Amended in Senate June 30, 2015

Amended in Assembly June 2, 2015

Amended in Assembly May 11, 2015

Amended in Assembly May 5, 2015

Amended in Assembly April 14, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 266


Introduced by Assembly Members Bonta, Cooley,begin delete and Jones-Sawyerend deletebegin insert Jones-Sawyer, and Lackeyend insert

begin insert

(Coauthor: Assembly Member Chiu)

end insert

February 10, 2015


An act to amend Sections 2220.05, 2242, and 2264 of, to add Article 25 (commencing with Section 2525) to Chapter 5 of Division 2 of, and to add Chapter 3.5 (commencing with Section 19300) to Division 8 of, the Business and Professions Code, to amend and repeal Section 11362.775 of the Health and Safety Code, to add Sections 147.5 and 3094 to the Labor Code, and to add Section 2402.5 to the Vehicle Code, relating to medical cannabis.

LEGISLATIVE COUNSEL’S DIGEST

AB 266, as amended, Bonta. Medical cannabis.

(1) Existing law, the Compassionate Use Act of 1996, an initiative measure enacted by the approval of Proposition 215 at the November 6, 1996, statewide general election, authorizes the use of marijuana for medical purposes. Existing law enacted by the Legislature requires the establishment of a program for the issuance of identification cards to qualified patients so that they may lawfully use marijuana for medical purposes, and requires the establishment of guidelines for the lawful cultivation of marijuana grown for medical use. Existing law provides for the licensure of various professions by the Department of Consumer Affairs. Existing law, the Sherman Food, Drug, and Cosmetic Law, provides for the regulation of food, drugs, devices, and cosmetics, as specified. A violation of that law is a crime.

This bill would enact the Medical Cannabis Regulation and Control Act and would establish within the office of the Governor, the Governor’s Office ofbegin delete Marijuanaend deletebegin insert Medical Cannabisend insert Regulation to coordinate and provide oversight of the licensing and regulation of various commercial cannabis activities, as defined. The bill would establish the Division of Medical Cannabisbegin delete Regulation, which is establishedend deletebegin insert Regulationend insert within the State Board of Equalization, for the licensure and regulation of medical cannabis dispensaries and transporters. The bill would establish the Division of Medical Cannabis Manufacturing and Testing within the State Department of Public Health for the licensing and regulation of medical cannabis manufacturers and certified testing laboratories. The bill would also require the Division of Medical Cannabis Manufacturing and Testing to set specified standards for edible cannabis products. The bill would also establish the Division of Medical Cannabis Cultivation within the Department of Food and Agriculture for the licensure and regulation of medical cannabis cultivators. The bill would set forth the duties of these various divisions. The bill would require the office, bybegin delete Marchend deletebegin insert Aprilend insert 1, 2016, to convene a task force to advise the office on the development of standards for the regulation of medical cannabis.

This bill would provide for the enforcement of the provisions of the act and of local ordinances relating to medical cannabis by the state and local governments and would require the officebegin insert, by January 1, 2017,end insert to develop an enforcement framework that clarifies the enforcement roles of the state and local governments. The bill would provide that the director of the office and other prescribed persons employed by licensing and law enforcement authorities are peace officers for purposes of enforcing the provisions of this act. The bill would specify that it does not supersede the provisions of Measure D, approved by the voters of the City of Los Angeles on the May 21, 2013,begin delete ballot.end deletebegin insert ballot and would require the State Board of Equalization to enter into a memorandum of understanding with the City of Los Angeles to establish specified protocols, including tracking medical cannabis to and from the City of Los Angeles. The bill would exempt facilities engaged in commercial cannabis activity within the City of Los Angeles from the licensing requirements and would give the city full power and authority to enforce prescribed standards and regulations.end insert

This bill would require, before a business granted a state license commences operation, that the business also obtain a license or permit from the local jurisdiction and would authorize the local jurisdiction to regulate commercial cannabis activity in specified ways. The bill would provide for provisional licensure to engage in commercial cannabis activity, as specified, until the state license application is either granted or denied or until July 1, 2017.

This bill would, by January 1, 2017, require the Division of Labor Standards and Enforcement to develop a certification program for cannabis employees. The bill would require, by January 1, 2019, that all persons who perform work as cannabis employees be certified or participating in an apprenticeship program, as provided.

This bill would establish the Medical Cannabis Regulation Fund and various accounts within that fund for the collection of fines and fees imposed on the licensees conducting commercial cannabis activities.

(2) Existing law establishes the Division of Apprenticeship Standards, which audits and regulates apprenticeship programs for various trades, including electricians.

This bill would require the division to investigate, approve, or reject applications for apprenticeship employees of a licensed cultivation site or a licensed dispensing facility, as defined.

(3) Existing law, the Medical Practice Act, provides for the licensure and regulation of physicians and surgeons by the Medical Board of California. Existing law requires the board to prioritize investigations and prosecutions of physicians and surgeons representing the greatest threat of harm, as specified. Existing law identifies the cases that are to be given priority, which include cases of repeated acts of excessively prescribing, furnishing, or administering controlled substances without a good faith prior examination of the patient. Existing law sets forth the conduct that would constitute unprofessional conduct for a physician and surgeon, including, but not limited to, prescribing certain drugs without an appropriate examination or medical indication. Existing law provides that a violation of the Medical Practice Act is a crime.

This bill would require the board to consult with the Center for Medicinal Cannabis Research on developing and adopting medical guidelines for the appropriate administration and use of marijuana.

The bill would also make it a misdemeanor for a physician and surgeon who recommends marijuana to a patient for a medical purpose to accept, solicit, or offer any remuneration from or to a licensed dispensing facility in which the physician and surgeon or his or her immediate family has a financial interest. By creating a new crime, the bill would impose a state-mandated local program.

This bill would specify that recommending marijuana to patients without an appropriate prior examination and a medical indication is unprofessional conduct. The bill would provide that specified acts of recommending marijuana for medical purposes without a good faith examination are among the types of cases that should be given priority for investigation and prosecution by the board, as described above. The bill would further prohibit a physician and surgeon from recommending medical marijuana to a patient unless that person is the patient’s attending physician, as defined. Because a violation of that provision would be a crime, the bill would impose a state-mandated local program.

begin delete

(4) Existing law authorizes the legislative body of a city or county to impose various taxes, including a transactions and use tax at a rate of 0.25%, or a multiple thereof, if approved by the required vote of the legislative body and the required vote of qualified voters, and limits the combined rate of transactions and use taxes within a city or county to 2%.

end delete
begin delete

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

end delete
begin delete

(5)

end delete

begin insert(4)end insert Existing law exempts qualified patients, persons with valid identification cards, and the designated primary caregivers of qualified patients and persons with identification cards from certain crimes, including possession of concentrated cannabis and marijuana, cultivation of marijuana, and possession of marijuana for sale.

This bill, commencing 180 days after thebegin delete Division of Medical Cannabis Regulation within the State Board of Equalizationend deletebegin insert Governor’s Office of Medical Cend insertbegin insertannabis Regulationend insert posts a notice on its Internet Web site that the licensing authorities have commenced issuing provisional licenses, would repeal those provisions.

begin delete

(6)

end delete

begin insert(5)end insert Existing law establishes the Department of the California Highway Patrol. Existing law also prohibits and establishes standards for driving under the influence of alcohol.

This bill would require the Department of the California Highway Patrol to establish protocols to determine 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.

begin delete

(7)

end delete

begin insert(6)end insert Existing law regulates the labor practices of agricultural employers. Existing law establishes the Occupational Safety and Health Standards Board within the Department of Industrial Relations to adopt, amend, and repeal occupational safety and health standards and establishes the Division of Occupational Safety and Health to enforce those standards.

This bill would include licensed cultivation sites in the definition of agricultural employer. The bill would require the division to convene an advisory committee to evaluate whether there is a need to develop industry-specific regulations relating to facilities issued a conditional license.

begin delete

(8)

end delete

begin insert(7)end insert This bill would provide that its provisions are severable.

begin delete

(9)

end delete

begin insert(8)end insert Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

This bill would make legislative findings to that effect.

begin delete

(10)

end delete

begin insert(9)end insert The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that with regard to certain mandates no reimbursement is required by this act for a specified reason.

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

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

P6    1

SECTION 1.  

The Legislature finds and declares all of the
2following:

3(a) The people of California enacted the Compassionate Use
4Act of 1996 to ensure that seriously ill Californians have access
5to cannabis for medical purposes. The Compassionate Use Act of
61996 urged the state and federal governments to implement a plan
7to provide for the safe and affordable distribution of medical
8cannabis to all patients in medical need of the drug.

9(b) Federal enforcement authorities have recognized that in
10 states that have authorized cannabis use and have enacted strong
11and effective regulatory and enforcement systems to control the
12cultivation, distribution, sale, and possession of cannabis, conduct
13in compliance with those regulatory and enforcement systems is
14less likely to threaten federal priorities, and, thus, less likely to
15require federal enforcement intervention (See: Memorandum For
16All United States Attorneys--Guidance Regarding Marijuana
17Enforcement, by James M. Cole, Deputy Attorney General, August
1829, 2013).

19(c) Greater certainty and minimum statewide standards are
20urgently needed regarding the obligations of medical cannabis
21facilities, and for the imposition and enforcement of regulations
22to prevent unlawful cultivation and the diversion of cannabis to
23nonmedical use.

24(d) The purpose of this act is to establish for California a robust
25medical cannabis regulatory and enforcement system to ensure
26that conduct in compliance with California’s medical cannabis
27laws does not threaten the federal priorities as set forth in the James
28M. Cole memorandum, and, therefore, does not require federal
29enforcement intervention.

30(e) The California Constitution grants cities and counties the
31authority to make and enforce, within their borders, “all local
32police, sanitary, and other ordinances and regulations not in conflict
33with the general laws.” This inherent local police power includes
P7    1broad authority to determine, for purposes of public health, safety,
2and welfare, the appropriate uses of land within the local
3jurisdiction’s borders. The police power, therefore, allows each
4city and county to determine whether or not a medical cannabis
5dispensary or other facility that makes medical cannabis available
6may operate within its borders. This authority has been upheld by
7City of Riverside v. Inland Empire Patients Health and Wellness
8Center, Inc. (2013) 56 Cal.4th 729, and County of Los Angeles v.
9Hill (2011) 192 Cal.App.4th 861. Nothing in this act shall diminish,
10erode, or modify that authority.

11(f) If a city or county determines that a dispensary or other
12facility that makes medical cannabis available may operate within
13its borders, then there is a need for the state to license these
14dispensaries and other facilities for the purpose of adopting and
15enforcing protocols for security standards at dispensaries and in
16the transportation of medical cannabis, as well as health and safety
17standards to ensure patient safety. This licensing requirement is
18not intended in any way nor shall it be construed to preempt local
19ordinances, regulations, or enforcement actions regarding the sale
20and use of medical cannabis, including, but not limited to, security,
21signage, lighting, and inspections.

22(g) Nothing in this act or Article 2 (commencing with Section
2311357) or Article 2.5 (commencing with Section 11362.7) of
24Chapter 6 of Division 10 of the Health and Safety Code is intended
25to preempt any local ordinance regulating or banning the
26cultivation, processing, manufacturing, testing, transportation,
27distribution, provision, donation, or sale of medical cannabis, or
28to otherwise prevent or limit a city, county, or city and county
29from adopting or enforcing a zoning ordinance or other law,
30ordinance, or regulation that bans or regulates the location,
31operation, or establishment of any individual or other person that
32cultivates, processes, possesses, stores, manufactures, tests,
33transports, distributes, provides, donates, or sells cannabis.

34(h) Nothing in this act is intended tobegin insert interfere with an employer’s
35rights and obligations to maintain a drug and alcohol free
36workplace or toend insert
require an employer to permit or accommodate
37the use, consumption, possession, transfer, display, transportation,
38sale, or growth of cannabis in the workplace, or to affect the ability
39of employers to have policiesbegin delete restrictingend deletebegin insert prohibitingend insert the use of
P8    1cannabis bybegin insert employees and prospectiveend insert employees, or otherwise
2complying withbegin insert state andend insert federal law.

3(i) Nothing in this act shall be construed to promote or facilitate
4the nonmedical, recreational possession, sale, or use of cannabis.

5(j) Nothing in this act shall have a diminishing effect on the
6begin delete rights andend delete protections granted to a patient or primary caregiver
7pursuant to the Compassionate Use Act of 1996.

8

SEC. 2.  

Section 2220.05 of the Business and Professions Code
9 is amended to read:

10

2220.05.  

(a) In order to ensure that its resources are maximized
11for the protection of the public, the Medical Board of California
12shall prioritize its investigative and prosecutorial resources to
13ensure that physicians and surgeons representing the greatest threat
14of harm are identified and disciplined expeditiously. Cases
15involving any of the following allegations shall be handled on a
16priority basis, as follows, with the highest priority being given to
17cases in the first paragraph:

18(1) Gross negligence, incompetence, or repeated negligent acts
19that involve death or serious bodily injury to one or more patients,
20such that the physician and surgeon represents a danger to the
21public.

22(2) Drug or alcohol abuse by a physician and surgeon involving
23death or serious bodily injury to a patient.

24(3) Repeated acts of clearly excessive prescribing, furnishing,
25or administering of controlled substances, or repeated acts of
26prescribing, dispensing, or furnishing of controlled substances, or
27recommending cannabis to patients for medical purposes without
28a good faith prior examination of the patient and medical reason
29therefor. However, in no event shall a physician and surgeon
30prescribing, furnishing, or administering controlled substances for
31intractable pain consistent with lawful prescribing, including, but
32not limited to, Sections 725, 2241.5, and 2241.6 of this code and
33Sections 11159.2 and 124961 of the Health and Safety Code, be
34prosecuted for excessive prescribing and prompt review of the
35applicability of these provisions shall be made in any complaint
36that may implicate these provisions.

37(4) Sexual misconduct with one or more patients during a course
38of treatment or an examination.

39(5) Practicing medicine while under the influence of drugs or
40alcohol.

P9    1(b) The board may by regulation prioritize cases involving an
2allegation of conduct that is not described in subdivision (a). Those
3cases prioritized by regulation shall not be assigned a priority equal
4to or higher than the priorities established in subdivision (a).

5(c) The Medical Board of California shall indicate in its annual
6report mandated by Section 2312 the number of temporary
7restraining orders, interim suspension orders, and disciplinary
8 actions that are taken in each priority category specified in
9subdivisions (a) and (b).

10

SEC. 3.  

Section 2242 of the Business and Professions Code is
11amended to read:

12

2242.  

(a) Prescribing, dispensing, or furnishing dangerous
13drugs as defined in Section 4022 without an appropriate prior
14examination and a medical indication, constitutes unprofessional
15conduct.begin delete Prescribing or recommendingend deletebegin insert Recommendingend insert medical
16cannabis to a patient for a medical purpose without an appropriate
17prior examination and a medical indication constitutes
18unprofessional conduct.

19(b) No licensee shall be found to have committed unprofessional
20conduct within the meaning of this section if, at the time the drugs
21were prescribed, dispensed, or furnished, any of the following
22applies:

23(1) The licensee was a designated physician and surgeon or
24podiatrist serving in the absence of the patient’s physician and
25surgeon or podiatrist, as the case may be, and if the drugs were
26prescribed, dispensed, or furnished only as necessary to maintain
27the patient until the return of his or her practitioner, but in any case
28no longer than 72 hours.

29(2) The licensee transmitted the order for the drugs to a
30registered nurse or to a licensed vocational nurse in an inpatient
31facility, and if both of the following conditions exist:

32(A) The practitioner had consulted with the registered nurse or
33licensed vocational nurse who had reviewed the patient’s records.

34(B) The practitioner was designated as the practitioner to serve
35in the absence of the patient’s physician and surgeon or podiatrist,
36as the case may be.

37(3) The licensee was a designated practitioner serving in the
38absence of the patient’s physician and surgeon or podiatrist, as the
39case may be, and was in possession of or had utilized the patient’s
40records and ordered the renewal of a medically indicated
P10   1prescription for an amount not exceeding the original prescription
2in strength or amount or for more than one refill.

3(4) The licensee was acting in accordance with Section 120582
4of the Health and Safety Code.

5

SEC. 4.  

Section 2264 of the Business and Professions Code is
6amended to read:

7

2264.  

(a) The employing, directly or indirectly, the aiding, or
8the abetting of any unlicensed person or any suspended, revoked,
9or unlicensed practitioner to engage in the practice of medicine or
10any other mode of treating the sick or afflicted which requires a
11license to practice constitutes unprofessional conduct.

12(b)  Employment by, or other agreement with, a mandatory
13commercial licensee acting pursuant to the Medical Cannabis
14Regulation and Control Act or a dispensary to provide
15recommendations for medical cannabis constitutes unprofessional
16conduct.

17

SEC. 5.  

Article 25 (commencing with Section 2525) is added
18to Chapter 5 of Division 2 of the Business and Professions Code,
19to read:

20 

21Article 25.  Recommending Medical Cannabis
22

 

23

2525.  

(a) It is unlawful for a physician and surgeon who
24recommends cannabis to a patient for a medical purpose to accept,
25solicit, or offer any form of remuneration from or to a facility
26issued abegin delete conditionalend deletebegin insert stateend insert license pursuant to Chapter 3.5
27(commencing with Section 19300) of Division 8, if the physician
28and surgeon or his or her immediate family have a financial interest
29in that facility.

30(b) For the purposes of this section, “financial interest” shall
31have the same meaning as in Section 650.01.

32(c) A violation of this section shall be a misdemeanor.

33

2525.1.  

The Medical Board of California shall consult with
34the California Marijuana Research Program, known as the Center
35for Medicinal Cannabis Research, authorized pursuant to Section
3611362.9 of the Health and Safety Code, on developing and adopting
37medical guidelines for the appropriate administration and use of
38medical cannabis.

39

2525.2.  

A physician and surgeon shall not recommend medical
40 cannabis to a patient, unless that person is the patient’s attending
P11   1physician, as defined by subdivision (a) of Section 11362.7 of the
2Health and Safety Code.

3

SEC. 6.  

Chapter 3.5 (commencing with Section 19300) is added
4to Division 8 of the Business and Professions Code, to read:

5 

6Chapter  3.5. Medical Cannabis
7

 

8Article 1.  Definitions
9

 

10

19300.  

For purposes of this chapter, the following definitions
11shall apply:

12(a) “Cannabinoid” means a chemical compound that is unique
13to and derived from cannabis, also known as phytocannabinoid.

14(b) “Cannabis” means all parts of the plant Cannabis sativa L.,
15Cannabis indica, or Cannabis ruderalis, whether growing or not;
16the seeds thereof; the resin, whether crude or purified, extracted
17from any part of the plant; and every compound, manufacture, salt,
18derivative, mixture, or preparation of the plant, its seeds, or resin.
19“Cannabis” does not include the mature stalks of the plant, fiber
20produced from the stalks, oil or cake made from the seeds of the
21plant, any other compound, manufacture, salt, derivative, mixture,
22or preparation of the mature stalks (except the resin extracted
23therefrom), fiber, oil, or cake, or the sterilized seed of the plant
24which is incapable of germination. “Cannabis” also meansbegin insert the
25separated resin, whether crude or purified, obtained from
26marijuana. Without limiting the definition, “cannabis” also meansend insert

27 marijuana as defined by Section 11018 of the Health and Safety
28Code as enacted by Chapter 1407 of the Statutes of 1972.

29(c) “Cannabis concentrate” means manufactured cannabis that
30has undergone a process to concentrate the cannabinoid active
31ingredient, thereby increasing the product’s potency.

begin insert

32(d) “Caregiver” or “primary caregiver” has the same meaning
33as that term is defined in Section 11362.7 of the Health and Safety
34Code.

end insert
begin delete

4 35(d)

end delete

36begin insert(e)end insert “Certified testing laboratory” means a laboratory that is
37certified by the State Department of Public Health to perform
38random sample testing of medical cannabis pursuant to the
39certification standards for these facilities promulgated by the
40department.

begin delete

9 P12   1(e)

end delete

2begin insert(f)end insert “Commercial cannabis activity” means any cultivation,
3 possession, manufacture, processing, storing, laboratory testing,
4labeling, transporting, distribution, or sale of cannabis or cannabis
5product, or anybegin delete Internet platform that facilitates any of these
6functions for the purpose of selling medical cannabis or medical
7cannabis products to qualified patients or caregivers,end delete
begin insert technology
8platform that enables qualified patients or primary caregivers to
9arrange for or facilitate any of the above-end insert
begin insertdescribed functions with
10a third party,end insert
except as set forth in Section 19316.

begin delete

16 11(f)

end delete

12begin insert(g)end insert “Cultivation” means any activity involving the planting,
13growing, harvesting, drying, processing, or trimming of cannabis.

begin delete

14(g)

end delete

15begin insert(h)end insert “Delivery” means the commercial transfer of medical
16cannabis or medical cannabis products from a dispensary to a
17primary caregiver or qualified patient, as defined in Section
1811362.7 of the Health and Safety Code.

begin delete

22 19(h)

end delete

20begin insert(i)end insert “Delivery service” means a person issued a state license by
21the Statebegin delete Department of Public Healthend deletebegin insert Board of Equalizationend insert
22 pursuant to this chapter and a local license or permit, to deliver
23medical cannabis or medical cannabis products, up to an amount
24determined by the department, to patients, testing laboratories, or
25to events or locations where it will be used solely for promotional
26purposes. A delivery service shall not be required to obtain a
27transporter license.

begin delete

28(i)

end delete

29begin insert(j)end insert “Director” means the director of the Office ofbegin delete Marijuanaend delete
30begin insert Medical Cannabisend insert Regulation.

begin delete

32 31(j)

end delete

32begin insert(k)end insert “Dispensary” means abegin delete nonmobile, nonvehicular,
33non-Internet-based retail location that distributes medical cannabis
34or medical cannabis products and is owned and operated by a
35licensee for these activities pursuant to this chapter.end delete
begin insert physical retail
36establishment operating from a fixed location, end insert
begin insertincluding mobile
37deliveries originating from the location, that makes retail sales of
38medical cannabis or medical cannabis productsend insert
begin insert. end insert

begin delete

39(k)

end delete

P13   1begin insert(l)end insert “Dispensing” means any activity involving the retail sale of
2medical cannabis or medical cannabis products from a dispensary.

begin insert

3(m) “Distribution” means the first sale of cannabis in this state.
4Distribution does not include the sale of cannabis from a cultivator
5to a distributor.

end insert
begin insert

6(n) “Distributor” means a person who is engaged in the business
7of purchasing medical cannabis in this state from a licensed
8cultivator and who then distributes the medical cannabis to a
9manufacturer or dispensary.

end insert
begin delete

39 10(l)

end delete

11begin insert(o)end insert “Dried flower” means all dead medical cannabis that has
12been harvested, dried, cured, or otherwisebegin delete processed.end deletebegin insert processed,
13excluding leaves and stems.end insert

begin delete

P14 1 14(m)

end delete

15begin insert(p)end insert “Edible cannabis product” means manufactured cannabis
16that is intended to be used, in whole or in part, for human
17consumption, including, but not limited to, chewing gum.

begin delete

4 18(n)

end delete

19begin insert(q)end insert “Fund” means the Medical Cannabis Regulation Fund
20established pursuant to Section 19361.

begin delete

6 21(o)

end delete

22begin insert(r)end insert “Identification program” means the universal identification
23certificate program for licensees.

begin delete

8 24(p)

end delete

25begin insert(s)end insert “Labor peace agreement” means an agreement between a
26licensee and a bona fide labor organization that, at a minimum,
27protects the state’s proprietary interests by prohibiting labor
28organizations and members from engaging in picketing, work
29stoppages, boycotts, and any other economic interference with the
30applicant’s business. This agreement means that the applicant has
31agreed not to disrupt efforts by the bona fide labor organization
32to communicate with, and attempt to organize and represent, the
33applicant’s employees. The agreement shall provide a bona fide
34labor organization access at reasonable times to areas in which the
35applicant’s employees work, for the purpose of meeting with
36employees to discuss their right to representation, employment
37rights under state law, and terms and conditions of employment.
38This type of agreement shall not mandate a particular method of
39election or certification of the bona fide labor organization.

begin delete

23 40(q)

end delete

P14   1begin insert(t)end insert “Licensed cultivation site” means a person that plants, grows,
2cultivates, harvests, dries, or processes medical cannabis, or that
3does all or any combination of those activities, and that is issued
4a state license pursuant to this chapter and a local license or permit.

begin delete

28 5(r)

end delete

6begin insert(u)end insert “Licensed dispensing facility” means a person that provides
7medical cannabis, medical cannabis products, or devices for the
8use of medical cannabis or medical cannabis products, either
9individually or in any combination, that is issued a state license
10pursuant to this chapter and a local license or permit.

begin delete

33 11(s)

end delete

12begin insert(v)end insert “Licensed manufacturer” means a person that conducts the
13production, preparation, propagation, compounding, or processing
14of medical cannabis or medical cannabis products, either directly
15or indirectly or by extraction processes, or independently by means
16of chemical synthesis or by a combination of extraction and
17chemical synthesis, and includes a location that packages or
18repackages medical cannabis or medical cannabis products or
19labeling or relabeling of its container, and that has been issued
20begin insert both a local license or permit andend insert a state license pursuant to this
21begin delete part.end deletebegin insert chapter.end insert

begin delete

3 22(t)

end delete

23begin insert(w)end insert “Licensed transporter” means a person issued a state license
24by the Board of Equalization to transport medical cannabis or
25medical cannabis products above a limit determined by the board
26begin delete to and fromend deletebegin insert betweenend insert facilities that have been issued a state license
27begin insert or to dispensing facilities in the City of Los Angelesend insert pursuant to
28this chapter.

begin delete

8 29(u)

end delete

30begin insert(x)end insert “Licensee” means a person issued a state license under this
31chapter to engage in commercial cannabis activity.

begin delete

10 32(v)

end delete

33begin insert(y)end insert “Licensing authority” means the state agency responsible
34for granting and renewing state licenses and regulating the relevant
35licensees. For licensed cultivators, the licensing authority is the
36Division of Medical Cannabis Cultivation in the Department of
37Food and Agriculture. For dispensaries and transporters, the
38licensing authority is thebegin insert Division of Medical Cannabis Regulation
39withinend insert
begin insert theend insert State Board of Equalization. For licensed manufacturers
40and certified testing laboratories, the licensing authority is the
P15   1Division of Medical Cannabis Manufacturing and Testing within
2the State Department of Public Health.

begin delete

19 3(w)

end delete

4begin insert(z)end insert “Live plants” means living medical cannabis flowers and
5plants, including seeds, immature plants, and vegetative stage
6plants.

begin delete

22 7(x)

end delete

8begin insert(aa)end insert “Manufactured cannabis” means raw cannabis that has
9undergone a process whereby the raw agricultural product has
10been transformed into a concentrate, an edible product, or a topical
11product.

begin insert

12(ab) “Manufacturing site” means a location that produces,
13prepares, propagates, compounds, or processes medical cannabis
14or medical cannabis products, directly or indirectly, by extraction
15processes, independently by means of chemical synthesis, or by a
16combination of extraction and chemical synthesis, and is owned
17and operated by a licensee for these activities pursuant to this
18chapter.

end insert
begin delete

26 19(y)

end delete

20begin insert(ac)end insert “Medical cannabis,” “medical cannabis product,” or
21“cannabis product” means a product containing cannabis, including,
22but not limited to, concentrates and extractions, intended to be sold
23for use by medical cannabis patients in California pursuant to the
24Compassionate Use Act of 1996 (Proposition 215).

begin delete

31 25(z)

end delete

26begin insert(ad)end insert “Nursery” means a licensee that produces only clones,
27immature plants, seeds, and other agricultural products used
28specifically for the planting, propagation, and cultivation of medical
29cannabis.

begin delete

35 30(aa)

end delete

31begin insert(ae)end insert “Office” means thebegin insert Governor’send insert Office ofbegin delete Marijuanaend delete
32begin insert Medical Cannabisend insert Regulation.

begin delete

36 33(ab)

end delete

34begin insert(af)end insert “Permit,” “local license,” or “local permit” means an official
35document granted by a local jurisdiction thatbegin insert specificallyend insert authorizes
36a person to conduct commercial cannabis activity in the local
37jurisdiction.

begin delete

P16 1 38(ac)

end delete

39begin insert(ag)end insert “Person” means an individual, firm, partnership, joint
40venture, association, corporation, limited liability company, estate,
P16   1trust, business trust, receiver, syndicate, or any other group or
2combination acting as a unit and includes the plural as well as the
3singular number.

begin delete

6 4(ad)

end delete

5begin insert(ah)end insert “State license ” or “license” means a state license issued
6pursuant to this chapter.

begin delete

8 7(ae)

end delete

8begin insert(ai)end insert “Topical cannabis” means abegin delete manufacturedend delete product intended
9for external use.

begin delete

10 10(af)

end delete

11begin insert(aj)end insert “Transport” means thebegin delete commercialend delete transfer of medical
12cannabis or medical cannabis products from thebegin insert permittedend insert business
13location of one licensee tobegin insert the permitted business location ofend insert
14 another licensee,begin insert or to dispensing facilities in the City of Los
15Angeles,end insert
for the purposes of conducting commercial cannabis
16activity authorized by licensees pursuant to this chapter.

17 

18Article 2.  Administration
19

 

20

19301.  

This chapter shall be known, and may be cited, as the
21Medical Cannabis Regulation and Control Act.

22

19302.  

(a) There is hereby created within the office of the
23Governor, the Governor’s Office ofbegin delete Marijuanaend deletebegin insert Medical Cannabisend insert
24 Regulation, under the supervision and control of the Director of
25the Office ofbegin delete Marijuanaend deletebegin insert Medical Cannabisend insert Regulation, who shall
26be appointed by thebegin delete Governor.end deletebegin insert Governor, subject to Senate
27confirmation.end insert
The Governor shall appoint the director at a salary
28to be fixed and determined by the director with the approval of the
29Director of Finance.begin delete The director shall serve in accordance with
30the State Civil Service Act (Part 2 (commencing with Section
3118500) of Division 5 of Title 2 of the Government Code).end delete

32(b) The director shall be the appointing power of all employees
33within the office, and all heads of divisions, bureaus, and other
34employees in the office shall be responsible to the director for the
35proper carrying out of the duties and responsibilities of their
36respective positions.

37(c) In developing a regulatory framework pursuant to this
38chapter, the director shall consult with state agencies possessing
39expertise in licensure and enforcement, including, but not limited
P17   1to, the Department of Alcoholic Beverage Control and the
2Department of Consumer Affairs.

3(d) The office shall have overall executive authority and
4responsibility for implementation of all aspects of cannabis
5regulation pursuant to this chapter.

6(e) The office shall coordinate and provide oversight of all
7activities described in this chapter. The office shall lead all state
8and local authorities regarding the tracking of medical cannabis,
9medical cannabis products, and licensees pursuant to this chapter.
10All departments and divisions specified in Section 19304 shall
11report directly to the office. Any information technology systems
12created to store and process data related to commercial cannabis
13licensing shall be integrated, and all licensing data shall be
14immediately available to each licensing authority and to the office.

15

19303.  

The office shall maintain a registry of all permit holders
16and shall maintain a record of all state licenses and commercial
17cannabis activity of the permit holder throughout the length of
18licensure and for a minimum of seven years following the
19expiration of each license. The office shall make limited licensee
20information available to a licensee so that it may verify whether
21it is engaging in commercial cannabis activities with a properly
22licensed entity.

23

19304.  

(a) The following entities shall report to and be directly
24accountable to the office for their respective designated
25responsibilities within the regulatory and enforcement framework,
26as follows:

27(1) The Division of Medical Cannabis Regulation, which is
28established within the State Board of Equalization, shall do all of
29the following:

30(A) Be administered by a person who is appointed by thebegin delete State
31Board of Equalization.end delete
begin insert Governor, subject to Senate confirmation.end insert

32(B) Administer this chapter, as it pertains to commercial
33cannabis activity relating to dispensaries and transporters.

34(2) The Division of Medical Cannabis Manufacturing and
35Testing, which is established within the State Department of Public
36Health, shall do all of the following:

37(A) Be administered by a person who is appointed by the
38begin delete Governor.end deletebegin insert Governor, subject to Senate confirmation.end insert

P18   1(B) Administer this chapter, as it pertains to manufacturing,
2testing, and certification of testing laboratories for medical cannabis
3and medical cannabis products.

4(3) The Division of Medical Cannabis Cultivation, which is
5established within the Department of Food and Agriculture, shall
6do all of the following:

7(A) Be administered by a person who is appointed by the
8begin delete Governor.end deletebegin insert Governor, subject to Senate confirmation.end insert

9(B) Administer this chapter as it pertains to cultivation of
10medical cannabis.

11(4) The California Environmental Protection Agency and the
12California Natural Resources Agency shall coordinate and direct
13the following entities in the discharge of their designated regulatory
14responsibilities:

15(A) The State Water Resources Control Board shall promulgate
16regulations related to discharge into waterways, and diversion
17therefrom, resulting from cannabis cultivation.

18(B) The Department of Fish and Wildlife shall promulgate
19regulations for the protection of any species affected by cultivation
20activity, and regulations for any cultivation-related development,
21including alteration of waterways.

22(5) The Department of Justice shall conduct the following
23activities:

24(A) Perform criminal background checks of applicants for
25licensure.

26(B) Develop uniform security standards for dispensaries and all
27phases of transport covered by this chapter.

28(C) Provide supplemental enforcement on an as-needed basis
29at the request of the office.

30

19305.  

(a) The office and licensing authorities shall have the
31authority necessary for the implementation of this chapter,
32including, but not limited to, all of the following:

33(1) Establishing rules or regulations necessary to carry out the
34purposes and intent of this chapter and to enable the office and
35licensing authorities to exercise the powers and perform the duties
36conferred by this chapter and in accordance with Chapter 3.5
37(commencing with Section 11340) of Part 1 of Division 3 of Title
382 of the Government Code. These rules and regulations shall not
39limit the authority of a city, county, or city and county specified
40in Article 3 (commencing with Section 19307), or specified in
P19   1Section 7 of Article XI of the California Constitution, or any other
2law. For the performance of its duties, the office has the powers
3set forth in Article 2 (commencing with Section 11180) of Chapter
42 of Part 1 of Division 3 of Title 2 of the Government Code. The
5office shall review all regulations and guidance promulgated by
6licensing authorities in the administration of this chapter to ensure
7no duplication, overlap, or inconsistent regulations occur between
8licensing authorities.

begin insert

9(2) Prescribing, adopting, and enforcing emergency regulations
10as necessary to implement this chapter. Emergency regulations
11prescribed, adopted, or enforced pursuant to this section shall be
12adopted in accordance with Chapter 3.5 (commencing with Section
1311340) of Part 1 of Division 3 of Title 2 of the Government Code.
14For purposes of that chapter, including Section 11349.6 of the
15Government Code, the adoption of the regulation is an emergency
16and shall be considered by the Office of Administrative Law as
17necessary for the immediate preservation of the public peace,
18health and safety, and general welfare.

end insert
begin delete

6 19(2)

end delete

20begin insert(3)end insert Issuing state licenses to persons for the cultivation,
21begin insert distribution,end insert manufacture, transportation, andbegin insert retailend insert sale of medical
22cannabis within the state.

begin delete

9 23(3)

end delete

24begin insert(4)end insert Setting application, licensing, and renewal fees for state
25licenses issued pursuant to this chapter.

begin delete

11 26(4)

end delete

27begin insert(5)end insert Establishing standards for commercial cannabis activity.

begin delete

12 28(5)

end delete

29begin insert(6)end insert Establishing procedures for the issuance, renewal,
30suspension, denial, and revocation of state licenses.

begin delete

14 31(6)

end delete

32begin insert(7)end insert Imposing a penalty authorized by this chapter or any rule
33or regulation adopted pursuant to this chapter.

begin delete

16 34(7)

end delete

35begin insert(8)end insert Taking action with respect to an application for a state
36license in accordance with procedures established pursuant to this
37chapter.

begin delete

19 38(8)

end delete

39begin insert(9)end insert Overseeing the operation of the Medical Cannabis Regulation
40Fund, established pursuant to Section 19361.

begin delete

21 P20   1(9)

end delete

2begin insert(10)end insert Consulting with other state or local agencies, departments,
3representatives of the medical cannabis community, or public or
4private entities for the purposes of establishing statewide standards
5and regulations.

6(b) Protection of thebegin delete publicend deletebegin insert public’s health and safetyend insert shall be
7the highest priority for the office and the licensing authorities in
8exercising the licensing, regulatory, and disciplinary functions
9pursuant to this chapter. Whenever the protection of thebegin delete publicend delete
10begin insert public’s health and safetyend insert is inconsistent with other interests sought
11to be promoted, the protection of thebegin delete publicend deletebegin insert public’s health and
12safetyend insert
shall be paramount.

13

19306.  

(a) The office, bybegin delete Marchend deletebegin insert Aprilend insert 1, 2016, shall convene
14a task force, which shall advise the office on the development of
15standards pursuant to this chapter. The task force shall be
16responsible for recommending to the office the appropriate roles
17of each state entity as it pertains to this chapter, and shall
18recommend guidelines on communication and information sharing
19between state entities, and with local agencies, for implementation
20of this chapter. Notwithstanding Section 10231.5 of the
21Government Code, the task force shall submit a report on these
22standards, determinations, and guidelines for implementation of
23this chapter to the Legislature and state entities affected by this
24chapter by August 1, 2016. The report submitted to the Legislature
25shall be submitted in compliance with Section 9795 of the
26Government Code.

27(b) The task force shall be comprised ofbegin delete representatives of
28medical cannabis consumer advocates, environmental experts,
29public health experts, medical cannabis industry representatives,
30related regulatory authorities, labor, and law enforcement. The
31task force may also be comprised of representatives of the State
32Board of Equalization and Attorney General, and other state
33agencies, as deemed appropriate. The task force shall have a
34minimum of nine members, with one-third of the members
35appointed by the California State Assembly, one-third of the
36members appointed by the California State Senate, and one-third
37of the members appointed by the Governor. If there is an unequal
38divide between these three entities, the Governor shall make
39appointments for the difference.end delete
begin insert 15 members, each of whom shall
40serve a two-end insert
begin insertyear term, as follows:end insert

begin insert

P21   1(1) Four members to be appointed by the Governor, as follows:

end insert
begin insert

2(A) A member representing counties.

end insert
begin insert

3(B) A member representing cities.

end insert
begin insert

4(C) A member representing local law enforcement.

end insert
begin insert

5(D) A member representing state law enforcement.

end insert
begin insert

6(2) Three members to be appointed by the Assembly, as follows:

end insert
begin insert

7(A) A member representing labor.

end insert
begin insert

8(B) A member representing the medical cannabis industry.

end insert
begin insert

9(C) A member with public health expertise.

end insert
begin insert

10(3) Three members to be appointed by the Senate, as follows:

end insert
begin insert

11(A) A member representing qualified medical cannabis patients
12and caregivers.

end insert
begin insert

13(B) A member with environmental expertise.

end insert
begin insert

14(C) A member representing physicians. This member shall have
15a minimum of two years experience recommending medical
16cannabis to qualified patients.

end insert
begin insert

17(4) The director or chief of each of the following state agencies,
18or his or her designee:

end insert
begin insert

19(A) The Department of Food and Agriculture.

end insert
begin insert

20(B) State Department of Public Health.

end insert
begin insert

21(C) State Board of Equalization.

end insert
begin insert

22(D) Department of Justice.

end insert
begin insert

23(E) Department of the California Highway Patrol.

end insert

24(c) Task force members shall serve on a voluntary basis and
25shall be responsible for costs associated with their participation in
26the task force. The licensing authorities shall not be responsible
27for travel costs incurred by task force members or otherwise
28compensating task force members for costs associated with their
29participation in the task force.

begin insert

30(d) Each member shall only have one vote in determinations of
31the task force.

end insert

32 

33Article 3.  Enforcement and Local Control
34

 

35

19307.  

(a) Each licensing authority shall work in conjunction
36withbegin delete law enforcementend deletebegin insert localend insert agencies for the purposes of
37implementing, administering, and enforcing this chapter, and any
38regulations adopted pursuant to this chapter and taking appropriate
39action against licensees and others who fail to comply with this
40chapter or the regulations adopted pursuant to this chapter.

P22   1(b) begin deleteThe end deletebegin insertExcept for persons employed by the State Board of
2Equalization, the end insert
director and the persons employed by the
3licensing authorities for the administration and enforcement of this
4chapter are, for purposes of this chapter, peace officers in the
5enforcement of the penal provisions of this chapter, the regulations
6adopted pursuant to this chapter, and any other penal provisions
7of law prohibiting or regulating the cultivation, processing, storing,
8 manufacturing, testing, transporting, or selling of medical cannabis.
9These persons may, while acting as peace officers, enforce any
10penal provisions of state lawbegin insert applicable to this chapterend insert while in
11the course of their employment.

12(c) The regulatory directors, persons employed by the licensing
13authorities for the administration and enforcement of this chapter,
14peace officers listed in Section 830.1 of the Penal Code,begin insert persons
15listed in Section 830.11 of the Penal Code,end insert
and officers listed in
16Section 830.6 of the Penal Code, while acting in the course and
17scope of their employment as peace officers, may, in enforcing
18this chapter, visit and inspect the premises of a licenseebegin delete at any time
19during which the licensee is acting pursuant to the state license.end delete

20begin insert pursuant to subdivision (f) of Section 19326.end insert

21(d) Peace officers of the Department of the California Highway
22Patrol, members of the University of California and California
23State University police departments, and peace officers of the
24Department of Parks and Recreation, as defined in subdivisions
25(a), (b), (c), and (f) of Section 830.2 of the Penal Code, may, in
26enforcing this chapter, visit and inspect the premises of a licensee
27begin delete at any time during which the licensee is acting pursuant to the state
28license.end delete
begin insert pursuant to subdivision (f) of Section 19326.end insert

29

19308.  

(a) begin deleteThe end deletebegin insertBy January 1, 2017, the end insertoffice shall, in
30consultation with local governments, develop an enforcement
31framework that clarifies the enforcement roles of the state and
32localbegin delete governments.end deletebegin insert governments consistent with this chapter.end insert Local
33agencies are authorized to enforce any state statutory or regulatory
34standard.

35(b) A state agency is not required by this section to enforce a
36city, county, city and county, or local law, ordinance, rule, or
37regulation regarding the site or operation of a facility or transporter
38issued a state license.

39

19309.  

(a) For facilities issued a state license that are located
40within the incorporated area of a city, the city shall have full power
P23   1and authority to enforce this chapter and the rules, regulations, and
2standards promulgated by the office.begin delete Theend deletebegin insert Notwithstanding Sections
3101375, 101400, and 101405 of the Health and Safety Code or
4any contract entered into pursuant thereto, or any other law, theend insert

5 city shall further assume complete responsibility for any regulatory
6function relating to those licensees within the city limits that would
7otherwise be performed by the county or any county officer or
8employee,begin insert including a county health officer,end insert without liability, cost,
9or expense to the county.

10(b) For licensed facilities located within the unincorporated area
11of a county, the county shall have full power and authority to
12enforce this chapter and the rules, regulations, and standards
13promulgated by the office.

begin delete

14(c) It is the intent of the Legislature in enacting this chapter to
15provide for the statewide regulation of the commercial cannabis
16activity and the enforcement of laws relating to commercial
17cannabis activities without preempting city, county, or city and
18county ordinances regulating or banning these activities. This
19chapter is an exercise of the police powers of the state for the
20protection of the safety, welfare, health, peace, and morals of the
21people of the state.

end delete
begin insert

22(c) All standards and regulations promulgated pursuant to this
23chapter shall be the minimum standards and regulations for
24obtaining and maintaining a state license. State agencies shall
25collaborate with local agencies to enforce state standards and
26regulations to the extent that it is within the scope of other statutory
27responsibilities of local agencies and to the extent that resources
28for this enforcement are available to the local agencies. This
29section shall not limit any other state or local requirements.

end insert
begin insert

30(d) Pursuant to Section 7 of Article XI of the California
31Constitution, a city, county, or city and county may adopt
32ordinances that establish additional standards, requirements, and
33regulations for local licenses and permits for commercial cannabis
34activity. For all conflicts between the state and local standards,
35requirements, and regulations regarding health and safety, testing,
36security, and worker protections, the state shall preempt local
37ordinances.

end insert
begin delete

9 38(d)

end delete

39begin insert(e)end insert Nothing in this chapter, or any regulations promulgated
40thereunder, shall be deemed to limit the authority or remedies of
P24   1a city, county, or city and county under any provision of law,
2including, but not limited to, Section 7 of Article XI of the
3California Constitution.

4

19310.  

(a) The director of a licensing authority or a district
5attorney, county counsel, city attorney, or city prosecutor may
6bring an action in the name of the people of the State of California
7to enjoin a violation or the threatened violation of any provision
8of this chapter, including, but not limited to, a licensee’s failure
9to correct objectionable conditions following notice or as a result
10of a rule promulgated pursuant to this chapter, and to assess and
11recover civil penalties in accordance with this chapter. The action
12shall be brought in the county in which the violation occurred or
13is threatened to occur. A proceeding for injunctive relief brought
14pursuant to this chapter shall conform to the requirements of
15Chapter 3 (commencing with Section 525) of Title 7 of Part 2 of
16the Code of Civil Procedure.

17(b) A state or local agency shall immediately notify the office
18and the appropriate licensing authority of violations or arrests made
19for violations over which the licensing authority has jurisdiction
20that involve a licensee or licensed premises. Notice shall be given
21within 10 days of the violation or arrest. The office or licensing
22authority shall promptly investigate as to whether grounds exist
23for suspension or revocation of the state license.

24(c) This chapter shall not be construed to limit abegin delete law enforcementend delete
25begin insert state or localend insert agency’s ability to investigate unlawful activity in
26relation to a state license.

27(d) Nothing in this chapter shall prevent a city or other local
28governing body from taking action as specified in Sectionbegin insert 19315
29of this code or Sectionend insert
11362.83 of the Health and Safety Code.

30(e) The office shall establish procedures to providebegin insert any relevantend insert
31 state andbegin delete local law enforcement,end deletebegin insert local agencies, including all
32licensing authorities,end insert
upon their request, with 24-hour access to
33information to verify a state license, track transportation manifests,
34and track the inventories of facilities issued a state license. This
35record shall allow state and local lawbegin delete enforcementend deletebegin insert enforcement,
36agencies, and licensing entitiesend insert
to verify a state license and provide
37summary information on licensees consisting of the name of the
38licensee, the date the license was issued, the status of the license,
39and the licensee’s mailing address.

begin delete
P25   1

19311.  

(a) Licensing authorities and any relevant local agency
2may examine the books and records of a licensee and may visit
3and inspect the premises of a licensee as the licensing authority or
4local agency deems necessary to perform their duties under this
5chapter or local ordinance.

6(b) If the licensee or any employee of the licensee refuses,
7impedes, obstructs, or interferes with an inspection pursuant to
8this chapter or local ordinance, or if the licensee fails to maintain
9or provide the books and records required by this chapter, the
10license may be summarily suspended and the licensing authority
11shall commence proceedings for the revocation of the state license
12in accordance with this chapter.

13(c) All cultivation and dispensing licensees shall be subject to
14an annual audit, as specified by the licensing authority, in order
15to ensure proper documentation is kept at each facility. The
16reasonable costs of the audit shall be paid for by the licensee.

end delete
17

19312.  

(a) This chapter shall in no way supersede the
18provisions of Measure D, approved by the voters of the City of
19Los Angeles on the May 21, 2013, ballot for the city, whichbegin delete grantedend delete
20begin insert provides potential limited immunity toend insert medical cannabis businesses
21begin delete and dispensaries qualified immunity consistent with theend deletebegin insert as defined
22by Measure D consistent with theend insert
terms of the measure and local
23ordinances. Notwithstanding the provisions of this part, cannabis
24businessesbegin delete and dispensaries subject to the provisions of Measure
25D and its qualified immunity shall continue to be subject to theend delete

26begin insert within the City of Los Angeles shall continue to be subject to
27Measure D and any and all other applicableend insert
ordinances and
28regulations of the City of Los Angeles.

29(b) It is the intent of the Legislature to recognize the unique
30circumstances of the City of Los Angeles with respect to Measure
31D and associated rules related to commercial cannabis activity.begin insert In
32light of these unique circumstances, the provisions of Sections
3319319 and 19338 shall apply in the City of Los Angeles.end insert

begin insert

34(c) The State Board of Equalization shall enter into a
35memorandum of understanding with the City of Los Angeles to
36establish protocols for the following:

end insert
begin insert

37(1) Tracking businesses granted immunity pursuant to Measure
38D, as approved by the voters of the City of Los Angeles at the May
3921, 2013, general election.

end insert
begin insert

P26   1(2) Tracking medical cannabis and medical cannabis products
2to and from the City of Los Angeles.

end insert
begin insert

3(3) Allowing for the legal transfer of medical cannabis and
4medical cannabis products from outside the jurisdiction of the City
5of Los Angeles to within the city by licensees conducting
6commercial cannabis activities outside of the city.

end insert
7

19313.  

(a) The actions of a licensee or provisional licensee,
8its employees, and its agents, that are permitted pursuant to both
9a state license or provisional license and a license or permit issued
10by the local jurisdiction following the requirements of the
11applicable local ordinances, and that are conducted in accordance
12with the requirements of this chapter and regulations adopted
13pursuant to this chapter, are not unlawful under state law and shall
14not be an offense subject to arrest, prosecution, or other sanction
15under state law or be subject to a civil fine or be a basis for seizure
16or forfeiture of assets under state law.

17(b) The actions of a person who, in good faith and upon
18investigation, allows his or her property to be used by a licensee
19 or provisional licensee, its employees, and its agents, as permitted
20pursuant to both a state license and a license or permit issued by
21the local jurisdiction following the requirements of the applicable
22local ordinances, are not unlawful under state law and shall not be
23an offense subject to arrest, prosecution, or other sanction under
24state law, or be subject to a civil fine or be a basis for seizure or
25forfeiture of assets under state law.

26(c) Conduct that is within the scope of a license issued pursuant
27to this chapter and permitted by local ordinance but not fully in
28compliance with this chapter shall be subject to the enforcement
29provisions of this chapter and shall not be subject to the penal
30provisions of state law generally prohibiting cannabis-related
31activity, unless and until the license is revoked.

32(d) This section shall not be deemed to limit the authority or
33 remedies of a city, county, or city and county under any provision
34of law, including, without limitation, Section 7 of Article XI of
35the California Constitution.

36

19314.  

(a) A person engaging in commercial cannabis activity
37begin delete and operating an unlicensed facility, building, structure, vehicle,
38mobile unit, or location in violation ofend delete
begin insert without a license required
39byend insert
this chapter shall be subject to civil penalties of up to twice the
40amount of the license fee for each violation, and the office,
P27   1licensing authority, or court may order the destruction of medical
2cannabis associated with that violation. Each day of operation shall
3constitute a separate violation of this section. All civil penalties
4imposed and collected pursuant to this section shall be deposited
5into the Medical Cannabis Fines and Penalties Account established
6pursuant to Section 19361.begin insert A day of operation is defined to mean
7any period of time within a 24-hour period. This section shall not
8apply to unlicensed facilities in the City of Los Angeles.end insert

9(b) If an action for civil penalties is brought by the Attorney
10General, the penalty collected shall be deposited into the General
11Fund. If the action is brought by a district attorney or county
12counsel, the penalty collected shall be paid to the treasurer of the
13county in which the judgment was entered. If the action is brought
14by a city attorney or city prosecutor, the penalty collected shall be
15paid to the treasurer of the city in which the judgment was entered.

begin insert

16(c) Notwithstanding subdivision (a), criminal penalties shall
17continue to apply to an unlicensed person or entity engaging in
18commercial cannabis activity in violation of this chapter, including,
19but not limited to, those individuals covered under Section 11362.7
20of the Health and Safety Code.

end insert
21

19315.  

(a) This chapter does not, nor do Article 2
22(commencing with Section 11357) and Article 2.5 (commencing
23with Section 11362.7) of Chapter 6 of Division 10 of the Health
24and Safety Code, prevent a city, county, or city and county from
25doing any of the following:

26(1) Adopting local ordinancesbegin insert, whether consistent orend insert inconsistent
27with this chapterbegin insert,end insert that do the following:

28(A) Regulate the location, operation, or establishment of a
29licensee or a person that cultivates, processes, possesses, stores,
30manufactures, tests, transports, distributes, or sells medical
31cannabis.

32(B) Prohibitbegin delete commercialend delete cannabis activity within their
33jurisdiction.

34(2) Providing for the administrative, civil, or criminal
35enforcement of the ordinances described in paragraph (1).

36(3) Establishing a feebegin delete or taxend delete for the operationbegin delete of a licensee within
37its jurisdiction.end delete
begin insert within its jurisdiction of any of the following:end insert

begin insert

38(A) A licensee.

end insert
begin insert

P28   1(B) Another person that cultivates, processes, possesses, stores,
2manufactures, tests, transports, distributes, or sells medical
3cannabis or medical cannabis products.

end insert
begin insert

4(C) A person exempt from licensure pursuant to this chapter.

end insert

5(4) Enacting and enforcing other laws or ordinances pursuant
6to the authority granted by Section 7 of Article XI of the California
7Constitution.

8(b) Nothing in this chapter or in Article 2 (commencing with
9Section 11357) or Article 2.5 (commencing with Section 11362.7)
10of Chapter 6 of Division 10 of the Health and Safety Code, shall
11prevent a city, county, or city and county from adopting or
12enforcing a zoning ordinance or other law, ordinance, or regulation
13that bans or regulates the location, operation, or establishment of
14a licensee or other person that engages inbegin delete commercialend delete cannabis
15activity.

16 

17Article 4.  Licensure
18

 

19

19316.  

(a) This chapter shall not apply to, and shall have no
20diminishing effect on the protections granted to, a patient or a
21primary caregiver pursuant to the Compassionate Use Act of 1996.

22(b) (1) Abegin insert qualifiedend insert patient who cultivates, possesses, stores,
23manufactures, or transports cannabis exclusively for his or her
24personal medical use but who does not provide, donate, sell, or
25distribute cannabis to any other person is not, thereby, engaged in
26commercial cannabis activity and is, therefore, exempt from the
27licensure requirements of this chapter.

28(2) A primary caregiver who cultivates, possesses, stores,
29manufactures, transports, donates, or provides cannabis exclusively
30for the personal medical purposes of no more than five specified
31qualified patients for whom he or she is the primary caregiver
32within the meaning of Section 11362.7 of the Health and Safety
33Code but who does not receive remuneration for these activities
34except for compensation in full compliance with subdivision (c)
35of Section 11362.765 of the Health and Safety Code is not engaged
36in commercial cannabis activity and is, therefore, exempt from the
37licensure requirements of this chapter.

38(c) Exemption from the license requirements of this chapter
39shall not limit or prevent a city, county, or city and county from
40regulating or banning the cultivation, storage, manufacture,
P29   1transport, provision, or other activity by the exempt person, or
2impair the enforcement of that regulation or ban.

3

19317.  

The state shall have the right and authority to conduct
4state licensure activities and to regulate commercial cannabis
5activity pursuant to this chapter. Local governments have the right
6and authority tobegin delete grant permits andend delete regulatebegin delete commercialend delete cannabis
7activity within theirbegin delete jurisdictionend deletebegin insert jurisdiction, including granting
8or refusing to grant permitsend insert
pursuant to local ordinances. In the
9exercise of these rights and powers, the state and each of its
10agencies, and all local agencies, are hereby deemed not to be
11engaged in activities requiring licensure under this chapter.

12

19318.  

(a) Licensing authoritiesbegin delete shallend deletebegin insert mayend insert issue state licenses
13begin insert onlyend insert to qualified applicants engaging in commercial cannabis
14activity pursuant to this chapter.begin delete Beginningend deletebegin insert Except as specified in
15Section 19318.1, beginningend insert
January 1, 2018, no person shall engage
16in commercial cannabis activity without possessing a state license
17and a local permit. For purposes of this section, “state license”
18includes a provisional license issued pursuant to Article 6
19(commencing with Section 19330).

20(b) Local permits shall be determined by local ordinances.
21Licensing authorities issuing state licenses shall have sole authority
22to revoke a state license. Local agencies issuing local permits shall
23have sole authority to revoke a local permit.

begin insert

24(c) Each applicant for a state license shall provide notice to
25every affected local jurisdiction at the same time the state
26application is filed. The office shall confirm with the applicant a
27list of each affected local jurisdictions, including those jurisdictions
28affected by potential deliveries by the applicant.

end insert
begin delete

39 29(c)

end delete

30begin insert(d)end insert The issuance of a state license shall not, in and of itself,
31authorize the recipient to begin business operations. The state
32license shall certify, at a minimum, that the applicant has paid the
33state licensing fee, successfully passed a criminal background
34check, and met state residency requirements.

begin delete

4 35(d)

end delete

36begin insert(e)end insert Even if a state license has been granted pursuant to this
37chapter, a facility shall not operate in a local jurisdiction that
38prohibits the establishment of that type of business. A facility shall
39not commence activity under the authority of a state license until
40the applicant has obtained, in addition to the state license, a license
P30   1or permit from the local jurisdiction in which he or she proposes
2to operate, following the requirements of the applicable local
3ordinances.

begin delete

12 4(e)

end delete

5begin insert(f)end insert If a local government agency notifies the office or a licensing
6authority and provides evidence that a licensee or applicant within
7its jurisdiction is in violation of local ordinances relating to
8begin delete commercialend delete cannabis activities, the licensing authority shallbegin delete revoke
9the state licenseend delete
begin insert schedule a hearing to determine whether the
10evidence is sufficient to constitute grounds for the revocation of
11the licenseend insert
within 20 working days.

begin delete

17 12(f)

end delete

13begin insert(g)end insert Revocation ofbegin delete eitherend delete a statebegin insert licenseend insert or local licensebegin insert or permitend insert
14 shall terminate the ability of a medical cannabis business to operate
15within California.

begin insert
16

begin insert19318.5.end insert  

(a) A licensing authority shall not issue a license to
17an applicant who proposes to operate within the City of Los
18Angeles, regardless of the activity for which the license is sought.

19(b) A medical cannabis business, as defined by Measure D,
20within the City of Los Angeles shall comply with all standards and
21regulations applicable to the commercial cannabis activity or
22activities engaged in by that medical cannabis business with
23respect to all of the following:

24(1) Standards for the production, labeling, and manufacture of
25medical cannabis and medical cannabis products, in accordance
26with Article 7 (commencing with Section 19332) and Article 10
27(commencing with Section 19342).

28(2) Standards regarding the application of pesticides, in
29accordance with Article 7 (commencing with Section 19332).

30(3) Regulations to be promulgated by the State Board of
31Equalization, in accordance with Article 8 (commencing with
32Section 19334), governing dispensing facilities and transporters
33to the extent that those regulations relate to health and safety
34standards, environmental standards, worker protections, or
35security requirements.

36(4) Security measures regarding transported medical cannabis,
37in accordance with Section 19337.

38(5) Standards to be promulgated by the Division of Medical
39Cannabis Manufacturing and Testing regarding health and safety,
40in accordance with Article 10 (commencing with Section 19342).

P31   1(c) The City of Los Angeles shall have the full power, authority,
2and discretion to enforce all standards and regulations required
3by this section.

end insert
4

19319.  

(a) begin deleteOn or before July 1, 2017, a end deletebegin insertA end insertlicensing authority
5shall promulgate regulations for implementation and enforcement
6of this chapter, including, but not limited to, all of the following:

7(1) A description of the various specific forms of commercial
8cannabis activity to be authorized by the various types of licenses.

9(2) Procedures for the issuance, renewal, suspension, denial,
10and revocation of a state license.

11(3) Procedures for appeal of fines and the appeal of denial,
12suspension, or revocation of a state license.

13(4) Application, licensing, and renewal forms and fees.begin insert All fees
14shall be established on a scaled basis, depending on the size or
15tier of the license.end insert

16(5) Time periods, not to exceed 90 days, by which the licensing
17authority shall approve or deny an application for a state license.
18The failure of the licensing authority to act upon an application
19for licensure within the time prescribed shall not be deemed
20approval of the application.

21(6) Qualifications for licensees.

22(7) Security requirements, including, but not limited to,
23procedures for limiting access to facilities and for the screening
24of employees.begin insert All screening processes shall adhere to guidance
25and best practices established by the United States Equal
26Employment Opportunity Commission, including, but not limited
27to, those on hiring practices relating to the consideration of arrest
28and conviction records in employment decisions under Title VII
29of the Civil Rights Act of 1964.end insert

30(8) Requirements to ensure that all licensees and certified testing
31laboratories conform with applicable standards equivalent to state
32statutory environmental, agricultural, consumer protection, and
33food and product safety requirements. These standards shall be in
34addition, and not limited, to any other state and local requirements.

begin insert

35(9) Develop procedures to ensure each licensee holds and
36maintains a seller’s permit required pursuant to Part 1
37(commencing with Section 6001) of Division 2 of the Revenue and
38Taxation Code.

end insert

39(b) Each state license application approved by the respective
40licensing authority pursuant to this chapter is separate and distinct.

P32   1(c) A state license application approved by a licensing authority
2pursuant to this chapter shall be valid for a period not to exceed
3one year from the date of approval unless revoked or suspended
4earlier than that date pursuant to this chapter or the rules or
5regulations adopted pursuant to this chapter.

6(d) Each licensing authority may adopt regulations for additional
7licenses for cannabis activity within its statutory jurisdiction
8pursuant to this chapter, as deemed necessary.

9(e) Each state license application approved by a licensing
10authority shall be reported to the office within 24 hours of its
11approval.

12(f) A licensing authority shall not issue a state license unless
13the applicant has met all of the requirements of this chapter.

14(g) begin deleteEach licensing authority shall adopt regulations as needed
15to implement the relevant licensing program within one year
16following the establishment of provisional licenses, pursuant to
17Section 19330. end delete
The regulations shall not limit the authority of a
18city, county, or city and county pursuant to Section 7 of Article
19XI of the California Constitution or any other law. The regulations
20shall do all of the following:

21(1) Establish procedures for approvalbegin insert, renewal,end insert or denial of
22applications for state licensure for each and every aspect of
23commercial cannabis activity, including, but not limited to,
24cultivation, possession, manufacture, processing, storing, laboratory
25testing, labeling, transporting, distribution, and sale of cannabis.

26(2) Establish applicant qualifications.

27(3) Establish state licensee employee qualifications, including,
28but not limited to, training and screening requirements.begin insert All
29screening processes shall adhere to guidance and best practices
30established by the United States Equal Employment Opportunity
31Commission, including, but not limited to, those relating to hiring
32practices on the consideration of arrest and conviction records in
33employment decisions under Title VII of the Civil Rights Act of
341964.end insert

35(4) Establish state licensee security requirements, including,
36but not limited to, procedures to limit access to facilities and to
37prevent diversion of product to nonmedical use.

38(5) Establish procedures and protocols for identifying, managing,
39and disposing of contaminated, adulterated, deteriorated, or excess
40product.

P33   1(6) Establish advertising, marketing, signage, and labeling
2requirements and restrictions.

3(7) Establish procedures for the suspension, revocation, or
4surrender of a state license, and establishing related fines and
5penalties to be assessed against licensees for violations of this
6chapter.

7

19320.  

(a) An applicant for a state license shall do all of the
8following:

9(1) Pay the fee or fees required by this chapter for each state
10license for which an application is submitted.

11(2) Register with the licensing authority on forms prescribed
12by the licensing authority. The forms shall contain sufficient
13information to identify the licensee, including all of the following:

14(A) Name of the owner or owners of a proposed facility,
15including all persons or entities having an ownership interest other
16than a security interest, lien, or encumbrance on property that will
17be used by the applicant.

18(B) The name, address, and date of birth of each principal officer
19and board member.

20(C) The address and telephone number of the proposed facility.

begin delete

21(3) In the case of a dispensary, provide the name and address
22of each licensed cultivation site and licensed manufacturer from
23which the dispensary will acquire or obtain medical cannabis or
24medical cannabis products.

end delete
begin delete

25 25(4)

end delete

26begin insert(3)end insert Provide a description, in writing, of the scope of business
27of the proposed facility.

begin delete

27 28(5)

end delete

29begin insert(4)end insert Provide evidence that the applicant and owner have been
30legal full-time residents of the state for not less thanbegin delete twoend deletebegin insert fourend insert years.
31begin insert For purposes of this paragraph, “applicant” means the owner or
32owners of a proposed facility, including all persons or entities
33having an ownership interest other than a security interest, lien,
34or encumbrance on property that will be used by the facility.end insert

begin delete

29 35(6)

end delete

36begin insert(5)end insert Provide detailed operating procedures, in writing, for the
37proposed facility, which shall include, but not be limited to,
38procedures for facility and operational security, prevention of
39diversion, employee screening, storage of medical cannabis,
40personnel policies, and recordkeeping procedures.begin insert All screening
P34   1processes shall adhere to guidance and best practices established
2by the United States Equal Employment Opportunity Commission,
3including, but not limited to, those relating to hiring practices on
4the consideration of arrest and conviction records in employment
5decisions under Title VII of the Civil Rights Act of 1964.end insert

begin delete

34 6(7)

end delete

7begin insert(6)end insert Submit the applicant’s fingerprint images as follows:

8(A) For purposes of this paragraph, “applicant” means the owner
9or owners of a proposed facility, including all persons or entities
10 having an ownership interest other than a security interest, lien,
11or encumbrance on property that will be used by the facility. If the
12owner is an entity, fingerprints shall be submitted for each person
13participating in the direction, control, or management of, or having
14a financial interest in, the proposed facility.

15(B) The applicant shall electronically submit to the Department
16 of Justice fingerprint images and related information required by
17the Department of Justice for the purpose of obtaining information
18as to the existence and content of a record of state or federal
19convictions and arrests, and information as to the existence and
20content of a record of state or federal convictions and arrests for
21which the Department of Justice establishes that the person is free
22on bail or on his or her own recognizance, pending trial or appeal.

23(C) The Department of Justice shall provide a response to the
24licensing authority pursuant to paragraph (1) of subdivision (p) of
25Section 11105 of the Penal Code.

26(D) The licensing authority shall request from the Department
27of Justice subsequent notification service, as provided pursuant to
28Section 11105.2 of the Penal Code, for applicants.

29(E) The Department of Justice shall charge the applicant a fee
30sufficient to cover the reasonable cost of processing the requests
31described in this paragraph.

begin delete

20 32(8) If applicable, provide

end delete

33begin insert(7)end insertbegin insertend insertbegin insertProvideend insert documentationbegin insert issued by the local jurisdiction in
34which the proposed business is operating or will operate certifyingend insert

35 that the applicantbegin insert is orend insert will be in compliance with all local
36ordinances andbegin delete regulations, including, but not limited to, an entity
37granted immunity under Measure D, approved by the voters of the
38City of Los Angeles at the May 21, 2013, general election.end delete

39begin insert regulations.end insert

begin delete

25 40(9)

end delete

P35   1begin insert(8)end insert Provide evidence of the legal right to occupy and use an
2established begin delete location, including that, if the proposed facility is a
3cultivator or a dispensary, that the proposed facility is located
4beyond at least a 600-foot radius from a school, or, if applicable,
5an immunity from prosecution for that occupancy or use pursuant
6to Measure D, approved by the voters of the City of Los Angeles
7at the May 21, 2013, general election.end delete
begin insert location.end insert

begin insert

8(9) If the proposed facility is a cultivator or a dispensary,
9provide evidence that the proposed facility is located beyond at
10least a 600 foot radius from a school, as required by Section
1111362.768 of the Health and Safety Code.

end insert

12(10) Provide a statement, signed by the applicant under penalty
13of perjury, that the information provided is true.

14(11) (A) For an applicant with 20 or more employees, provide
15a statement that the applicant will enter into, or demonstrate that
16it has already entered into, and abide by the terms of a labor peace
17agreement.

18(B) For the purposes of this paragraph, “employee” does not
19include a supervisor.

20(C) For purposes of this paragraph, “supervisor” means an
21individual having authority, in the interest of the licensee, to hire,
22transfer, suspend, lay off, recall, promote, discharge, assign,
23reward, or discipline other employees, or responsibility to direct
24them or to adjust their grievances, or effectively to recommend
25such action, if, in connection with the foregoing, the exercise of
26that authority is not of a merely routine or clerical nature, but
27requires the use of independent judgment.

begin insert

28(D) Provide the applicant’s seller’s permit number issued
29pursuant to Part 1 (commencing with Section 6001) of Division 2
30of the Revenue and Taxation Code, or indicate that the applicant
31is currently applying for a seller’s permit.

end insert

32(12) Provide any other information required by the licensing
33authority.

34(13) For an applicant seeking a cultivation license, provide a
35statement declaring the applicant is an “agricultural employer,” as
36defined in the Alatorre-Zenovich-Dunlap-Berman Agricultural
37Labor Relations Act of 1975 (Part 3.5 (commencing with Section
381140) of Division 2 of the Labor Code), to the extent not prohibited
39by law.

P36   1(14) For an applicant seeking abegin delete cultivationend deletebegin insert cultivator, distributor,end insert
2 or dispensary license, provide a notarized statement from the owner
3of real property orbegin delete landlordend deletebegin insert their agentend insert where the cultivationbegin insert,
4distribution, end insert
begin insertmanufacturing,end insert or dispensing commercial medical
5cannabis activities will occur, as proof to demonstrate the
6landowner has acknowledged and consented to permit cultivationbegin insert,
7distribution,end insert
or dispensary activities to be conducted on the
8property by the tenant applicant.

9(b) Each location and each discrete use of a single location shall
10require a separate state license. Each application for a state license
11is separate and distinct, and the licensing authority may charge a
12separate fee for each.

13(c) For applicants seeking a state license tobegin delete cultivate andend delete
14begin insert cultivate, distribute, orend insert manufacture, the application shall also
15include a detailed description of the operating procedures for all
16of the following, as applicable:

17(1) Cultivation.

18(2) Extraction and infusion methods.

19(3) The transportation process.

20(4) Inventory procedures.

21(5) Quality control procedures.

22

19321.  

(a) Upon receipt of an application for licensure and
23the applicable fee, each licensing authority shall make a thorough
24investigation to determine whether the applicant and the premises
25for which a state license is applied qualify for the state license and
26whether this chapter has been complied with, and shall investigate
27all matters connected therewith that may affect the public welfare
28and morals.

29(b) A licensing authority shall deny an application if either the
30applicant or the premises for which a state license is applied do
31not qualify for licensure under this chapter.

32(c) A licensing authority may place reasonable conditions upon
33licensure if grounds exist for denial of the state license, and the
34licensing authority finds those grounds may be removed by the
35imposition of those conditions. However, the limitations set forth
36inbegin delete paragraphend deletebegin insert paragraphsend insert (15)begin insert and (18)end insert of subdivision (d) shall not
37be waived.

38(d) Each licensing authoritybegin delete shallend deletebegin insert mayend insert deny the application for
39licensure or renewal, or suspend or revoke a state license, if any
40of the following conditions apply:

P37   1(1) An entity making or authorizing in any manner or by any
2means a written or oral statement that is untrue or misleading and
3that is known, or that by exercise of reasonable care should be
4known, to be untrue or misleading.

5(2) Conduct that constitutes fraud.

6(3) Conduct constituting gross negligence.

7(4) Failure to comply with the provisions of this chapter or any
8rule or regulation adopted pursuant to this chapter.

9(5) Conduct that constitutes grounds for denial of licensure
10pursuant to Chapter 2 (commencing with Section 480) of Division
111.5.

12(6) Local agencies have notified the licensing authority or the
13office and provided evidence that a licensee or applicant within
14its jurisdiction is in violation of local ordinances relating to medical
15cannabis activities.

16(7) The applicant fails to meet the requirements of this chapter
17or any regulation adopted pursuant to this chapter or any applicable
18city, county, or city and county ordinance or regulation. If a local
19government adopts an ordinance or resolution authorizing medical
20cannabis to be cultivated, manufactured, stored, distributed, or
21sold within its jurisdiction, itbegin delete shallend deletebegin insert mayend insert submit to the office
22documentation detailing their renewal requirements.begin insert Failure to
23submit an ordinance or resolution to the office shall not impair
24the enforceability of the ordinance or resolution. Ordinances or
25resolutions that are not submitted pursuant to this subdivision
26shall not be considered in denial of licensure pursuant to this
27chapter.end insert

28(8) Granting or continuation of a state license would be contrary
29to thebegin delete public welfare or morals.end deletebegin insert public’s safety.end insert

30(9) The applicant holding or seeking a state license hasbegin delete violated
31any law prohibiting conductend delete
begin insert been convicted of a misdemeanorend insert
32 involving moralbegin delete turpitude.end deletebegin insert turpitude, excluding misdemeanors
33involving marijuana.end insert

34(10) The application has failed to state with sufficient specificity
35the jurisdiction and location at which the applicant proposes to
36establish operations.

37(11) The applicant, or any of its officers, directors, or owners,
38is under 21 years of age.

39(12) The applicant fails to provide notarized written proof that
40the owner of real property or landlord has acknowledged and
P38   1consented to its tenant’s proposed cultivation or dispensing of
2medical cannabis or medical cannabis products.

3(13) The applicant has failed to provide information requested.

4(14) The applicant, or any of its officers, directors, or owners,
5has been convicted of a felony criminal conviction forbegin insert the
6possession for sale, sale, manufacture, transportation, or
7cultivation of a controlled substance, including a narcotic drug
8classified in Schedule II, III, IV, or V, but excluding marijuana,
9forend insert
drug trafficking involving a minor, felonies subject to
10enhancements Section 11370.4 or 11379.8 of the Health and Safety
11Code, a violent felony, as specified in subdivision (c) of Section
12667.5 of the Penal Code, a serious felony as specified in
13subdivision (c) of Section 1192.7 of the Penal Code, a felony
14offense involving fraud or deceit, or any other felony that, in the
15licensing authority’s determination, would impair the applicant’s
16ability to appropriately operate as a state licensee. The licensing
17authority may, at its discretion, issue a state license to an applicant
18that has obtained a certificate of rehabilitation pursuant to Section
194852.13 of the Penal Code.

20(15) The applicant, or any of its officers, directors, or owners,
21is a licensed physician making patient recommendations for
22medical cannabis.

23(16) The applicant, or any of its officers, directors, or owners,
24has been sanctioned by a licensing authority, the office, or a city,
25county, or a city and county for unlicensed commercial medical
26cannabis activities or has had a license revoked under this chapter
27in the previous three years.

28(17) The applicant, or any of its officers, directors, or owners,
29has been subject to fines or penalty for cultivation or production
30of a controlled substance on public or private lands pursuant to
31Section 12025 of the Fish and Game Code.

32(18) The proposed commercial medical cannabis activity will
33violate any applicable local law or ordinance.

34(19) The applicant has had 20 employees or more in the past
35year and failed to enter into a labor peace agreement.

36(20)  The applicant or the owner is unable to establish that he
37or she has been a resident of the state for not less thanbegin delete 2end deletebegin insert fourend insert years.

begin insert

38(21) Failure to obtain and maintain a valid seller’s permit
39requires pursuant to Part 1 (commencing with Section 6001) of
40the Revenue and Taxation Code.

end insert

P39   1(e) Applicants shall be notified of a denied application in writing
2via personal service or mail addressed to the address of the
3applicant or licensee set forth in the application. The denial letter
4shall contain the detailed reasons for which the application was
5denied. The applicant shall have the right to appeal the denial and
6be given a hearing within 30 days of the appeal. On appeal, the
7decision shall be upheld unless the applicant demonstrates that the
8applicant is in fact eligible for licensure and the application is in
9compliance with this chapter.

begin insert
10

begin insert19322.end insert  

(a) A licensing authority may refuse to issue, reinstate,
11or renew a state license, or may suspend a state license for failure
12of a licensee to resolve all outstanding final liabilities, including,
13but not limited to, taxes, additions to tax, penalties, interest, and
14fees that have been assessed by the State Board of Equalization.

15(1) Until the final liabilities covered by this section are satisfied,
16a person named on a state license that has been suspended
17pursuant to this section shall be prohibited from serving in any
18capacity that is subject to licensure pursuant to this chapter, but
19may act as a nonsupervising employee.

20(2) All state licenses issued with the same personnel of record
21that have been assessed an outstanding liability covered by this
22section shall be suspended until the debt has been satisfied or until
23the indebted personnel of record disassociate themselves from the
24licensee.

25(b) The refusal to issue a state license or the suspension of a
26state license as provided by this section shall occur only if the
27licensing authority has mailed a notice, prior to the refusal or
28suspension, that indicates that the state license will be refused or
29suspended by a date certain. This preliminary notice shall be
30mailed to the licensee at least 60 days before the date certain.

31(c) This section shall not apply to any outstanding final liability
32if the licensee has entered into an installment payment agreement
33for that liability with the State Board of Equalization and is in
34compliance with the terms of that agreement.

end insert
35

19323.  

(a) Provided the applicant has not committed an act or
36crime constituting grounds for the denial of licensure under Section
3719321, a licensing authority may issue a state license and send a
38proof of issuance to the applicant.

P40   1(b) A licensing authority shall, by regulation, prescribe
2conditions upon which a person whose state license has previously
3been denied, suspended, or revoked, may be issued a state license.

4

19324.  

The office may adopt regulations to limit the number
5of state licenses issued pursuant to this chapter upon a finding that
6the otherwise unrestricted issuance of state licenses is dangerous
7to thebegin delete publicend deletebegin insert public’send insert health and safety.

8 

9Article 5.  Regulation of Medical Cannabis
10

 

11

19325.  

(a) Except as provided in Section 11362.5begin delete of, and
12Article 2.5 (commencing with Section 11362.7) of Chapter 6 of
13Division 10 of,end delete
begin insert ofend insert the Health and Safety Codebegin insert and Section 19316end insert,
14a person shall not sellbegin insert, distribute, provide, or donateend insert medical
15cannabisbegin insert or medical cannabis productsend insert to a patient or caregiver
16other than at a licensed dispensing facility or through delivery
17from a licensed dispensing facility.

18(b) Except as provided in Section 11362.5 of, and Article 2.5
19(commencing with Section 11362.7) of Chapter 6 of Division 10
20of, the Health and Safety Codebegin insert and Section 19316end insert, a person shall
21notbegin delete growend deletebegin insert cultivateend insert medical cannabis other than at a licensed
22cultivation site.

23(c) Except as provided in Section 11362.5 of, and Article 2.5
24(commencing with Section 11362.7) of Chapter 6 of Division 10
25of, the Health and Safetybegin delete Code,end deletebegin insert Code and Section 19316,end insert a person
26other than a licensed manufacturer shall not manufacturebegin insert or processend insert
27 medical cannabis or medical cannabis products.

28(d) A person other than a licensed transporter shall not transport
29medical cannabis from one facility issued a state license tobegin delete another.end delete
30begin insert another, unless otherwise specified in this chapter.end insert

begin delete

31(e) A licensed manufacturer may obtain medical cannabis from
32a licensed cultivator and may furnish medical cannabis products
33to a licensed dispensary.

end delete
begin insert

34(e) All licensees holding cultivation or manufacturing licenses
35shall send all medical cannabis and medical cannabis products
36cultivated or manufactured to a licensed processor for processing
37and testing prior to retail or sale of medical cannabis or medical
38cannabis products or to a dispensary, qualified patient, or
39caregiver, according to the allowances by their license. Those
40licensees holding a Type 10A license in addition to a cultivation
P41   1license shall send all medical cannabis to a licensed processor
2prior to dispensing any product. Medical cannabis and medical
3cannabis products shall not be returned to a cultivation or
4manufacturing licensee unless that licensee is also a licensed
5dispensary. The licensing authority shall fine a licensee who
6violates this subdivision in an amount determined by the licensing
7authority to be reasonable.

end insert
begin insert

8(f) (1) Upon receipt of medical cannabis or medical cannabis
9products by a holder of a cultivation or manufacturing license,
10the Type 11 licensee shall first inspect the product to ensure the
11identity and quantity of the product and then send the medical
12cannabis or medical cannabis product to be tested by a Type 8
13licensee.

end insert
begin insert

14(2) Upon certification by the Type 8 licensee that the product
15is fit for manufacturing or retail, all medical cannabis and medical
16cannabis products shall be processed by a certified processor prior
17to retail or dispensing to ensure the quantity and content of the
18medical cannabis or medical cannabis product, and for tracking
19and taxation purposes by the state. Licensed processors shall
20package or seal all medical cannabis and medical cannabis
21products in tamper-evident packaging and use a unique identifier,
22such as a batch and lot number or bar code, to identify and track
23the medical cannabis or medical cannabis products. All packaging
24and sealing shall be completed prior to any medical cannabis or
25medical cannabis products being transported or delivered to a
26licensee, qualified patient, or caregiver.

end insert
begin delete

6 27(f)

end delete

28begin insert(g)end insert Medical cannabis and medical cannabis products shall be
29tested by a certified testingbegin delete laboratory.end deletebegin insert laboratory, prior to retail
30sale or dispensing, as follows:end insert

begin insert

31(1) Medical cannabis from dried flower shall, at a minimum,
32be tested for potency, pesticides, mold, and other contaminants.

end insert
begin insert

33(2) Medical cannabis extracts shall, at a minimum, be tested
34for potency and purity of the product.

end insert
begin insert

35(3) This chapter shall not prohibit a licensee from performing
36on-site testing for the purposes of quality assurance of the product
37in conjunction with reasonable business operations. On-site testing
38by the licensee shall not be certified by the Division of Medical
39Cannabis Manufacturing and Testing.

end insert
begin delete

8 40(g)

end delete

P42   1begin insert(h)end insert For purposes of this section, “license” includes a provisional
2license issued pursuant to Section 19330.

begin delete

10 3(h)

end delete

4begin insert(i)end insert This section shall become operative on July 1, 2017.

5

19326.  

(a) A licensee shall not cultivate, process, store,
6manufacture, transport, or sell medical cannabis in the state unless
7accurate records are kept at the licensed premises of the growing,
8processing, storing, manufacturing, transporting, or selling by the
9licensee.

10(b) A licensee shall keep, at the licensed premises, accurate
11records of the specific commercial cannabis activity conducted by
12the licensee. The records shall include, at a minimum, all of the
13following for each batch of product:

14(1) The name and address of the supplier.

15(2) The dates on which the product was received.

16(3) The amounts, form, and batch and lot number.

17(4) The location of the cultivation site.

18(5) The name of the employee who received the product.

19(6) Records demonstrating compliance by the licensee with state
20and federal rules and regulations regarding reporting and taxation
21of income received.

22(7) Receipts for all expenditures incurred by the licensee and
23banking records, if any, for all funds obtained or expended in the
24performance of any activity under the authority of the state license.

25(c) Records shall be kept for a minimum of sevenbegin delete years.end deletebegin insert years
26following approval of a state license.end insert

27(d) The officebegin insert, the local enforcement agency designated in
28accordance with Section 19309,end insert
andbegin delete anend deletebegin insert any otherend insert appropriate state
29or local agency may examine the books and records of a state
30licensee and may visit and inspect the premises of a state licensee,
31as the office or state or local agency deems necessary to perform
32its duties under this chapter.begin insert All inspections shall be conducted
33during standard business hours of the licensed facility.end insert

34(e) Books or records requested by the office or an appropriate
35state or local agency shall be provided by the licensee no later than
36five business days after the request is made.

37(f) Thebegin delete officeend deletebegin insert office, the local enforcement agency designated
38pursuant to Section 19309,end insert
orbegin delete aend deletebegin insert any otherend insert state or local agency
39may enter and inspect the premises of a facility issued a state
40license between the hours of 8 a.m. and 8 p.m. on any day that the
P43   1facility is open, or at any reasonable time, to ensure compliance
2and enforcement of the provisions of this chapter or a local
3ordinance.

4(g) If a licensee or an employee of a licensee refuses, impedes,
5obstructs, or interferes with an inspection pursuant to this section,
6the state license may be summarily suspended and the licensing
7authority shall directly commence proceedings for the revocation
8of the state license.

9(h) If a licensee or an employee of a licensee fails to maintain
10or provide the books and records required pursuant to this section,
11the licensee shall be subject to a civil fine of fifteen thousand
12dollars ($15,000) per individual violation.

13(i) Allbegin delete cultivationend deletebegin insert cultivator, distributor,end insert and dispensing
14licensees shall be subject tobegin delete an annual audit,end deletebegin insert inspection,end insert as specified
15by the licensing authority, in order to ensurebegin delete proper documentation
16is kept at each site or facility. The reasonable costs of the audit
17shall be paid for by the licensee.end delete
begin insert compliance with this chapter,
18including, but not limited to, maintaining proper documentation
19at each site or facility.end insert

begin delete
20

19327.  

(a) A licensee may only hold a state license in up to
21two separate license categories, as follows:

22(1) Type 1, 1A, and 5 licensees may apply for type 6A, 6B, 7A,
23and 7B licenses or type 10, 11, and 12 licenses.

24(2) Type 6A, 6B, 7A, and 7B licensees may apply for type 1,
251A, and 5 licenses or type 10, 10D, 11, 11D, 12, and 12D licenses.

26(3) Type 10, 11, and 12 licensees may apply for type 1, 1A, and
275 licenses or type 6A, 6B, 7A, and 7B licenses.

28(4) Type 10D, 11D, and 12D licensees may apply for type 6A,
296B, 7A, and 7B licenses.

30(b) Types 2, 2A, 3, 3A, 4, and 8 licensees shall not hold licenses
31in any other category.

32(c) Type 9 licensees may apply only for one additional license
33from either the cultivation, manufacturing, or dispensing category.

34(d) It is the intent of the Legislature to further develop which
35licensees may hold more than one license type.

end delete
begin insert
36

begin insert19327.end insert  

(a) A licensee may only hold a state license in up to
37two separate license categories, as follows:

38(1) Type 1, 1A, 2, and 2A licensees, or a combination thereof,
39may apply for a Type 6 or 7 state license, or a combination thereof.

P44   1(2) Type 6 and 7 licensees, or a combination thereof, may apply
2for a Type 1, 1A, 2, 2A state license, or a combination thereof.

3(3) Type 6 and 7 licensees, or a combination thereof, may apply
4for a Type 10A state license.

5(4) Type 10A licensees may apply for a Type 6 and 7 state
6license, or a combination thereof.

7(5) Type 1, 1A, 2, 2A licensees, or a combination thereof, may
8apply for a Type 10A state license.

9(6) Type 10A licensees, may apply for Type 1, 1A, 2, 2A state
10license, or a combination thereof.

11(b) Except as provided in subdivision (a), a person or entity
12that holds a state license is prohibited from licensure for any other
13activity authorized under this chapter, and is prohibited from
14holding an ownership interest in real property, personal property,
15or other assets associated or used in any other license category.

16(c) A licensee conducting commercial cannabis activity in a
17jurisdiction that, prior to January 1, 2016, imposed a local
18ordinance requiring a qualified businesses or individuals to
19cultivate, manufacture, and dispense medical cannabis or medical
20cannabis products, with all commercial cannabis activity being
21conducted by a single licensee, may maintain their current
22categories of licensure.

end insert
begin insert
23

begin insert19327.2.end insert  

A licensee with a Type 10 or Type 10A state license
24shall not also be licensed as a retailer of alcoholic beverages
25pursuant to Division 9 (commencing with Section 23000).

end insert
26

19328.  

Each licensing authority shall make recommendations
27to the Legislature pertaining to the establishment of an appeals
28and judicial review process for persons aggrieved by a final
29decision of the licensing authority.

30

19329.  

This chapter and Article 2 (commencing with Section
3111357) and Article 2.5 (commencing with Section 11362.7) of
32Chapter 6 of Division 10 of the Health and Safety Codebegin delete do notend delete
33begin insert shall not interfere with an employer’s rights and obligations to
34maintain a drug and alcohol free workplace orend insert
require an employer
35to permit or accommodate the use, consumption, possession,
36transfer, display, transportation, sale, or growth of cannabis in the
37workplace or affect the ability of employers to have policies
38begin delete restrictingend deletebegin insert prohibitingend insert the use of cannabis by employeesbegin insert and
39prospective employeesend insert
, or prevent employers from complying with
40begin insert state orend insert federal law.

 

P45   1Article 6.  Provisional Licensing
2

 

3

19330.  

(a) Each licensing authority shall, as soon as practicable
4following January 1, 2016, allow a qualified applicant for licensure
5to applybegin delete for andend deletebegin insert for,end insert receivebegin insert, and renewend insert a provisional license to
6engage in commercial cannabis activity so as to ensure an adequate
7supply of medical cannabis upon full implementation of this
8chapter.begin insert The provisional license shall have a scheduled expiration
9date, as determined by the licensing authority.end insert

10(b) Each licensing authority shall establish appropriate fees not
11to exceed the reasonable regulatory costs to the licensing authority
12for the issuancebegin insert and renewalend insert of a provisional license under its
13jurisdiction.

14(c) Each licensing authority shall, if the applicant meets all the
15requirements in this section, issue a provisional license to
16individuals and entities that the licensing authority determines
17were, during the three months prior tobegin delete Januaryend deletebegin insert Marchend insert 1, 2016,
18regularly cultivating, processing, manufacturing, transporting, or
19distributing medical cannabis collectively or cooperatively in full
20compliance with any applicable local ordinance, and to continue
21to do so until the licensee’s application for a state license has been
22approved or denied under this chapter, but no later than 90 days
23after the licensing authority begins accepting applications for
24regular state licenses. The licensing authority may consult with
25relevant local agencies in making a determination on whether a
26provisional license applicant is in compliance with applicable
27ordinances.begin insert Priority for provisional licensure shall be given to
28those businesses in compliance with local ordinances prior to
29September 1, 2015.end insert

30(d) To qualify for a provisional license, an applicant shall
31disclose to the appropriate licensing authority all of the following
32information in writing:

33(1) The names, addresses, and dates of birth of each principal
34officer, owner, or board member.

35(2) The common street address and assessor’s parcel number
36of the property at which the licensee conducts activity under the
37authority of the license.

38(3) The common street address and assessor’s parcel number
39of the property at which cultivation activity was or is to be
40conducted.

P46   1(4) For the three months prior tobegin delete Januaryend deletebegin insert Marchend insert 1, 2016, the
2quantity of cannabis cultivated, processed, manufactured, tested,
3transported, or sold at a location, and the quantity expected to be
4cultivated, processed, manufactured, tested, transported, or sold
5frombegin delete Januaryend deletebegin insert Marchend insert 1, 2016, tobegin delete Julyend deletebegin insert Septemberend insert 1, 2016, inclusive.
6The licensee shall make its records of current activity, and activity
7for the three months prior tobegin delete Januaryend deletebegin insert Marchend insert 1, 2016, available to
8the licensing authority upon request.

9(5) For an applicant seeking abegin delete cultivation or dispensary license,end delete
10begin insert license to cultivate, distribute, or dispense medical cannabis,end insert a
11notarized statement from the owner of real property or landlord
12where thebegin delete cultivation or dispensing of commercial cannabisend delete
13begin insert licensedend insert activities will occur, as proof to demonstrate the landowner
14has acknowledged and consented to permitbegin delete cultivation or
15dispensaryend delete
begin insert the proposedend insert activities to be conducted on the property
16by the tenant applicant.

17(e) Upon receipt of the application materials and fee, if the
18applicant meets all the requirements of this section and if the
19applicant has not committed any act or crime constituting grounds
20for the denial of licensure, the licensing authority shall issuebegin insert or
21renewend insert
a provisional license and send a proof of issuancebegin insert or renewalend insert
22 to the applicant.

23(f) Notwithstanding any other provision of this section, a
24licensing authority shall not issuebegin insert or renewend insert a provisional license
25to an individual or entity, or for a premises, against whom there
26are pending state or local administrative or judicial proceedings
27or actions initiated by a city, county, or city and county under an
28applicable local ordinance, or who has been determined through
29those proceedings to have violated a local ordinance related to
30cannabis activity, or that knowingly provides false or fraudulent
31information on an application for licensure.

begin delete

32(g) Entities that are provided immunity under Measure D,
33approved by the voters of the City of Los Angeles at the May 21,
342013, general election, shall be considered the equivalent of entities
35that are registered, permitted, or licensed as a medical cannabis
36business, dispensary, or other entity involved in providing medical
37cannabis to patients under a local ordinance and shall be considered
38in compliance with a local ordinance for the purposes of this
39section.

end delete
begin delete

3 40(h)

end delete

P47   1begin insert(g)end insert A provisional licensee shall comply with all standards and
2requirements applicable to a licensee under this chapter, including,
3but not limited to, the production, recordkeeping, security, and
4transportation requirements and standards.

begin delete

7 5(i)

end delete

6begin insert(h)end insert Beginning July 1, 2017, all commercial cannabis activity
7shall be conducted between licensees of commercial cannabis
8activity. If the licensing authority has not promulgated its respective
9regulations by that date, the licensing authority shall provide an
10extension for all provisional licenses for applicants abiding by the
11provisions of this chapter.

begin insert

12(i) A provisional license issued pursuant to this section shall
13automatically terminate upon a licensing agency’s issuance of a
14regular state license.

end insert

15 

16Article 7.  Licensed Cultivation Sites
17

 

18

19332.  

(a) The Division of Medical Cannabis Cultivation in
19the Department of Food and Agriculture shall promulgate
20regulations governing the licensing of cultivation sites. For
21purposes of this chapter, the Secretary of the Department of Food
22and Agriculture shall declare medical cannabis to be an agricultural
23product. The department shall develop standards for the production
24and labeling of all edible medical cannabis products, standards for
25the use of pesticides and rodenticides in cultivation, and, in
26consultation with the State Department of Public Health, maximum
27tolerances for pesticides, rodenticides, and other foreign object
28residue in harvested cannabis.

29(b) The Department of Food and Agriculture shall have the
30authority necessary for the implementation of this chapter.
31Department regulations shall do all of the following:

32(1) Provide that weighing or measuring devices used in
33connection with the sale or distribution of medical cannabis are
34required to meet standardsbegin delete analogousend deletebegin insert equivalentend insert to Division 5
35(commencing with Section 12001).

36(2) Require that the application of pesticides or other pest control
37in connection with the indoor or outdoor cultivation of medical
38cannabis shall meet standardsbegin delete analogousend deletebegin insert equivalentend insert to Division 6
39(commencing with Section 11401) of the Food and Agricultural
40Code and its implementing regulations.

P48   1(3) Require that indoor and outdoor cannabis cultivation by
2licensees is conducted in accordance with state and local laws and
3best practices related to land conversion, grading, electricity usage,
4water usage, agricultural discharges, and similar matters.

5(c) State licenses to be issued by the Division of Medical
6Cannabis Cultivation are as follows:

7(1) Type 1, or “specialty outdoor,” for outdoor cultivation of
8less than 5,000 square feet of totalbegin delete areaend deletebegin insert canopy sizeend insert on one
9begin delete property. Maximum of 50 mature plants on the property.end deletebegin insert premises.end insert

10(2) Type 1A, or “specialty indoor,” for indoor cultivation of
11less than 5,000 square feet of totalbegin delete areaend deletebegin insert canopy sizeend insert on one
12begin delete property. Maximum of 50 mature plants on the property.end deletebegin insert premises.end insert

13(3) Type 2, or “small outdoor,” for outdoor cultivation between
145,001 and 10,000 square feet of totalbegin delete areaend deletebegin insert canopy sizeend insert on one
15begin delete property. Maximum of 99 mature plants on the property.end deletebegin insert premises.end insert

16(4) Type 2A, or “small indoor,” for indoor cultivation between
175,001 and 10,000 square feet of totalbegin delete areaend deletebegin insert canopy sizeend insert on one
18begin delete property. Maximum of 99 mature plants on the property.end deletebegin insert premises.end insert

19(5) Type 3, orbegin delete “medium outdoor,”end deletebegin insert “outdoor,end insertbegin insertend insert for outdoor
20cultivation between 10,001 andbegin delete 30,000end deletebegin insert 44,000end insert square feet of total
21begin delete areaend deletebegin insert canopy sizeend insert on onebegin delete property. Maximum of 299 mature plants
22on the property.end delete
begin insert premises.end insert The Division of Medical Cannabis
23Cultivation shall limit the number of licenses allowed of this type.

begin delete

24(6) Type 3A, or “medium indoor,” for indoor cultivation
25between 10,001 and 30,000 square feet of total area on one
26property. Maximum of 299 mature plants on the property. The
27Division of Medical Cannabis Cultivation shall limit the number
28of licenses allowed of this type.

29(7) Type 4, or “large outdoor,” for outdoor cultivation greater
30than 30,001 square feet of total area on one property. Maximum
31of 500 mature plants on the property. The Division of Medical
32Cannabis Cultivation shall limit the number of licenses allowed
33of this type.

end delete
begin delete

32 34(8)

end delete

35begin insert(6)end insert Typebegin delete 5,end deletebegin insert 4,end insert or “nursery,” for cultivation of medical cannabis
36solely as a nursery. Typebegin delete 5end deletebegin insert 4end insert licensees may transport live plants.

37(d) All license fees collected by the division pursuant to this
38chapter shall be deposited into the Medical Cannabis Cultivation
39Fees Account, which is hereby established within the fund. All
40moneys within this account are available upon appropriation by
P49   1the Legislature to the division solely for the purposes of fully
2funding and administering this chapter, including, but not limited
3to, the costs incurred by the division for its administrative expenses
4and costs and the costs of regulation.

5(e) It is the intent of the Legislature to establish appropriate
6protocols for the collection of the specific location of cultivation
7 sites.

begin insert
8

begin insert19333.end insert  

An employee engaged in commercial cannabis
9cultivation activity shall be subject to Wage Order 4-2001 of the
10Industrial Welfare Commission.

end insert

11 

12Article 8.  Licensedbegin delete Dispensing Facilitiesend deletebegin insert Distributors,
13Dispensaries, and Transportersend insert
14

 

15

19334.  

(a) The State Board of Equalization shall promulgate
16regulations governing the licensing and regulation ofbegin delete wholesalers,end delete
17begin insert distributors,end insert dispensing facilities, and transporters. State
18enforcement shall be conducted in coordination with local
19authorities.

begin insert

20(b) By March 1, 2016, the State Board of Equalization shall
21submit a request for proposal to the public regarding a tracking
22program for medical cannabis and medical cannabis products as
23part of the anti-diversion effort. The State Board of Equalization
24shall choose a supplier and begin full implementation of the
25program prior to the issuance of state licenses pursuant to this
26chapter.

end insert

27(b) State licenses to be issued by the State Board of Equalization
28are as follows:

begin delete

29(1) Type 9, or “wholesale,” for the storage of medical cannabis
30or medical cannabis products. Maximum storage shall be two
31pounds of dried flower or 200 individual units per medical cannabis
32product.

end delete
begin delete

19 33(2)

end delete

34begin insert(1)end insert Type 10, or begin delete “small dispensary,” for dispensaries with 1-50
35employees, including management.end delete
begin insert “dispensary,” for the retail
36of medical cannabis or medical cannabis products. This license
37shall allow for delivery upon local approval.end insert

begin delete

38(3) Type 10D, or “small dispensary-delivery,” for dispensaries
39with the same restrictions as Type 10; also allows for delivery.

end delete
begin insert

P50   1(2) Type 10A or “special dispensary status,” for dispensers
2who have no more than three licensed dispensary facilities. This
3license shall allow for delivery with local approval.

end insert
begin delete

23 4(4)

end delete

5begin insert(3)end insert Type 11, orbegin delete “medium dispensary,” for dispensaries with
651-100 employees, including management.end delete
begin insert “distributor,” for the
7processing and certification of the content of all medical cannabis
8or medical cannabis products that are transported or delivered
9by licensees. A Type 11 licensee shall not hold a license in any
10other license category and shall not own, or have an ownership
11interest in, a facility licensed pursuant to this chapter other than
12a security interest, lien, or encumbrance on property that is used
13by a licensee.end insert

begin delete

14(5) Type 11D, or “medium dispensary-delivery,” for dispensaries
15with the same restrictions as Type 11; also allows for delivery.

end delete
begin delete

28 16(6)

end delete

17begin insert(4)end insert Type 12, orbegin delete “large dispensary,” for dispensaries with 100
18employees or more, including management.end delete
begin insert “transport,” for
19transporters of medical cannabis or medical cannabis products.end insert

begin delete

20(7) Type 12D, or “large dispensary-delivery,” for dispensaries
21with the same restrictions as Type 12; also allows for delivery.

22(8) Type 13, or “transport,” for transporters of medical cannabis
23and medical cannabis products.

end delete
begin insert
24

begin insert19334.5.end insert  

(a) The State Board of Equalization shall adopt a
25medical cannabis and medical cannabis products track and trace
26process for reporting the movement of cannabis items throughout
27the distribution chain that also employs secure packaging and that
28is capable of providing information that captures, at a minimum,
29all of the following:

30(1) The licensee receiving the product.

31(2) The transaction date.

32(3) Any other information deemed necessary by the State Board
33of Equalization for the taxation and regulation of medical cannabis
34and medical cannabis products.

35(b) It is the intent of the Legislature, in subsequent legislation,
36to adequately fund the medical cannabis and medical cannabis
37products track and trace process.

end insert
begin insert
38

begin insert19335.end insert  

(a) The provisions of Chapter 4 (commencing with
39Section 55121) of Part 30 of Division 2 of the Revenue and
40Taxation Code shall apply with respect to the State Board of
P51   1Equalization’s collection of the fees, civil fines, and penalties
2imposed pursuant to this chapter.

3(b) The provisions of Chapter 8 (commencing with Section
455381) of Part 30 of Division 2 of the Revenue and Taxation Code
5shall apply with respect to the disclosure of information under this
6chapter.

end insert

7 

8Article 9.  Licensed Transporters
9

 

10

19336.  

(a) A licensee authorized to transport, or transport and
11deliver, medical cannabis and medical cannabis products shall do
12so only as set forth in this chapter.

13(b) Prior to transporting or delivering medical cannabis or
14medical cannabis products, a licensee authorized to transport or
15deliver medical cannabis or medical cannabis products shall do
16both of the following:

17(1) Complete an electronic shipping manifest as prescribed by
18the licensing authority. All delivery shipping manifests shall not
19identify the qualified patient or primary caregiver by name or
20address.

21(2) Securely transmit the manifest to the licensing authority and
22the licensee that will receive the medical cannabis product, as
23applicable.

24(c) During transportation or delivery, the licensed transporter
25shall maintain a physical copy of the shipping manifest and make
26it available upon request to agents of the licensing authority, local
27law enforcement officers, or any other designated enforcement
28agency.

29(d) The licensee receiving the shipment shall maintain each
30electronic shipping manifest and shall make it available upon
31request to agents of the licensing authority, local law enforcement
32officers, or any other designated enforcement agency.

33(e) Upon receipt of the transported shipment, a licensee shall
34submit to the licensing agency a record verifying receipt of the
35shipment and the details of the shipment.

begin insert
36

begin insert19336.5.end insert  

An entity licensed pursuant to Section 19332, 19334,
37or 19342 may transport between licensees medical cannabis or
38medical cannabis products with a total retail value less than the
39statewide monetary threshold, which shall be adopted by regulation
P52   1by the licensing authority after review by the task force and the
2office.

end insert
3

19337.  

(a) Transported and delivered medical cannabis or
4medical cannabis products shall be transported only in a storage
5compartment that is securely affixed to the interior of the
6transporting vehicle and that is not visible from outside the vehicle.
7This requirement shall only apply to licensees transporting medical
8cannabis or medical cannabis products with a total retail value of
9at least an amount equal to a statewide monetary threshold, which
10shall be adopted by regulation by the licensing authority after
11review by the task force and the office.

12(b) begin deleteA end deletebegin insertExcept as provided in Section 19340, a end insertvehicle
13transporting medical cannabis or medical cannabis products shall
14travel only directly between licensed facilities, unless otherwise
15authorized under its license.begin insert All transport and deliveries shall be
16conducted between 8:00 a.m. and 8:00 p.m. Transportation and
17delivery of shipments do not have to be completed in a single day.end insert

18(c) All transport or delivery vehicles shall be staffed with a
19minimum of twobegin insert directend insert employeesbegin insert of the licenseeend insert. At least one
20employee shall remain with the vehicle at all times when the
21vehicle contains medical cannabis. This requirement shall only
22apply to licensees transporting medical cannabis or medical
23cannabis products with a total retail value of at least an amount
24equal to a statewide monetary threshold, which shall be adopted
25by regulation by the licensing authority after review by the task
26force and the office.

27(d) Each transport or delivery team member shall possess
28documentation of licensing and a government-issued identification
29card at all times when transporting or delivering medical cannabis
30and shall produce it upon the request of agents of anybegin delete regulatoryend delete
31begin insert licensingend insert authority or a law enforcement official.

begin insert

32(e) This section shall be enforced by the Department of the
33California Highway Patrol in collaboration with local agencies.

end insert
begin insert
34

begin insert19337.1.end insert  

Notwithstanding Section 19337, a licensed transporter
35may transport medical cannabis products to an unlicensed
36dispensing facility within the City of Los Angeles, provided the
37following requirements are met:

38(a) The licensed transporter shall comply with subdivisions (b)
39and (c) of Section 19336, except that, in complying with paragraph
40(2) of subdivision (b), the licensed transporter shall securely
P53   1transmit the manifest to the licensing authority and the unlicensed
2dispensing facility that will receive the medical cannabis products.

3(b) The licensed transporter shall record and maintain, in both
4physical and electronic format, the following information with
5respect to the delivery of medical cannabis products to the
6unlicensed dispensing facility:

7(1) The date of delivery.

8(2) The address of delivery.

9(3) The name of the individual who completed the delivery.

10(4) The name of the individual at the facility who received the
11delivery.

12(5) The name of the owner or operator of the facility.

13(6) The name of the facility, as reflected on any signage.

14(7) The quantity, or weight, and variety of all medical cannabis
15products delivered.

16(8) The source of all medical cannabis delivered.

17(9) The monetary amount charged and received for all medical
18cannabis products delivered.

19(c) The recorded information specified in subdivision (b) shall
20be transmitted within five days to the City of Los Angeles, in a
21manner to be determined and specified by the City of Los Angeles.

22(d) The records required by this section shall be maintained
23and made available in accordance with the provisions of Section
2419326.

end insert
25

19338.  

(a) The licensing authority shall develop a database
26containing the electronic shipping manifests, which shall include,
27but not be limited to, the following information:

28(1) The quantity, or weight, and variety of products shipped.

29(2) The estimated times of departure and arrival.

30(3) The quantity, or weight, and variety of products received.

31(4) The actual time of arrival.

32(5) A categorization of the product.

33(b) The database shall be designed to flag irregularities for a
34begin delete regulatoryend deletebegin insert licensingend insert authority to investigate. An authorized
35enforcement authority may, at any time, inspect shipments and
36request documentation for current inventory.

37

19339.  

(a) This chapter shall not be construed to authorize or
38permit a licensee to transport or deliver, or cause to be transported
39or delivered, cannabis or cannabis products outside the state, unless
40authorized by federal law.

P54   1(b) A local jurisdiction shall not prevent transportation of
2medical cannabis or medical cannabis products on public roads
3by a licensee transporting medical cannabis or medical cannabis
4products that acts in compliance with thisbegin delete chapter and applicable
5local ordinances.end delete
begin insert chapter.end insert

begin insert

6(c) A local jurisdiction shall not prevent delivery of medical
7cannabis or medical cannabis products on public roads by a
8licensee that acts in compliance with this chapter and applicable
9local ordinances.

end insert
10

19340.  

(a) All mobile, vehicular, andbegin delete Internet-based delivery
11servicesend delete
begin insert technology platforms that enableend insertbegin insert qualified patients or
12primary caregivers to arrange for any of the above-described
13functions with a third partyend insert
are prohibitedbegin insert,end insert except as authorized
14by this chapter.

15(b) Upon approval of the licensing authority, a licensee
16authorized to provide delivery services shall abide by the following:

17(1) The city, county, or city and county in which the premises
18of the licensee is located, and in which each delivery is made, must
19specifically permit delivery service by ordinance referring to this
20section.

21(2) All employees delivering medical cannabis or medical
22cannabis products must carry a current license authorizing those
23services with them during deliveries, and must present that license
24upon request to state and local law enforcement, employees of
25regulatory authorities, and other state and local agencies enforcing
26this chapter.

begin insert

27(3) Delivery of medical cannabis or medical cannabis products
28pursuant to this section shall comply with subdivision (c) of Section
2919336 and subdivisions (a), (c), and (d) of Section 19337.

end insert

30(c) Abegin delete city, county, or city andend delete county shall have the authority
31to impose a tax, pursuant to Section 19355, on each delivery
32transaction completed by a licensee.

33(d) Whenever a licensing authority has knowledge that a licensee
34has transported or delivered, or arranged or facilitated the transport
35or delivery of, medical cannabis or medical cannabis products in
36violation of this chapter, the licensing authority shall summarily
37suspend that facility’s license and shall without delay commence
38proceedings for the revocation of the license in accordance with
39this chapter.

P55   1(e) All license fees collected by the licensing authority pursuant
2to this chapter shall be deposited into the Medical Cannabis Retail
3Fees Account, which is hereby established within the fund. All
4moneys within the Medical Cannabis Retail Fees Account are
5available upon appropriation to the State Board of Equalization,
6solely for the purposes of fully funding and administering this
7chapter, including, but not limited to, the costs incurred by the
8board for its administrative expenses and costs and the costs of
9regulation.

begin insert
10

begin insert19341.end insert  

Notwithstanding any other law or the wage orders of
11the Industrial Welfare Commission, a driver employed to transport
12medical cannabis or medical cannabis products shall be entitled
13to overtime pay pursuant to Section 510 of the Labor Code.

end insert

14 

15Article 10.  Licensed Manufacturers and Certified Laboratories
16

 

17

19342.  

(a) The Division of Medical Cannabis Manufacturing
18and Testing within the State Department of Public Health shall
19promulgate regulations governing the licensing of cannabis
20manufacturers.

21(b) Licenses to be issued by the division are as follows:

begin delete

22(1) Type 6A, or “small manufacturing level 1,” for
23manufacturing sites that use a maximum of XXX pounds of
24medical cannabis each year to produce medical cannabis products,
25using nonvolatile solvents.

26(2) Type 6B, or “small manufacturing level 2,” for
27manufacturing sites that use a maximum of XXX pounds of
28medical cannabis each year to produce medical cannabis products,
29using volatile solvents.

30(3) Type 7A, or “large manufacturing level 1,” for
31manufacturing sites that use a maximum of XXX pounds of
32medical cannabis each year to produce medical cannabis products,
33using nonvolatile solvents. The division shall limit the number of
34licenses of this type.

35(4) Type 7B, or “large manufacturing level 2,” for manufacturing
36sites that use a maximum of XXX pounds of medical cannabis
37each year to produce medical cannabis products, using volatile
38solvents. The division shall limit the number of licenses of this
39type.

end delete
begin insert

P56   1(1) Type 6, or “manufacturing level 1,” for manufacturing sites
2that produce medical cannabis products using nonvolatile solvents.

end insert
begin insert

3(2) Type 7, or “manufacturing level 2,” for manufacturing sites
4that produce medical cannabis products using volatile solvents.
5The division shall limit the number of licenses of this type.

end insert
begin delete

9 6(5)

end delete

7begin insert(3)end insert Type 8, or “testing,” for testing of medical cannabis and
8medical cannabis products. Type 8 licensees shall have their
9facilities certified according to regulations set forth by the division.
10begin insert A Type 8 licensee shall not hold a license in another license
11category of this chapter and shall not own or have ownership
12interest in a facility licensed pursuant to this chapter, other than
13a security interest, lien, or encumbrance on property that will be
14used by the licensee.end insert

15(c) All license fees collected by the division pursuant to this
16chapter shall be deposited into the Medical Cannabis
17Manufacturingbegin delete and Testingend delete Fees Account, which is hereby
18established within the fund. All moneys within the Medical
19Cannabis Manufacturingbegin delete and Testingend delete Fees Account are available
20upon appropriation by the Legislature to the division, solely for
21the purposes of fully funding and administering this chapter,
22including, but not limited to, the costs incurred by the division for
23its administrative expenses and costs and the costs of regulation.

24

19343.  

(a) The State Department of Public Health shall
25promulgate standards for certification of testing laboratories to
26perform random sample testing of allbegin insert medical cannabis andend insert
27 medical cannabis products, including standards for onsite testing.

28(b) Certification of testing laboratories shall be consistent with
29general requirements for the competence of testing and calibration
30activities, including sampling, using standard methods established
31by the International Organization for Standardization, specifically
32ISO/IEC 17020 and ISO/IEC 17025.

33(c) These requirements shall apply to all entities, including
34third-party laboratories, engaged in the testing of medical cannabis
35pursuant to this chapter.

36

19344.  

(a) A laboratory certified by the department to perform
37random sample testing ofbegin insert medical cannabis orend insert medical cannabis
38products shall notbegin delete acquire, process, possess, store, transfer,
39transport, or dispense medical cannabis for any purpose other than
40those authorized by Article 2.5 (commencing with Section 11362.7)
P57   1of Chapter 6 of Division 10 of the Health and Safety Code.end delete
begin insert acquire
2or receive medical cannabis or medical cannabis products except
3from a licensed facility in accordance with this chapter, and shall
4not distribute, sell, deliver, transfer, transport, or dispense medical
5cannabis or medical cannabis products except to the licensed
6facility from which the medical cannabis or medical cannabis
7products were acquired or received.end insert
All transfer or transportation
8shall be performed pursuant to a specified chain of custody
9protocol.

begin delete

10(b) A laboratory certified by the department to perform random
11sample testing of medical cannabis products shall not acquire,
12process, possess, store, transfer, transport, or dispense medical
13cannabis plants or medical cannabis products except through a
14patient, primary caregiver, or a facility issued a state license. All
15transfer or transportation shall be performed pursuant to a specified
16chain of custody protocol.

8 17(c)

end delete

18begin insert(b)end insert The department shall develop procedures to ensure that
19testing of cannabis occurs prior to delivery to dispensaries or any
20other business, and specify how often licensees shall test cannabis,
21that the cost of testing shall be borne by the licensed cultivators,
22and requiring destruction of harvested batches whose testing
23samples indicate noncompliance with health and safety standards
24promulgated by the department, unless remedial measures can
25bring the cannabis into compliance with quality assurance standards
26as promulgated by the department.

begin delete

17 27(d)

end delete

28begin insert(c)end insert The department shall establish a certification fee, and
29laboratories shall pay a fee to be certified. Certification fees shall
30not exceed the reasonable regulatory cost of the certification
31activities.

begin delete

21 32(e)

end delete

33begin insert(d)end insert All certification fees collected by the department pursuant
34to this chapter shall be deposited into the Medical Cannabis
35begin delete Manufacturing andend delete Testing Fees Account, which is hereby
36established within the fund.begin insert All moneys in the Medical Cannabis
37Testing Fees Account shall be available to the division upon
38appropriation of the Legislature solely for the purpose of fully
39funding administration of this chapter, including, but not limited
P58   1to, the costs incurred by the division for the administrative expenses
2and costs and the costs of regulation.end insert

3

19345.  

(a) The Division of Medical Cannabis Manufacturing
4and Testing within the State Department of Public Health shall
5promulgate the following standards:

6(1) Health and safety standards applicable to all medical
7cannabis, and medical cannabis products, including maximum
8potencybegin delete standards.end deletebegin insert standards for medical cannabis products.end insert

9(2) Standards for licensed manufacturers of medical cannabis
10and medical cannabis products, including, but not limited to, edible
11products.

12(b) At a minimum, the standards required by this section shall
13do all of the following:

14(1) Prescribe sanitation standardsbegin delete analogousend deletebegin insert equivalentend insert to the
15California Retail Food Code (Part 7 (commencing with Section
16113700) of Division 104 of the Health and Safety Code) for food
17preparation, storage, handling, and sale of edible medical cannabis
18products. For purposes of this chapter, edible medical cannabis
19products are deemed to be unadulterated food products.

20(2) Require that edible medical cannabis products produced,
21distributed, provided, donated, or sold by licensees shall be limited
22to nonpotentially hazardous food, as established by the State
23Department of Public Health pursuant to Section 114365.5 of the
24Health and Safety Code.

25(3) Require that facilities in which edible medical cannabis
26products are prepared shall be constructed in accordance with
27applicable building standards, health and safety standards, and
28other state laws.

29(4) Require that all edible medical cannabis products shall be
30packaged at the original point of preparation.

31(c) No person shall engage in the manufacture, packing, or
32holding of processed food containing edible cannabis unless the
33person has a valid registration from the department pursuant to
34Section 110460 of the Health and Safety Code. Health and safety
35standards prescribed by this section or promulgated through
36regulation may be enforced by local environmental health
37departments.

38

19346.  

(a) Prior to sale or distribution at a licensed dispensing
39begin delete facility, edibleend deletebegin insert facility or an unlicensed dispensing facility in the
40City of Los Angeles,end insert
medical cannabis products shall be labeled
P59   1and in a tamper-evident package. Labels and packages ofbegin delete edibleend delete
2 medical cannabis products shall meet the following requirements:

3(1) begin deleteEdible medical end deletebegin insertMedical end insertcannabis packages and labels shall
4not be made to be attractive to children.

5(2) Allbegin delete edibleend delete medical cannabis product labels shall include the
6following information, prominently displayed and in a clear and
7legible font:

8(A) Manufacture date and source.

9(B) The statement “KEEP OUT OF REACH OF CHILDREN
10AND ANIMALS” in bold print.

11(C) The statement “FOR MEDICAL USE ONLY.”

12(D) The statement “THE INTOXICATING EFFECTS OF THIS
13PRODUCT MAY BE DELAYED BY UP TO TWO HOURS.”

14(E) begin deleteNet end deletebegin insertFor packages containing only dried cannabis, the net end insert
15weight of medical cannabis in the package.

16(F) A warning if nuts or other known allergens arebegin delete used and the
17total weight, in ounces or grams, of medical cannabis in the
18package.end delete
begin insert used.end insert

19(G) List of pharmacologically active ingredients, including, but
20not limited to,begin delete tetrahydrocannabinol (THC) and cannabidiol (CBD)end delete
21begin insert cannabinoidend insert content, thebegin delete THCend deletebegin insert cannabinoidend insert amount in milligrams
22per serving, servings per package, and thebegin delete THCend deletebegin insert cannabinoidend insert
23 amount in milligrams for the package total.

24(H) Clear indication, in bold type, that the product contains
25medical cannabis.

26(I) Identification of the source and date of cultivation and
27manufacture.

begin delete

28(J) The name and location of the licensed dispensing facility
29providing the product.

end delete
begin delete

11 30(K)

end delete

31begin insert(J)end insert The date of sale.

begin delete

12 32(L)

end delete

33begin insert(K)end insert Any other requirement set by the department.

34(b) Only generic food names may be used to describe edible
35medical cannabis products.

36 

37Article 11.  Cannabis Employee Certification and Apprenticeship
38

 

39

19350.  

This article applies only to cultivation sites and
40dispensaries.

P60   1

19351.  

The Division of Labor Standards Enforcement shall do
2all of the following:

3(a) Maintain minimum standards for the competency and training
4of employees of a licensed cultivator or dispensary through a
5system of testing and certification.

6(b) Maintain an advisory committee and panels as necessary to
7carry out its functions under this article. There shall be employer
8representation on the committee and panels.

9(c) Adopt regulations as determined to be necessary to
10implement this article.

11(d) Issue certification cards to employees certified pursuant to
12this article.

13(e) Establish registration fees in an amount reasonably necessary
14to implement this article, not to exceed twenty-five dollars ($25)
15for the initial registration. There shall be no fee for annual renewal
16of registration. Fees collected for cultivation sites and dispensaries
17shall be placed into the Medical Cannabis Cultivation Fee Account
18and the Medical Cannabis Retail Fee Account, respectively.

19

19352.  

(a) By January 1, 2017, the Division of Labor Standards
20Enforcement shall develop a certification program for cannabis
21employees. Commencing January 1, 2019, except as provided in
22subdivision (c), certification shall be required of all persons who
23perform work as cannabis employees.

24(b) Individuals desiring to be certified shall submit an
25application for certification and examination.

26(c) (1) Certification is not required for registered apprentices
27working as cannabis employees as part of a state-approved
28apprenticeship program. An apprentice who is within one year of
29completion of his or her term of apprenticeship shall be permitted
30to take the certification examination and, upon passing the
31examination, shall be certified immediately upon completion of
32the term of apprenticeship.

33(2) Commencing January 1, 2019, an uncertified person may
34perform work for which certification is otherwise required in order
35to acquire the necessary on-the-job experience for certification
36provided that the person shall be under the direct supervision of a
37cannabis employee certified pursuant to this section who is
38responsible for supervising no more than one uncertified person.

39(3) The Division of Labor Standards Enforcement may develop
40additional criteria governing this subdivision.

P61   1

19353.  

(a) The following shall constitute additional grounds
2for disciplinary proceedings, including suspension or revocation
3of the license issued pursuant to this chapter:

4(1) The licensee willfully employs one or more uncertified
5persons to perform work as cannabis employees in violation of
6this article.

7(2) The licensee willfully fails to provide adequate supervision
8of uncertified workers.

9(3) The licensee willfully fails to provide adequate supervision
10of apprentices.

11(b) The Labor Commissioner shall maintain a process for
12referring cases to the appropriatebegin delete regulatoryend deletebegin insert licensingend insert authority
13when it has been determined that a violation of this section has
14likely occurred. The Labor Commissioner shall have a
15memorandum of understanding with the regulatory authorities in
16furtherance of this section.

17(c) Upon receipt of a referral by the Labor Commissioner
18alleging a violation under this section, the appropriate licensing
19authority shall open an investigation. Disciplinary action against
20the licensee shall be initiated within 60 days of the receipt of the
21referral. The licensing authority may initiate disciplinary action
22against a licensee upon his or her own investigation, the filing of
23a complaint, or a finding that results from a referral from the Labor
24Commissioner alleging a violation under this section. Failure of
25the employer or employee to provide evidence of certification or
26apprentice status shall create a rebuttable presumption of violation
27of this section.

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

29 

30Article 12.  Taxation
31

 

32

19355.  

The office and other state agencies may assist state
33taxation authorities in the development of uniform policies for the
34state taxation of state licensees.

begin delete
35

19356.  

(a) (1) In addition to any authority otherwise provided
36by law, the board of supervisors of a county may impose, by
37ordinance, a tax on the privilege of cultivating, dispensing,
38producing, processing, preparing, storing, providing, donating,
39selling, or distributing cannabis by a licensee operating pursuant
40to this chapter. The tax may be imposed for general governmental
P62   1purposes or for purposes specified in the ordinance by the board
2of supervisors.

3(2) The board of supervisors shall specify in the ordinance
4proposing the tax the activities subject to the tax, the applicable
5rate or rates, the method of apportionment, and the manner of
6collection of the tax. A tax imposed pursuant to this section is a
7tax and not a fee or special assessment, and the tax is not required
8to be apportioned on the basis of benefit to any person or property
9or be applied uniformly to all taxpayers or all real property.

10(3) A tax imposed by a county pursuant to this section by a
11county may include a transactions and use tax imposed solely for
12cannabis or cannabis products, which shall otherwise conform to
13Part 1.6 (commencing with Section 7251) of Division 2 of the
14Revenue and Taxation Code. Notwithstanding Section 7251.1 of
15the Revenue and Taxation Code, the tax may be imposed at any
16rate specified by the board of supervisors, and the tax rate
17authorized by this section shall not be considered for purposes of
18the combined tax rate limitation established by that section.

19(4) The tax authorized by this section may be imposed upon
20any or all of the activities set forth in paragraph (1), regardless of
21whether the activity is undertaken individually, collectively, or
22cooperatively, and regardless of whether the activity is for
23compensation or gratuitously, as determined by the board of
24supervisors.

25(5) The board of supervisors shall specify whether the tax applies
26throughout the entire county or within the unincorporated area of
27the county.

28(b) In addition to any other method of collection authorized by
29law, the board of supervisors may provide for the collection of the
30tax imposed pursuant to this section in the same manner, and
31subject to the same penalties and priority of lien, as other charges
32and taxes fixed and collected by the county.

33(c) Any tax imposed pursuant to this section shall be subject to
34applicable voter approval requirements imposed by any other law.

35(d) For purposes of this section, “cannabis” shall have the same
36meanings as the definition set forth in Section 19300.

37(e) This section does not limit or prohibit the levy or collection
38or any other fee, charge, or tax, or any license or service fee or
39charge upon, or related to, the activities set forth in subdivision
40(a), as otherwise provided by law. This section shall not be
P63   1construed as a limitation upon the taxing authority of any county
2as provided by other law.

end delete
begin insert
3

begin insert19356.end insert  

It is the intent of the Legislature to grant authority to
4the board of supervisors of a county to impose appropriate taxes
5on facilities licensed pursuant to this chapter.

end insert

6 

7Article 13.  Funding
8

 

9

19360.  

Each licensing authority shall establish a scale of
10application, licensing, and renewal fees, based upon the cost of
11enforcing this chapter, as follows:

12(a) Each licensing authority shall charge each licensee a
13licensure or renewal fee. The licensure or renewal fee shall be
14calculated to cover the costs of administering this chapter. The
15licensure fee may vary depending upon the varying costs associated
16with administering the various regulatory requirements of this
17chapter as they relate to the nature and scope of the different
18licensure activities, but shall not exceed the reasonable regulatory
19costs to the licensing authority.

20(b) The total fees assessed pursuant to this chapter, including,
21but not limited to, provisional license fees set forth in Section
2219330, shall be set at an amount that will fairly and proportionately
23generate sufficient total revenue to fully cover the total costs of
24administering this chapter.

begin insert

25(c) All license fees shall be set on a scaled basis by the licensing
26authority, dependant on the size of the business.

end insert
27

19361.  

(a) The Medical Cannabis Regulation Fund is hereby
28established within the State Treasury. Notwithstanding Section
2916305.7 of the Government Code, the fund shall include any
30interest and dividends earned on the moneys in the fund.

31(b) Except as otherwise provided, all moneys collected pursuant
32to this chapter as a result of fines or penalties imposed under this
33chapter shall be deposited directly into the Medical Cannabis Fines
34and Penalties Account, which is hereby established within the
35fund, and shall be available, upon appropriation by the Legislature
36to the office, for the purposes of funding the enforcement grant
37program pursuant to subdivision (c).

38(c) (1) The office shall establish a grant program to allocate
39moneys from the Medical Cannabis Fines and Penalties Account
40to state and local entities for the following purposes:

P64   1(A) To assist with medical cannabis regulation and the
2enforcement of this chapter and other state and local laws
3applicable to cannabis activities.

4(B) For allocation to state and local agencies and law
5enforcement to remedy the environmental impacts of cannabis
6cultivation.

7(2) The costs of the grant program under this subdivision shall,
8upon appropriation by the Legislature, be paid for with moneys in
9the Medical Cannabis Fines and Penalties Account.

10(d) begin insert(1)end insertbegin insertend insert Funds for the establishment and support of the
11regulatory activities pursuant to this chapter may be advanced as
12a General Fund or special fund loan, and shall be repaid by the
13initial proceeds from fees collected pursuant to this chapter or any
14rule or regulation adopted pursuant to this chapter, by January 1,
152022.

begin insert

16(2) Funds advanced pursuant to this subdivision shall be
17appropriated to the office, which shall distribute the moneys to
18the appropriate licensing authorities, as necessary to implement
19the provisions of this chapter.

end insert

20 

21Article 14.  Reporting
22

 

23

19363.  

On or before March 1 of each year, the director shall
24prepare and submit to the Legislature an annual report on the
25office’s activities and post the report on the office's Internet Web
26site. The report shall include, but not be limited to, the following
27information for the previous fiscal year:

28(a) The amount of funds allocated and spent by the office and
29licensing authorities for medical cannabis licensing, enforcement,
30and administration.

31(b) The number of state licenses issued, renewed, denied,
32suspended, and revoked, by state license category.

33(c) The average time for processing state license applications,
34by state license category.

35(d) The number and type of enforcement activities conducted
36by the licensing authorities and by local law enforcement agencies
37in conjunction with the licensing authorities or the office.

38(e) The number, type, and amount of penalties, fines, and other
39disciplinary actions taken by the licensing authorities.

 

P45   1Article 15.  Privacy
2

 

3

19365.  

(a) Information identifying the names of patients, their
4medical conditions, or the names of their primary caregivers
5received and contained in records kept by the office or licensing
6authorities for the purposes of administering this chapter are
7confidential and shall not be disclosed pursuant to the California
8Public Records Act (Chapter 3.5 (commencing with Section 6250)
9of Division 7 of Title 1 of the Government Code), except as
10necessary for authorized employees of the State of California or
11any city, county, or city and county to perform official duties
12pursuant to this chapter, or a local ordinance.

13(b) Nothing in this section precludes the following:

14(1) Employees of any of the office or licensing authorities
15notifying state or local agencies about information submitted to
16the agency that the employee suspects is falsified or fraudulent.

17(2) Notifications from any of the office or licensing authorities
18to state or local agencies about apparent violations of this chapter
19or applicable local ordinance.

20(3) Verification of requests by state or local agencies to confirm
21licenses and certificates issued by the regulatory authorities or
22other state agency.

23(4) Provision of information requested pursuant to a court order
24or subpoena issued by a court or an administrative agency or local
25governing body authorized by law to issue subpoenas.

26(c) Information shall not be disclosed by any state or local
27agency beyond what is necessary to achieve the goals of a specific
28investigation, notification, or the parameters of a specific court
29order or subpoena.

30

SEC. 7.  

Section 11362.775 of the Health and Safety Code is
31amended to read:

32

11362.775.  

(a) Subject to subdivision (b), qualified patients,
33persons with valid identification cards, and the designated primary
34caregivers of qualified patients and persons with identification
35cards, who associate within the State of California in order to
36collectively or cooperatively cultivate cannabis for medical
37purposes, shall not solely on the basis of that fact be subject to
38state criminal sanctions under Section 11357, 11358, 11359, 11360,
3911366, 11366.5, or 11570.

P66   1(b) This section shall remain in effect only until 180 days after
2thebegin delete Division of Medical Cannabis Regulation within the State
3Board of Equalizationend delete
begin insert Governor’s Office of Medical Cannabis
4Regulationend insert
posts a notice on its Internet Web site that the licensing
5authorities have commenced issuing provisional licenses pursuant
6to the Medical Cannabis Regulation and Control Act (Chapter 3.5
7(commencing with Section 19300) of Division 8 of the Business
8and Professions Code), and as of that date is repealed.

9

SEC. 8.  

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

10

147.5.  

(a) By January 1, 2017, the Division of Occupational
11Safety and Health shall convene an advisory committee to evaluate
12whether there is a need to develop industry-specific regulations
13related to the activities of facilities issued a license pursuant to
14Chapter 3.5 (commencing with Section 19300) of Division 8 of
15the Business and Professions Code.

16(b) By July 1, 2017, the advisory committee shall present to the
17board its findings and recommendations for consideration by the
18board. By July 1, 2017, the board shall render a decision regarding
19the adoption of industry-specific regulations pursuant to this
20section.

21

SEC. 9.  

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

22

3094.  

The Division of Apprenticeship Standards shall
23investigate, approve, or reject applications for apprenticeship
24programs for employees of a licensee subject to Article 11
25(commencing with Section 19350) of Chapter 3.5 of Division 8
26of the Business and Professions Code. The Division of
27Apprenticeship Standards shall adopt regulations necessary to
28implement and regulate the establishment of the apprenticeship
29programs described in this section.

30

SEC. 10.  

Section 2402.5 is added to the Vehicle Code, to read:

31

2402.5.  

The Department of the California Highway Patrol shall
32establish protocols to determine whether a driver is operating a
33vehicle under the influence of cannabis, and shall develop protocols
34setting forth best practices to assist law enforcement agencies. The
35costs to the Department of the California Highway Patrol of
36implementing this subdivision shall, upon appropriation by the
37Legislature, be paid for with appropriations from moneys in the
38Fines and Penalties Account of the Medical Cannabis Regulation
39Fund.

P67   1

SEC. 11.  

The provisions of this act are severable. If any
2provision of this act or its application is held invalid, that invalidity
3shall not affect other provisions or applications that can be given
4effect without the invalid provision or application.

5

SEC. 12.  

The Legislature finds and declares that Section 6 of
6this act, which adds Chapter 3.5 (commencing with Section 19300)
7to Division 8 of the Business and Professions Code, imposes a
8limitation on the public’s right of access to the meetings of public
9bodies or the writings of public officials and agencies within the
10meaning of Section 3 of Article I of the California Constitution.
11Pursuant to that constitutional provision, the Legislature makes
12the following findings to demonstrate the interest protected by this
13limitation and the need for protecting that interest:

14It is necessary to maintain the confidentiality of patient and
15physician information provided to the regulatory authorities in
16order to protect the private medical information of patients who
17use medical cannabis and to preserve the essential confidentiality
18of the physician and patient relationship.

19

SEC. 13.  

No reimbursement is required by this act pursuant to
20Section 6 of Article XIII B of the California Constitution for certain
21costs that may be incurred by a local agency or school district
22because, in that regard, this act creates a new crime or infraction,
23eliminates a crime or infraction, or changes the penalty for a crime
24or infraction, within the meaning of Section 17556 of the
25Government Code, or changes the definition of a crime within the
26meaning of Section 6 of Article XIII B of the California
27Constitution.

28However, if the Commission on State Mandates determines that
29this act contains other costs mandated by the state, reimbursement
30to local agencies and school districts for those costs shall be made
31pursuant to Part 7 (commencing with Section 17500) of Division
324 of Title 2 of the Government Code.



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