whether a provisional
license applicant is in compliance with any applicable ordinance.

(d) To qualify for a provisional mandatory commercial license,
applicants shall disclose to the begin delete division end delete begin insert appropriate regulatory
authority end insert all of the following information in writing:

(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 licensee conducts any activity under
the authority of the licensee.

(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 begin delete 12 end delete begin insert 3 end insert months prior to January 1, 2016, the quantity
of cannabis cultivated, processed, manufactured, tested, transported,
or sold at a location and the quantity expected to be cultivated,
processed, manufactured, tested, transported, or sold from January
1, 2016, to July 1, 2016, inclusive. The licensee shall make its
records of current activity and activity for the begin delete 12 end delete begin insert 3 end insert months prior
to January 1, 2016, available to the division upon request.

(e) Upon receipt of the application materials and fee, the division
may issue a provisional license and send a proof of issuance to the
applicant, if the applicant has not committed any act or crime
constituting grounds for the denial of licensure.

(f) Notwithstanding any other provision of this section, the
division shall not issue a provisional license to an individual or
entity, or for a premises, against whom there are pending state or
local administrative or judicial proceedings or actions initiated by
a city, county, or city and county under any applicable local
ordinance or who has been determined through those proceedings
to have violated any local ordinance related to cannabis activity,
or that knowingly provides false or fraudulent information on an
application for licensure.

(g) 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 this section.

(h) Provisional licensees shall comply with all standards and
requirements applicable to a licensee under this chapter, including,
but not limited to, the production, recordkeeping, security, and
transportation requirements and standards.

begin insert

(i) Beginning July 1, 2017, all commercial cannabis activity
shall be conducted between licensees of commercial cannabis
activity, pursuant to this chapter. If the regulatory authorities have
not promulgated their respective regulations by that date, the
regulatory authorities shall provide an extension for all provisional
licenses for applicants abiding by the provisions of this chapter.

end insert

26055.  

The begin delete division end delete begin insert regulatory authority end insert may adopt regulations
to permit the transfer of a license from a licensee to another person
who demonstrates to the begin delete division end delete begin insert regulatory authority end insert that he or
she is eligible for licensure under this chapter, if the begin delete following
requirements are met: end delete

begin delete

(a) The division has determined that granting an additional
license of the type in question in the geographic region in question
may lead to the availability of product in excess of the amounts
needed to meet the medical need.

end delete

begin delete (b) end delete begin delete   end delete begin delete The end delete prospective recipient of the license complies with all
of the requirements of this chapter relating to a new application
for licensure, including, but not limited to, payment to the begin delete division end delete
begin insert regulatory authority end insert of a reasonable license transfer fee.

26057.  

begin delete The division end delete begin insert Each regulatory authority end insert 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 begin delete division end delete begin insert regulatory authority end insert .

 

Article 4.  Enforcement

 

26060.  

(a)  begin delete The division end delete begin insert Each regulatory authority end insert shall work
in conjunction with law enforcement agencies for the purposes of
implementing, administering, and enforcing this chapter and the
division’s regulations and taking appropriate action against
licensees and others who fail to comply with this chapter or the
regulations adopted pursuant to this chapter.

(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 regulates the location, operation, or establishment of a licensee
or other person that engages in commercial cannabis activity.

26062.  

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

begin delete

26063.  

(a) Any product containing cannabis that is distributed
or offered for sale by a licensee shall comply with the testing,
labeling, and food safety requirements established pursuant to this
chapter.

(b) No person shall steal or fraudulently use a licensee’s
identification certificate or license, or other licensee’s identification
card or license issued by the division, to acquire, cultivate, process,
manufacture, test, transport, produce, possess for sale, sell, or
distribute cannabis.

(c) No person shall counterfeit, tamper with, or fraudulently
produce an identification card or license 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 ____months or a fine not to exceed ____dollars ($____),
or both.

(2) For a second or subsequent offense, imprisonment in a
county jail for no more than ____ or a fine not to exceed ____
dollars ($____), 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.

end delete

26064.  

Any person engaging in commercial cannabis activity
and operating an unlicensed facility, building, structure, vehicle,
mobile unit, or location in violation of this chapter shall be subject
to civil penalties of up to ____ dollars ($____) for each violation,
and the division or court may order the destruction of any cannabis
associated with that violation. All civil fines collected pursuant to
this section shall be deposited into the fines and penalties account
established pursuant to Section 26028. If an action for civil
penalties is brought by the Attorney General, the penalty collected
shall be deposited into the General Fund pursuant to Section 26028.
If the action is brought by a district attorney or county counsel,
the penalty collected shall be paid to the treasurer of the county in
which the judgment was entered. If the action is brought by a city
attorney or city prosecutor, the penalty collected shall be paid to
the treasurer of the city in which the judgment was entered.

26066.  

(a)  begin delete The end delete begin insert Any regulatory end insert 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 licensee’s failure to correct
objectionable conditions following notice or as a result of any rule
promulgated pursuant to this chapter, and to assess and recover
civil penalties in accordance with this chapter. The action shall be
brought in the county in which the violation occurred or is
threatened to occur. Any proceeding for injunctive relief 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.

(b) A state or local agency shall immediately notify the division
of any violations or arrests made for violations over which the
division has jurisdiction which involve a licensee or licensed
premises. Notice shall be given within 10 days of the violation or
arrest. The division shall promptly cause an investigation to be
made as to whether grounds exist for suspension or revocation of
the license.

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

(d) The division shall keep a complete record of all entities
licensed pursuant to this chapter. This record shall be made
available on the division’s Internet Web site so as to permit state
and local law enforcement to verify a mandatory commercial
license.

(e)  begin delete The department shall authorize the end delete begin insert A end insert city, county, or city
and county begin delete to end delete begin insert may end insert impose a begin delete “temporary local suspension” end delete
begin insert temporary local suspension end insert of the license of a commercial licensee
for up to 30 days for violations of this chapter. The begin delete department end delete
begin insert regulatory authority end insert shall promptly cause an investigation to be
made as to whether grounds exist for continued suspension or
revocation of the license. begin insert A city, county, or city and county may
impose a subsequent temporary local suspension of the license of
a commercial licensee for the same violation until the regulatory
authority’s investigation and all appeals are complete. end insert

 

Article 5.  Transportation of Medical Cannabis

 

26100.  

A begin delete licensed transporter shall end delete begin insert licensee authorized to end insert
transport medical cannabis and medical cannabis products begin insert shall
do so end insert only begin delete between licensed facilities. end delete begin insert as set forth in this chapter. end insert

26102.  

(a) Prior to transporting begin insert medical cannabis or end insert medical
cannabis products, a begin delete licensed transporter end delete begin insert licensee authorized to
transport medical cannabis or medical cannabis products end insert shall
do both of the following:

(1) Complete an electronic shipping manifest as prescribed by
the division.

(2) Securely transmit the manifest to the division and the
licensee that will receive the medical cannabis product.

(b) During transportation, the licensed transporter shall maintain
a physical copy of the shipping manifest and make it available
upon request to agents of the division, local law enforcement
officers, or any other designated enforcement agency.

(c) The licensee receiving the shipment shall maintain each
electronic shipping manifest and shall make it available upon
request to agents of the division, local law enforcement officers,
or any other designated enforcement agency.

(d) Upon receipt of the shipment, a licensed facility shall submit
to the division a record verifying receipt of the shipment and the
details of the shipment.

26104.  

(a) Transported begin insert medical cannabis or end insert medical cannabis
products shall be transported only in a storage compartment that
is securely affixed to the interior of the transporting vehicle, and
shall not be visible from outside the vehicle. begin insert This requirement
shall only apply to licensees transporting medical cannabis or
medical cannabis products with a total retail value of over end insert begin insert five
hundred dollars ($500). end insert

(b) A vehicle transporting medical cannabis products shall travel
only directly between licensed facilities.

(c) All transport vehicles shall be staffed with a minimum of
two employees. At least one transport member shall remain with
the vehicle at all times when the vehicle contains medical cannabis.
begin insert This requirement shall only apply to licensees transporting medical
cannabis or medical cannabis products with a total retail value
of over five thousand dollars ($5,000). end insert

(d) Each transport team member shall possess documentation
of licensing and a government-issued identification card at all
times when transporting or delivering medical cannabis and shall
produce it upon the request of agents of begin delete the division end delete begin insert any regulatory
authority end insert or any law enforcement officials.

26105.  

(a) The division shall develop a database containing
the electronic shipping manifests, which shall include, but are not
limited to, the following information:

(1) The quantity, or weight, and variety of products shipped.

(2) The estimated times of departure and arrival.

(3) The quantity or weight, and variety of products received.

(4) The actual time of arrival.

(5) A categorization of the product.

(b) The database shall be designed to flag irregularities for begin delete the
division end delete begin insert any regulatory authority end insert to investigate. begin delete The division end delete begin insert Any
regulatory authority end insert may, at any time, inspect shipments and
request documentation for current inventory.

 

Article 6.  Cannabis Employee Certification and Apprenticeship
Program for Cultivation Sites and Dispensaries

 

26140.  

This article applies only to cultivation sites and
dispensaries.

26140.5.  

The Division of Labor Standards Enforcement shall
do all of the following:

(a) Maintain minimum standards for the competency and training
of employees of a licensed cultivator or dispensary through a
system of testing and certification.

(b) Maintain an advisory committee and panels as necessary to
carry out its functions under this article. There shall be employer
representation on the committee and panels.

(c) Adopt regulations as determined to be necessary to
implement this article.

(d) Issue certification cards to employees certified pursuant to
this article.

(e) Establish registration fees in an amount reasonably necessary
to implement this article, not to exceed twenty-five dollars ($25)
for the initial registration. There shall be no fee for annual renewal
of registration. Fees shall be placed in the fund.

26141.  

(a)  begin delete Commencing end delete begin insert By end insert January 1, begin delete 2019, end delete begin insert 2017, the Division
of Labor Standards Enforcement shall develop a certification
program for cannabis employees. Commencing January 1, 2019, end insert
except as provided in subdivision (c), begin insert certification shall be required
of all end insert persons who perform work as cannabis begin delete employees shall be
certified by the Division of Labor Standards Enforcement. end delete
begin insert employees. end insert

(b)  begin delete Commencing January 1, 2019, individuals end delete begin insert Individuals end insert
desiring to be certified shall submit an application for certification
and examination.

(c) (1) Certification is not required for registered apprentices
working as cannabis employees as part of begin delete an apprenticeship
program approved on or after January 1, 2019, under end delete a
state-approved apprenticeship program. An apprentice who is
within one year of completion of his or her term of apprenticeship
shall be permitted to take the certification examination and, upon
passing the examination, shall be certified immediately upon
completion of the term of apprenticeship.

(2)  begin delete On or after end delete begin insert Commencing end insert January 1, 2019, an uncertified
person may perform work for which certification is otherwise
required in order to acquire the necessary on-the-job experience
for certification provided that the person shall be under the direct
supervision of a cannabis employee certified pursuant to Section
26141 who is responsible for supervising no more than one
uncertified person.

(3) The Division of Labor Standards Enforcement may develop
additional criteria governing this subdivision.

26141.5.  

(a) The following shall constitute additional grounds
for disciplinary proceedings, including suspension or revocation
of the license issued pursuant to this chapter:

(1) The licensee willfully employs one or more uncertified
persons to perform work as cannabis employees in violation of
this section.

(2) The licensee willfully fails to provide adequate supervision
of uncertified workers.

(3) The licensee willfully fails to provide adequate supervision
of apprentices performing work pursuant to paragraph (1) of
subdivision (c) of Section 26141.

(b) The Labor Commissioner shall maintain a process for
referring cases to the begin delete Division of Medical Cannabis Regulation
and Enforcement end delete begin insert appropriate regulatory authority end insert when it has
been determined that a violation of this section has likely occurred.
The Labor Commissioner shall have a memorandum of
understanding with the begin delete Division of Medical Cannabis Regulation
and Enforcement end delete begin insert regulatory authorities end insert in furtherance of this
section.

(c) Upon receipt of a referral by the Labor Commissioner
alleging a violation under this section, the begin delete Division of Medical
Cannabis Regulation and Enforcement end delete begin insert appropriate regulatory
authority end insert shall open an investigation. Disciplinary action against
the licensee shall be initiated within 60 days of the receipt of the
referral. The begin delete Division of Medical Cannabis Regulation and
Enforcement end delete begin insert regulatory authority end insert may initiate disciplinary action
against a licensee upon his or her own investigation, the filing of
a complaint, or a finding that results from a referral from the Labor
Commissioner alleging a violation under this section. Failure of
the employer or employee to provide evidence of certification or
apprentice status shall create a rebuttable presumption of violation
of this provision.

(d) This section shall become operative on January 1, 2019.

SEC. 6.  

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 by a licensee operating pursuant
to the Medical Cannabis Regulation and Control Act (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 the 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, “marijuana” begin insert or “cannabis end insert begin insert ” end insert
shall have the meanings set forth in Section 26002 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.

(f) The total taxation of state and local authorities shall not be
in excess of 25 percent of retail prices.

SEC. 7.  

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) Commencing 180 days following the issuance of provisional
licenses pursuant to the Medical Cannabis Regulation and Control
Act (Chapter 18 (commencing with Section 26000) of Division 9
of the Business and Professions Code), subdivision (a) shall not
apply to licensees under that act. begin delete The Division of Medical Cannabis
Regulation and Enforcement end delete begin insert Each regulatory authority end insert shall post
a notice on its Internet Web site indicating when it has commenced
issuing provisional licenses and when the 180-day period has been
exhausted.

SEC. 8.  

Section 147.5 is added to the Labor Code, to read:

147.5.  

(a) By January 1, 2017, the division shall convene an
advisory committee to evaluate whether there is a need to develop
industry-specific regulations related to the activities of facilities
issued a license pursuant to Chapter 18 (commencing with Section
26000) of Division 9 of the Business and Professions Code.

(b) By July 1, 2017, the advisory committee shall present to the
board its findings and recommendations for consideration by the
board. By July 1, 2017, the board shall render a decision regarding
the adoption of industry-specific regulations pursuant to this
section.

SEC. 9.  

Section 3094 is added to the Labor Code, to read:

3094.  

The Division of Apprenticeship Standards shall
investigate, approve, or reject applications for apprenticeship
programs for employees of a licensee subject to Article 6
(commencing with Section 26140) of Chapter 18 of Division 9 of
the Business and Professions Code. The Division of Apprenticeship
Standards shall adopt regulations necessary to implement and
regulate the establishment of the apprenticeship programs described
in this section.

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 5 of
this act, which adds Chapter 18 (commencing with Section 26000)
to Division 9 of the Business and Professions Code, imposes a
limitation on the public’s right of access to the meetings of public
bodies or the writings of public officials and agencies within the
meaning of Section 3 of Article I of the California Constitution.
Pursuant to that constitutional provision, the Legislature makes
the following findings 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 begin delete Division of Medical
Cannabis Regulation and Enforcement end delete begin insert regulatory authorities end insert 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 for certain
costs that may be incurred by a local agency or school district
because, in that regard, 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.

However, if the Commission on State Mandates determines that
this act contains other costs mandated by the state, reimbursement
to local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.