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  ****