BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 243| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 243 Author: Wood (D), et al. Amended: 9/11/15 in Senate Vote: 27 - Urgency SENATE GOVERNANCE & FIN. COMMITTEE: 5-0, 7/8/15 AYES: Hertzberg, Beall, Hernandez, Lara, Pavley NO VOTE RECORDED: Nguyen, Moorlach SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-0, 7/15/15 AYES: Wieckowski, Hill, Jackson, Leno, Pavley NO VOTE RECORDED: Gaines, Bates SENATE APPROPRIATIONS COMMITTEE: 5-0, 8/27/15 AYES: Lara, Beall, Hill, Leyva, Mendoza NO VOTE RECORDED: Bates, Nielsen ASSEMBLY FLOOR: 60-15, 6/3/15 - See last page for vote SUBJECT: Medical Board of California: medical marijuana SOURCE: Author DIGEST: This bill establishes a regulatory program for the cultivation of medical cannabis, as part of the Medical Marijuana Regulation and Safety Act (MMRSA). ANALYSIS: Existing law: 1) Provides, under the Compassionate Use Act (CUA), that qualified patients with specified illnesses or their qualified caregivers cannot be prosecuted for possessing or AB 243 Page 2 cultivating medical marijuana upon the written or oral recommendation or approval of an attending physician (Proposition 215, 1996). 2) Encourages federal and state governments to implement a plan to provide for the safe and affordable distribution of medical marijuana to those who need it, but also states that it is not to be construed to supersede legislation prohibiting conduct that endangers others or to condone the diversion of medical marijuana for nonmedical purposes. 3) Directs the Department of Public Health to administer the Medical Marijuana Program, where qualified patients apply for identification cards when deemed appropriate by their attending physician. 4) Requires county health departments to issue identification cards to qualified patients and primary caregivers who voluntarily register. Cards are valid for one year and may be renewed annually. 5) Provides that qualified patients, persons with valid identification cards, and the designated primary caregivers of qualified patients and persons with identification cards, who associate within the State of California in order to collectively or cooperatively cultivate marijuana for medical purposes, shall not solely on the basis of that fact be subject to state criminal sanctions under existing law (SB 420, Vasconcellos, Chapter 875, Statutes of 2003). 6) Prohibits any medical marijuana cooperative, collective, dispensary, operator, establishment, or provider, as specified, from being located within 600 feet of a school (AB 2650, Buchannan, Chapter 603, Statutes of 2010), and further clarified the authority of local agencies to adopt and enforce ordinances regulating the location, operation, or establishment of a medical marijuana cooperative or collective (AB 1300, Blumenfield, Chapter 196, Statutes of 2011). 7) Establishes the Joint Sunset Review Committee to comprehensively analyze every eligible agency to determine AB 243 Page 3 whether the agency is cost-effective and necessary. Each eligible agency with a statutory sunset date must submit specified information to the Committee by December 1 of the year prior to the year it's set to be repealed. 8) Imposes the Sales and Use Tax on the gross receipts from the sale of, and on the sales price of, tangible personal property, unless specifically exempted by statute. a) Requires every person, retailer, and wholesaler engaged in selling tangible personal property subject to sales tax to apply to the Board of Equalization (BOE) for a seller's permit. b) Provides that a person that engages in business as a seller in this state without a seller's permit, and each officer of any corporation that so engages in business, is guilty of a misdemeanor. c) Makes persons who fail to pay Sales and Use Tax obligations liable for accrued interest and penalties for up to eight previous calendar years, but that the statute of limitations never commences when a taxpayer fails to file a return. d) Applies various penalties for failing to obtain a permit, pay or prepay a tax, or file a return. e) Enacts an exemption for the sales and use tax for prescription medication; however, to be exempt, the medication must be: f) prescribed by an authorized person and dispensed on a prescription filled by a pharmacist, i) Furnished by a licensed physician to his or her own patient, or ii) Furnished by a health facility for treatment pursuant to a licensed physician's order, or sold to a licensed physician. AB 243 Page 4 9)Allows local governments, pursuant to the California Constitution, to make and enforce within its limits all local, police, sanitary, and other regulations which are not in conflict with general laws, known as the "police power." This bill: 1) Makes findings related to the environmental impacts associated with marijuana cultivation and the complex nature of remediating marijuana cultivation sites, and that: a) The federal government, including the United States Environmental Protection Association, has not regulated pesticide use in medical cannabis. b) Lawful growers of medical cannabis urge the California Department of Pesticide Regulation to provide guidance on the use of pesticides. 2) Requires Department of Fish and Wildlife (DFW), in consultation with State Water Resources Control Board (SWRCB), to establish a multiagency task force to address environmental impacts associated with marijuana cultivation. 3) Requires DFW to adopt regulations to enhance the fees on any entity cultivating marijuana that impacts a bed, channel or bank of any river, stream or lake, pursuant to Fish and Game Code Section 1602, as specified. 4) Requires the multiagency task force, established pursuant to Water Code Section12029, DFW and the existing SWRCB pilot project, established to respond to damages caused by marijuana cultivation, to continue enforcement efforts on permanent basis statewide to ensure the reduction of adverse impacts of marijuana cultivation on water quality and fish and wildlife. 5) Requires each regional board, and permits SWRCB, to address discharges of waste resulting from medical marijuana cultivation and associated activities, including adopting a general permit or establishing waste discharge requirements or waivers as specified. AB 243 Page 5 6) Requires a state license to cultivate marijuana and requires the California Department of Food and Agriculture (CDFA) to establish a Medical Cannabis Cultivation Program in order to license the cultivation of indoor and outdoor medical marijuana. 7) Establishes classes of cultivation licenses based on the size of the operation and the location. 8) Requires CDFA to establish a program to uniquely identify medical marijuana plants, in consultation with SWRCB and DFW that meets the following conditions: a) The program must issue a unique identifier to each plant that enables identification of permitted plants as they are being cultivated. b) The unique identifier must be attached to the base of the marijuana plant and must only be issued to licensed individuals. c) CDFA must take steps to prevent fraudulent identifiers and illegal diversion of unique identifiers to unlicensed cultivators. d) In implementing the program, CDFA must consider water use and environmental impacts and ensure that individual and cumulative effects of water diversion do not affect the instream flows needed for fish spawning, natural variability, or springs and other aquatic habitats. 9) Authorizes CDFA to develop and implement regulations to carry out the licensing program authorized under this bill and to regulate weighing and measuring devices used to meet the MMRSA's requirements. 10)States that nothing in MMRSA supersedes the authority of the SWRCB, regional water boards, or DFW. 11)Authorizes a city, county, or city and county, through its current or future land use regulations or ordinance, to issue AB 243 Page 6 or deny permits that allow the cultivation of medical marijuana, with the condition that the permit does not become active until the cultivator receives a state license and final local approval. 12)Requires any local licensing requirements, including the unique identifier program, to be equivalent to or more stringent than CDFA's licensing requirements. 13)Prohibits a cultivator from applying for a state license if they have not received the required local approval, or if the local government has prohibited medical marijuana cultivation. 14)Establishes CDFA as the sole regulator in any local jurisdiction that has not implemented a local permitting system by March 1, 2016. 15)States that the cultivation licensing program does not apply to a qualified patient if he or she does not cultivate greater than 100 square feet, nor a caregiver if the caregiver does not cultivate greater than 500 square feet and does not supply more than five qualified patients and meets certain other requirements. 16)Requires each licensing authority, as defined in AB 266 (Bonta, 2015) - which enacts the Medical Marijuana Public Safety and Environmental Protection Act - to levy fees adequate to cover the reasonable regulatory costs of administering the MMRSA. These fees must be: a) Charged to fairly and proportionately to cover the total cost of administering MMRSA; b) Scaled based on the size of the business charged the fee. c) Deposited in the Medical Marijuana Regulation and Safety Act Fund (MMRSAF), as created by this bill. d) Used, upon appropriation of the Legislature, by the licensing authorities to administer MMRSA. AB 243 Page 7 17)Establishes civil penalties for engaging in cannabis activity without the required licenses and unique identifiers of up to twice the cost of the appropriate licensing fee per day of violation, to be paid as follows: a) If the Attorney General brings action, to the General Fund. b) If a district attorney or county counsel brings action, to the treasurer of the county in which the judgment was entered. c) If a city attorney or city prosecutor, to the treasurer of the city or city and county in which the judgment was entered, unless the case is adjudicated in a superior court in the unincorporated area or in another city, in which case the penalty shall be split evenly between the treasurers in the two jurisdictions. 18)Authorizes the destruction of medical cannabis associated with any civil penalties. 19)Provides for a General Fund or special fund loan, including up to $10 million from the General Fund, to the Bureau of Medical Marijuana Regulation (Bureau) as established by AB 266, to support the initial regulatory activities authorized by MMRSA. 20)Requires repayment of any initial loans for regulatory activities to be repaid by January 1, 2022, from the regulatory fees charged by the licensing authorities and, if necessary, from the Medical Cannabis Fines and Penalties Account. 21)Requires the Bureau to establish a grant program to fund activities by state and local law enforcement to remedy the environmental effects of cannabis cultivation, payable from fines and penalties charged pursuant to the bill after all outstanding loans for the program are repaid. 22)Appropriates $10 million from the MMRSAF to the Department AB 243 Page 8 of Consumer Affairs to begin the activities of the Bureau. 23)Provides that provisions relating to Joint Sunset Review Committee oversight do not apply to the Bureau. 24)Ends the legal effect of current law stating patients, individuals with identification cards, or their caregivers, who associate in California to collectively and cooperatively cultivate marijuana for medical purposes shall not solely on the basis of that fact be subject to state criminal sanctions when the Bureau posts a notice on its Internet website that licensing authorities have commenced issuing licenses. 25)Directs BOE to adopt a system to report the movement of commercial cannabis and cannabis products throughout the distribution chain, which must not duplicate CDFA's track and trace program. The system must capture specified information regarding: a) Amount of tax due by the designated entity, b) Name, address, and license number of the designated entity remitting the tax, c) Name, address, and license number of the succeeding entity receiving the product, d) The transaction date, and e) Any other information deemed necessary by BOE for the taxation and regulation of marijuana and marijuana products. 26)States that no reimbursement for local costs is required because this bill creates a new crime or infraction, among other reasons, but requires reimbursement of local agencies pursuant to existing law if the Commission on State Mandates determines that the bill contains other mandated costs. 27)States that the measure only becomes active upon the enactment and operation of Assembly Bill 266 and Senate Bill 643 of the 2015-16 Regular Session. AB 243 Page 9 Background The Compassionate Use Act and SB 420. In 1996, voters approved Proposition 215, known as the Compassionate use Act of 1996. The CUA 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, 2003) 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. However, since the passage of Proposition 215 and SB 420, the state has not adopted a framework to provide for appropriate licensure and regulation of medical marijuana. In addition, despite the CUA and SB 420, marijuana is still illegal under state and federal law. Local authority over medical marijuana. By exempting qualified patients and caregivers from prosecution for using or from collectively or cooperatively cultivating medical marijuana, the CUA and SB 420 essentially authorized the cultivation and use of medical marijuana. These laws have triggered the growth of medical marijuana dispensaries in many localities, and in response, local governments have sought to exercise 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 (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 SB 420 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. Accordingly, many California AB 243 Page 10 jurisdictions, roughly estimated by the League of California Cities at 50% pending completion of a statewide survey, ban the cultivation and sale of medical marijuana altogether. Environmental concerns. According to some estimates, there are 30,000 cultivation sites in the tri-county area of Humboldt-Mendocino-Trinity, and an additional 10,000 or more cultivation sites elsewhere in California. As a result, California land, watersheds, and some species have been significantly damaged by some cultivation operations. "Trespass grows", which cultivate marijuana without permission on public, tribal or privately owned land, have been associated with wildlife poisoning, use and dumping of fertilizers and pesticides, illegal water diversions and water pollution, logging and land disturbance, and severe problems with garbage and human waste. These industrial-size marijuana grows, taking place in the National Forests and on private timberland in some of the state's most remote and ecologically sensitive areas, are the subject of a recent study by DFW, "Impacts of Surface Water Diversions for Marijuana Cultivation on Aquatic Habitat in Four Northwestern California Watershed," which showed that during drought conditions, water demand for marijuana cultivation exceeded stream flow in three of four study watersheds and that diminished stream flow from this water-intensive activity is likely to have lethal to sub-lethal effects on salmon and steelhead trout, which are listed under the state and federal Endangered Species Acts, and cause further decline of sensitive amphibian species. In response, the Budget Act of 2014 appropriated resources for both DFW and SWRCB to reduce environmental damage caused by marijuana cultivation on private and high value state-owned public lands in California. A total of $3.3 million was allocated to the two agencies to create a multi-disciplinary Marijuana Task Force, and to implement a priority-driven approach to address the natural resources damages from marijuana cultivation on private lands in northern California and on high conservation value public lands. This program was authorized as a pilot program for five years. AB 243 Page 11 Some organizations want to remedy the environmental effects of past marijuana cultivation and regulate medical marijuana cultivation more consistently throughout the state. Comments Purpose of the bill. The cultivation of marijuana has caused significant damage to California's natural environment. The potential for future damage is made all the greater by the lack of regulation of the medical marijuana industry, and in particular, the cultivation of medical marijuana. AB 243 creates a regulatory framework around cultivation. The unique identification program allows for the tracking of medicinal marijuana plants to ensure that marijuana is not being diverted to the black market and also allows law enforcement to determine which plants are legally being cultivated for medical purposes and which are being illegally cultivated. This enables swifter eradication actions against illegal grows while avoiding the accidental eradications of legal medicinal plantings. This need is made all the more dire by the current drought, which exacerbates the harm caused by the illegal diversion of water to cultivate marijuana. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No Unknown SUPPORT: (Verified9/11/15) California League of Conservation Voters California Native Plant Society California State Parks Foundation California Trout California Urban Streams Partnership Clean Water Action Defenders of Wildlife Nature Conservancy Pacific Forest Trust AB 243 Page 12 Trout Unlimited Trust for Public Land OPPOSITION: (Verified9/11/15) None received ASSEMBLY FLOOR: 60-15, 6/3/15 AYES: Alejo, Bigelow, Bloom, Bonilla, Bonta, Brown, Burke, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Lackey, Levine, Lopez, Low, Maienschein, McCarty, Medina, Mullin, Nazarian, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NOES: Achadjian, Travis Allen, Baker, Brough, Chávez, Beth Gaines, Gatto, Grove, Harper, Kim, Linder, Mathis, Melendez, Obernolte, Steinorth NO VOTE RECORDED: Calderon, Campos, Chang, Dahle, Mayes Prepared by:Anton Favorini-Csorba / GOV. & F. / (916) 651-4119 9/11/15 18:58:39 **** END ****