BILL ANALYSIS                                                                                                                                                                                                    



                                                                      AB 34


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          Date of Hearing:   April 28, 2015


                   ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS


                                Susan Bonilla, Chair


          AB 34  
          (Bonta and Jones-Sawyer) - As Amended April 23, 2015


          SUBJECT:  Medical  cannabis regulation and enforcement.


          SUMMARY:  Establishes a licensing and regulatory framework for  
          medical cannabis under the Medical Cannabis Regulation and  
          Control Act, and would establish the Division of Medical  
          Cannabis Regulation and Enforcement within the Department of  
          Alcoholic Beverage Control (ABC), the Division of Medical  
          Cannabis Manufacturing and Testing within the State Department  
          of Public Health (CDPH), and the Division of Medical Cannabis  
          Cultivation within the Department of Food and Agriculture  
          (CDFA), and would set forth the duties of the respective  
          regulatory authorities.


          EXISTING LAW:


          1)Recognizes the authority of cities and counties to make and  
            enforce, within their borders, all local, police, sanitary,  
            and other ordinances and regulations not in conflict with  
            general interest laws.  (Cal. Const. Art. XI Sec. 7)

          2)Licenses and regulates physicians and surgeons under the  
            Medical Practice Act (Act) by the Medical Board of California  
            (MBC), within the Department of Consumer Affairs (DCA).   








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            (Business and Professions Code (BPC) Section 2000 et seq.)

          3)Requires the MBC to prioritize its investigative and  
            prosecutorial resources to ensure that physicians representing  
            the greatest threat of harm are identified and disciplined  
            expeditiously and includes in that prioritization list:   
            "Repeated acts of clearly excessive prescribing, furnishing,  
            or administering of controlled substances, or repeated acts of  
            prescribing, dispensing, or furnishing of controlled  
            substances without a good faith prior examination of the  
            patient and medical reason therefor."  (BPC Section 2220.05)

          4)Prohibits the possession, possession with intent to sell,  
            cultivation, sale, transportation, importation, or furnishing  
            of marijuana, except as otherwise provided by law.  (Health  
            and Safety Code (HSC) Sections 11357, 11358, 11359, and 11360)

          5)Prohibits prosecution under the Compassionate Use Act of 1996  
            (CUA), an initiative measure, for the possession or  
            cultivation of marijuana of a patient or a patient's primary  
            caregiver who possesses or cultivates marijuana for the  
            personal medical purposes of the patient upon the written or  
            oral recommendation or approval of a physician.  (HSC Section  
            11362.5)

          6)States that nothing in the CUA shall be construed to supersede  
            legislation prohibiting persons from engaging in conduct that  
            endangers others, or to condone the diversion of marijuana for  
            non-medical purposes.  (HSC Section 11362.5(b)(2))

          7)Provides that no physician in California shall be punished, or  
            denied any right or privilege, for having recommended  
            marijuana to a patient for medical purposes.  (HSC Section  
            11362.5(c))

          8)Defines "attending physician" as an individual who possesses a  
            license in good standing to practice medicine or osteopathy  
            issued by the MBC or the Osteopathic Medical Board of  
            California and who has taken responsibility for an aspect of  








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            the medical care, treatment, diagnosis, counseling, or  
            referral of a patient and who has conducted a medical  
            examination of that patient before recording in the patient's  
            medical record the physician's assessment of whether the  
            patient has a serious medical condition and whether the  
            medical use of marijuana is appropriate.  (HSC Section  
            11362.7(a))

          9)Defines "primary caregiver" for purposes of the CUA as the  
            individual designated by a patient who has consistently  
            assumed responsibility for the housing, health, or safety of  
            that person.  (HSC Section 11362.7(d))

          10)Requires the CDPH to establish and maintain a voluntary  
            Medical Marijuana Program for qualified patients to apply for  
            identification cards, and county health departments to issue  
            identification cards to qualified patients and their  
            caregivers.  (HSC Section 11362.7 et seq.)

          11)Requires a person who seeks an identification card to pay a  
            fee and provide to the county health department the person's  
            name, proof of residency, written documentation by the  
            attending physician in the person's medical records stating  
            that the person has been diagnosed with a serious medical  
            condition and that the medical use of marijuana is  
            appropriate, and the doctor's name, contact information, and  
            California medical license number, as specified.  (HSC Section  
            11362.715(a))

          12)Makes it a misdemeanor offense to, among other things,   
            fraudulently represent a medical condition or provide any  
            material misinformation to a physician, health department  
            designee, or to law enforcement, for the purpose or falsely  
            obtaining an identification card; counterfeit, tamper with, or  
            fraudulently produce an identification card; or breach any  
            confidentiality requirements pertaining to an identification  
            card program.  (HSC Section 11362.81) 

          13)Provides that qualified patients, persons with valid  








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            identification cards, and their designated primary caregivers  
            who associate in order to collectively or cooperatively to  
            cultivate marijuana are not subject to criminal liability  
            solely on that basis.  (HSC Section 11362.775)

          THIS BILL:


          General Provisions


          1)Establishes the Medical Cannabis Regulation and Control Act  
            (Act).


          2)Provides that, without limiting the authority of a city or  
            county pursuant to Section 7 of Article XI of the California  
            Constitution, 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  
            in the state.


          3)Defines the following terms:


             a)   "Regulatory authority" means the Division of Medical  
               Cannabis Regulation and Enforcement within the ABC, the  
               Division of Medical Cannabis Manufacturing and Testing  
               within the CDPH, or the Division of Medical Cannabis  
               Cultivation within the CDFA, as appropriate to the context;


             b)   "Division" means the Division of Medical Cannabis  
               Regulation and Enforcement within the ABC;


             c)   "Commercial cannabis activity" means any cultivation,  








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               possession, manufacture, processing, storing, laboratory  
               testing, labeling, transporting, distributing, or sale of  
               cannabis or cannabis product, except as specified;


             d)   "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);


             e)   "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;


             f)   "Dispensary" means a retail location that distributes  
               cannabis or medical cannabis products and is owned and  
               operated by a licensee;


             g)   "Testing and labeling" means a labeling and quality  
               assurance plan that addresses all of the following:  
               potency; chemical residue; microbiological contaminants;  
               handling, care, and storage; and date and location of  
               cultivation, processing, and manufacturing;


             h)   "Cultivation site" means a location that grows cannabis  
               or medical cannabis products and is owned and operated by a  
               licensee, including a nursery;


             i)   "Cultivation" means any activity involving the planting,  
               growing, harvesting, drying, processing, or trimming of  
               cannabis; and,








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          4)Provides that the Act does not prevent a city or county from  
            doing any of the following:


             a)   Adopting local ordinances inconsistent with the Act that  
               do the following:


               i)     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.


               ii)    Prohibit commercial cannabis activity within their  
                 jurisdiction.


             b)   Administrative, civil or criminal enforcement of the  
               ordinances described under a), or establishing a fee or tax  
               for the operation of a licensee within its jurisdiction;  
               or, 


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


          


          State Framework 


          5)Establishes the Division of Medical Cannabis Regulation and  
            Enforcement within the ABC, and requires the Division to: 








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             a)   Be administered by a person who is appointed by the  
               Director of the ABC, and administer the Act, as it pertains  
               to commercial cannabis activity relating to dispensaries.


             b)   Lead all state and local authorities regarding the  
               tracking of medical cannabis, medical cannabis products and  
               licensees pursuant to the Act.


             c)   Maintain a registry of all permit holders and shall  
               maintain a record of all licensees and commercial cannabis  
               activity of the permit holder throughout the length of  
               licensure and for a minimum of seven years following the  
               expiration of the licensure.


             d)   Keep a complete record of all entities licensed pursuant  
               to the Act, which 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)   Develop a database containing electronic shipping  
               manifests, as specified, and designed to flag  
               irregularities for any regulatory authority to investigate.  



             f)   Adopt regulations regarding the minimum standards for  
               the operation of dispensaries, including:


               i)     A requirement that dispensaries provide patients  
                 with detailed written information about the contents of  
                 the cannabis and medical cannabis products they obtain;









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               ii)    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;


               iii)   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; 


               iv)    Minimum standards governing signage and advertising  
                 for dispensaries.


             g)   Commencing 180 days after the Division begins issuing  
               provisional licenses, only allows a dispensary to provide  
               patients medical cannabis and medical cannabis products  
               obtained only from persons licensed under the Act.


          6)Establishes the Division of Medical Cannabis Manufacturing and  
            Testing within the CDPH, and requires it to:


             a)   Be administered by a person who is appointed by the  
               State Health Officer and administer the Act as it pertains  
               to manufacturing, testing, and certification of testing  
               laboratories for medical cannabis, and adopt regulations  
               that: 


               i)     Establish product labeling and packaging standards  
                 and requirements that require manufactured cannabis  








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                 products to include: 


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


                  (2)       Warning that state, "KEEP OUT OF REACH OF  
                    CHILDREN AND ANIMALS" and "FOR MEDICAL USE ONLY."


                  (3)       Clear indication in bold font that the package  
                    contains medical cannabis.  The package shall not be  
                    designed in a manner that attracts minors.


                  (4)       Standards that clearly distinguish edible  
                    cannabis products from non-cannabis products.


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


               ii)    Establish consumer protection, food and product  
                 safety requirements, including:


                  (1)       Adverse event reporting and product recall  
                    systems and the requirement that employees who  
                    manufacture or handle edible cannabis products to  
                    thoroughly wash their hands;


                  (2)       Standards for cannabinoid dosage in edible  








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                    products;


                  (3)       Sanitation standards equivalent to the  
                    California Retail Food 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;


                  (5)       Weighing or measuring standards, as specified;  



                  (6)       Standards controlling the application of  
                    pesticides; and,


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


               iii)   Establish testing requirements for all medical  
                 cannabis and medical cannabis products, including: 


                  (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 medical cannabis and medical cannabis  
                    products.  The Division of Medical Cannabis  








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                    Manufacturing and Testing shall also determine maximum  
                    potency standards in the potency of medical cannabis  
                    and medical cannabis products;


                  (3)       Testing standards by which to test and measure  
                    the quality of medical cannabis and medical cannabis  
                    products; and,


                  (4)       Protocols for medical cannabis and medical  
                    cannabis product testing. 


               iv)    Establish procedures for certifying laboratories for  
                 the testing of medical cannabis and medical cannabis  
                 products, which shall be consistent with general  
                 requirements for the competence of testing and  
                 calibration activities, as specified. 


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


          7)Establishes the Division of Medical Cannabis Cultivation  
            within the CDFA, and requires it to:


             a)   Adopt regulations, in consultation with the Department  
               of Water Resources to ensure that commercial cannabis  
               activity does not threaten the state's clean water and  
               environment.


             b)   Adopt regulations ensuring that the cultivation of  
               cannabis under the Act is in compliance with the standards  
               equivalent to the statutory and regulatory requirements  








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               applicable to the production of a food crop, including: 


               i)     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; and,


               ii)    Environmentally sound agricultural practices,  
                 including a requirement that any actual or potential for,  
                 environmental damage be addressed by the relevant state  
                 agency; a provision authoring revocation of a license if  
                 the state determines that the conduct of the licensee  
                 threatens to inflict or has inflicted significant damage  
                 to the environment; and standards controlling the  
                 application of pesticides; 


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


          8)Requires each regulatory entity to adopt regulations as needed  
            to implement the licensing program within one year following  
            the establishment of a provisional license, as specified,  
            which shall not limit the authority of a city or a county  
            pursuant to Section 7 of Article XI of the California  
            Constitution, or any other law, and require the regulations  
            to:


             a)   Establish a scale of application, licensing, and renewal  
               fees, based upon the cost of enforcing the Act, as  
               specified;  








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             b)   Establish procedures for the approval or denial of  
               applications for commercial cannabis activity; 


             c)   Establish applicant qualifications and licensee employee  
               qualifications, including training and screening  
               requirements, and licensee security requirements, including  
               procedures to limit access to facilities and to prevent  
               diversion of product to nonmedical use; 


             d)   Establish procedures and protocols for identifying,  
               managing, and disposing of contaminated, adulterated,  
               deteriorated, or excess product and advertising, marketing,  
               signage, and labeling requirements and restrictions; 


             e)   Establish procedures for the suspension, revocation, or  
               surrender of a license and establishing related fines and  
               penalties for violations;   


          Licensing Framework 


          9)Exempts from licensure a patient who cultivates, possesses,  
            stores, manufactures, or transports medical cannabis only for  
            his her personal medical use, or a primary caregiver who does  
            so only for the personal medical purposes of his or her  
            specified qualified patient, as specified. 


          10)Provides that 180 days after the issuance of provisional  
            licenses under the Act, that criminal immunity for qualified  
            patients, persons with valid identification card, and the  
            designated primary caregivers of qualified patients and  
            persons with identification cards who collectively and  








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            cooperatively cultivate marijuana for medical purposes shall  
            not apply to licenses under the Act.  


          11)Requires the regulatory authority to issue licenses to  
            applicants to engage in commercial cannabis activity pursuant  
            to the Act, and prohibits persons from engaging in commercial  
            cannabis activity unless the person obtains permission from  
            local authorities, as specified.


          12)Prohibits a person from engaging in commercial cannabis  
            activity unless the person: 


             a)   Obtains permission from local authorities, and requires  
               the document granting permission to include: 


               i)     Legal name, address, and date of birth of the  
                 applicant and the type of license the applicant is  
                 requesting a permit for;


               ii)    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, as specified;


               iii)   A statement of whether or not the applicant has  
                 previously committed a drug trafficking, serious, or  
                 violent felony, a felony involving fraud or deceit or any  
                 other felony, as determined by the Division; and


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








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             b)   Provides that this requirement for permission from local  
               authorities does not apply to a person who holds a valid  
               business license, conditional use permit, or other locally  
               issued permit for commercial cannabis activity;


             c)   Submits a copy of the permission, or equivalent  
                                                                          qualifying documents, to the Division for recordation, and  
               requires the Division, upon receipt of an approved  
               permission, to provide the applicant with a certificate of  
               approval for licensure, to be presented to the relevant  
               regulatory authority under which the person seeks  
               licensure.  Prohibits a regulatory authority from granting  
               approval of an application without a certificate of  
               approval; 


             d)   Applies for licensure from commercial cannabis activity  
               from a regulatory authority and receives approval for that  
               licensure; and


             e)   Abides by all local and state ordinances and regulations  
               pursuant to the Act. 


          13)Provides that an application for licensure shall include:


             a)   A certificate of approval for licensure by the Division.  



             b)   The legal name and proposed physical addresses of the  
               mandatory commercial licensee, and the name, address, and  
               date of each principal officer and board member, and a list  
               of all persons or entities having an ownership interest  








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               other than a security interest, lien, or encumbrances on  
               any property that will be used by the applicant, and  
               evidence that all of the officers and owners have been  
               residents of the State of California for at least three  
               years.


             c)   Operating and inventory control procedures to ensure  
               security and prevent diversion, and detailed operating  
               procedures for the proposed facility, which shall include  
               provisions for facility and operational security,  
               prevention of diversion, employee screening, storage of  
               medical cannabis, personnel policies, and recordkeeping  
               procedures. 


             d)   Evidence of the legal right to occupy and use an  
               established location, or immunity from prosecution for that  
               occupancy or use pursuant to a local ordinance, as  
               specified, and  documentation that the applicant will be in  
               compliance with all local ordinances and regulations, as  
               specified. 


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


          14)For applicants seeking a license to cultivate and process,  
            the application shall also include a detailed description of  
            the operating procedures for: cultivation; extraction and  
            infusion methods; transportation process; inventory  
            procedures; and quality control procedures. 


          15)Requires regulatory authorities, upon receipt of an  
            application and fee, to make a thorough investigation to  
            determine whether the applicant and the premises for which a  








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            license is applied qualify for a license and whether the Act  
            has been complied with. 


          16)Authorizes a regulatory authority to 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.  Provides that specified  
            limitations shall not be waived.  


          17)Requires a regulatory authority to deny a license or renewal  
            of a license if:


             a)   Granting or continuation of a license would be contrary  
               to the public welfare or morals, or the applicant or  
               license holder has violated any law prohibiting conduct  
               involving moral turpitude.


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


             c)   The applicant fails to meet the requirements of the Act  
               or any regulation adopted pursuant to the Act, or any  
               applicable city or county ordinance or regulation.


             d)   The applicant, or any of its officers, directors, or  
               owners, has been convicted of a felony criminal conviction  
               for drug trafficking, a violent felony, a serious felony, a  
               felony involved fraud or deceit, or any other felony, as  
               determined by the Division.










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             e)   The applicant has been sanctioned by the Division or a  
               local government for unlicensed medical cannabis activities  
               or has had a license revoked in the last three years.


          18)Requires the regulatory authority to submit to the Department  
            of Justice fingerprint images and related information for all  
            license applicants.  


          19)Requires regulatory authorities to adopt regulations  
            establishing tiered licensing schemes to accommodate the  
            different levels and types of activities to be licensed, as  
            specified. 


          20)Requires the regulations to set forth the application and  
            licensing process, including, but not limited to:


             a)   A description of the various specific forms of  
               commercial cannabis activity to be authorized by the  
               various types of licenses and the establishment of the  
               license application, issuance, renewal, suspension,  
               surrender, and revocation procedures for the various types  
               of licenses to be issued;


             b)   Procedures for the issuance, renewal, suspension, and  
               revocation of mandatory commercial licenses, and time  
               periods not to exceed 90 days by which the Division shall  
               approve or deny an application; and


             c)   Qualifications for licensees and security requirements.


          21)Provides that each application approved by the respective  
            licensing authority is separate and distinct, and requires  








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            each approved license application to be reported to the  
            Division within 24 hours. 


          22)Requires each regulatory authority to adopt, as soon as  
            practicable, emergency regulations consistent with the Act 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 the Act. 


          23)Requires each regulatory authority to, as soon as  
            practicable, allow a qualified applicant for licensure to  
            apply for and receive a provisional license, and establish  
            appropriate fees. 


          24)Requires each regulatory authority to issue a provisional  
            license to individuals and entities the authority determines  
            were, during the three months prior to January 1, 2016,  
            regularly cultivating, processing, manufacturing,  
            transporting, or distributing medical cannabis collectively or  
            cooperatively in full compliance with any applicable local  
            ordinance to continue to do so unless the licensee's  
            application has been approved or denied, but not later than 90  
            days after the authority begins accepting applications for  
            regular licenses. 


          25)Beginning July 1, 2017, all commercial cannabis activity  
            shall be conducted between licensees of commercial cannabis  
            activity pursuant to the Act, except as specified.  


          Enforcement 


          26)Requires state agencies to collaborate with local agencies,  








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            and local agencies, within the scope of their jurisdiction,  
            and to the extent resources are available, to assist state  
            agencies in the enforcement of the Act, as specified.


          27)Requires regulations to set forth the inspection and  
            enforcement responsibilities of the ABC, CDPH, Division of  
            Labor Standards Enforcement, Department of Water Resources,  
            and CDFA associated with the Act. 


          28)Requires the regulatory authority to enter into an  
            interagency agreement with the ABC, the DCA, the Division of  
            Labor Standards and Enforcement, the Department of Water  
            Resources, the CDPH, and the CDFA setting forth the duties of  
            those agencies under the Act and providing for reimbursement  
            to the appropriate state and local authorities of associated  
            costs from revenues deposited into the fees account of the  
            fund. 


          29)Provides that the regulatory directors and the persons  
            employed by the regulatory authorities for the administration  
            and enforcement of the Act are peace officers in the  
            enforcement of the penal provisions of the Act, the rules of  
            the division adopted under the Act, and any other penal  
            provisions of law in the 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.  


          30)Provides that regulatory directors, persons employed by  
            regulatory authorities, and peace officers, as specified,  
            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  








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            the licensee is acting pursuant to the mandatory commercial  
            license. 


          31)Provides that the actions of a licensee that are within the  
            scope of the license issued pursuant to the Act and the  
            regulations adopted pursuant to the authority granted by the  
            Act are not unlawful under state law and shall not be an  
            offense subject to arrest, prosecution, or other sanction  
            under state law, or subject to a civil fine. 


          32)Provides that conduct within the scope of a license but not  
            fully in compliance with this chapter shall not be subject to  
            the enforcement provisions of the Act and shall not be subject  
            to the penal provisions generally prohibited cannabis-related  
            activity, unless and until the license is revoked. 


          33)Requires each regulatory authority to work in conjunction  
            with law enforcement agencies for the purposes of  
            implementing, administering, and enforcing the Act and the  
            Division's regulations and taking appropriate action against  
            licensees and others who fail to comply with the Act or  
            regulations adopted pursuant to the Act. 


          34)Provides that nothing in the Act, or other related laws,  
            shall prevent a local government from adopting or enforcing a  
            zoning ordinance or other law, ordinance, or regulation that  
            regulates the location, operation, or establishment of a  
            license or other person that engages in commercial cannabis  
            activity. 


          35)Provides that if a person engages in commercial cannabis  
            activity and operates an unlicensed facility, building,  
            structure, or location in violation of the Act is subject to  
            unspecified civil penalties. 








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          36)Requires a state or local agency to 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. 


          37)Authorizes a local government to impose a temporary local  
            suspension of the license of a commercial licensee for up to  
            30 days for violations of the Act, and may impose a subsequent  
            temporary local suspension of the license for the same  
            violation until the regulatory authority's investigation and  
            all appeals are complete.  


          Medical Cannabis Control Fund 


          38)Establishes the Medical Cannabis Control Fund within the  
            State Treasury.


          39)Provides that all fees collected under the Act be deposited  
            into the fees account, which shall be established within the  
            fund and continuously appropriated to the Division solely for  
            the purposes of fully funding and administering the Act,  
            including the costs incurred by the Division for its  
            administrative expenses and costs and the costs of all  
            regulatory authorization, as specified. 


          40)Requires all monies collected under the Act as fines or  
            penalties be deposited into the fines and penalties account,  
            which shall be available, upon appropriation, for purposes of  
            funding the enforcement grant program.


          41)Requires the regulatory authorizes to collaboratively  








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            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 the Act and other state and  
            local laws.


          42)Requires the total fees charged pursuant to the Act to be  
            sufficient to pay the costs associated with the administrative  
            and enforcement duties of the Division and of the associated  
            state agencies in administering the Act. 


          Health and Safety Standards


          43) Requires the Department of Transportation to conduct  
            research regarding determining whether a driver is operating a  
            vehicle under the influence of cannabis, and to develop  
            protocols setting forth best practices to assist law  
            enforcement agencies. 


          44)Requires regulations on the cultivation of medical cannabis  
            to:


             a)   Require the licensee to comply with all regulations of  
               the CDFA pursuant to the Act regarding the cultivation of  
               medical cannabis and any other applicable requirements of  
               the Division pursuant to the Act.


             b)   Requires licensees to track all cannabis products and  
               report to the Division. 


             c)   Requires all medical cannabis to be tested by a  
               laboratory that has been certified and licensed pursuant to  








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               the Act prior to commercial exchange with a dispensary.


          45)Requires regulations on the testing of medical cannabis to:


             a)   Prohibit a testing licensee from receiving medical  
               cannabis products except through a regulatory authority or  
               licensee.


             b)   Prohibit a licensee from being licensed for any other  
               activity authorized under licensing provisions, and from  
               holding an ownership interest in any property or assets  
               associated or used in any other license category. 


          46)Requires regulations on the manufacturing of medical cannabis  
            to:


             a)   Require the manufacturing licensee to comply with all  
               regulations of the CDPH regarding the cultivation of  
               medical cannabis and any other applicable requirement of  
               the Division. 


             b)   Require licensees to track all cannabis products and  
               report to the Division.


             c)    Require all manufactured medical cannabis and medical  
               cannabis products to be tested by a laboratory that is  
               certified and licensed pursuant to the Act prior to  
               commercial exchange with a dispensary.


          47)Requires regulations on the dispensing of medical cannabis  
            to:








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             a)   Require the dispensary licensee to comply with all  
               regulations of the Division regarding the dispensary of  
               medical cannabis and any other applicable requirements of  
               the Division pursuant to the Act.


             b)   Allow dispensary licensees to store limited quantities  
               of medical cannabis and medical cannabis products for  
               commercial purposes pursuant to the act.


             c)   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. 


             d)   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 that entity. 


             e)   Require licensees to track all medical cannabis and  
               medical cannabis products and report to the Division.


             f)   Require that, upon receipt of medical cannabis or  
               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.


          48)Requires regulations for the wholesale of medical cannabis  
            to:









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                                                                    Page  26






             a)   Require all wholesale licensees to comply with all  
               regulations of the Division regarding the wholesale storage  
               and distribution of medical cannabis. 


             b)   Establish criteria for the qualifications, including  
               maximum amounts of medical cannabis that can be stored.


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


             d)   Requires licensees to track all medical cannabis and  
               medical cannabis products and report to the Division. 


          Recordkeeping, Security, and Transportation Standards.  


          49)Requires a licensee to keep accurate records of the specific  
            commercial cannabis activity conducted by the licensee, as  
            specified. 


          50)Authorizes the division to make any examination of the books  
            and records of any licensee and to inspect and visit the  
            premises of the licensee, and if a licensee or its employee  
            refuses or impedes an inspection, or fails to maintain the  
            books or records, the license may be summarily suspended, as  
            specified. 


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








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          52)Requires a licensee authorized to transport medical cannabis  
            and medical cannabis products to: 


             a)   Prior to transport, complete an electronic shipping  
               manifest, as prescribed by the Division, and to securely  
               transmit the manifest to the Division and the licensee that  
               will receive the shipment.


             b)   During transportation, maintain a physical copy of the  
               shipping manifest and make it available to agents of the  
               Division, local law enforcement, or any other designated  
               enforcement agency.  


          53)Requires a licensee receiving the shipment to maintain each  
            electronic shipping manifest and make it available to agents  
            of the Division, local law enforcement, or any other  
            designated enforcement agency and submit to the Division a  
            record verifying receipt of the shipment and details of the  
            shipment. 


          54)Requires transported medical cannabis or medical cannabis  
            products worth more than $500 dollars at retail to be  
            transported only in secured storage compartments, as  
            specified.


          55)Requires, for licensees transporting medical cannabis with a  
            retail value of over $5,000,  transport vehicles to be staffed  
            with a minimum of two employees. 


          









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          Taxation


          56)Authorizes the regulatory authorities to assist state  
            taxation authorities in the development of uniform policies  
            for the state taxation of mandatory commercial licensees. 


          57)Requires licensees to obtain a seller's permit from the Board  
            of Equalization to validate the authority of the licensee to  
            sell medical cannabis or medical cannabis products to another  
            licensee.


          58)Requires licensees to obtain a resale certificate upon the  
            sale of medical cannabis or medical cannabis to another  
            licensee, to track the quantities exchanged. 


          59)Authorizes the Board of Supervisors in any county to impose,  
            by ordinance, a tax on the privilege of cultivating,  
            dispensing, producing, processing, preparing, storing,  
            providing, donating, selling or distributing cannabis by a  
            licensee, as specified.


          Labor Provisions. 


          60)Requires the Division of Labor Standards Enforcement  
            (Division) to:  



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









                                                                      AB 34


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              b)   Establish registration fees in an amount reasonably  
               necessary to implement this article, not to exceed $25 for  
               initial registration.  



              c)   By January 1, 2017, develop a certification program for  
               cannabis employees, and commencing January 1, 2019, require  
               certification for all persons who perform work as cannabis  
               employees, except as specified.  



              d)   By January 1, 2017, convene an advisory committee to  
               evaluate whether there is a need to develop  
               industry-specific regulations related to the activities of  
               licensees. 



             e)   By July 1, 2017, require the advisory committee to  
               present its findings and recommendations to the Board of  
               the Division of Occupational Safety and Health in the  
               Department of Industrial Relations, and requires the Board  
               to render a decision regarding the adopting of these  
               regulations. 
                


           61)Beginning January 1, 2019, establishes additional grounds for  
            disciplinary proceedings, including suspension or revocation  
            of a license issued under the Act, as specified, and requires  
            the Division of Labor Standards Enforcement to refer cases to  
               the appropriate regulatory authority when it is determined  
            that a violation has occurred, as specified, and requires the  
            regulatory authority to open an investigation and take  
            disciplinary action within 60 days of receipt of the referral.  








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           62)Requires the Division of Apprenticeship Standards to  
            investigate, approve, or reject applications for  
            apprenticeship programs for employees of a licensed cultivator  
            or dispensary, as specified. 
          


          Physician Provisions 


          63)Requires the MBC to prioritize cases involving physicians who  
            recommend marijuana to patients for medical purposes without a  
            good faith prior examination of the patient and medical reason  
            therefor.


          64)Makes it unprofessional conduct to prescribe or recommend  
            marijuana to a patient for a medical purpose without an  
            appropriate prior examination and a medical indication, or to  
            be employed by, or have an agreement with, a mandatory  
            commercial licensee acting pursuant to the Act or a dispensary  
            to provide recommendations for medical marijuana.   


          FISCAL EFFECT:  Unknown. This bill is keyed fiscal by the  
          Legislative Counsel. 


          COMMENTS


          1)Purpose.  This bill is author-sponsored.  According to the  
            author: "In 1996, California made history by becoming the  
            first state in the nation to allow the use of medical cannabis  
            after voters approved Proposition 215.  However, in the past  
            two decades, California has fallen behind the nation and  








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            failed to implement a comprehensive licensing and regulatory  
            structure to ensure patient access and protect our  
            environment, public safety, and public health. AB 34 would  
            fulfill the promise made to the people of California back in  
            1996 by creating the structure in which patients can safely  
            exercise their right to medical cannabis.  AB 34 approaches  
            regulation of medical cannabis with one core method-apply  
            existing regulatory frameworks to this new industry while  
            adapting for the unique and historical circumstances  
            surrounding medical cannabis. To this end, the bill divides  
            the licensing structure among multiple agencies that have  
            expertise in various industries that have similarities to that  
            of medical cannabis, in addition to requiring these agencies  
            to promulgate appropriate regulations for the medical cannabis  
            industry.  AB 34 also ensures that all licensees and  
            transactions between them are tracked in order to fight  
            diversion of medical cannabis.


            AB 34 recognizes that for too long, cities and counties have  
            been on the leading edge of crafting medical cannabis policies  
            when faced with murky state law and contradictory federal  
            priorities. That is why this bill respects local decisions on  
            the regulation of medical cannabis-including the decision to  
            ban-and incorporates local control throughout the regulatory  
            process, including the issuance and renewal of state licenses.  
             AB 34 protects patients by requiring compliance with  
            stringent regulatory requirements, preserves the environment  
            and protects water resources by building on the existing  
            interagency taskforce work in this field, and ensures that  
            workers in the cannabis industry are treated fairly and  
            receive equal protections under the labor code.  AB 34  
            combines the input of stakeholders throughout the state to  
            create thoughtful, effective regulations that fit within our  
            existing regulatory frameworks for other products, comply with  
            federal goals, and create a better system for the entire life  
            cycle of the medical cannabis treatment."










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          2)Background. 


            The Compassionate Use Act (CUA) and SB 420.  In 1996, voters  
            approved the CUA, which allowed patients and primary  
            caregivers to obtain and use medical marijuana, as recommended  
            by a physician, and prohibited physicians from being punished  
            or denied any right or privilege for making a medical  
            marijuana recommendation to a patient.  In 2003, SB 420  
            (Vasconcellos), Chapter 875, Statutes of 2003, established the  
            Medical Marijuana Program (MMP), which allowed patients and  
            primary caregivers to collectively and cooperatively cultivate  
            medical marijuana, and established a medical marijuana card  
            program for patients to use on a voluntary basis.  The card  
            can be used to verify that a patient has authorization to  
            possess, grow, transport, or use medical marijuana in  
            California, and that a caregiver has authorization to possess,  
            grow, and transport medical marijuana in California.  The MMP  
            facilitates the registration of qualified patients and their  
            caregivers through a statewide identification system, and  
            qualified patients and their caregivers may apply for and be  
            issued an identification card through their county of  
            residence.  Upon issuance of the card, it is registered with  
            an online database which law enforcement can use to verify  
            whether a card is valid.



            Under the MPP, a person is required to get a recommendation  
            for medical marijuana from an attending physician, which is  
            defined to mean someone who, "? has taken responsibility for  
            an aspect of the medical care, treatment, diagnosis,  
            counseling, or referral of a patient and who has conducted a  
            medical examination of that patient before recording in the  
            patient's medical record the physician's assessment of whether  
            the patient has a serious medical condition and whether the  
            medical use of marijuana is appropriate."  Written  
            documentation of this recommendation is required to be  
            submitted to the county in order to receive a medical  








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            marijuana card.  Since Proposition 215 and SB 420, however,  
            the state has not adopted a framework to provide for  
            appropriate licensure and regulation of medical marijuana.  As  
            a result, in the nearly 20 years since the passage of  
            Proposition 215, there has been an explosion of medical  
            marijuana collectives and cooperatives that are largely left  
            to the enforcement of local governments, resulting in a  
            patchwork for regulations for these industries and with little  
            statewide involvement.    

            The California Attorney General's Compassionate Use  
            Guidelines.  SB 420 required the California Attorney General  
            to "develop and adopt appropriate guidelines to ensure the  
            security and non-diversion of marijuana grown for medical use  
            by patients qualified under the Compassionate Use Act of  
            1996."  In 2008, the Attorney General issued guidelines to: 1)  
            ensure that marijuana grown for medical purposes remains  
            secure and does not find its way to non-patients or illicit  
            markets, 2) help law enforcement agencies perform their duties  
            effectively and in accordance with California law, and 3) help  
            patients and primary caregivers understand how they may  
            cultivate, transport, possess, and use medical marijuana under  
            California law.  According to a 2011 letter, after a series of  
            meeting with stakeholders to assess whether to clarify the  
            2008 guidelines to stop the exploitation of California's  
            medical marijuana laws by gangs, criminal enterprises, and  
            others, the Attorney General decided to postpone the issuance  
            of new guidelines because of pending litigation and to urge  
            the Legislature to amend the law to establish clear rules  
            governing access to medical marijuana.  

            California Supreme Court Affirms Local Control Over Medical  
            Marijuana.  By exempting qualified patients and caregivers  
            from prosecution for using or from collectively or  
            cooperatively cultivating medical marijuana, the CUA and the  
            MPP essentially authorized the collective and cooperative  
            system for medical marijuana.  These laws have triggered the  
            growth of medical marijuana dispensaries in many localities,  
            and in response, local governments have sought to exercise  








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            their police powers to regulate or ban activities relating to  
            medical marijuana.  After numerous court cases and years of  
            uncertainty relating to the ability of local governments to  
            control medical marijuana activities, particularly relating to  
            the ability to control the zoning, operation, and existence of  
            medical marijuana dispensaries, the California Supreme Court,  
            in City of Riverside v. Inland Empire Patients (2013) 56  
            Cal.4th 729, held that California's medical marijuana statutes  
            do not preempt a local ban on facilities that distribute  
            medical marijuana.  The court held that nothing in the CUA or  
            the MMP expressly or impliedly limited the inherent authority  
            of a local jurisdiction, by its own ordinances, to regulate  
            the use of its land, including the authority to provide that  
            facilities for the distribution of medical marijuana will not  
            be permitted to operate within its borders.

            Federal Controlled Substances Act.  Despite the CUA and SB  
            420, marijuana is still illegal under state and federal law.   
            Under California law, marijuana is listed as a hallucinogenic  
            substance in Schedule I of the California Uniform Controlled  
            Substances Act.  Yet, the CUA prohibits prosecution for  
            obtaining, distributing, or using marijuana for medical  
            purposes.  However, under the federal Controlled Substances  
            Act, it is unlawful for any person to manufacture, distribute,  
            dispense or possess a controlled substance, including  
            marijuana, whether or not it is for a medical purpose.  As a  
            result, patients, caregivers, and dispensary operators who  
            engage in activities relating to medical marijuana may still  
            vulnerable to federal arrest and prosecution.  According to  
            the California Attorney General's guidelines, the difference  
            between state and federal law gives rise to confusion.   
            However, California has tried to avoid this conflict not by  
            legalizing medical marijuana, but by deciding not to use the  
            state's powers to punish certain marijuana offenses under  
            state law when a physician has recommended its use to treat a  
            serious medical condition.  

            U.S. Department of Justice (US DOJ) Guidance Regarding  
            Marijuana Enforcement.  On August 29, 2013, the US DOJ issued  








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            a memorandum (Cole Memo) that updated its guidance to all U.S.  
            Attorneys in light of state ballot initiatives to legalize  
            under state law the possession of small amounts of marijuana  
            and provide for the regulation of marijuana production,  
            processing, and sale.  While the memorandum noted that illegal  
            distribution and sale of marijuana is a serious crime that  
            provides a significant source of revenue to large-scale  
            criminal enterprises, gangs, and cartels, it also noted that  
            the US DOJ is committed to using its limited investigative and  
            prosecutorial resources to address the most significant  
            threats, which include: preventing distribution to minors;  
            preventing revenue from marijuana from going to criminal  
            enterprises; preventing diversion to other states where  
            marijuana is not legal under state law; preventing  
            state-authorized marijuana from being a cover for trafficking  
            in other illegal drugs or illegal activity; preventing  
            violence in cultivating and distributing marijuana; preventing  
            drugged driving and other public health problems from  
            marijuana use; and preventing growing, possessing or using  
            marijuana on public lands or on federal property.  

            According to the US DOJ, "In jurisdictions that have enacted  
            laws legalizing marijuana in some form and that have also  
            implemented strong and effective regulatory and enforcement  
            systems to control the cultivation, distribution, sale, and  
            possession of marijuana, conduct in compliance with those laws  
            and regulations is less likely to threaten the federal  
            priorities set forth above?In those circumstances, consistent  
            with the traditional allocation of federal-state efforts in  
            this area, enforcement of state law by state and local law  
            enforcement and regulatory bodies should remain the primary  
            means of addressing marijuana-related activity."  
            Medical Marijuana Industry in California.  According to the  
            author's Sunrise Questionnaire, there are no feasible means to  
            quantify the total number of medical cannabis practitioners in  
            California due to the unregulated nature of the industry.  In  
            addition, although California has exercised its traditional  
            power to regulate the practice of medicine and has determined  
            that marijuana has medicinal properties that play a  








                                                                      AB 34


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            significant role in medicine, marijuana is currently listed as  
            a Schedule I drug under federal law; therefore it has been  
            difficult for California practitioners within the field of  
            medicinal cannabis to work under standard business practices  
            without risking action from federal enforcement authorities.  





            However, according to the Emerald Growers Association, there  
            are an estimated 30,000 cultivation sites alone in the  
            tri-county area of Humboldt-Mendocino-Trinity.  According to  
            numerous estimates, the California cannabis industry is in the  
            billions of dollars, and there are a reported 1.5 million  
            medical cannabis patients.


            


            Need for Regulation.  California has recognized the medicinal  
            value of cannabis and therefore all industry practices  
            relating to providing medical cannabis for the treatment of  
            medical conditions for qualified patients should be allowed  
            under state law.  However, according to the author, in the  
            nearly two decades since the passage of Proposition 215, it is  
            clear that California remains very much in the Wild West of  
            medical marijuana.





            Due to the lack of statewide regulations, practitioners within  
            the medical cannabis industry create their own standards  
            (e.g., labeling, potency, quality assurance, content, dosage  
            etc.).  While certain partners within the industry may  
            collaborate with each other, there is no statewide standard  








                                                                      AB 34


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            for practitioners to make professional judgments of  
            consequence.  The lack of regulations results in practitioners  
            making these decisions on a daily basis during their business  
            practices.  The consequences can be that some products either  
            do not meet or exceed current standards for other similar  
            products within related industries.  For example, some  
            manufactured edible cannabis products that are being sold to  
            patients may not have gone through the same stringent food  
            retail and safety standards as other foods, which may risk  
            harm for consumers.  While some facilities may test their  
            products for mold, pesticides, or contaminants, without  
            licensing or certification standards for that testing, the  
            same product at two different locations can yield vastly  
            different results, which pose risk of harm to consumers,  
            especially when dealing with patients who may be  
            immunosuppressed or otherwise vulnerable.  In addition,  
            medical cannabis cultivation has recently received significant  
            attention within the media because of its utilization of  
            scarce water supplies in the midst of a drought and associated  
            environmental impacts from water diversion and pesticide use.   
            The author's proposed regulatory structure would fund  
            enforcement of existing standards, while also requiring  
            legitimate licensees to comply with state and local  
            environmental regulations.





            Due to the lack of regulation, some actors have also been  
            encouraged to operate at the edge of the law and in the grey  
            area between state and federal rules.  This has reduced  
            consumer protections, worker protections, impacted business  
            operations, and even banking services, to name just a few  
            areas which have been harmed by regulatory uncertainty.   
            Furthermore, the lack of statewide standards regarding  
            suitability for receiving a license, when combined with a  
            patchwork of local ordinances that have made it difficult for  
            legitimate operators to engage in business above board, and  








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            provided a competitive advantage to the black market  
            operators.  Without such standards, there are no market  
            controls, and no standards for consume protection.  While  
            there have been some moves towards self-regulation, such as  
            the development of testing laboratories which work solely on  
            medical cannabis, by and large the legal uncertainty has  
            severely hindered protection of the public welfare.  There is  
            also the harm and the threat of federal action looming over  
            California patients and practitioners until the state has  
            enacted the comprehensive and robust regulatory system as  
            demanded in the Cole Memo described above.  Until such a  
            comprehensive regulatory scheme is enacted, the medical  
            marijuana industry will continue to swing between two  
            unacceptable extremes of having no oversight or regulations,  
            to being subject to federal action despite compliance with  
            local laws.  According to the author, only comprehensive,  
            rigorous regulations for medical cannabis will overcome  
            potential harm to consumers and the industry.





            AB 34 Licensing and Regulatory Framework.  This bill will  
            address the above concerns by doing all of the following: 


            


                 Establishing a comprehensive licensure and regulatory  
               scheme for medical cannabis activities, including for  
               dispensaries, wholesalers, manufacturers, and testing  
               laboratories, including minimum standards for operation.



                 Requires the Division of Medical Cannabis Regulation and  
               Enforcement to lead all state and local authorities  








                                                                      AB 34


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               regarding the tracking of medical cannabis, medical  
               cannabis products and licensees.



                 Establishes standards for manufacturers, testing, and  
               certification of testing laboratories for medical cannabis,  
               including establishing product labeling and packaging  
               standards for cannabis products, and establishing consumer  
               protection, food and product safety requirements, including  
               those relating to dosage and sanitation, and testing for  
               potency and for bacteria, yeast, and mold. 



                 Establishes standards for cultivators, including meeting  
               regulations to ensure that commercial cannabis activity  
               does not threaten the state's clean water and environment. 



                 Ensures patient access to care by establishing a  
               provisional license program, continuing to exempt patients  
               and caregivers, and establishing tiered licensing schemes  
               to accommodate different levels and types of activities.



                 Maintains local authority by prohibiting persons from  
               engaging in commercial cannabis activity unless the person  
               obtains permission from local authorities.  



                 Establishes a grant program to allocate monies to state  
               and local entities for purposes of assisting with  
               regulation and enforcement. 










                                                                      AB 34


                                                                    Page  40






            According to the author, while many of these standards are for  
            the health and safety of the public, arguably if all were  
            implemented it would go beyond freedom from harm and instead  
            improve the lives of patients and the public.  These proposals  
            would also allow a vast and economically vibrant industry to  
            thrive in a regulated fashion protected from the federal  
            government.  The economic benefits from this  
            regulation-stimulating the local and state economy, providing  
            significant tax revenues, and helping patients live more  
            productive lives-are above and beyond the protections provided  
            by these regulations. 


            Marijuana Frameworks Established in Other States.   California  
            is the only state that permits for medical marijuana in the  
            absence of a robust state-wide regulatory system.  The  
            following states have state-wide medical marijuana regulatory  
            systems: Alaska, Arizona, Colorado, Washington DC, Delaware,  
            Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan,  
            Minnesota, Montana, Nevada; New Hampshire, New Jersey, New  
            Mexico, New York, Oregon, Rhode Island, Vermont and  
            Washington.  In addition, Colorado, Washington and Oregon have  
            established recreational marijuana licensing schemes.  


            


            Both Washington and Colorado have created systems of legal  
            production and sale, subject to licensing, regulation and  
            taxation.  However, the laws impose different industry  
            structures and build on their existing medical systems in  
            different ways.  Colorado allows entrepreneurs to produce  
            cannabis and sell it at retail, and such businesses are, at  
            least initially, required to produce the majority of the pot  
            they sell (vertical integration), while Washington state  
            maintains clear separation between pot growers, processors and  
            retailers (horizontal integration).  Both models seek to,  








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            however, reduce diversion and increase accountability.  In  
            addition, the commercial market in Washington is supervised by  
            the Washington State Liquor Control Board, while Colorado's  
                                             law vests authority to regulate the commercial market in the  
            newly created Marijuana Enforcement Division of the Department  
            of Revenue.  Colorado's medical marijuana program is also  
            under that Division - prior to the recreational initiative,  
            the Medical Marijuana Enforcement Division was regulating that  
            part of the market.  


            According to the Brookings Institution, since the early 1990s,  
            U.S. public opinion has trended in favor of marijuana  
            legalization.  Currently, a majority of Americans support  
            legalization by a margin of seven points-52 percent to 45  
            percent, according to findings from a Pew Research Center  
            survey in March 2013. Support for marijuana legalization has  
            risen sharply since 2010, by 11 percentage points.  This  
            increasing support for marijuana legalization is present in  
            California as well, with recent polls showing that a majority  
            of Californians support marijuana legalization.  There are an  
            estimated four different marijuana initiatives attempting to  
            qualify for the 2016 ballot.  In order for any marijuana  
            scheme to be effective, it should address all parts of the  
            industry, including establishing a robust licensing and  
            regulatory scheme, a taxation scheme, incorporate health and  
            safety standards, in addition to ensuring that the public is  
            protected; however, if the measure is too prescriptive, it may  
            hamper the ability to address any unintended consequences or  
            fill in any policy gaps without having to go back to the  
            ballot.  As a result, if the State is able to create a  
            comprehensive framework for medical marijuana, it may also  
            serve a dual role by serving as a basis for a recreational  
            marijuana scheme.  


          1)Current Related Legislation. AB 26 (Jones-Sawyer) of the  
            current legislative session, would enact the Medical Cannabis  
            Regulation and Control Act to license and regulate medical  








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            cannabis, and would create the Division of Medical Cannabis  
            Regulation and Enforcement within the Department of Alcoholic  
            Beverage Control to administer the act.  (STATUS: This bill is  
            in the Assembly Business and Professions Committee.) 



          AB 34 (Bonta) of the current legislation, session would enact  
            the Medical Cannabis Regulation and Control Act to license and  
            regulate medical cannabis, and would establish the Division of  
            Medical Cannabis Regulation and Enforcement within the  
            Department of Alcoholic Beverage Control to administer the  
            act.  (STATUS: This bill is in the Assembly Business and  
            Professions Committee.) 
            AB 243 (Wood) of the current legislation session, would  
            require all medical marijuana cultivation (MMC) to be  
            conducted in accordance with state and local laws and best  
            practices, as specified, and would require state agencies to  
            address environmental impacts of MMC and coordinate with local  
            governments in enforcement efforts, and establishes a MMC  
            permitting system.  (STATUS: This bill is in the Assembly  
            Environmental Safety and Toxic Materials Committee.) 


            SB 673 (McGuire) of the current legislation session, would  
            establish within the Department of Consumer Affairs a Bureau  
            of Medical Marijuana Regulation, under the supervision and  
            control of the Chief of the Bureau of Medical Marijuana  
            Regulation, and would require the bureau to license and  
            regulate dispensing facilities, cultivation sites,  
            transporters, and manufacturers of medical marijuana and  
            medical marijuana products, subject to local ordinances, and  
            enforced primarily at the local level.  (STATUS: This bill is  
            in the Senate Governance and Finance Committee.)


          2)Prior Related Legislation. AB 1262 (Correa) of 2014, would  
            have established a licensing and regulatory framework for the  
            cultivation, processing, transportation, testing,  








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            recommendation and sale of medical marijuana to be  
            administered by the Department of Consumer Affairs (DCA) and  
            enforced primarily at the local level.  (NOTE: This bill was  
            held in the Assembly Appropriations Committee.)



          AB 1894 (Ammiano) of 2014, would have enacted the Medical  
            Cannabis Regulation and Control Act to license and regulate  
            the cultivation, manufacture, testing, transportation,  
            storage, distribution, and sale of medical cannabis, and would  
            create the Division of Medical Cannabis Regulation and  
            Enforcement within the Department of Alcoholic Beverage  
            Control.  (NOTE: This bill was held on the Assembly Floor.) 

          AB 473 (Ammiano) of 2013, would have enacted the Medical  
            Marijuana Regulation and Control Act to license and regulate  
            the cultivation, manufacturing, testing, transportation,  
            distribution, and sales of medical marijuana and medical  
            marijuana products, and would create the Division of Medical  
            Marijuana Regulation and Enforcement within the Department of  
            Alcoholic Beverage Control.  (NOTE: This bill was held on the  
            Assembly Floor.) 
            AB 604 (Ammiano) of 2013, would have enacted the Medical  
            Cannabis Regulation and Control Act to license and regulate  
            the cultivation, manufacture, testing, transportation,  
            storage, distribution, and sale of medical cannabis, and would  
            create the Division of Medical Cannabis Regulation and  
            Enforcement within ABC.  (NOTE: This bill was held in the  
            Senate Public Safety Committee.)



            AB 2312 (Ammiano) of 2012, would have established the Medical  
            Marijuana Regulation and Control Act, authorizing local taxes  
            on medical cannabis and creating a board to regulate the  
            medical cannabis industry.  (NOTE: This bill was held in the  
            Senate Committee on Business, Professions and Economic  
            Development.)








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            SB 1182 (Leno) of 2012, would have provided that a cooperative  
            or collective that operates within the Attorney General's (AG)  
            guidelines shall not be subject to prosecution for marijuana  
            possession or commerce, as specified.  (NOTE: This bill was  
            held on the Senate Floor.)  



            AB 1300 (Blumenfield), Chapter 196, Statutes of 2011, provided  
            that a local government entity may enact an ordinance  
            regulating the location, operation or establishment of a  
            medical marijuana cooperative or collective; authorizes local  
            government entities to enforce such ordinances through civil  
            or criminal remedies and actions; and authorizes a local  
            government entity to enact any ordinance that is consistent  
            with the Medical Marijuana Program.  

            SB 626 (Calderon) of 2011 would have required the Board of  
            Equalization (BOE) to establish a nine-member task force to  
            conduct a study to determine ways to enhance collections of  
            sales and use taxes on retail sales of marijuana and ensure  
            proper regulation of the cultivation, transportation, and  
            distribution of marijuana and marijuana products.  (NOTE: This  
            bill was held in the Senate Appropriations Committee.)

            AB 390 (Ammiano) of 2009, would have legalized the possession,  
            sale, cultivation and other conduct relating to marijuana and  
            required the Department of Alcoholic Beverage Control to  
            administer and enforce the terms of legalized marijuana.   
            (NOTE: This bill was held in the Assembly Health Committee.)

            SB 420 (Vasconcellos), Chapter 875, Statutes of 2003,  
            established the Medical Marijuana Program Act, a statewide,  
            voluntary program for the issuance of identification cards to  
            identify persons authorized to engage in the medical use of  
            marijuana under the Compassionate Use Act.

            Proposition 215, of the November 1996 General Election,  
            prohibits prosecution for the possession and cultivation of  








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            cannabis by a patient or a patient's primary caregiver with a  
            physician's written or oral recommendation.



          ARGUMENTS IN SUPPORT 





          The  Emerald Growers Association  writes in support, "The bill  
          takes a measured approach to this complex public policy  
          challenge.  AB 34 identifies regulatory agencies, calls on those  
          agencies to develop a system of licensure, and - most  
          importantly from our perspective-calls on the [CDFA] to take a  
          lead role regulating cultivation?.By referring many of the  
          specific details to future legislation and regulatory processes,  
          this bill empowers stakeholders to form stronger relationships  
          and gain a deeper understanding of other perspectives?There is  
          no other major industry in CA that is regulated entirely by one  
          agency and past attempts to fit the entire industry into the  
          oversight of a single industry have failed.  The multi-agency  
          approach ensures that agencies are only responsible for  
          regulating things they are capable of regulating?.[This bill]  
          calls on the regulatory authorities to establish a tiered  
          licensing scheme to accommodate the different levels and types  
          of activity to be licensed. This will create opportunities for  
          small, medium, and large businesses to participate in the  
          regulated industry and ensure the most expeditious transition to  
          regulation with minimum disruption to regional economies."





           United Food and Commercial Workers Union  writes a letter in  
          support and states, "a 'cannabis worker apprenticeship program  
          and certification program' will ensure the rights of workers are  








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          protected, health and safety standards are maintained and  
          ongoing product knowledge and skills development are sustained  
          with consistency throughout the cannabis industry similar to  
          pharmacy laboratory technicians, nursing assistants, dental  
          hygienists, physical therapists, and cosmetologists."





          








          ARGUMENTS IN OPPOSITION


          


          The  League of California Cities  writes in opposition: "Despite  
          provisions in the bill appearing to uphold local regulations,  
          the bill also contains provisions that clearly undermine the  
          power of local ordinances, setting the stage for future  
          litigation on this issue, should this measure be enacted  
          unchanged?.[C]onflicting provisions raise the question of  
          whether AB 34 is serious about upholding local control in the  
          context of a regulatory scheme for medical marijuana.  First,  
          this measure places the [ABC] in overall charge of the  
          regulatory scheme?As a matter of policy, the League is convinced  
          that in a state the size of California, no state agency should  
          have the primary role of enforcement in the field of marijuana  
          regulation - the cost to the state will be excessive and the  
          enforcement in too many instances will be neither timely nor  








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          sufficient ?.Second, there is no local licensing under AB 34's  
          regulatory scheme?Third, AB 34 authorizes locals to temporarily  
          suspend a license, but the authorization flows from  
          ABC?Fourth,?language calls into question the validity of  
          pre-existing local bans?.Each of these provisions sets the stage  
          for future litigation, pitting local governments against the  
          state, and against industry participants who have attempted to  
          set up shop in many of our cities in direct violation of local  
          ordinances." 





          The California Police Chiefs Association  writes in opposition:  
          "[W]e do not believe that the ABC is an appropriate  
          administrative department for medical marijuana regulation. We  
          have serious concerns regarding the efficacy of state  
          enforcement and instead advocate for an enforcement structure  
          based off of local enforcement with state enforcement being  
          secondary.  Furthermore, we do not believe that an agency with  
          profound experience in recreational substance has the  
          appropriate expertise to regulate a medical product?We believed  
          that AB 34 as currently constructed, erodes the authority of  
          cities and counties to prohibit medical marijuana operations in  
          their jurisdiction?AB 34 appears to downgrade drug trafficking  
          to a misdemeanor?"





          POLICY ISSUES FOR CONSIDERATION: 





          This bill would establish a novel licensing and regulatory  








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          scheme for medical cannabis, which covers nearly every aspect of  
          the medical cannabis industry, from seed to sale.  To accomplish  
          this scheme, the bill creates three new divisions within three  
          different state departments, and carves out the responsibilities  
          and jurisdiction of each one. Wholesalers and dispensaries are  
          licensed under the Division of Medical Cannabis Regulation and  
          Enforcement (DMCRE), under the ABC; manufacturers and testing  
          laboratories are under the Division of Medical Cannabis  
          Manufacturing and Testing (DMCMT), under the CDPH; and  
          cultivators are licensed under the Division of Medical Cannabis  
          Cultivation under the CDFA, all collectively known as the  
          "regulatory authorities."  Each of these newly-created divisions  
          have myriad duties involved in this comprehensive new scheme,  
          which include establishing new standards for licensure, in  
          addition to comprehensive health and safety and environmental  
          standards.  Each division is responsible for enforcement of  
          their respective areas. As would be expected for any new  
          regulatory program of this scale and scope, let alone three new  
          programs, a number of outstanding issues and overarching  
          concerns should be addressed to ensure that this framework has  
          the greatest chance of success, the key of which is likely to be  
          coordination and collaboration among the regulatory authorities.





          In addition, successful implementation of any medical cannabis  
          program will require strong leadership and involvement from the  
          Administration to prioritize implementation so that it meets  
          federal guidance and prevents the potential for illegitimate  
          activities; to coordinate efforts among all regulatory  
          authorities and other state entities that will play a role in  
          establishing a robust and effective licensing and regulatory  
          framework; and to ensure that all of the regulatory authorities  
          will have sufficient resources to ensure that staffing and other  
          needs will be met.  










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          Division of Medical Cannabis Regulation and Enforcement (DMCRE)  
          Under the ABC.  ABC has the exclusive right and power to license  
          and regulate the manufacture, importation, and sale of alcoholic  
          beverages.  ABC is authorized 427 positions, organized into  
          three major division and twenty-four district offices, to  
          regulate the 87,112 ABC-licensed businesses.  The licensing  
          section investigates all applicants and proposed business  
          locations to ensure they meet minimum qualifications, and may  
          examine police problems, over concentration of licensed premises  
          in the area, and the possible impact the proposed business will  
          have on nearby residences, churches, schools, and hospitals.   
          Currently, the ABC has over seventy licensing categories that  
          are established in statute.  While most of the ABC authority for  
          licensure and enforcement is explicit in statute, the ABC has  
          the authority to promulgate rules to effectively implement its  
          mission and purpose.





          ABC agents are peace officers and are empowered to investigate  
          and make arrests for violations that occur on or about licensed  
          premises.  The ABC employs various methods of enforcement, often  
          collaborating with other agencies to enforce the provisions in  
          the ABC Act including minor-decoy operations, fake  
          identification stings known as "Operation Trapdoor," and  
          complaint-driven investigations.  Agents are further empowered  
          to enforce any penal provisions of the law any place in the  
          State.  However, the ABC relies on local law enforcement to  
          police the provisions within the ABC Act for approximately  
          40-50% of its enforcement functions.  Regardless of the agency  
          filing the violation, licensees who violate state laws or local  
          ordinances are subject to disciplinary action and may have their  
          licenses suspended or revoked. These licensees are entitled to a  
          hearing before an Administrative Law Judge and an appellate  








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          process to the State Supreme Court.  





          While it appears that the ABC has an infrastructure in place to  
          support these additional licensing and enforcement activities  
          relating to medical cannabis, the author may wish to consider  
          the extent to which the proposed licensing and enforcement  
          should parallel and be modeled after the licensure and  
          enforcement provisions for alcohol, particularly with regards to  
          local involvement during the licensure process, tiers of  
          licensure categories, and the number of licenses a licensee may  
          ahold across different activities.  In addition, the author may  
          wish to specify the type of enforcement the ABC is intended to  
          have, and clarify the role of enforcement and sharing of  
          enforcement responsibility between ABC and local governments,  
          and whether the medical cannabis program should have a similar  
          appeals process.   





          In addition, the ABC's jurisdiction and operations are primarily  
          guided by statute; the ABC does not promulgate many of its  
          regulations.  In light of the ABC's broad new jurisdiction under  
          this bill, the author should continue to build upon the  
          framework in this bill to ensure that the ABC's primary role is  
          in implementing these laws, and not creating policy with respect  
          to these laws.  In addition, the author may wish to specify that  
          the DMCRE roles with respect to medical cannabis is to promote  
          patient safety and legitimate access to care.    













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          Laboratory Certification.  The DMCMT, under CDPH, would be  
          required to license and regulate manufacturers and testing  
          laboratories, in addition to establishing complex and  
          comprehensive health and safety standards, including standards  
          relating to product labeling, food and product safety  
          requirements, maximum potency for cannabinoids, sanitization  
          standards, and testing standards.  Many of these areas build  
          upon the CDPH's existing jurisdiction and areas of expertise.   
          The CDPH operates some licensing and certification programs for  
          food and drugs under its Food and Drug Branch, establishes  
          health and safety standards under the Food Safety Program, and  
          is responsible for promulgating certification regulations and  
          certifies some laboratories. 





          The International Laboratory Accreditation Cooperation (ILAC) is  
          a well-respected industry organization that has several  
          accreditation bodies that are considered complaint with ISO/IEC  
          17011, which is the standard by which accreditation bodies are  
          to operate, and are qualified to attest that a laboratory meets  
          the standards found in ISO/IEC 17025 and ISO/EIC 17020 (which is  
          the visual inspection standard).  For example, the American  
          Association for Laboratory Accreditation in Maryland is an  
          ILAC-approved accreditation body that has developed a Cannabis  
          Testing Laboratory Program specifically designed to raise the  
          standard in laboratory testing relating to medical marijuana.   
          As a result, the author should consider whether laboratory  
          certification using an outside accreditation body may be a more  
          appropriate or specify that DMCMT may rely upon an outside  
          accreditation body as part of its certification.  The licensee  
          could then be charged with using a certified laboratory or face  
          sanctions for failure to comply with the requirement that an  
          accredited laboratory was utilized, thereby limiting the  
          administrative oversight of the division, is appropriate.  










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          Establishing a Taskforce.  Because the structure requires  
          multiple new divisions, each with oversight over their  
          respective licensees and possible overlap (because the licensing  
          structure does not limit the number of licensees an entity might  
          have), there will be a need for great communication and  
          collaboration among the regulatory entities and other state and  
          local entities that play a role in licensing and enforcement.   
          For example, if one entity took action against a licensee, that  
          action should be communicated to any other regulatory entity or  
          relevant local entity, and the possibility of joint enforcement  
          actions may be considered.  The bill serves to create such  
          communication by, among other things, requiring the DMCRE to  
          serve as a repository of information for all licensees, and  
          requiring such actions to be reported to the DMCRE.  In  
          addition, the bill requires regulations that set forth the  
          inspection and enforcement responsibilities of each relevant  
          state entity, and requires the regulatory authorities to enter  
          into an interagency agreement to set forth the duties of those  
          agencies under the Act and provide for reimbursement to the  
          appropriate state and local authorities of associated costs from  
          revenues deposited into the fees account of the fund.





          To build upon these efforts to increase communication, ensure a  
          coordinated front, and reduce duplicative efforts, the author  
          may wish to consider establishing a taskforce to clarify the  
          appropriate roles of each state entity, and establish clear  
          communication and information sharing guidelines.  Such a  
          taskforce could also bolster each regulatory authorities  
          regulatory efforts by inviting outside expertise, such as  
          including other environmental departments, medical cannabis or  
          industry experts, and local enforcement and licensing entities.   
          Other participants may also include the Board of Equalization  








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                                                                    Page  53
                                                                




          and the Attorney General, to help navigate state and federal  
          legal landscapes.  





          Information Database.  The bill would require the DMCRE to lead  
          all state and local authorities regarding the tracking of  
          medical cannabis, medical cannabis products, and licensees  
          pursuant to the Act; maintain a registry of all licensees and  
          records of all licensees; maintain all electronic shipping  
          manifests; and share the above information with state and local  
          law enforcement.  Based on the state's spotted history with  
          complex information technology projects, the author should  
          consider working early on with the ABC and other relevant state  
          entities to determine the feasibility, timeline, and cost to  
          establish a database system that would meet these new  
          requirements. 





          Multiple Licenses.  Under the bill, licensees can hold multiple  
          license types, except it cannot combine a testing laboratory  
          with any other license.  This approach is similar to Colorado's  
          approach, which initially required "vertical integration," or  
          requires businesses to be involved in all parts of the business  
          to get a license.  This approach was thought to initially limit  
          the number of businesses, making it easier to control the  
          market, and allowed additional licensees to enter the market at  
          a later time. Washington, on the other hand, prohibited  
          "vertical integration" and instead only permitted business to  
          get licensed in one stage of production, similar, for the most  
          part, to the alcohol control model.  The intent behind that  
          model was to avoid the creation of monopolies, and some also  
          believe that structure makes it harder to licensees to falsify  
          any data.  Currently, the bill allows licensees to hold multiple  








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          licensees, but does not require a licensee to be involved in all  
          parts of the business; instead, it allows for both types of  
          models.  The author may wish to consider the benefits of both  
          approaches, and whether it may be beneficial at some point to  
          limit the number of licensees one can hold.    


           


          Use of Peace Officers.  The bill provides that regulatory  
          directors and persons employed by the regulatory authorities for  
          the administration and enforcement of the Act are peace officers  
          in the enforcement of the penal provisions of the Act, the rules  
          of the division adopted under the Act, and any other relevant  
          penal provisions.  While many state entities use sworn officers,  
          the language in the bill raises the question of whether all  
          persons employed by the divisions for administration and  
          enforcement need to be sworn officers.  For example, ABC agents  
          are peace officers and are empowered to investigate and make  
          arrests for violations of the BPC that occur on or about  
          licensed premises, but less complex tasks, such as license  
          applications, are reviewed and processed by non-sworn licensing  
          representatives.  The author may wish to clarify that the  
          regulatory authorities also rely on non-sworn personnel.





          Enforcement.  The bill vests primary responsibility to regulate  
          medical cannabis with the State, and requires each regulatory  
          authority to enforce their own provisions.  However, the bill  
          also requires state agencies to collaborate with local agencies,  
          and local agencies, within the scope of their jurisdiction, and  
          to the extent resources are available, to assist state agencies  
          in the enforcement of the Act.  In addition, the bill requires  
          the regulatory authorities to collaboratively establish and  
          administer a grant program to allocate moneys from the fines and  








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          penalties account to state and local entities for the purpose of  
          assisting with medical cannabis regulation and the enforcement.   
          While the regulatory authorities are clearly tasked with  
          enforcement responsibilities, many of these entities work with  
          local law and code enforcement or local health and agricultural  
          offices to enforce health and safety and other standards.  The  
          author may wish to consider clarifying these instances and  
          opportunities for collaboration. 





          Fund.  While the bill authorizes regulatory authorities to  
          establish a fee for provisional licensees, it does not provide  
          any further guidance about how a regulatory authority can  
          support its startup costs.  The author may wish to consider  
          whether the state entity housing each new division is able to  
          advance those startup costs as a loan.  In addition, the author  
          should consider establishing a separate fee account for each  
          regulatory authority to enable it to deposit fees and penalties  
          it collects and to also draw upon those funds.  





          Appointments.  Currently, the bill requires the Director or  
          Officer of each department to appoint a person to administer the  
          Act under each respective division.  However, such appointments  
          are typically made by the Governor. The author may wish to  
          consider whether it may be more appropriate for the Governor to  
          make these appointments.





          AMENDMENTS: 








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          Local Control and Licensure.  The bill specifically states in  
          numerous provisions that any licensing and regulatory structure  
          established under the bill does not affect a local government's  
          ability to enact or enforce local ordinances pursuant to Section  
          7 of Article XI of the California Constitution.  However, there  
          are some places in the bill where this local authority could be  
          further clarified; as a result, the author may wish to consider  
          the following amendments: 





            On page 9, line 20, strike:  exclusive  and insert:  primary  





          To clarify the type of documentation required to prove that an  
          applicant for state licensure has obtained local permission in  
          accordance with the Act, the author may wish to specify that the  
          documentation shall be issued by the local authority: 


            


            On page 30, line 11, after "shall" insert:  shall be issued by  
          the local authority and  












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          The author may wish to specify that a city or county may impose  
          a temporary local suspension of a licensee not only for a  
          violation of the Act, but also for a local ordinance, and  
          clarify that the ability to impose a temporary local suspension  
          does not limit a local government's authority to take other  
          enforcement action.





            Section 26066(e): (e)  A city, county, or city and county to  
            may impose a temporary local suspension of the license of a  
            commercial licensee for up to 30 days for violations of this  
            chapter  or local ordinance  . The regulatory authority shall  
            promptly cause an investigation to be made as to whether  
            grounds exist for continued suspension or revocation of the  
            license.  If the regulatory authority has not completed its  
            investigation or disciplinary action within 30 days, 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,  suspension or revocation  , and all appeals  to  
            that suspension or revocation  are complete.   This subdivision  
            shall not limit a city, county, or city and county's authority  
            to enforce other laws or ordinances pursuant to the authority  
            granted by Section 7 of Article XI of the California  
            Constitution  . 


          . 


          Existing law provides that the immunity that applies to  
          qualified patients and primary caregivers who "collectively or  
          cooperatively" associate to cultivate medical marijuana shall  
          not solely on the basis of that fact be subject to specified  
          criminal sanctions.  The bill provides that six months after the  








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          issuance of provisional licenses pursuant to the Act, this  
          immunity shall no longer be available to licensees under the  
          Act, who are specifically provided immunity under Section 26049.  
            To clarify, however, that the existing exemption for  
          collectives and cooperatives also does not extend beyond that  
          time, the author may wish to consider making the following  
          changes: 


            


            On page 46, line 26, insert:  Subject to subdivision (b  ),





            On page 46, line 38, after "act" insert:  or to any persons who  
            collectively or cooperatively cultivate marijuana for medical  
            purposes  





          Because California law prohibits any medical marijuana facility  
          from being located closer than 600 feet to a school, the author  
          may wish to consider providing evidence of meeting this  
          requirement as part of the licensure process, to quickly  
          eliminate facilities that are not operating in accordance with  
          existing law. 





            On page 31, line 24, after "location" insert:  including, if  
            the proposed facility is a cultivator or a dispensary, that  








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            the proposed facility is located beyond at least a 600-foot  
            radius from a school,  





          This bill seeks to provide some flexibility to a regulatory  
          authority when determining whether a license may be denied by  
          allowing the regulatory authority to place reasonable conditions  
          upon licensure to address any concerns.  However, the bill does  
          not prohibit the waiver of a specified condition, Section  
          26040(b)(6), which deals with security requirements.  Upon  
          discussion with the author's office, the reference was intended  
          to refer to Section 26047(e)(10), which prohibits licensure if  
          an applicant has been sanctioned for unlicensed medical cannabis  
          activities or has had a licensed revoked.  The author should  
          make the following change: 





            On page 33, line 1, strike:  paragraph (6) of subdivision (b)  
            of Section 26040  and insert  paragraph (10) of subdivision (e)  





          The author may also wish to clarify that the conditions for  
          which a license may be denied also may serve as a reason to  
          suspend or revoke a license. 





            On page 33, line 4, after "renewal" insert:  or suspend or  








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          revoke a license  .





          The author may wish to clarify that a regulatory is only  
          required to issue a provisional license if the applicant meets  
          all of the requirements in those provisions.





            On page 37, line 7, after "shall" insert:  if the applicant  
            meets all the requirements in this section,  "





          Department of Consumer Affairs (DCA).  The DCA issues licenses  
          in dozens of business and professional categories, including  
          doctors, dentists, contractors, cosmetologists and automotive  
          repair facilities.  The DCA includes 41 regulatory entities (25  
          boards, nine bureaus, four committees, two programs, and one  
          commission).  These entities establish minimum qualifications  
          and levels of competency for licensure. The DCA's area of  
          expertise includes professional licensure and regulation,  
          primarily of licensed professionals, and the DCA's oversight is  
          typically over fragmented chunks of licensed professionals, as  
          opposed to entire swaths of industries.  While the bill  
          currently requires the DCA to play a role under the new  
          licensure and regulatory structure, particularly with respect to  
          the certification and licensing of testing laboratories, this  
          responsibility is not one that is typically within the DCA's  
          purview.  As a result, the author may wish to consider  
          eliminating the DCA from the bill. 









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            On page 9, line 40, strike:  the Director of Consumer Affairs  ,


           


          Recordkeeping and Auditing.  Under the bill, the DMCRE would be  
          responsible for, among other things, maintaining a registry of  
          all licensees and a record of all medical cannabis commercial  
          activity.  The bill also prohibits licensees from interacting  
          with non-licensed entities.  To ensure that licensees will be  
          able to easily determine whether they are engaging with a  
          licensed entity in compliance with the Act, the author may wish  
          to specify that licensees are able to obtain such information. 





            On page 13, at the end of line 22, add:  The division shall  
            make limited licensee information available to a licensee so  
            that it may verify whether it is engaging in commercial  
            cannabis activities with a properly licensed entity  .





          With regards to auditing requirements, the author may wish to  
          specify that the DMCRE has the discretion to determine the type  
          of annual audit required, instead of requiring the State Auditor  
          to conduct annual audits of all licensees and that licensees are  
          responsible for those audit costs. 










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            On page 35, line 38, strike "  by the State Auditor  " and insert:  
             as specified by the regulatory authority  ," and at the end of  
            line 39, insert:  The reasonable costs of the audit shall be  
            paid for by the licensee  .


          


          Fees and Funds.  Currently, the bill has unspecified amounts for  
          various licensure fees and for fees and penalties.  The author  
          may wish to consider specifying that any license fee shall be  
          limited to the reasonable regulatory costs incurred by the  
          regulatory entity, and establishing a penalty based on the  
          amount of the fee. 





            On page 14, lines 4-5, strike  ___dollars ($____) for an  
            initial application, and line 5 ____dollars ($____) for a  
            renewal application  and insert:  the reasonable regulatory  
            costs to the regulatory authority  





            On page 14, lines 13-14, strike:  be less line 14 than ____  
            dollars ($____), nor more than ____ dollars ($____)  and  
            insert:  exceed the reasonable regulatory costs to the  
            regulatory authority  "











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            On page 36, line 27, strike  ____ dollars ($____)  and insert:  
             the reasonable regulatory costs to the regulatory authority


             


            On page 40, line 17, strike:  ____ dollars ($____)  and insert:  
             two times the amount of the license fee  





          In addition, the bill currently requires all fees collected  
          pursuant to the Act to be deposited into the fees account,  
          established within the Medical Cannabis Control Fund, to be  
          appropriated to the DMCRE for costs incurred.  Because other  
          regulatory entities will also be collecting fees and incurring  
          costs relating to licensees under their respective jurisdiction,  
          the author may wish to specify that the fees may be appropriated  
          to the appropriate regulatory authority.  In addition, the  
          author may wish to clarify in the future each specific fee  
          account that should be created to simplify this process. 


            


            On page 20, lines 9-10, strike:  Division of Medical Cannabis  
            Regulation and Enforcement  and insert: appropriate regulatory  
            authority













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            On page 20, line 12, strike:  division  and insert:  regulatory  
            authority  


              


          Duties of the California Department of Food and Agriculture.  To  
          make clear that while the Division of Medical Cannabis  
          Manufacturing and Testing is the one establishing requirements  
          for testing standards, that cultivation licensees under the  
          Division of Medical Cannabis Cultivation are still required to  
          follow those standards, the author may wish to add the following  
          provision: 


            


            On page 16, line 8, insert:  In consultation with the State  
            Department of Public Health, establish testing standards for  
            medical cannabis  .


           


          The CDFA is organized into six divisions, which include the  
          Inspection Services Division, which inspects crops to ensure  
          that they are safe, abundant, quality food supply and  
          environmentally sound agricultural practices, and the Division  
          of Measurement Standards, which ensure the accuracy of  
          commercial weighing and measuring devices.  This bill specifies  
          various duties under the regulatory entities, including  
          requiring the Division of Medical Cannabis Manufacturing and  
          Testing to, among other things, ensure that cultivation  
          licensees have access to agricultural support programs and  
          conform with weighing or measuring standards and standards  
          controlling the application of pesticides.  Because these  








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          provisions are typically with the CDFA's jurisdiction, the  
          author should consider reassigning those responsibilities to the  
          Division of Medical Cannabis Cultivation under the CDFA.  





            On page 17, strike lines 35-39, and on page 18, strike lines  
          1-5 and lines 30-31. 





            On page 16, line 8, insert: (e)  Ensure cultivation licensees  
            have access to existing agricultural incentive and support  
            programs.  





            (f) 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.





            (g) 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  ."









                                                                      AB 34


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          Health, Safety, and Testing Standards.  The author may wish to  
          clarify that edible medical cannabis products may be regulated,  
          and do not have to be summarily destroyed as an adulterated  
          product. 





            On page 17, at the end of line 25, insert:  For purposes of  
            this chapter, edible medical cannabis products are deemed to  
            be unadulterated food products  .


           


          In addition, the author may wish to consider specifying that in  
          addition to a testing laboratory having to use methods  
          established by the International Organization for  
          Standardization, specifically ISO/IEC 17025, that laboratories  
          should also use ISO/EIC 17020, which is the visual inspection  
          standard. 





            On page 18, line 29, after "ISO/IEC" insert:  17020 and  





          In addition, in Section 46041(e)(5), the author may wish to  








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          conform testing standards for wholesale licensees with testing  
          standards for other licensees.  





            (5) Require that all medical cannabis and medical cannabis  
            products be tested by  a laboratory that has been certified and  
            licensed pursuant to this chapter   the wholesale licensee  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  .





          Security Standards.  Under the bill, dispensaries are required  
          to "maintain dedicated, licensed security staff both inside and  
          outside the dispensary."  Because this requirement might be  
          overly burdensome for small dispensaries, which may not pose as  
          great of a risk, the author may wish to consider the following  
          change: 





            On page 19, line 20, strike:  both inside and outside the  
            dispensary  " and insert:  as deemed appropriate by the division  





          The bill currently requires the DMCRE to keep a complete record  








                                                                      AB 34


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          of all entities licensed pursuant to the Act, and to make that  
          record available on the DMCRE's website to state and local law  
          enforcement to verify a mandatory commercial license.  To  
          address potential security concerns with publishing sensitive  
          information on online, the author may wish to delete the  
          requirement that the information be provided online. 





            On page 41, line 15, strike:  on the division's Internet Web  
          site so as  and strike  permit  





          Labeling Standards.  The bill would require, among other things,  
          that medical cannabis products, including edibles, be labeled  
          and include specified information, such as a list of cannabinoid  
          content and dosage.  Because medicinal cannabis varies in terms  
          of the levels and types of active ingredient, for example, and  
          what it is used for varies among patients, it may be difficult  
          to develop a standard "dosage" for products.  As a result, the  
          author may wish to consider clarifying labeling standards with  
          regards to medical marijuana products and requiring products to  
          instead state the amount of cannabinoid per milligrams in each  
          serving, and the total amount in a package.  The author should  
          also include a warning to let consumers know that the  
          intoxicating effects of edible medical marijuana products may be  
          delayed to prevent consumers from consuming more than is  
          necessary to alleviate symptoms.  





            On page 17, lines 1-2, strike:  dosage in total milligrams of  








                                                                      AB 34


                                                                    Page  69





            cannabinoids delivered, and  and insert on line 2, after  
            "allergens":  and the amount in milligrams of cannabinoids per  
            serving, servings per package, and the amount in milligrams of  
            cannabinoids in the total package  "





          REGISTERED SUPPORT:





          American Nurses Association\California


          Conscious Cannabis Ventures


          Emerald Growers Association 


          Heritage Associates 


          United Food and Commercial Workers Union


          1 owner of a cannabis dispensary 




          REGISTERED OPPOSITION:


          Association for Los Angeles Deputy Sheriffs








                                                                      AB 34


                                                                    Page  70







          Association of Deputy District Attorneys


          California Association of Code Enforcement Officers


          California Narcotics Officers' Association 


          California Police Chiefs Association 


          California College and University Police Chiefs Association


          California Correctional Supervisors Organization 


          City of Concord


          City of Tulare


          Family Winemakers of California 


          International Faith Based Coalition 


          League of California Cities


          Los Angeles Police Protective League 


          Riverside Sheriffs Association








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          Analysis Prepared by:Eunie Linden / B. & P. / (916) 319-3301,   
          Christian Jagusch / B. & P. / (916) 319-3301