BILL NUMBER: AB 266	AMENDED
	BILL TEXT

	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

INTRODUCED BY   Assembly Members Bonta, Cooley,  and
Jones-Sawyer   Jones-Sawyer,   and Lackey 

    (   Coauthor:   Assembly Member  
Chiu   ) 

                        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 of  Marijuana   Medical
Cannabis  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 Cannabis
 Regulation, which is established   Regulation
 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, by
 March   April  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 office  , by
January 1, 2017,  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,  ballot. 
 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. 
   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. 
   (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%.  
   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.  
   (5) 
    (4)  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 the  Division of
Medical Cannabis Regulation within the State Board of Equalization
  Governor's Office of Medical C   annabis
Regulation  posts a notice on its Internet Web site that the
licensing authorities have commenced issuing provisional licenses,
would repeal those provisions. 
   (6) 
    (5)  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. 
   (7) 
    (6)  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. 
   (8) 
    (7)  This bill would provide that its provisions are
severable. 
   (9) 
    (8)  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. 

   (10) 
    (9)  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:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) The people of California enacted the Compassionate Use Act of
1996 to ensure that seriously ill Californians have access to
cannabis for medical purposes. The Compassionate Use Act of 1996
urged the state and federal governments to implement a plan to
provide for the safe and affordable distribution of medical cannabis
to all patients in medical need of the drug.
   (b) Federal enforcement authorities have recognized that in states
that have authorized cannabis use and have enacted strong and
effective regulatory and enforcement systems to control the
cultivation, distribution, sale, and possession of cannabis, conduct
in compliance with those regulatory and enforcement systems is less
likely to threaten federal priorities, and, thus, less likely to
require federal enforcement intervention (See: Memorandum For All
United States Attorneys--Guidance Regarding Marijuana Enforcement, by
James M. Cole, Deputy Attorney General, August 29, 2013).
   (c) Greater certainty and minimum statewide standards are urgently
needed regarding the obligations of medical cannabis facilities, and
for the imposition and enforcement of regulations to prevent
unlawful cultivation and the diversion of cannabis to nonmedical use.

   (d) The purpose of this act is to establish for California a
robust medical cannabis regulatory and enforcement system to ensure
that conduct in compliance with California's medical cannabis laws
does not threaten the federal priorities as set forth in the James M.
Cole memorandum, and, therefore, does not require federal
enforcement intervention.
   (e) The California Constitution grants cities and counties the
authority to make and enforce, within their borders, "all local
police, sanitary, and other ordinances and regulations not in
conflict with the general laws." This inherent local police power
includes broad authority to determine, for purposes of public health,
safety, and welfare, the appropriate uses of land within the local
jurisdiction's borders. The police power, therefore, allows each city
and county to determine whether or not a medical cannabis dispensary
or other facility that makes medical cannabis available may operate
within its borders. This authority has been upheld by City of
Riverside v. Inland Empire Patients Health and Wellness Center, Inc.
(2013) 56 Cal.4th 729, and County of Los Angeles v. Hill (2011) 192
Cal.App.4th 861. Nothing in this act shall diminish, erode, or modify
that authority.
   (f) If a city or county determines that a dispensary or other
facility that makes medical cannabis available may operate within its
borders, then there is a need for the state to license these
dispensaries and other facilities for the purpose of adopting and
enforcing protocols for security standards at dispensaries and in the
transportation of medical cannabis, as well as health and safety
standards to ensure patient safety. This licensing requirement is not
intended in any way nor shall it be construed to preempt local
ordinances, regulations, or enforcement actions regarding the sale
and use of medical cannabis, including, but not limited to, security,
signage, lighting, and inspections.
   (g) Nothing in this act or Article 2 (commencing with Section
11357) or Article 2.5 (commencing with Section 11362.7) of Chapter 6
of Division 10 of the Health and Safety Code is intended to preempt
any local ordinance regulating or banning the cultivation,
processing, manufacturing, testing, transportation, distribution,
provision, donation, or sale of medical cannabis, or to otherwise
prevent or limit a city, county, or city and county from adopting or
enforcing a zoning ordinance or other law, ordinance, or regulation
that bans or regulates the location, operation, or establishment of
any individual or other person that cultivates, processes, possesses,
stores, manufactures, tests, transports, distributes, provides,
donates, or sells cannabis.
   (h) Nothing in this act is intended to  interfere with an
employer's rights and obligations to maintain a drug and alcohol free
workplace or to  require an employer to permit or accommodate
the use, consumption, possession, transfer, display, transportation,
sale, or growth of cannabis in the workplace, or to affect the
ability of employers to have policies  restricting 
 prohibiting  the use of cannabis by  employees and
prospective  employees, or otherwise complying with  state
and  federal law.
   (i) Nothing in this act shall be construed to promote or
facilitate the nonmedical, recreational possession, sale, or use of
cannabis.
   (j) Nothing in this act shall have a diminishing effect on the
 rights and  protections granted to a patient or
primary caregiver pursuant to the Compassionate Use Act of 1996.
  SEC. 2.  Section 2220.05 of the Business and Professions Code is
amended to read:
   2220.05.  (a) In order to ensure that its resources are maximized
for the protection of the public, the Medical Board of California
shall prioritize its investigative and prosecutorial resources to
ensure that physicians and surgeons representing the greatest threat
of harm are identified and disciplined expeditiously. Cases involving
any of the following allegations shall be handled on a priority
basis, as follows, with the highest priority being given to cases in
the first paragraph:
   (1) Gross negligence, incompetence, or repeated negligent acts
that involve death or serious bodily injury to one or more patients,
such that the physician and surgeon represents a danger to the
public.
   (2) Drug or alcohol abuse by a physician and surgeon involving
death or serious bodily injury to a patient.
   (3) Repeated acts of clearly excessive prescribing, furnishing, or
administering of controlled substances, or repeated acts of
prescribing, dispensing, or furnishing of controlled substances, or
recommending cannabis to patients for medical purposes without a good
faith prior examination of the patient and medical reason therefor.
However, in no event shall a physician and surgeon prescribing,
furnishing, or administering controlled substances for intractable
pain consistent with lawful prescribing, including, but not limited
to, Sections 725, 2241.5, and 2241.6 of this code and Sections
11159.2 and 124961 of the Health and Safety Code, be prosecuted for
excessive prescribing and prompt review of the applicability of these
provisions shall be made in any complaint that may implicate these
provisions.
   (4) Sexual misconduct with one or more patients during a course of
treatment or an examination.
   (5) Practicing medicine while under the influence of drugs or
alcohol.
   (b) The board may by regulation prioritize cases involving an
allegation of conduct that is not described in subdivision (a). Those
cases prioritized by regulation shall not be assigned a priority
equal to or higher than the priorities established in subdivision
(a).
   (c) The Medical Board of California shall indicate in its annual
report mandated by Section 2312 the number of temporary restraining
orders, interim suspension orders, and disciplinary actions that are
taken in each priority category specified in subdivisions (a) and
(b).
  SEC. 3.  Section 2242 of the Business and Professions Code is
amended to read:
   2242.  (a) Prescribing, dispensing, or furnishing dangerous drugs
as defined in Section 4022 without an appropriate prior examination
and a medical indication, constitutes unprofessional conduct.
 Prescribing or recommending   Recommending
 medical cannabis to a patient for a medical purpose without an
appropriate prior examination and a medical indication constitutes
unprofessional conduct.
   (b) No licensee shall be found to have committed unprofessional
conduct within the meaning of this section if, at the time the drugs
were prescribed, dispensed, or furnished, any of the following
applies:
   (1) The licensee was a designated physician and surgeon or
podiatrist serving in the absence of the patient's physician and
surgeon or podiatrist, as the case may be, and if the drugs were
prescribed, dispensed, or furnished only as necessary to maintain the
patient until the return of his or her practitioner, but in any case
no longer than 72 hours.
   (2) The licensee transmitted the order for the drugs to a
registered nurse or to a licensed vocational nurse in an inpatient
facility, and if both of the following conditions exist:
   (A) The practitioner had consulted with the registered nurse or
licensed vocational nurse who had reviewed the patient's records.
   (B) The practitioner was designated as the practitioner to serve
in the absence of the patient's physician and surgeon or podiatrist,
as the case may be.
   (3) The licensee was a designated practitioner serving in the
absence of the patient's physician and surgeon or podiatrist, as the
case may be, and was in possession of or had utilized the patient's
records and ordered the renewal of a medically indicated prescription
for an amount not exceeding the original prescription in strength or
amount or for more than one refill.
   (4) The licensee was acting in accordance with Section 120582 of
the Health and Safety Code.
  SEC. 4.  Section 2264 of the Business and Professions Code is
amended to read:
   2264.  (a) The employing, directly or indirectly, the aiding, or
the abetting of any unlicensed person or any suspended, revoked, or
unlicensed practitioner to engage in the practice of medicine or any
other mode of treating the sick or afflicted which requires a license
to practice constitutes unprofessional conduct.
   (b)  Employment by, or other agreement with, a mandatory
commercial licensee acting pursuant to the Medical Cannabis
Regulation and Control Act or a dispensary to provide recommendations
for medical cannabis constitutes unprofessional conduct.
  SEC. 5.  Article 25 (commencing with Section 2525) is added to
Chapter 5 of Division 2 of the Business and Professions Code, to
read:

      Article 25.  Recommending Medical Cannabis


   2525.  (a) It is unlawful for a physician and surgeon who
recommends cannabis to a patient for a medical purpose to accept,
solicit, or offer any form of remuneration from or to a facility
issued a  conditional   state  license
pursuant to Chapter 3.5 (commencing with Section 19300) of Division
8, if the physician and surgeon or his or her immediate family have a
financial interest in that facility.
   (b) For the purposes of this section, "financial interest" shall
have the same meaning as in Section 650.01.
   (c) A violation of this section shall be a misdemeanor.
   2525.1.  The Medical Board of California shall consult with the
California Marijuana Research Program, known as the Center for
Medicinal Cannabis Research, authorized pursuant to Section 11362.9
of the Health and Safety Code, on developing and adopting medical
guidelines for the appropriate administration and use of medical
cannabis.
   2525.2.  A physician and surgeon shall not recommend medical
cannabis to a patient, unless that person is the patient's attending
physician, as defined by subdivision (a) of Section 11362.7 of the
Health and Safety Code.
  SEC. 6.  Chapter 3.5 (commencing with Section 19300) is added to
Division 8 of the Business and Professions Code, to read:
      CHAPTER 3.5.  MEDICAL CANNABIS



      Article 1.  Definitions


   19300.  For purposes of this chapter, the following definitions
shall apply:
   (a) "Cannabinoid" means a chemical compound that is unique to and
derived from cannabis, also known as phytocannabinoid.
   (b) "Cannabis" means all parts of the plant Cannabis sativa L.,
Cannabis indica, or Cannabis ruderalis, whether growing or not; the
seeds thereof; the resin, whether crude or purified, extracted from
any part of the plant; and every compound, manufacture, salt,
derivative, mixture, or preparation of the plant, its seeds, or
resin. "Cannabis" does not include the mature stalks of the plant,
fiber produced from the stalks, oil or cake made from the seeds of
the plant, any other compound, manufacture, salt, derivative,
mixture, or preparation of the mature stalks (except the resin
extracted therefrom), fiber, oil, or cake, or the sterilized seed of
the plant which is incapable of germination. "Cannabis" also means
 the separated resin, whether crude or purified, obtained from
marijuana. Without limiting the definition, "cannabis" also means
 marijuana as defined by Section 11018 of the Health and Safety
Code as enacted by Chapter 1407 of the Statutes of 1972.
   (c) "Cannabis concentrate" means manufactured cannabis that has
undergone a process to concentrate the cannabinoid active ingredient,
thereby increasing the product's potency. 
   (d) "Caregiver" or "primary caregiver" has the same meaning as
that term is defined in Section 11362.7 of the Health and Safety
Code.  
   (d) 
    (e)  "Certified testing laboratory" means a laboratory
that is certified by the State Department of Public Health to perform
random sample testing of medical cannabis pursuant to the
certification standards for these facilities promulgated by the
department. 
   (e) 
    (f)  "Commercial cannabis activity" means any
cultivation, possession, manufacture, processing, storing, laboratory
testing, labeling, transporting, distribution, or sale of cannabis
or cannabis product, or any  Internet platform that
facilitates any of these functions for the purpose of selling medical
cannabis or medical cannabis products to qualified patients or
caregivers,   technology platform that enables qualified
patients or primary caregivers to arrange for or facilitate any of
the above-   described functions with a third party, 
except as set forth in Section 19316. 
   (f) 
    (g)  "Cultivation" means any activity involving the
planting, growing, harvesting, drying, processing, or trimming of
cannabis. 
   (g) 
    (h)  "Delivery" means the commercial transfer of medical
cannabis or medical cannabis products from a dispensary to a primary
caregiver or qualified patient, as defined in Section 11362.7 of the
Health and Safety Code. 
   (h) 
    (i)  "Delivery service" means a person issued a state
license by the State  Department of Public Health 
 Board of Equalization  pursuant to this chapter and a local
license or permit, to deliver medical cannabis or medical cannabis
products, up to an amount determined by the department, to patients,
testing laboratories, or to events or locations where it will be used
solely for promotional purposes. A delivery service shall not be
required to obtain a transporter license. 
   (i) 
    (j)  "Director" means the director of the Office of
 Marijuana   Medical Cannabis  Regulation.

   (j) 
    (k)  "Dispensary" means a  nonmobile,
nonvehicular, non-Internet-based retail location that distributes
medical cannabis or medical cannabis products and is owned and
operated by a licensee for these activities pursuant to this chapter.
  physical retail establishment operating from a fixed
location,   including mobile deliveries originating from the
location, that makes retail sales of medical cannabis or medical
cannabis products   .  
   (k) 
    (l)  "Dispensing" means any activity involving the
retail sale of medical cannabis or medical cannabis products from a
dispensary. 
   (m) "Distribution" means the first sale of cannabis in this state.
Distribution does not include the sale of cannabis from a cultivator
to a distributor.  
   (n) "Distributor" means a person who is engaged in the business of
purchasing medical cannabis in this state from a licensed cultivator
and who then distributes the medical cannabis to a manufacturer or
dispensary.  
   (l) 
   (o)  "Dried flower" means all dead medical cannabis that
has been harvested, dried, cured, or otherwise  processed.
  processed, excluding leaves and stems.  
   (m) 
    (p)  "Edible cannabis product" means manufactured
cannabis that is intended to be used, in whole or in part, for human
consumption, including, but not limited to, chewing gum. 
   (n) 
    (q)  "Fund" means the Medical Cannabis Regulation Fund
established pursuant to Section 19361. 
   (o) 
    (r)  "Identification program" means the universal
identification certificate program for licensees. 
   (p) 
    (s)  "Labor peace agreement" means an agreement between
a licensee and a bona fide labor organization that, at a minimum,
protects the state's proprietary interests by prohibiting labor
organizations and members from engaging in picketing, work stoppages,
boycotts, and any other economic interference with the applicant's
business. This agreement means that the applicant has agreed not to
disrupt efforts by the bona fide labor organization to communicate
with, and attempt to organize and represent, the applicant's
employees. The agreement shall provide a bona fide labor organization
access at reasonable times to areas in which the applicant's
employees work, for the purpose of meeting with employees to discuss
their right to representation, employment rights under state law, and
terms and conditions of employment. This type of agreement shall not
mandate a particular method of election or certification of the bona
fide labor organization. 
   (q) 
    (t)  "Licensed cultivation site" means a person that
plants, grows, cultivates, harvests, dries, or processes medical
cannabis, or that does all or any combination of those activities,
and that is issued a state license pursuant to this chapter and a
local license or permit. 
   (r) 
    (u)  "Licensed dispensing facility" means a person that
provides medical cannabis, medical cannabis products, or devices for
the use of medical cannabis or medical cannabis products, either
individually or in any combination, that is issued a state license
pursuant to this chapter and a local license or permit. 
   (s) 
    (v)  "Licensed manufacturer" means a person that
conducts the production, preparation, propagation, compounding, or
processing of medical cannabis or medical cannabis products, either
directly or indirectly or by extraction processes, or independently
by means of chemical synthesis or by a combination of extraction and
chemical synthesis, and includes a location that packages or
repackages medical cannabis or medical cannabis products or labeling
or relabeling of its container, and that has been issued  both a
local license or permit and  a state license pursuant to this
 part.   chapter.  
   (t) 
    (w)  "Licensed transporter" means a person issued a
state license by the Board of Equalization to transport medical
cannabis or medical cannabis products above a limit determined by the
board  to and from   between  facilities
that have been issued a state license  or to dispensing
facilities in the City of Los Angeles  pursuant to this chapter.

   (u) 
    (x)  "Licensee" means a person issued a state license
under this chapter to engage in commercial cannabis activity.

   (v) 
    (y)  "Licensing authority" means the state agency
responsible for granting and renewing state licenses and regulating
the relevant licensees. For licensed cultivators, the licensing
authority is the Division of Medical Cannabis Cultivation in the
Department of Food and Agriculture. For dispensaries and
transporters, the licensing authority is the  Division of Medical
Cannabis Regulation within   the  State Board of
Equalization. For licensed manufacturers and certified testing
laboratories, the licensing authority is the Division of Medical
Cannabis Manufacturing and Testing within the State Department of
Public Health. 
   (w) 
    (z)  "Live plants" means living medical cannabis flowers
and plants, including seeds, immature plants, and vegetative stage
plants. 
   (x) 
    (aa)  "Manufactured cannabis" means raw cannabis that
has undergone a process whereby the raw agricultural product has been
transformed into a concentrate, an edible product, or a topical
product. 
   (ab) "Manufacturing site" means a location that produces,
prepares, propagates, compounds, or processes medical cannabis or
medical cannabis products, directly or indirectly, by extraction
processes, independently by means of chemical synthesis, or by a
combination of extraction and chemical synthesis, and is owned and
operated by a licensee for these activities pursuant to this chapter.
 
   (y) 
    (ac)  "Medical cannabis," "medical cannabis product," or
"cannabis product" means a product containing cannabis, including,
but not limited to, concentrates and extractions, intended to be sold
for use by medical cannabis patients in California pursuant to the
Compassionate Use Act of 1996 (Proposition 215). 
   (z) 
    (ad)  "Nursery" means a licensee that produces only
clones, immature plants, seeds, and other agricultural products used
specifically for the planting, propagation, and cultivation of
medical cannabis. 
   (aa) 
    (ae)  "Office" means the  Governor's  Office of
 Marijuana   Medical Cannabis  Regulation.

   (ab) 
    (af)  "Permit," "local license," or "local permit" means
an official document granted by a local jurisdiction that 
specifically  authorizes a person to conduct commercial cannabis
activity in the local jurisdiction. 
   (ac) 
    (ag)  "Person" means an individual, firm, partnership,
joint venture, association, corporation, limited liability company,
estate, trust, business trust, receiver, syndicate, or any other
group or combination acting as a unit and includes the plural as well
as the singular number. 
   (ad) 
    (ah)  "State license " or "license" means a state
license issued pursuant to this chapter. 
   (ae) 
    (ai)  "Topical cannabis" means a  manufactured
 product intended for external use. 
   (af) 
    (aj)  "Transport" means the  commercial
 transfer of medical cannabis or medical cannabis products
from the  permitted  business location of one licensee to
 the permitted business location of  another licensee, 
or to dispensing facilities in the City of Los Angeles,  for the
purposes of conducting commercial cannabis activity authorized by
licensees pursuant to this chapter.

      Article 2.  Administration


   19301.  This chapter shall be known, and may be cited, as the
Medical Cannabis Regulation and Control Act.
   19302.  (a) There is hereby created within the office of the
Governor, the Governor's Office of  Marijuana  
Medical Cannabis  Regulation, under the supervision and control
of the Director of the Office of  Marijuana  
Medical Cannabis  Regulation, who shall be appointed by the
 Governor.   Governor, subject to Senate
confirmation.  The Governor shall appoint the director at a
salary to be fixed and determined by the director with the approval
of the Director of Finance.  The director shall serve in
accordance with the State Civil Service Act (Part 2 (commencing with
Section 18500) of Division 5 of Title 2 of the Government Code).

   (b) The director shall be the appointing power of all employees
within the office, and all heads of divisions, bureaus, and other
employees in the office shall be responsible to the director for the
proper carrying out of the duties and responsibilities of their
respective positions.
   (c) In developing a regulatory framework pursuant to this chapter,
the director shall consult with state agencies possessing expertise
in licensure and enforcement, including, but not limited to, the
Department of Alcoholic Beverage Control and the Department of
Consumer Affairs.
   (d) The office shall have overall executive authority and
responsibility for implementation of all aspects of cannabis
regulation pursuant to this chapter.
   (e) The office shall coordinate and provide oversight of all
activities described in this chapter. The office shall lead all state
and local authorities regarding the tracking of medical cannabis,
medical cannabis products, and licensees pursuant to this chapter.
All departments and divisions specified in Section 19304 shall report
directly to the office. Any information technology systems created
to store and process data related to commercial cannabis licensing
shall be integrated, and all licensing data shall be immediately
available to each licensing authority and to the office.
   19303.  The office shall maintain a registry of all permit holders
and shall maintain a record of all state licenses and commercial
cannabis activity of the permit holder throughout the length of
licensure and for a minimum of seven years following the expiration
of each license. The office shall make limited licensee information
available to a licensee so that it may verify whether it is engaging
in commercial cannabis activities with a properly licensed entity.
   19304.  (a) The following entities shall report to and be directly
accountable to the office for their respective designated
responsibilities within the regulatory and enforcement framework, as
follows:
   (1) The Division of Medical Cannabis Regulation, which is
established within the State Board of Equalization, shall do all of
the following:
   (A) Be administered by a person who is appointed by the 
State Board of Equalization.   Governor, subject to
Senate   confirmation. 
   (B) Administer this chapter, as it pertains to commercial cannabis
activity relating to dispensaries and transporters.
   (2) The Division of Medical Cannabis Manufacturing and Testing,
which is established within the State Department of Public Health,
shall do all of the following:
   (A) Be administered by a person who is appointed by the 
Governor.   Governor, subject to Senate confirmation.

   (B) Administer this chapter, as it pertains to manufacturing,
testing, and certification of testing laboratories for medical
cannabis and medical cannabis products.
   (3) The Division of Medical Cannabis Cultivation, which is
established within the Department of Food and Agriculture, shall do
all of the following:
   (A) Be administered by a person who is appointed by the 
Governor.   Governor, subject to Senate confirmation.

   (B) Administer this chapter as it pertains to cultivation of
medical cannabis.
   (4) The California Environmental Protection Agency and the
California Natural Resources Agency shall coordinate and direct the
following entities in the discharge of their designated regulatory
responsibilities:
           (A) The State Water Resources Control Board shall
promulgate regulations related to discharge into waterways, and
diversion therefrom, resulting from cannabis cultivation.
   (B) The Department of Fish and Wildlife shall promulgate
regulations for the protection of any species affected by cultivation
activity, and regulations for any cultivation-related development,
including alteration of waterways.
   (5) The Department of Justice shall conduct the following
activities:
   (A) Perform criminal background checks of applicants for
licensure.
   (B) Develop uniform security standards for dispensaries and all
phases of transport covered by this chapter.
   (C) Provide supplemental enforcement on an as-needed basis at the
request of the office.
   19305.  (a) The office and licensing authorities shall have the
authority necessary for the implementation of this chapter,
including, but not limited to, all of the following:
   (1) Establishing rules or regulations necessary to carry out the
purposes and intent of this chapter and to enable the office and
licensing authorities to exercise the powers and perform the duties
conferred by this chapter and in accordance with Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code. These rules and regulations shall not limit the
authority of a city, county, or city and county specified in Article
3 (commencing with Section 19307), or specified in Section 7 of
Article XI of the California Constitution, or any other law. For the
performance of its duties, the office has the powers set forth in
Article 2 (commencing with Section 11180) of Chapter 2 of Part 1 of
Division 3 of Title 2 of the Government Code. The office shall review
all regulations and guidance promulgated by licensing authorities in
the administration of this chapter to ensure no duplication,
overlap, or inconsistent regulations occur between licensing
authorities. 
   (2) Prescribing, adopting, and enforcing emergency regulations as
necessary to implement this chapter. Emergency regulations
prescribed, adopted, or enforced pursuant to this section shall be
adopted in accordance with Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code. For
purposes of that chapter, including Section 11349.6 of the
Government Code, the adoption of the regulation is an emergency and
shall be considered by the Office of Administrative Law as necessary
for the immediate preservation of the public peace, health and
safety, and general welfare.  
   (2) 
    (3)  Issuing state licenses to persons for the
cultivation,  distribution,  manufacture, transportation,
and  retail  sale of medical cannabis within the state.

   (3) 
    (4)  Setting application, licensing, and renewal fees
for state licenses issued pursuant to this chapter. 
   (4) 
    (5)  Establishing standards for commercial cannabis
activity. 
   (5) 
    (6)  Establishing procedures for the issuance, renewal,
suspension, denial, and revocation of state licenses. 
   (6) 
    (7)  Imposing a penalty authorized by this chapter or
any rule or regulation adopted pursuant to this chapter. 
   (7) 
    (8)  Taking action with respect to an application for a
state license in accordance with procedures established pursuant to
this chapter. 
   (8) 
    (9)  Overseeing the operation of the Medical Cannabis
Regulation Fund, established pursuant to Section 19361. 
   (9) 
    (10)  Consulting with other state or local agencies,
departments, representatives of the medical cannabis community, or
public or private entities for the purposes of establishing statewide
standards and regulations.
   (b) Protection of the  public   public's
health and safety  shall be the highest priority for the office
and the licensing authorities in exercising the licensing,
regulatory, and disciplinary functions pursuant to this chapter.
Whenever the protection of the public   public's
health and safety  is inconsistent with other interests sought
to be promoted, the protection of the  public  
public's health and safety  shall be paramount.
   19306.  (a) The office, by  March   April
 1, 2016, shall convene a task force, which shall advise the
office on the development of standards pursuant to this chapter. The
task force shall be responsible for recommending to the office the
appropriate roles of each state entity as it pertains to this
chapter, and shall recommend guidelines on communication and
information sharing between state entities, and with local agencies,
for implementation of this chapter. Notwithstanding Section 10231.5
of the Government Code, the task force shall submit a report on these
standards, determinations, and guidelines for implementation of this
chapter to the Legislature and state entities affected by this
chapter by August 1, 2016. The report submitted to the Legislature
shall be submitted in compliance with Section 9795 of the Government
Code.
   (b) The task force shall be comprised of  representatives
of medical cannabis consumer advocates, environmental experts, public
health experts, medical cannabis industry representatives, related
regulatory authorities, labor, and law enforcement. The task force
may also be comprised of representatives of the State Board of
Equalization and Attorney General, and other state agencies, as
deemed appropriate. The task force shall have a minimum of nine
members, with one-third of the members appointed by the California
State Assembly, one-third of the members appointed by the California
State Senate, and one-third of the members appointed by the Governor.
If there is an unequal divide between these three entities, the
Governor shall make appointments for the difference.  
15 members, each of whom shall serve a two-   year term, as
follows:  
   (1) Four members to be appointed by the Governor, as follows:
 
   (A) A member representing counties.  
   (B) A member representing cities.  
   (C) A member representing local law enforcement.  
   (D) A member representing state law enforcement.  
   (2) Three members to be appointed by the Assembly, as follows:
 
   (A) A member representing labor.  
   (B) A member representing the medical cannabis industry. 

   (C) A member with public health expertise.  
   (3) Three members to be appointed by the Senate, as follows: 

   (A) A member representing qualified medical cannabis patients and
caregivers.  
   (B) A member with environmental expertise.  
   (C) A member representing physicians. This member shall have a
minimum of two years experience recommending medical cannabis to
qualified patients.  
   (4) The director or chief of each of the following state agencies,
or his or her designee:  
   (A) The Department of Food and Agriculture.  
   (B) State Department of Public Health.  
   (C) State Board of Equalization.  
   (D) Department of Justice.  
   (E) Department of the California Highway Patrol. 
   (c) Task force members shall serve on a voluntary basis and shall
be responsible for costs associated with their participation in the
task force. The licensing authorities shall not be responsible for
travel costs incurred by task force members or otherwise compensating
task force members for costs associated with their participation in
the task force. 
   (d) Each member shall only have one vote in determinations of the
task force. 

      Article 3.  Enforcement and Local Control


   19307.  (a) Each licensing authority shall work in conjunction
with  law enforcement  local  agencies for
the purposes of implementing, administering, and enforcing this
chapter, and any regulations adopted pursuant to this chapter and
taking appropriate action against licensees and others who fail to
comply with this chapter or the regulations adopted pursuant to this
chapter.
   (b)  The   Except  for persons
employed by the State Board of Equalization, the  director and
the persons employed by the licensing authorities for the
administration and enforcement of this chapter are, for purposes of
this chapter, peace officers in the enforcement of the penal
provisions of this chapter, the regulations adopted pursuant to this
chapter, and any other penal provisions of law prohibiting or
regulating the cultivation, processing, storing, manufacturing,
testing, transporting, or selling of medical cannabis. These persons
may, while acting as peace officers, enforce any penal provisions of
state law  applicable to this chapter  while in the course
of their employment.
   (c) The regulatory directors, persons employed by the licensing
authorities for the administration and enforcement of this chapter,
peace officers listed in Section 830.1 of the Penal Code, 
persons listed in Section 830.11 of the Penal Code,  and
officers listed in Section 830.6 of the Penal Code, while acting in
the course and scope of their employment as peace officers, may, in
enforcing this chapter, visit and inspect the premises of a licensee
 at any time during which the licensee is acting pursuant to
the state license.   pursuant to subdivision (f) of
Section 19326. 
   (d) Peace officers of the Department of the California Highway
Patrol, members of the University of California and California State
University police departments, and peace officers of the Department
of Parks and Recreation, as defined in subdivisions (a), (b), (c),
and (f) of Section 830.2 of the Penal Code, may, in enforcing this
chapter, visit and inspect the premises of a licensee  at any
time during which the licensee is acting pursuant to the state
license.   pursuant to subdivision (f) of Section 19326.

   19308.  (a)  The   By January 1, 2017, the
 office shall, in consultation with local governments, develop
an enforcement framework that clarifies the enforcement roles of the
state and local  governments.   governments
consistent with this chapter.  Local agencies are authorized to
enforce any state statutory or regulatory standard.
   (b) A state agency is not required by this section to enforce a
city, county, city and county, or local law, ordinance, rule, or
regulation regarding the site or operation of a facility or
transporter issued a state license.
   19309.  (a) For facilities issued a state license that are located
within the incorporated area of a city, the city shall have full
power and authority to enforce this chapter and the rules,
regulations, and standards promulgated by the office.  The
  Notwithstanding Sections 101375, 101400, and 101405 of
the Health and Safety Code or any contract entered into pursuant
thereto, or any other law, the  city shall further assume
complete responsibility for any regulatory function relating to those
licensees within the city limits that would otherwise be performed
by the county or any county officer or employee,  including a
county health officer,  without liability, cost, or expense to
the county.
   (b) For licensed facilities located within the unincorporated area
of a county, the county shall have full power and authority to
enforce this chapter and the rules, regulations, and standards
promulgated by the office. 
   (c) It is the intent of the Legislature in enacting this chapter
to provide for the statewide regulation of the commercial cannabis
activity and the enforcement of laws relating to commercial cannabis
activities without preempting city, county, or city and county
ordinances regulating or banning these activities. This chapter is an
exercise of the police powers of the state for the protection of the
safety, welfare, health, peace, and morals of the people of the
state.  
   (c) All standards and regulations promulgated pursuant to this
chapter shall be the minimum standards and regulations for obtaining
and maintaining a state license. State agencies shall collaborate
with local agencies to enforce state standards and regulations to the
extent that it is within the scope of other statutory
responsibilities of local agencies and to the extent that resources
for this enforcement are available to the local agencies. This
section shall not limit any other state or local requirements. 

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

   (d) 
    (e)  Nothing in this chapter, or any regulations
promulgated thereunder, shall be deemed to limit the authority or
remedies of a city, county, or city and county under any provision of
law, including, but not limited to, Section 7 of Article XI of the
California Constitution.
   19310.  (a) The director of a licensing authority or a district
attorney, county counsel, city attorney, or city prosecutor may bring
an action in the name of the people of the State of California to
enjoin a violation or the threatened violation of any provision of
this chapter, including, but not limited to, a licensee's failure to
correct objectionable conditions following notice or as a result of a
rule promulgated pursuant to this chapter, and to assess and recover
civil penalties in accordance with this chapter. The action shall be
brought in the county in which the violation occurred or is
threatened to occur. A proceeding for injunctive relief brought
pursuant to this chapter shall conform to the requirements of Chapter
3 (commencing with Section 525) of Title 7 of Part 2 of the Code of
Civil Procedure.
   (b) A state or local agency shall immediately notify the office
and the appropriate licensing authority of violations or arrests made
for violations over which the licensing authority has jurisdiction
that involve a licensee or licensed premises. Notice shall be given
within 10 days of the violation or arrest. The office or licensing
authority shall promptly investigate as to whether grounds exist for
suspension or revocation of the state license.
   (c) This chapter shall not be construed to limit a  law
enforcement   state or local  agency's ability to
investigate unlawful activity in relation to a state license.
   (d) Nothing in this chapter shall prevent a city or other local
governing body from taking action as specified in Section  19315
of this code or Section  11362.83 of the Health and Safety Code.

   (e) The office shall establish procedures to provide  any
relevant  state and  local law enforcement, 
 local agencies, including all licensing authorities,  upon
their request, with 24-hour access to information to verify a state
license, track transportation manifests, and track the inventories of
facilities issued a state license. This record shall allow state and
local law  enforcement   enforcement, agencies,
and licensing entities  to verify a state license and provide
summary information on licensees consisting of the name of the
licensee, the date the license was issued, the status of the license,
and the licensee's mailing address. 
   19311.  (a) Licensing authorities and any relevant local agency
may examine the books and records of a licensee and may visit and
inspect the premises of a licensee as the licensing authority or
local agency deems necessary to perform their duties under this
chapter or local ordinance.
   (b) If the licensee or any employee of the licensee refuses,
impedes, obstructs, or interferes with an inspection pursuant to this
chapter or local ordinance, or if the licensee fails to maintain or
provide the books and records required by this chapter, the license
may be summarily suspended and the licensing authority shall commence
proceedings for the revocation of the state license in accordance
with this chapter.
   (c) All cultivation and dispensing licensees shall be subject to
an annual audit, as specified by the licensing authority, in order to
ensure proper documentation is kept at each facility. The reasonable
costs of the audit shall be paid for by the licensee. 
   19312.  (a) This chapter shall in no way supersede the provisions
of Measure D, approved by the voters of the City of Los Angeles on
the May 21, 2013, ballot for the city, which  granted
  provides potential limited immunity to  medical
cannabis businesses  and dispensaries qualified immunity
consistent with the   as defined by Measure D consistent
with the  terms of the measure and local ordinances.
Notwithstanding the provisions of this part, cannabis businesses
 and dispensaries subject to the provisions of Measure D and
its qualified immunity shall continue to be subject to the 
 within the City of Los Angele   s shall continue to be
subject to Measure D and any and all other applicable 
ordinances and regulations of the City of Los Angeles.
   (b) It is the intent of the Legislature to recognize the unique
circumstances of the City of Los Angeles with respect to Measure D
and associated rules related to commercial cannabis activity.  In
light of these unique circumstances, the provisions of Sections
19319 and 19338 shall apply in the City of Los Angeles.  
   (c) The State Board of Equalization shall enter into a memorandum
of understanding with the City of Los Angeles to establish protocols
for the following:  
   (1) Tracking businesses granted immunity pursuant to Measure D, as
approved by the voters of the City of Los Angeles at the May 21,
2013, general election.  
   (2) Tracking medical cannabis and medical cannabis products to and
from the City of Los Angeles.  
   (3) Allowing for the legal transfer of medical cannabis and
medical cannabis products from outside the jurisdiction of the City
of Los Angeles to within the city by licensees conducting commercial
cannabis activities outside of the city. 
   19313.  (a) The actions of a licensee or provisional licensee, its
employees, and its agents, that are permitted pursuant to both a
state license or provisional license and a license or permit issued
by the local jurisdiction following the requirements of the
applicable local ordinances, and that are conducted in accordance
with the requirements of this chapter and regulations adopted
pursuant to this chapter, are not unlawful under state law and shall
not be an offense subject to arrest, prosecution, or other sanction
under state law or be subject to a civil fine or be a basis for
seizure or forfeiture of assets under state law.
   (b) The actions of a person who, in good faith and upon
investigation, allows his or her property to be used by a licensee or
provisional licensee, its employees, and its agents, as permitted
pursuant to both a state license and a license or permit issued by
the local jurisdiction following the requirements of the applicable
local ordinances, are not unlawful under state law and shall not be
an offense subject to arrest, prosecution, or other sanction under
state law, or be subject to a civil fine or be a basis for seizure or
forfeiture of assets under state law.
   (c) Conduct that is within the scope of a license issued pursuant
to this chapter and permitted by local ordinance but not fully in
compliance with this chapter shall be subject to the enforcement
provisions of this chapter and shall not be subject to the penal
provisions of state law generally prohibiting cannabis-related
activity, unless and until the license is revoked.
   (d) This section shall not be deemed to limit the authority or
remedies of a city, county, or city and county under any provision of
law, including, without limitation, Section 7 of Article XI of the
California Constitution.
   19314.  (a) A person engaging in commercial cannabis activity
 and operating an unlicensed facility, building, structure,
vehicle, mobile unit, or location in violation of  
without a license required by  this chapter shall be subject to
civil penalties of up to twice the amount of the license fee for each
violation, and the office, licensing authority, or court may order
the destruction of medical cannabis associated with that violation.
Each day of operation shall constitute a separate violation of this
section. All civil penalties imposed and collected pursuant to this
section shall be deposited into the Medical Cannabis Fines and
Penalties Account established pursuant to Section 19361.  A day
of operation is defined to mean any period of time within a 24-hour
period. This section shall not apply to unlicensed facilities in the
City of Los Angeles. 
   (b) If an action for civil penalties is brought by the Attorney
General, the penalty collected shall be deposited into the General
Fund. If the action is brought by a district attorney or county
counsel, the penalty collected shall be paid to the treasurer of the
county in which the judgment was entered. If the action is brought by
a city attorney or city prosecutor, the penalty collected shall be
paid to the treasurer of the city in which the judgment was entered.

   (c) Notwithstanding subdivision (a), criminal penalties shall
continue to apply to an unlicensed person or entity engaging in
commercial cannabis activity in violation of this chapter, including,
but not limited to, those individuals covered under Section 11362.7
of the Health and Safety Code. 
   19315.  (a) This chapter does not, nor do Article 2 (commencing
with Section 11357) and Article 2.5 (commencing with Section 11362.7)
of Chapter 6 of Division 10 of the Health and Safety Code, prevent a
city, county, or city and county from doing any of the following:
   (1) Adopting local ordinances  , whether consistent or 
inconsistent with this chapter  ,  that do the following:
   (A) Regulate the location, operation, or establishment of a
licensee or a person that cultivates, processes, possesses, stores,
manufactures, tests, transports, distributes, or sells medical
cannabis.
   (B) Prohibit  commercial  cannabis activity
within their jurisdiction.
   (2) Providing for the administrative, civil, or criminal
enforcement of the ordinances described in paragraph (1).
   (3) Establishing a fee  or tax  for the operation
 of a licensee within its jurisdiction.  
within its jurisdiction of any of the following:  
   (A) A licensee.  
   (B) Another person that cultivates, processes, possesses, stores,
manufactures, tests, transports, distributes, or sells medical
cannabis or medical cannabis products.  
   (C) A person exempt from licensure pursuant to this chapter. 

   (4) Enacting and enforcing other laws or ordinances pursuant to
the authority granted by Section 7 of Article XI of the California
Constitution.
   (b) Nothing in this chapter or in Article 2 (commencing with
Section 11357) or Article 2.5 (commencing with Section 11362.7) of
Chapter 6 of Division 10 of the Health and Safety Code, shall prevent
a city, county, or city and county from adopting or enforcing a
zoning ordinance or other law, ordinance, or regulation that bans or
regulates the location, operation, or establishment of a licensee or
other person that engages in  commercial  cannabis
activity.

      Article 4.  Licensure


   19316.  (a) This chapter shall not apply to, and shall have no
diminishing effect on the protections granted to, a patient or a
primary caregiver pursuant to the Compassionate Use Act of 1996.
   (b) (1) A  qualified  patient who cultivates, possesses,
stores, manufactures, or transports cannabis exclusively for his or
her personal medical use but who does not provide, donate, sell, or
distribute cannabis to any other person is not, thereby, engaged in
commercial cannabis activity and is, therefore, exempt from the
licensure requirements of this chapter.
   (2) A primary caregiver who cultivates, possesses, stores,
manufactures, transports, donates, or provides cannabis exclusively
for the personal medical purposes of no more than five specified
qualified patients for whom he or she is the primary caregiver within
the meaning of Section 11362.7 of the Health and Safety Code but who
does not receive remuneration for these activities except for
compensation in full compliance with subdivision (c) of Section
11362.765 of the Health and Safety Code is not engaged in commercial
cannabis activity and is, therefore, exempt from the licensure
requirements of this chapter.
   (c) Exemption from the license requirements of this chapter shall
not limit or prevent a city, county, or city and county from
regulating or banning the cultivation, storage, manufacture,
transport, provision, or other activity by the exempt person, or
impair the enforcement of that regulation or ban.
   19317.  The state shall have the right and authority to conduct
state licensure activities and to regulate commercial cannabis
activity pursuant to this chapter. Local governments have the right
and authority to  grant permits and  regulate
 commercial  cannabis activity within their 
jurisdiction   jurisdiction, including granting or
refusing to grant permits  pursuant to local ordinances. In the
exercise of these rights and powers, the state and each of its
agencies, and all local agencies, are hereby deemed not to be engaged
in activities requiring licensure under this chapter.
   19318.  (a) Licensing authorities  shall  
may  issue state licenses  only  to qualified
applicants engaging in commercial cannabis activity pursuant to this
chapter.  Beginning   Except as specified in
Section 19318.1, beginning  January 1, 2018, no person shall
engage in commercial cannabis activity without
                          possessing a state license and a local
permit. For purposes of this section, "state license" includes a
provisional license issued pursuant to Article 6 (commencing with
Section 19330).
   (b) Local permits shall be determined by local ordinances.
Licensing authorities issuing state licenses shall have sole
authority to revoke a state license. Local agencies issuing local
permits shall have sole authority to revoke a local permit. 
   (c) Each applicant for a state license shall provide notice to
every affected local jurisdiction at the same time the state
application is filed. The office shall confirm with the applicant a
list of each affected local jurisdictions, including those
jurisdictions affected by potential deliveries by the applicant.
 
   (c) 
    (d)  The issuance of a state license shall not, in and
of itself, authorize the recipient to begin business operations. The
state license shall certify, at a minimum, that the applicant has
paid the state licensing fee, successfully passed a criminal
background check, and met state residency requirements. 
   (d) 
    (e)  Even if a state license has been granted pursuant
to this chapter, a facility shall not operate in a local jurisdiction
that prohibits the establishment of that type of business. A
facility shall not commence activity under the authority of a state
license until the applicant has obtained, in addition to the state
license, a license or permit from the local jurisdiction in which he
or she proposes to operate, following the requirements of the
applicable local ordinances. 
   (e) 
    (f)  If a local government agency notifies the office or
a licensing authority and provides evidence that a licensee or
applicant within its jurisdiction is in violation of local ordinances
relating to  commercial  cannabis activities, the
licensing authority shall  revoke the state license 
 schedule a hearing to determine whether the evidence is
sufficient to constitute grounds for the revocation of the license
 within 20 working days. 
   (f) 
    (g)  Revocation of  either  a state
 license  or local license  or permit  shall
terminate the ability of a medical cannabis business to operate
within California. 
   19318.5.  (a) A licensing authority shall not issue a license to
an applicant who proposes to operate within the City of Los Angeles,
regardless of the activity for which the license is sought.
   (b) A medical cannabis business, as defined by Measure D, within
the City of Los Angeles shall comply with all standards and
regulations applicable to the commercial cannabis activity or
activities engaged in by that medical cannabis business with respect
to all of the following:
   (1) Standards for the production, labeling, and manufacture of
medical cannabis and medical cannabis products, in accordance with
Article 7 (commencing with Section 19332) and Article 10 (commencing
with Section 19342).
   (2) Standards regarding the application of pesticides, in
accordance with Article 7 (commencing with Section 19332).
   (3) Regulations to be promulgated by the State Board of
Equalization, in accordance with Article 8 (commencing with Section
19334), governing dispensing facilities and transporters to the
extent that those regulations relate to health and safety standards,
environmental standards, worker protections, or security
requirements.
   (4) Security measures regarding transported medical cannabis, in
accordance with Section 19337.
   (5) Standards to be promulgated by the Division of Medical
Cannabis Manufacturing and Testing regarding health and safety, in
accordance with Article 10 (commencing with Section 19342).
   (c) The City of Los Angeles shall have the full power, authority,
and discretion to enforce all standards and regulations required by
this section. 
   19319.  (a)  On or before July 1, 2017, a   A
 licensing authority shall promulgate regulations for
implementation and enforcement of this chapter, including, but not
limited to, all of the following:
   (1) A description of the various specific forms of commercial
cannabis activity to be authorized by the various types of licenses.
   (2) Procedures for the issuance, renewal, suspension, denial, and
revocation of a state license.
   (3) Procedures for appeal of fines and the appeal of denial,
suspension, or revocation of a state license.
   (4) Application, licensing, and renewal forms and fees.  All
fees shall be established on a scaled basis, depending on the size or
tier of the license. 
   (5) Time periods, not to exceed 90 days, by which the licensing
authority shall approve or deny an application for a state license.
The failure of the licensing authority to act upon an application for
licensure within the time prescribed shall not be deemed approval of
the application.
   (6) Qualifications for licensees.
   (7) Security requirements, including, but not limited to,
procedures for limiting access to facilities and for the screening of
employees.  All screening processes shall adhere to guidance and
best practices established by the United States Equal Employment
Opportunity Commission, including, but not limited to, those on
hiring practices relating to the consideration of arrest and
conviction records in employment decisions under Title VII of the
Civil Rights Act of 1964. 
   (8) Requirements to ensure that all licensees and certified
testing laboratories conform with applicable standards equivalent to
state statutory environmental, agricultural, consumer protection, and
food and product safety requirements. These standards shall be in
addition, and not limited, to any other state and local requirements.

   (9) Develop procedures to ensure each licensee holds and maintains
a seller's permit required pursuant to Part 1 (commencing with
Section 6001) of Division 2 of the Revenue and Taxation Code. 
   (b) Each state license application approved by the respective
licensing authority pursuant to this chapter is separate and
distinct.
   (c) A state license application approved by a licensing authority
pursuant to this chapter shall be valid for a period not to exceed
one year from the date of approval unless revoked or suspended
earlier than that date pursuant to this chapter or the rules or
regulations adopted pursuant to this chapter.
   (d) Each licensing authority may adopt regulations for additional
licenses for cannabis activity within its statutory jurisdiction
pursuant to this chapter, as deemed necessary.
   (e) Each state license application approved by a licensing
authority shall be reported to the office within 24 hours of its
approval.
   (f) A licensing authority shall not issue a state license unless
the applicant has met all of the requirements of this chapter.
   (g)  Each licensing authority shall adopt regulations as
needed to implement the relevant licensing program within one year
following the establishment of provisional licenses, pursuant to
Section 19330.  The regulations shall not limit the
authority of a city, county, or city and county pursuant to Section 7
of Article XI of the California Constitution or any other law. The
regulations shall do all of the following:
   (1) Establish procedures for approval  , renewal,  or
denial of applications for state licensure for each and every aspect
of commercial cannabis activity, including, but not limited to,
cultivation, possession, manufacture, processing, storing, laboratory
testing, labeling, transporting, distribution, and sale of cannabis.

   (2) Establish applicant qualifications.
   (3) Establish state licensee employee qualifications, including,
but not limited to, training and screening requirements.  All
screening processes shall adhere to guidance and best practices
established by the United States Equal Employment Opportunity
Commission, including, but not limited to, those relating to hiring
practices on the consideration of arrest and conviction records in
employment decisions under Title VII of the Civil Rights Act of 1964.

   (4) Establish state licensee security requirements, including, but
not limited to, procedures to limit access to facilities and to
prevent diversion of product to nonmedical use.
   (5) Establish procedures and protocols for identifying, managing,
and disposing of contaminated, adulterated, deteriorated, or excess
product.
   (6) Establish advertising, marketing, signage, and labeling
requirements and restrictions.
   (7) Establish procedures for the suspension, revocation, or
surrender of a state license, and establishing related fines and
penalties to be assessed against licensees for violations of this
chapter.
   19320.  (a) An applicant for a state license shall do all of the
following:
   (1) Pay the fee or fees required by this chapter for each state
license for which an application is submitted.
   (2) Register with the licensing authority on forms prescribed by
the licensing authority. The forms shall contain sufficient
information to identify the licensee, including all of the following:

   (A) Name of the owner or owners of a proposed facility, including
all persons or entities having an ownership interest other than a
security interest, lien, or encumbrance on property that will be used
by the applicant.
   (B) The name, address, and date of birth of each principal officer
and board member.
   (C) The address and telephone number of the proposed facility.

   (3) In the case of a dispensary, provide the name and address of
each licensed cultivation site and licensed manufacturer from which
the dispensary will acquire or obtain medical cannabis or medical
cannabis products.  
   (4) 
    (3)  Provide a description, in writing, of the scope of
business of the proposed facility. 
   (5) 
    (4)  Provide evidence that the applicant and owner have
been legal full-time residents of the state for not less than
 two   four  years.  For purposes of
this paragraph, "applicant" means the owner or owners of a proposed
facility, including all persons or entities having an ownership
interest other than a security interest, lien, or encumbrance on
property that will be used by the facility.  
   (6) 
    (5)  Provide detailed operating procedures, in writing,
for the proposed facility, which shall include, but not be limited
to, procedures for facility and operational security, prevention of
diversion, employee screening, storage of medical cannabis, personnel
policies, and recordkeeping procedures.  All screening processes
shall adhere to guidance and best practices established by the
United States Equal Employment Opportunity Commission, including, but
not limited to, those relating to hiring practices on the
consideration of arrest and conviction records in employment
decisions under Title VII of the Civil Rights Act of 1964. 

   (7) 
    (6)  Submit the applicant's fingerprint images as
follows:
   (A) For purposes of this paragraph, "applicant" means the owner or
owners of a proposed facility, including all persons or entities
having an ownership interest other than a security interest, lien, or
encumbrance on property that will be used by the facility. If the
owner is an entity, fingerprints shall be submitted for each person
participating in the direction, control, or management of, or having
a financial interest in, the proposed facility.
   (B) The applicant shall electronically submit to the Department of
Justice fingerprint images and related information required by the
Department of Justice for the purpose of obtaining information as to
the existence and content of a record of state or federal convictions
and arrests, and information as to the existence and content of a
record of state or federal convictions and arrests for which the
Department of Justice establishes that the person is free on bail or
on his or her own recognizance, pending trial or appeal.
   (C) The Department of Justice shall provide a response to the
licensing authority pursuant to paragraph (1) of subdivision (p) of
Section 11105 of the Penal Code.
   (D) The licensing authority shall request from the Department of
Justice subsequent notification service, as provided pursuant to
Section 11105.2 of the Penal Code, for applicants.
   (E) The Department of Justice shall charge the applicant a fee
sufficient to cover the reasonable cost of processing the requests
described in this paragraph. 
   (8) If applicable, provide 
    (7)     Provide  documentation 
issued by the local   jurisdiction in which the proposed
business is operating or will operate certifying  that the
applicant  is or  will be in compliance with all local
ordinances and  regulations, including, but not limited to,
an entity granted immunity under Measure D, approved by the voters of
the City of Los Angeles at the May 21, 2013, general election.
  regulations.  
   (9) 
    (8)  Provide evidence of the legal right to occupy and
use an established  location, including that, if the proposed
facility is a cultivator or a dispensary, that the proposed facility
is located beyond at least a 600-foot radius from a school, or, if
applicable, an immunity from prosecution for that occupancy or use
pursuant to Measure D, approved by the voters of the City of Los
Angeles at the May 21, 2013, general election.  
location.  
   (9) If the proposed facility is a cultivator or a dispensary,
provide evidence that the proposed facility is located beyond at
least a 600 foot radius from a school, as required by Section
11362.768 of the Health and Safety Code. 
   (10) Provide a statement, signed by the applicant under penalty of
perjury, that the information provided is true.
   (11) (A) For an applicant with 20 or more employees, provide a
statement that the applicant will enter into, or demonstrate that it
has already entered into, and abide by the terms of a labor peace
agreement.
   (B) For the purposes of this paragraph, "employee" does not
include a supervisor.
   (C) For purposes of this paragraph, "supervisor" means an
individual having authority, in the interest of the licensee, to
hire, transfer, suspend, lay off, recall, promote, discharge, assign,
reward, or discipline other employees, or responsibility to direct
them or to adjust their grievances, or effectively to recommend such
action, if, in connection with the foregoing, the exercise of that
authority is not of a merely routine or clerical nature, but requires
the use of independent judgment. 
   (D) Provide the applicant's seller's permit number issued pursuant
to Part 1 (commencing with Section 6001) of Division 2 of the
Revenue and Taxation Code, or indicate that the applicant is
currently applying for a seller's permit. 
   (12) Provide any other information required by the licensing
authority.
   (13) For an applicant seeking a cultivation license, provide a
statement declaring the applicant is an "agricultural employer," as
defined in the Alatorre-Zenovich-Dunlap-Berman Agricultural Labor
Relations Act of 1975 (Part 3.5 (commencing with Section 1140) of
Division 2 of the Labor Code), to the extent not prohibited by law.
   (14) For an applicant seeking a  cultivation 
 cultivator, distributor,  or dispensary license, provide a
notarized statement from the owner of real property or 
landlord   their agent  where the cultivation 
, distribution,   manufacturing,  or dispensing
commercial medical cannabis activities will occur, as proof to
demonstrate the landowner has acknowledged and consented to permit
cultivation  , distribution,  or dispensary activities to be
conducted on the property by the tenant applicant.
   (b) Each location and each discrete use of a single location shall
require a separate state license. Each application for a state
license is separate and distinct, and the licensing authority may
charge a separate fee for each.
   (c) For applicants seeking a state license to  cultivate
and   cultivate, distribute, or  manufacture, the
application shall also include a detailed description of the
operating procedures for all of the following, as applicable:
   (1) Cultivation.
   (2) Extraction and infusion methods.
   (3) The transportation process.
   (4) Inventory procedures.
   (5) Quality control procedures.
   19321.  (a) Upon receipt of an application for licensure and the
applicable fee, each licensing authority shall make a thorough
investigation to determine whether the applicant and the premises for
which a state license is applied qualify for the state license and
whether this chapter has been complied with, and shall investigate
all matters connected therewith that may affect the public welfare
and morals.
   (b) A licensing authority shall deny an application if either the
applicant or the premises for which a state license is applied do not
qualify for licensure under this chapter.
   (c) A licensing authority may place reasonable conditions upon
licensure if grounds exist for denial of the state license, and the
licensing authority finds those grounds may be removed by the
imposition of those conditions. However, the limitations set forth in
 paragraph   paragraphs  (15)  and
(18)  of subdivision (d) shall not be waived.
   (d) Each licensing authority  shall   may
 deny the application for licensure or renewal, or suspend or
revoke a state license, if any of the following conditions apply:
   (1) An entity making or authorizing in any manner or by any means
a written or oral statement that is untrue or misleading and that is
known, or that by exercise of reasonable care should be known, to be
untrue or misleading.
   (2) Conduct that constitutes fraud.
   (3) Conduct constituting gross negligence.
   (4) Failure to comply with the provisions of this chapter or any
rule or regulation adopted pursuant to this chapter.
   (5) Conduct that constitutes grounds for denial of licensure
pursuant to Chapter 2 (commencing with Section 480) of Division 1.5.
   (6) Local agencies have notified the licensing authority or the
office and provided evidence that a licensee or applicant within its
jurisdiction is in violation of local ordinances relating to medical
cannabis activities.
   (7) The applicant fails to meet the requirements of this chapter
or any regulation adopted pursuant to this chapter or any applicable
city, county, or city and county ordinance or regulation. If a local
government adopts an ordinance or resolution authorizing medical
cannabis to be cultivated, manufactured, stored, distributed, or sold
within its jurisdiction, it  shall   may 
submit to the office documentation detailing their renewal
requirements.  Failure to submit an ordinance or resolution to
the office shall not impair the enforceability of the ordinance or
resolution. Ordinances or resolutions that are not submitted pursuant
to this subdivision shall not be considered in denial of licensure
pursuant to this chapter. 
   (8) Granting or continuation of a state license would be contrary
to the  public welfare or morals.   public's
safety. 
   (9) The applicant holding or seeking a state license has 
violated any law prohibiting conduct   been convicted of
a misdemeanor  involving moral  turpitude. 
 turpitude, excluding misdemeanors involving marijuana. 
   (10) The application has failed to state with sufficient
specificity the jurisdiction and location at which the applicant
proposes to establish operations.
   (11) The applicant, or any of its officers, directors, or owners,
is under 21 years of age.
   (12) The applicant fails to provide notarized written proof that
the owner of real property or landlord has acknowledged and consented
to its tenant's proposed cultivation or dispensing of medical
cannabis or medical cannabis products.
   (13) The applicant has failed to provide information requested.
   (14) The applicant, or any of its officers, directors, or owners,
has been convicted of a felony criminal conviction for  the
possession for sale, sale, manufacture, transportation, or
cultivation of a controlled substance, including a narcotic drug
classified in Schedule II, III, IV, or V, but excluding marijuana,
for  drug trafficking involving a minor, felonies subject to
enhancements Section 11370.4 or 11379.8 of the Health and Safety
Code, a violent felony, as specified in subdivision (c) of Section
667.5 of the Penal Code, a serious felony as specified in subdivision
(c) of Section 1192.7 of the Penal Code, a felony offense involving
fraud or deceit, or any other felony that, in the licensing authority'
s determination, would impair the applicant's ability to
appropriately operate as a state licensee. The licensing authority
may, at its discretion, issue a state license to an applicant that
has obtained a certificate of rehabilitation pursuant to Section
4852.13 of the Penal Code.
   (15) The applicant, or any of its officers, directors, or owners,
is a licensed physician making patient recommendations for medical
cannabis.
   (16) The applicant, or any of its officers, directors, or owners,
has been sanctioned by a licensing authority, the office, or a city,
county, or a city and county for unlicensed commercial medical
cannabis activities or has had a license revoked under this chapter
in the previous three years.
   (17) The applicant, or any of its officers, directors, or owners,
has been subject to fines or penalty for cultivation or production of
a controlled substance on public or private lands pursuant to
Section 12025 of the Fish and Game Code.
   (18) The proposed commercial medical cannabis activity will
violate any applicable local law or ordinance.
   (19) The applicant has had 20 employees or more in the past year
and failed to enter into a labor peace agreement.
   (20)  The applicant or the owner is unable to establish that he or
she has been a resident of the state for not less than  2
  four  years. 
   (21) Failure to obtain and maintain a valid seller's permit
requires pursuant to Part 1 (commencing with Section 6001) of the
Revenue and Taxation Code. 
   (e) Applicants shall be notified of a denied application in
writing via personal service or mail addressed to the address of the
applicant or licensee set forth in the application. The denial letter
shall contain the detailed reasons for which the application was
denied. The applicant shall have the right to appeal the denial and
be given a hearing within 30 days of the appeal. On appeal, the
decision shall be upheld unless the applicant demonstrates that the
applicant is in fact eligible for licensure and the application is in
compliance with this chapter. 
   19322.  (a) A licensing authority may refuse to issue, reinstate,
or renew a state license, or may suspend a state license for failure
of a licensee to resolve all outstanding final liabilities,
including, but not limited to, taxes, additions to tax, penalties,
interest, and fees that have been assessed by the State Board of
Equalization.
   (1) Until the final liabilities covered by this section are
satisfied, a person named on a state license that has been suspended
pursuant to this section shall be prohibited from serving in any
capacity that is subject to licensure pursuant to this chapter, but
may act as a nonsupervising employee.
   (2) All state licenses issued with the same personnel of record
that have been assessed an outstanding liability covered by this
section shall be suspended until the debt has been satisfied or until
the indebted personnel of record disassociate themselves from the
licensee.
   (b) The refusal to issue a state license or the suspension of a
state license as provided by this section shall occur only if the
licensing authority has mailed a notice, prior to the refusal or
suspension, that indicates that the state license will be refused or
suspended by a date certain. This preliminary notice shall be mailed
to the licensee at least 60 days before the date certain.
   (c) This section shall not apply to any outstanding final
liability if the licensee has entered into an installment payment
agreement for that liability with the State Board of Equalization and
is in compliance with the terms of that agreement. 
   19323.  (a) Provided the applicant has not committed an act or
crime constituting grounds for the denial of licensure under Section
19321, a licensing authority may issue a state license and send a
proof of issuance to the applicant.
   (b) A licensing authority shall, by regulation, prescribe
conditions upon which a person whose state license has previously
been denied, suspended, or revoked, may be issued a state license.
   19324.  The office may adopt regulations to limit the number of
state licenses issued pursuant to this chapter upon a finding that
the otherwise unrestricted issuance of state licenses is dangerous to
the  public   public's  health and safety.


      Article 5.  Regulation of Medical Cannabis


   19325.  (a) Except as provided in Section 11362.5  of, and
Article 2.5 (commencing with Section 11362.7) of Chapter 6 of
Division 10 of,   of  the Health and Safety Code
 and Section 19316  , a person shall not sell  ,
distribute, provide, or donate  medical cannabis  or medical
cannabis products  to a patient or caregiver other than at a
licensed dispensing facility or through delivery from a licensed
dispensing facility.
   (b) Except as provided in Section 11362.5 of, and Article 2.5
(commencing with Section 11362.7) of Chapter 6 of Division 10 of, the
Health and Safety Code  and Section 19316  , a person shall
not  grow   cultivate  medical cannabis
other than at a licensed cultivation site.

    (c) Except as provided in Section 11362.5 of, and Article 2.5
(commencing with Section 11362.7) of Chapter 6 of Division 10 of, the
Health and Safety  Code,  Code and Section
19316,  a person other than a licensed manufacturer shall not
manufacture  or process  medical cannabis or medical
cannabis products.
   (d) A person other than a licensed transporter shall not transport
medical cannabis from one facility issued a state license to
 another.   another, unless otherwise specified
in this chapter.  
   (e) A licensed manufacturer may obtain medical cannabis from a
licensed cultivator and may furnish medical cannabis products to a
licensed dispensary.  
   (e) All licensees holding cultivation or manufacturing licenses
shall send all medical cannabis and medical cannabis products
cultivated or manufactured to a licensed processor for processing and
testing prior to retail or sale of medical cannabis or medical
cannabis products or to a dispensary, qualified patient, or
caregiver, according to the allowances by their license. Those
licensees holding a Type 10A license in addition to a cultivation
license shall send all medical cannabis to a licensed processor prior
to dispensing any product. Medical cannabis and medical cannabis
products shall not be returned to a cultivation or manufacturing
licensee unless that licensee is also a licensed dispensary. The
licensing authority shall fine a licensee who violates this
subdivision in an amount determined by the licensing authority to be
reasonable.  
   (f) (1) Upon receipt of medical cannabis or medical cannabis
products by a holder of a cultivation or manufacturing license, the
Type 11 licensee shall first inspect the product to ensure the
identity and quantity of the product and then send the medical
cannabis or medical cannabis product to be tested by a Type 8
licensee.  
   (2) Upon certification by the Type 8 licensee that the product is
fit for manufacturing or retail, all medical cannabis and medical
cannabis products shall be processed by a certified processor prior
to retail or dispensing to ensure the quantity and content of the
medical cannabis or medical cannabis product, and for tracking and
taxation purposes by the state. Licensed processors shall package or
seal all medical cannabis and medical cannabis products in
tamper-evident packaging and use a unique identifier, such as a batch
and lot number or bar code, to identify and track the medical
cannabis or medical cannabis products. All packaging and sealing
shall be completed prior to any medical cannabis or medical cannabis
products being transported or delivered to a licensee, qualified
patient, or caregiver.  
   (f) 
    (g)  Medical cannabis and medical cannabis products
shall be tested by a certified testing  laboratory. 
 laboratory, prior to retail sale or dispensing, as follows:
 
   (1) Medical cannabis from dried flower shall, at a minimum, be
tested for potency, pesticides, mold, and other contaminants. 

   (2) Medical cannabis extracts shall, at a minimum, be tested for
potency and purity of the product.  
   (3) This chapter shall not prohibit a licensee from performing
on-site testing for the purposes of quality assurance of the product
in conjunction with reasonable business operations. On-site testing
by the licensee shall not be certified by the Division of Medical
Cannabis Manufacturing and Testing.  
   (g) 
    (h)  For purposes of this section, "license" includes a
provisional license issued pursuant to Section 19330. 
   (h) 
    (i)  This section shall become operative on July 1,
2017.
   19326.  (a) A licensee shall not cultivate, process, store,
manufacture, transport, or sell medical cannabis in the state unless
accurate records are kept at the licensed premises of the growing,
processing, storing, manufacturing, transporting, or selling by the
licensee.
   (b) A licensee shall keep, at the licensed premises, accurate
records of the specific commercial cannabis activity conducted by the
licensee. The records shall include, at a minimum, all of the
following for each batch of product:
   (1) The name and address of the supplier.
   (2) The dates on which the product was received.
   (3) The amounts, form, and batch and lot number.
   (4) The location of the cultivation site.
   (5) The name of the employee who received the product.
   (6) Records demonstrating compliance by the licensee with state
and federal rules and regulations regarding reporting and taxation of
income received.
   (7) Receipts for all expenditures incurred by the licensee and
banking records, if any, for all funds obtained or expended in the
performance of any activity under the authority of the state license.

   (c) Records shall be kept for a minimum of seven  years.
  years following approval of a state license. 
   (d) The office  , the local enforcement agency designated in
accordance with Section 19309,  and  an  
any other  appropriate state or local agency may examine the
books and records of a state licensee and may visit and inspect the
premises of a state licensee, as the office or state or local agency
deems necessary to perform its duties under this chapter.  All
inspections shall be conducted during standard business hours of the
licensed facility. 
   (e) Books or records requested by the office or an appropriate
state or local agency shall be provided by the licensee no later than
five business days after the request is made.
   (f) The  office   office, the local
enforcement agency designated pursuant to Section 19309,  or
 a   any other  state or local agency may
enter and inspect the premises of a facility issued a state license
between the hours of 8 a.m. and 8 p.m. on any day that the facility
is open, or at any reasonable time, to ensure compliance and
enforcement of the provisions of this chapter or a local ordinance.
   (g) If a licensee or an employee of a licensee refuses, impedes,
obstructs, or interferes with an inspection pursuant to this section,
the state license may be summarily suspended and the licensing
authority shall directly commence proceedings for the revocation of
the state license.
   (h) If a licensee or an employee of a licensee fails to maintain
or provide the books and records required pursuant to this section,
the licensee shall be subject to a civil fine of fifteen thousand
dollars ($15,000) per individual violation.
   (i) All  cultivation   cultivator,
distributor,  and dispensing licensees shall be subject to
 an annual audit,   inspection,  as
specified by the licensing authority, in order to ensure 
proper documentation is kept at each site or facility. The reasonable
costs of the audit shall be paid for by the licensee.  
compliance with this chapter, including, but not limited to,
maintaining proper documentation at each site or facility. 

   19327.  (a) A licensee may only hold a state license in up to two
separate license categories, as follows:
   (1) Type 1, 1A, and 5 licensees may apply for type 6A, 6B, 7A, and
7B licenses or type 10, 11, and 12 licenses.
   (2) Type 6A, 6B, 7A, and 7B licensees may apply for type 1, 1A,
and 5 licenses or type 10, 10D, 11, 11D, 12, and 12D licenses.
   (3) Type 10, 11, and 12 licensees may apply for type 1, 1A, and 5
licenses or type 6A, 6B, 7A, and 7B licenses.
   (4) Type 10D, 11D, and 12D licensees may apply for type 6A, 6B,
7A, and 7B licenses.
   (b) Types 2, 2A, 3, 3A, 4, and 8 licensees shall not hold licenses
in any other category.
   (c) Type 9 licensees may apply only for one additional license
from either the cultivation, manufacturing, or dispensing category.
   (d) It is the intent of the Legislature to further develop which
licensees may hold more than one license type.  
   19327.  (a) A licensee may only hold a state license in up to two
separate license categories, as follows:
   (1) Type 1, 1A, 2, and 2A licensees, or a combination thereof, may
apply for a Type 6 or 7 state license, or a combination thereof.
   (2) Type 6 and 7 licensees, or a combination thereof, may apply
for a Type 1, 1A, 2, 2A state license, or a combination thereof.
   (3) Type 6 and 7 licensees, or a combination thereof, may apply
for a Type 10A state license.
   (4) Type 10A licensees may apply for a Type 6 and 7 state license,
or a combination thereof.
   (5) Type 1, 1A, 2, 2A licensees, or a combination thereof, may
apply for a Type 10A state license.
   (6) Type 10A licensees, may apply for Type 1, 1A, 2, 2A state
license, or a combination thereof.
   (b) Except as provided in subdivision (a), a person or entity that
holds a state license is prohibited from licensure for any other
activity authorized under this chapter, and is prohibited from
holding an ownership interest in real property, personal property, or
other assets associated or used in any other license category.
   (c) A licensee conducting commercial cannabis activity in a
jurisdiction that, prior to January 1, 2016, imposed a local
ordinance requiring a qualified businesses or individuals to
cultivate, manufacture, and dispense medical cannabis or medical
cannabis products, with all commercial cannabis activity being
conducted by a single licensee, may maintain their current categories
of licensure.  
   19327.2.  A licensee with a Type 10 or Type 10A state license
shall not also be licensed as a retailer of alcoholic beverages
pursuant to Division 9 (commencing with Section 23000). 
   19328.  Each licensing authority shall make recommendations to the
Legislature pertaining to the establishment of an appeals and
judicial review process for persons aggrieved by a final decision of
the licensing authority.
   19329.  This chapter and Article 2 (commencing with Section 11357)
and Article 2.5 (commencing with Section 11362.7) of Chapter 6 of
Division 10 of the Health and Safety Code  do not 
 shall not interfere with an employer's rights and obligations to
maintain a drug and alcohol free workplace or  require an
employer to permit or accommodate the use, consumption, possession,
transfer, display, transportation, sale, or growth of cannabis in the
workplace or affect the ability of employers to have policies
 restricting   prohibiting  the use of
cannabis by employees  and prospective employe   es
 , or prevent employers from complying with state or 
federal law.

      Article 6.  Provisional Licensing


   19330.  (a) Each licensing authority shall, as soon as practicable
following January 1, 2016, allow a qualified applicant for licensure
to apply  for and   for,  receive  ,
and renew  a provisional license to engage in commercial
cannabis activity so as to ensure an adequate supply of medical
cannabis upon full implementation of this chapter.  The
provisional license shall have a scheduled expiration date, as 
 determined by the licensing authority. 
   (b) Each licensing authority shall establish appropriate fees not
to exceed the reasonable regulatory costs to the licensing authority
for the issuance  and renewal  of a provisional license
under its jurisdiction.
   (c) Each licensing authority shall, if the applicant meets all the
requirements in this section, issue a provisional license to
individuals and entities that the licensing authority determines
were, during the three months prior to  January 
 March  1, 2016, regularly cultivating, processing,
manufacturing, transporting, or distributing medical cannabis
collectively or cooperatively in full compliance with any applicable
local ordinance, and to continue to do so until the licensee's
application for a state license has been approved or denied under
this chapter, but no later than 90 days after the licensing authority
begins accepting applications for regular state licenses. The
licensing authority may consult with relevant local agencies in
making a determination on whether a provisional license applicant is
in compliance with applicable ordinances.  Priority for
provisional licensure shall be given to those businesses in
compliance with local ordinances prior to September 1, 2015. 
   (d) To qualify for a provisional license, an applicant shall
disclose to the appropriate licensing authority all of the following
information in writing:
   (1) The names, addresses, and dates of birth of each principal
officer, owner, or board member.
   (2) The common street address and assessor's parcel number of the
property at which the licensee conducts activity under the authority
of the license.
   (3) The common street address and assessor's parcel number of the
property at which cultivation activity was or is to be conducted.
   (4) For the three months prior to  January  
March  1, 2016, the quantity of cannabis cultivated, processed,
manufactured, tested, transported, or sold at a location, and the
quantity expected to be cultivated, processed, manufactured, tested,
transported, or sold from  January   March 
1, 2016, to  July   September  1, 2016,
inclusive. The licensee shall make its records of current activity,
and activity for the three months prior to  January 
 March  1, 2016, available to the licensing authority upon
request.
   (5) For an applicant seeking a  cultivation or dispensary
license,   license to cultivate, distribute, or dispense
medical cannabis,  a notarized statement from the owner of real
property or landlord where the  cultivation or dispensing of
commercial cannabis   licensed  activities will
occur, as proof to demonstrate the landowner has acknowledged and
consented to permit  cultivation or dispensary  
the proposed  activities to be conducted on the property by the
tenant applicant.
   (e) Upon receipt of the application materials and fee, if the
applicant meets all the requirements of this section and if the
applicant has not committed any act or crime constituting grounds for
the denial of licensure, the licensing authority shall issue  or
renew  a provisional license and send a proof of issuance 
or renewal  to the applicant.
   (f) Notwithstanding any other provision of this section, a
licensing authority shall not issue  or renew  a provisional
license to an individual or entity, or for a premises, against whom
there are pending state or local administrative or judicial
proceedings or actions initiated by a city, county, or city and
county under an applicable local ordinance, or who has been
determined through those proceedings to have violated a local
ordinance related to cannabis activity, or that knowingly provides
false or fraudulent information on an application for licensure.

   (g) Entities that are provided immunity under Measure D, approved
by the voters of the City of Los Angeles at the May 21, 2013, general
election, shall be considered the equivalent of entities that are
registered, permitted, or licensed as a medical cannabis business,
dispensary, or other entity involved in providing medical cannabis to
patients under a local ordinance and shall be considered in
compliance with a local ordinance for the purposes of this section.
 
   (h) 
    (g)  A provisional licensee shall comply with all
standards and requirements applicable to a licensee under this
chapter, including, but not limited to, the production,
recordkeeping, security, and transportation requirements and
standards. 
   (i) 
    (h)  Beginning July 1, 2017, all commercial cannabis
activity shall be conducted between licensees of commercial cannabis
activity. If the licensing authority has not promulgated its
respective regulations by that date, the licensing authority shall
provide an extension for all provisional licenses for applicants
abiding by the provisions of this chapter. 
   (i) A provisional license issued pursuant to this section shall
automatically terminate upon a licensing agency's issuance of a
regular state license. 

      Article 7.  Licensed Cultivation Sites


   19332.  (a) The Division of Medical Cannabis Cultivation in the
Department of Food and Agriculture shall promulgate regulations
governing the licensing of cultivation sites. For purposes of this
chapter, the Secretary of the Department of Food and Agriculture
shall declare medical cannabis to be an agricultural product. The
department shall develop standards for the production and labeling of
all edible medical cannabis products, standards for the use of
pesticides and rodenticides in cultivation, and, in consultation with
the State Department of Public Health, maximum tolerances for
pesticides, rodenticides, and other foreign object residue in
harvested cannabis.
   (b) The Department of Food and Agriculture shall have the
authority necessary for the implementation of this chapter.
Department regulations shall do all of the following:
   (1) Provide that weighing or measuring devices used in connection
with the sale or distribution of medical cannabis are required to
meet standards  analogous   equivalent  to
Division 5 (commencing with Section 12001).
   (2) Require that the application of pesticides or other pest
control in connection with the indoor or outdoor cultivation of
medical cannabis shall meet standards  analogous 
 equivalent  to Division 6 (commencing with Section 11401)
of the Food and Agricultural Code and its implementing regulations.
   (3) Require that indoor and outdoor cannabis cultivation by
licensees is conducted in accordance with state and local laws and
best practices related to land conversion, grading, electricity
usage, water usage, agricultural discharges, and similar matters.
   (c) State licenses to be issued by the Division of Medical
Cannabis Cultivation are as follows:
   (1) Type 1, or "specialty outdoor," for outdoor cultivation of
less than 5,000 square feet of total  area  
canopy size  on one  property. Maximum of 50 mature
plants on the property.   premises. 
   (2) Type 1A, or "specialty indoor," for indoor cultivation of less
than 5,000 square feet of total  area   canopy
size  on one  property. Maximum of 50 mature plants on
the property.   premises. 
   (3) Type 2, or "small outdoor," for outdoor cultivation between
5,001 and 10,000 square feet of total  area  
canopy size  on one  property. Maximum of 99 mature
plants on the property.   premises. 
   (4) Type 2A, or "small indoor," for indoor cultivation between
5,001 and 10,000 square feet of total  area  
canopy size  on one  property. Maximum of 99 mature
plants on the property.   premises. 
   (5) Type 3, or  "medium outdoor,"   "outdoor,
  "  for outdoor cultivation between 10,001 and
 30,000   44,000  square feet of total
 area   canopy size  on one 
property. Maximum of 299 mature plants on the property. 
 premises.  The Division of Medical Cannabis Cultivation
shall limit the number of licenses allowed of this type. 
   (6) Type 3A, or "medium indoor," for indoor cultivation between
10,001 and 30,000 square feet of total area on one property. Maximum
of 299 mature plants on the property. The Division of Medical
Cannabis Cultivation shall limit the number of licenses allowed of
this type.  
   (7) Type 4, or "large outdoor," for outdoor cultivation greater
than 30,001 square feet of total area on one property. Maximum of 500
mature plants on the property. The Division of Medical Cannabis
Cultivation shall limit the number of licenses allowed of this type.
 
   (8) 
    (6)  Type  5,   4,  or
"nursery," for cultivation of medical cannabis solely as a nursery.
Type  5   4  licensees may transport live
plants.
   (d) All license fees collected by the division pursuant to this
chapter shall be deposited into the Medical Cannabis Cultivation Fees
Account, which is hereby established within the fund. All moneys
within this account are available upon appropriation by the
Legislature to the division solely for the purposes of fully funding
and administering this chapter, including, but not limited to, the
costs incurred by the division for its administrative expenses and
costs and the costs of regulation.
   (e) It is the intent of the Legislature to establish appropriate
protocols for the collection of the specific location of cultivation
sites. 
   19333.  An employee engaged in commercial cannabis cultivation
activity shall be subject to Wage Order 4-2001 of the Industrial
Welfare Commission. 

      Article 8.  Licensed  Dispensing Facilities 
 Distributors, Dispensaries, and Transporters 


   19334.  (a) The State Board of Equalization shall promulgate
regulations governing the licensing and regulation of 
wholesalers,   distributors,  dispensing
facilities, and transporters. State enforcement shall be conducted in
coordination with local authorities. 
   (b) By March 1, 2016, the State Board of Equalization shall submit
a request for proposal to the public regarding a tracking program
for medical cannabis and medical cannabis products as part of the
anti-diversion effort. The State Board of Equalization shall choose a
supplier and begin full implementation of the program prior to the
issuance of state licenses pursuant to this chapter. 
   (b) State licenses to be issued by the State Board of Equalization
are as follows: 
   (1) Type 9, or "wholesale," for the storage of medical cannabis or
medical cannabis products. Maximum storage shall be two pounds of
dried flower or 200 individual units per medical cannabis product.
 
   (2) 
    (1)  Type 10, or  "small dispensary," for
dispensaries with 1-50 employees, including management. 
 "dispensary," for the retail of medical cannabis or medical
cannabis products. This license shall allow for delivery upon local
approval.  
   (3) Type 10D, or "small dispensary-delivery," for dispensaries
with the same restrictions as Type 10; also allows for delivery.
 
   (2) Type 10A or "special dispensary status," for dispensers who
have no more than three licensed dispensary facilities. This license
shall allow for delivery with local approval.  
   (4) 
    (3)  Type 11, or  "medium dispensary," for
dispensaries with 51-100 employees, including management. 
 "distributor," for the processing and certification of the
content of all medical cannabis or medical cannabis products that are
transported or delivered by licensees. A Type 11 licensee shall not
hold a license in any other license category and shall not own, or
have an ownership interest in, a facility licensed pursuant to this
chapter  other than a security interest, lien, or
encumbrance on property that is used by a licensee.  
   (5) Type 11D, or "medium dispensary-delivery," for dispensaries
with the same restrictions as Type 11; also allows for delivery.
 
   (6) 
    (4)  Type 12, or  "large dispensary," for
dispensaries with 100 employees or more, including management.
  "transport," for transporters of medical cannabis or
medical cannabis products.  
   (7) Type 12D, or "large dispensary-delivery," for dispensaries
with the same restrictions as Type 12; also allows for delivery.
 
   (8) Type 13, or "transport," for transporters of medical cannabis
and medical cannabis products.  
   19334.5.  (a) The State Board of Equalization shall adopt a
medical cannabis and medical cannabis products track and trace
process for reporting the movement of cannabis items throughout the
distribution chain that also employs secure packaging and that is
capable of providing information that captures, at a minimum, all of
the following:
   (1) The licensee receiving the product.
   (2) The transaction date.
   (3) Any other information deemed necessary by the State Board of
Equalization for the taxation and regulation of medical cannabis and
medical cannabis products.
   (b) It is the intent of the Legislature, in subsequent
legislation, to adequately fund the medical cannabis and medical
cannabis products track and trace process.  
   19335.  (a) The provisions of Chapter 4 (commencing with Section
55121) of Part 30 of Division 2 of the Revenue and Taxation Code
shall apply with respect to the State Board of Equalization's
collection of the fees, civil fines, and penalties imposed pursuant
to this chapter.
   (b) The provisions of Chapter 8 (commencing with Section 55381) of
Part 30 of Division 2 of the Revenue and Taxation Code shall apply
with respect to the disclosure of information under this chapter.


      Article 9.  Licensed Transporters


   19336.  (a) A licensee authorized to transport, or transport and
deliver, medical cannabis and medical cannabis products shall do so
only as set forth in this chapter.
   (b) Prior to transporting or delivering medical cannabis or
medical cannabis products, a licensee authorized to transport or
deliver medical cannabis or medical cannabis products shall do both
of the following:
   (1) Complete an electronic shipping manifest as prescribed by the
licensing authority. All delivery shipping manifests shall not
identify the qualified patient or primary caregiver by name or
address.
   (2) Securely transmit the manifest to the licensing authority and
the licensee that will receive the medical cannabis product, as
applicable.

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

   (d) The licensee receiving the shipment shall maintain each
electronic shipping manifest and shall make it available upon request
to agents of the licensing authority, local law enforcement
officers, or any other designated enforcement agency.
   (e) Upon receipt of the transported shipment, a licensee shall
submit to the licensing agency a record verifying receipt of the
shipment and the details of the shipment. 
   19336.5.  An entity licensed pursuant to Section 19332, 19334, or
19342 may transport between licensees medical cannabis or medical
cannabis products with a total retail value less than the statewide
monetary threshold, which shall be adopted by regulation by the
licensing authority after review by the task force and the office.

   19337.  (a) Transported and delivered medical cannabis or medical
cannabis products shall be transported only in a storage compartment
that is securely affixed to the interior of the transporting vehicle
and that is not visible from outside the vehicle. This requirement
shall only apply to licensees transporting medical cannabis or
medical cannabis products with a total retail value of at least an
amount equal to a statewide monetary threshold, which shall be
adopted by regulation by the licensing authority after review by the
task force and the office.
   (b)  A   Except   as provided in
Section 19340, a  vehicle transporting medical cannabis or
medical cannabis products shall travel only directly between licensed
facilities, unless otherwise authorized under its license.  All
transport and deliveries shall be conducted between 8:00 a.m. and
8:00 p.m. Transportation and delivery of shipments do not have to be
completed in a single day. 
   (c) All transport or delivery vehicles shall be staffed with a
minimum of two  direct  employees  of the licensee 
. At least one employee shall remain with the vehicle at all times
when the vehicle contains medical cannabis. This requirement shall
only apply to licensees transporting medical cannabis or medical
cannabis products with a total retail value of at least an amount
equal to a statewide monetary threshold, which shall be adopted by
regulation by the licensing authority after review by the task force
and the office.
   (d) Each transport or delivery team member shall possess
documentation of licensing and a government-issued identification
card at all times when transporting or delivering medical cannabis
and shall produce it upon the request of agents of any 
regulatory   licensing  authority or a law
enforcement official. 
   (e) This section shall be enforced by the Department of the
California Highway Patrol in collaboration with local agencies. 

   19337.1.  Notwithstanding Section 19337, a licensed transporter
may transport medical cannabis products to an unlicensed dispensing
facility within the City of Los Angeles, provided the following
requirements are met:
   (a) The licensed transporter shall comply with subdivisions (b)
and (c) of Section 19336, except that, in complying with paragraph
(2) of subdivision (b), the licensed transporter shall securely
transmit the manifest to the licensing authority and the unlicensed
dispensing facility that will receive the medical cannabis products.
   (b) The licensed transporter shall record and maintain, in both
physical and electronic format, the following information with
respect to the delivery of medical cannabis products to the
unlicensed dispensing facility:
   (1) The date of delivery.
   (2) The address of delivery.
   (3) The name of the individual who completed the delivery.
   (4) The name of the individual at the facility who received the
delivery.
   (5) The name of the owner or operator of the facility.
   (6) The name of the facility, as reflected on any signage.
   (7) The quantity, or weight, and variety of all medical cannabis
products delivered.
   (8) The source of all medical cannabis delivered.
   (9) The monetary amount charged and received for all medical
cannabis products delivered.
   (c) The recorded information specified in subdivision (b) shall be
transmitted within five days to the City of Los Angeles, in a manner
to be determined and specified by the City of Los Angeles.
   (d) The records required by this section shall be maintained and
made available in accordance with the provisions of Section 19326.

   19338.  (a) The licensing authority shall develop a database
containing the electronic shipping manifests, which shall include,
but not be limited to, the following information:
   (1) The quantity, or weight, and variety of products shipped.
   (2) The estimated times of departure and arrival.
   (3) The quantity, or weight, and variety of products received.
   (4) The actual time of arrival.
   (5) A categorization of the product.
   (b) The database shall be designed to flag irregularities for a
 regulatory   licensing  authority to
investigate. An authorized enforcement authority may, at any time,
inspect shipments and request documentation for current inventory.
   19339.  (a) This chapter shall not be construed to authorize or
permit a licensee to transport or deliver, or cause to be transported
or delivered, cannabis or cannabis products outside the state,
unless authorized by federal law.
   (b) A local jurisdiction shall not prevent transportation of
medical cannabis or medical cannabis products on public roads by a
licensee transporting medical cannabis or medical cannabis products
that acts in compliance with this  chapter and applicable
local ordinances.   chapter.  
   (c) A local jurisdiction shall not prevent delivery of medical
cannabis or medical cannabis products on public roads by a licensee
that acts in compliance with this chapter and applicable local
ordinances. 
   19340.  (a) All mobile, vehicular, and  Internet-based
delivery services   technology platforms that enable
  qualified patients or primary caregivers to arrange for
any of the above-described functions with a third party  are
prohibited  ,  except as authorized by this chapter.
   (b) Upon approval of the licensing authority, a licensee
authorized to provide delivery services shall abide by the following:

   (1) The city, county, or city and county in which the premises of
the licensee is located, and in which each delivery is made, must
specifically permit delivery service by ordinance referring to this
section.
   (2) All employees delivering medical cannabis or medical cannabis
products must carry a current license authorizing those services with
them during deliveries, and must present that license upon request
to state and local law enforcement, employees of regulatory
authorities, and other state and local agencies enforcing this
chapter. 
   (3) Delivery of medical cannabis or medical cannabis products
pursuant to this section shall comply with subdivision (c) of Section
19336 and subdivisions (a), (c), and (d) of Section 19337. 
   (c) A  city, county, or city and  county shall
have the authority to impose a tax, pursuant to Section 19355, on
each delivery transaction completed by a licensee.
   (d) Whenever a licensing authority has knowledge that a licensee
has transported or delivered, or arranged or facilitated the
transport or delivery of, medical cannabis or medical cannabis
products in violation of this chapter, the licensing authority shall
summarily suspend that facility's license and shall without delay
commence proceedings for the revocation of the license in accordance
with this chapter.
   (e) All license fees collected by the licensing authority pursuant
to this chapter shall be deposited into the Medical Cannabis Retail
Fees Account, which is hereby established within the fund. All moneys
within the Medical Cannabis Retail Fees Account are available upon
appropriation to the State Board of Equalization, solely for the
purposes of fully funding and administering this chapter, including,
but not limited to, the costs incurred by the board for its
administrative expenses and costs and the costs of regulation. 
   19341.  Notwithstanding any other law or the wage orders of the
Industrial Welfare Commission, a driver employed to transport medical
cannabis or medical cannabis products shall be entitled to overtime
pay pursuant to Section 510 of the Labor Code. 

      Article 10.  Licensed Manufacturers and Certified Laboratories


   19342.  (a) The Division of Medical Cannabis Manufacturing and
Testing within the State Department of Public Health shall promulgate
regulations governing the licensing of cannabis manufacturers.
   (b) Licenses to be issued by the division are as follows: 

   (1) Type 6A, or "small manufacturing level 1," for manufacturing
sites that use a maximum of XXX pounds of medical cannabis each year
to produce medical cannabis products, using nonvolatile solvents.
 
   (2) Type 6B, or "small manufacturing level 2," for manufacturing
sites that use a maximum of XXX pounds of medical cannabis each year
to produce medical cannabis products, using volatile solvents.
 
   (3) Type 7A, or "large manufacturing level 1," for manufacturing
sites that use a maximum of XXX pounds of medical cannabis each year
to produce medical cannabis products, using nonvolatile solvents. The
division shall limit the number of licenses of this type. 

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

   (1) Type 6, or "manufacturing level 1," for manufacturing sites
that produce medical cannabis products using nonvolatile solvents.
 
   (2) Type 7, or "manufacturing level 2," for manufacturing sites
that produce medical cannabis products using volatile solvents. The
division shall limit the number of licenses of this type. 

   (5) 
    (3)  Type 8, or "testing," for testing of medical
cannabis and medical cannabis products. Type 8 licensees shall have
their facilities certified according to regulations set forth by the
division.  A Type 8 licensee shall not hold a license in another
license category of this chapter and shall not own or have ownership
interest in a facility licensed pursuant to this chapter, other than
a security interest, lien, or encumbrance on property that will be
used by the licensee. 
   (c) All license fees collected by the division pursuant to this
chapter shall be deposited into the Medical Cannabis Manufacturing
 and Testing  Fees Account, which is hereby
established within the fund. All moneys within the Medical Cannabis
Manufacturing  and Testing  Fees Account are
available upon appropriation by the Legislature to the division,
solely for the purposes of fully funding and administering this
chapter, including, but not limited to, the costs incurred by the
division for its administrative expenses and costs and the costs of
regulation.
   19343.  (a) The State Department of Public Health shall promulgate
standards for certification of testing laboratories to perform
random sample testing of all  medical cannabis and  medical
cannabis products, including standards for onsite testing.
   (b) Certification of testing laboratories shall be consistent with
general requirements for the competence of testing and calibration
activities, including sampling, using standard methods established by
the International Organization for Standardization, specifically
ISO/IEC 17020 and ISO/IEC 17025.
   (c) These requirements shall apply to all entities, including
third-party laboratories, engaged in the testing of medical cannabis
pursuant to this chapter.
   19344.  (a) A laboratory certified by the department to perform
random sample testing of  medical cannabis or  medical
cannabis products shall not  acquire, process, possess,
store, transfer, transport, or dispense medical cannabis for any
purpose other than those authorized by Article 2.5 (commencing with
Section 11362.7) of Chapter 6 of Division 10 of the Health and Safety
Code.   acquire or receive medical cannabis or medical
cannabis products except from a licensed facility in accordance 
 with this chapter, and shall not distribute, sell, deliver,
transfer, transport, or dispense medical cannabis or medical cannabis
products except to the licensed facility from which the medical
cannabis or medical cannabis products were acquired or received.
 All transfer or transportation shall be performed pursuant to a
specified chain of custody protocol. 
   (b) A laboratory certified by the department to perform random
sample testing of medical cannabis products shall not acquire,
process, possess, store, transfer, transport, or dispense medical
cannabis plants or medical cannabis products except through a
patient, primary caregiver, or a facility issued a state license. All
transfer or transportation shall be performed pursuant to a
specified chain of custody protocol.  
   (c) 
    (b)  The department shall develop procedures to ensure
that testing of cannabis occurs prior to delivery to dispensaries or
any other business, and specify how often licensees shall test
cannabis, that the cost of testing shall be borne by the licensed
cultivators, and requiring destruction of harvested batches whose
testing samples indicate noncompliance with health and safety
standards promulgated by the department, unless remedial measures can
bring the cannabis into compliance with quality assurance standards
as promulgated by the department. 
   (d) 
    (c)  The department shall establish a certification fee,
and laboratories shall pay a fee to be certified. Certification fees
shall not exceed the reasonable regulatory cost of the certification
activities. 
   (e) 
    (d)  All certification fees collected by the department
pursuant to this chapter shall be deposited into the Medical Cannabis
 Manufacturing and  Testing Fees Account, which is
hereby established within the fund.  All moneys in the Medical
Cannabis Testing Fees Account shall be available to the division upon
appropriation of the Legislature solely for the purpose of fully
funding administration of this chapter, including, but not limited
to, the costs incurred by the division for the administrative
expenses and costs and the costs of regulation. 
   19345.  (a) The Division of Medical Cannabis Manufacturing and
Testing within the State Department of Public Health shall promulgate
the following standards:
   (1) Health and safety standards applicable to all medical
cannabis, and medical cannabis products, including maximum potency
 standards.   standards for medical cannabis
products. 
   (2) Standards for licensed manufacturers of medical cannabis and
medical cannabis products, including, but not limited to, edible
products.
   (b) At a minimum, the standards required by this section shall do
all of the following:
   (1) Prescribe sanitation standards  analogous 
 equivalent  to the California Retail Food Code (Part 7
(commencing with Section 113700) of Division 104 of the Health and
Safety Code) for food preparation, storage, handling, and sale of
edible medical cannabis products. For purposes of this chapter,
edible medical cannabis products are deemed to be unadulterated food
products.
   (2) Require that edible medical cannabis products produced,
distributed, provided, donated, or sold by licensees shall be limited
to nonpotentially hazardous food, as established by the State
Department of Public Health pursuant to Section 114365.5 of the
Health and Safety Code.
   (3) Require that facilities in which edible medical cannabis
products are prepared shall be constructed in accordance with
applicable building standards, health and safety standards, and other
state laws.
   (4) Require that all edible medical cannabis products shall be
packaged at the original point of preparation.
   (c) No person shall engage in the manufacture, packing, or holding
of processed food containing edible cannabis unless the person has a
valid registration from the department pursuant to Section 110460 of
the Health and Safety Code. Health and safety standards prescribed
by this section or promulgated through regulation may be enforced by
local environmental health departments.
   19346.  (a) Prior to sale or distribution at a licensed dispensing
 facility, edible   facility or an unlicensed
dispensing facility in the City of Los Angeles,  medical
cannabis products shall be labeled and in a tamper-evident package.
Labels and packages of  edible  medical cannabis
products shall meet the following requirements:
   (1)  Edible medical   Medical  
 cannabis packages and labels shall not be made to be attractive
to children.
   (2) All  edible  medical cannabis product labels
shall include the following information, prominently displayed and in
a clear and legible font:
   (A) Manufacture date and source.
   (B) The statement "KEEP OUT OF REACH OF CHILDREN AND ANIMALS" in
bold print.
   (C) The statement "FOR MEDICAL USE ONLY."
   (D) The statement "THE INTOXICATING EFFECTS OF THIS PRODUCT MAY BE
DELAYED BY UP TO TWO HOURS."
   (E)  Net   For packages containing only dried
cannabis, the net  weight of medical cannabis in the package.
   (F) A warning if nuts or other known allergens are  used
and the total weight, in ounces or grams, of medical cannabis in the
package.   used. 
   (G) List of pharmacologically active ingredients, including, but
not limited to,  tetrahydrocannabinol (THC) and cannabidiol
(CBD)   cannabinoid  content, the  THC
  cannabinoid  amount in milligrams per serving,
servings per package, and the  THC   cannabinoid
 amount in milligrams for the package total.
   (H) Clear indication, in bold type, that the product contains
medical cannabis.
   (I) Identification of the source and date of cultivation and
manufacture. 
   (J) The name and location of the licensed dispensing facility
providing the product.  
   (K) 
    (J)  The date of sale. 
   (L) 
    (K)  Any other requirement set by the department.
   (b) Only generic food names may be used to describe edible medical
cannabis products.

      Article 11.  Cannabis Employee Certification and Apprenticeship



   19350.  This article applies only to cultivation sites and
dispensaries.
   19351.  The Division of Labor Standards Enforcement shall do all
of the following:
   (a) Maintain minimum standards for the competency and training of
employees of a licensed cultivator or dispensary through a system of
testing and certification.
   (b) Maintain an advisory committee and panels as necessary to
carry out its functions under this article. There shall be employer
representation on the committee and panels.
   (c) Adopt regulations as determined to be necessary to implement
this article.
   (d) Issue certification cards to employees certified pursuant to
this article.
   (e) Establish registration fees in an amount reasonably necessary
to implement this article, not to exceed twenty-five dollars ($25)
for the initial registration. There shall be no fee for annual
renewal of registration. Fees collected for cultivation sites and
dispensaries shall be placed into the Medical Cannabis Cultivation
Fee Account and the Medical Cannabis Retail Fee Account,
respectively.
   19352.  (a) By January 1, 2017, the Division of Labor Standards
Enforcement shall develop a certification program for cannabis
employees. Commencing January 1, 2019, except as provided in
subdivision (c), certification shall be required of all persons who
perform work as cannabis employees.
   (b) Individuals desiring to be certified shall submit an
application for certification and examination.
   (c) (1) Certification is not required for registered apprentices
working as cannabis employees as part of a state-approved
apprenticeship program. An apprentice who is within one year of
completion of his or her term of apprenticeship shall be permitted to
take the certification examination and, upon passing the
examination, shall be certified immediately upon completion of the
term of apprenticeship.
   (2) Commencing January 1, 2019, an uncertified person may perform
work for which certification is otherwise required in order to
acquire the necessary on-the-job experience for certification
provided that the person shall be under the direct supervision of a
cannabis employee certified pursuant to this section who is
responsible for supervising no more than one uncertified person.
   (3) The Division of Labor Standards Enforcement may develop
additional criteria governing this subdivision.
   19353.  (a) The following shall constitute additional grounds for
disciplinary proceedings, including suspension or revocation of the
license issued pursuant to this chapter:
   (1) The licensee willfully employs one or more uncertified persons
to perform work as cannabis employees in violation of this article.
   (2) The licensee willfully fails to provide adequate supervision
of uncertified workers.
   (3) The licensee willfully fails to provide adequate supervision
of apprentices.
   (b) The Labor Commissioner shall maintain a process for referring
cases to the appropriate  regulatory   licensing
 authority when it has been determined that a violation of this
section has likely occurred. The Labor Commissioner shall have a
memorandum of understanding with the regulatory authorities in
furtherance of this section.
   (c) Upon receipt of a referral by the Labor Commissioner alleging
a violation under this section, the appropriate licensing authority
shall open an investigation. Disciplinary action against the licensee
shall be initiated within 60 days of the receipt of the referral.
The licensing authority may initiate disciplinary action against a
licensee upon his or her own investigation, the filing of a
complaint, or a finding that results from a referral from the Labor
Commissioner alleging a violation under this section. Failure of the
employer or employee to provide evidence of certification or
apprentice status shall create a rebuttable presumption of violation
of this section.
   (d) This section shall become operative on January 1, 2019.

      Article 12.  Taxation


   19355.  The office and other state agencies may assist state
taxation authorities in the development of uniform policies for the
state taxation of state licensees. 
   19356.  (a) (1) In addition to any authority otherwise provided by
law, the board of supervisors of a county may impose, by ordinance,
a tax on the privilege of cultivating, dispensing, producing,
processing, preparing, storing, providing, donating, selling, or
distributing cannabis by a licensee operating pursuant to this
chapter. The tax may be imposed for general governmental purposes or
for purposes specified in the ordinance by the board of supervisors.
   (2) The board of supervisors shall specify in the ordinance
proposing the tax the activities subject to the tax, the applicable
rate or rates, the method of apportionment, and the manner of
collection of the tax. A tax imposed pursuant to this section is a
tax and not a fee or special assessment, and the tax is not required
to be apportioned on the basis of benefit to any person or property
or be applied uniformly to all taxpayers or all real property.
   (3) A tax imposed by a county pursuant to this section by a county
may include a transactions and use tax imposed solely for cannabis
or cannabis products, which shall otherwise conform to Part 1.6
(commencing with Section 7251) of Division 2 of the Revenue and
Taxation Code. Notwithstanding Section 7251.1 of the Revenue and
Taxation Code, the tax may be imposed at any rate specified by the
board of supervisors, and the tax rate authorized by this section
shall not be considered for purposes of the combined tax rate
limitation established by that section.
   (4) The tax authorized by this section may be imposed upon any or
all of the activities set forth in paragraph (1), regardless of
whether the activity is undertaken individually, collectively, or
cooperatively, and regardless of whether the activity is for
compensation or gratuitously, as determined by the board of
supervisors.
   (5) The board of supervisors shall specify whether the tax applies
throughout the entire county or within the unincorporated area of
the county.
   (b) In addition to any other method of collection authorized by
law, the board of supervisors may provide for the collection of the
tax imposed pursuant to this section in the same manner, and subject
to the same penalties and priority of lien, as other charges and
taxes fixed and collected by the county.
   (c) Any tax imposed pursuant to this section shall be subject to
applicable voter approval requirements imposed by any other law.
   (d) For purposes of this section, "cannabis" shall have the same
meanings as the definition set forth in Section 19300.
   (e) This section does not limit or prohibit the levy or collection
or any other fee, charge, or tax, or any license or service fee or
charge upon, or related to, the activities set forth in subdivision
(a), as                                              otherwise
provided by law. This section shall not be construed as a limitation
upon the taxing authority of any county as provided by other law.
 
   19356.  It is the intent of the Legislature to grant authority to
the board of supervisors of a county to impose appropriate taxes on
facilities licensed pursuant to this chapter. 

      Article 13.  Funding


   19360.  Each licensing authority shall establish a scale of
application, licensing, and renewal fees, based upon the cost of
enforcing this chapter, as follows:
   (a) Each licensing authority shall charge each licensee a
licensure or renewal fee. The licensure or renewal fee shall be
calculated to cover the costs of administering this chapter. The
licensure fee may vary depending upon the varying costs associated
with administering the various regulatory requirements of this
chapter as they relate to the nature and scope of the different
licensure activities, but shall not exceed the reasonable regulatory
costs to the licensing authority.
   (b) The total fees assessed pursuant to this chapter, including,
but not limited to, provisional license fees set forth in Section
19330, shall be set at an amount that will fairly and proportionately
generate sufficient total revenue to fully cover the total costs of
administering this chapter. 
   (c) All license fees shall be set on a scaled basis by the
licensing authority, dependant on the size of the business. 
   19361.  (a) The Medical Cannabis Regulation Fund is hereby
established within the State Treasury. Notwithstanding Section
16305.7 of the Government Code, the fund shall include any interest
and dividends earned on the moneys in the fund.
   (b) Except as otherwise provided, all moneys collected pursuant to
this chapter as a result of fines or penalties imposed under this
chapter shall be deposited directly into the Medical Cannabis Fines
and Penalties Account, which is hereby established within the fund,
and shall be available, upon appropriation by the Legislature to the
office, for the purposes of funding the enforcement grant program
pursuant to subdivision (c).
   (c) (1) The office shall establish a grant program to allocate
moneys from the Medical Cannabis Fines and Penalties Account to state
and local entities for the following purposes:
   (A) To assist with medical cannabis regulation and the enforcement
of this chapter and other state and local laws applicable to
cannabis activities.
   (B) For allocation to state and local agencies and law enforcement
to remedy the environmental impacts of cannabis cultivation.
   (2) The costs of the grant program under this subdivision shall,
upon appropriation by the Legislature, be paid for with moneys in the
Medical Cannabis Fines and Penalties Account.
   (d)  (1)    Funds for the establishment and
support of the regulatory activities pursuant to this chapter may be
advanced as a General Fund or special fund loan, and shall be repaid
by the initial proceeds from fees collected pursuant to this chapter
or any rule or regulation adopted pursuant to this chapter, by
January 1, 2022. 
   (2) Funds advanced pursuant to this subdivision shall be
appropriated to the office, which shall distribute the moneys to the
appropriate licensing authorities, as necessary to implement the
provisions of this chapter. 

      Article 14.  Reporting


   19363.  On or before March 1 of each year, the director shall
prepare and submit to the Legislature an annual report on the office'
s activities and post the report on the office's Internet Web site.
The report shall include, but not be limited to, the following
information for the previous fiscal year:
   (a) The amount of funds allocated and spent by the office and
licensing authorities for medical cannabis licensing, enforcement,
and administration.
   (b) The number of state licenses issued, renewed, denied,
suspended, and revoked, by state license category.
   (c) The average time for processing state license applications, by
state license category.
   (d) The number and type of enforcement activities conducted by the
licensing authorities and by local law enforcement agencies in
conjunction with the licensing authorities or the office.
   (e) The number, type, and amount of penalties, fines, and other
disciplinary actions taken by the licensing authorities.

      Article 15.  Privacy


   19365.  (a) Information identifying the names of patients, their
medical conditions, or the names of their primary caregivers received
and contained in records kept by the office or licensing authorities
for the purposes of administering this chapter are confidential and
shall not be disclosed pursuant to the California Public Records Act
(Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1
of the Government Code), except as necessary for authorized employees
of the State of California or any city, county, or city and county
to perform official duties pursuant to this chapter, or a local
ordinance.
   (b) Nothing in this section precludes the following:
   (1) Employees of any of the office or licensing authorities
notifying state or local agencies about information submitted to the
agency that the employee suspects is falsified or fraudulent.
   (2) Notifications from any of the office or licensing authorities
to state or local agencies about apparent violations of this chapter
or applicable local ordinance.
   (3) Verification of requests by state or local agencies to confirm
licenses and certificates issued by the regulatory authorities or
other state agency.
   (4) Provision of information requested pursuant to a court order
or subpoena issued by a court or an administrative agency or local
governing body authorized by law to issue subpoenas.
   (c) Information shall not be disclosed by any state or local
agency beyond what is necessary to achieve the goals of a specific
investigation, notification, or the parameters of a specific court
order or subpoena.
  SEC. 7.  Section 11362.775 of the Health and Safety Code is amended
to read:
   11362.775.  (a) Subject to subdivision (b), qualified patients,
persons with valid identification cards, and the designated primary
caregivers of qualified patients and persons with identification
cards, who associate within the State of California in order to
collectively or cooperatively cultivate cannabis for medical
purposes, shall not solely on the basis of that fact be subject to
state criminal sanctions under Section 11357, 11358, 11359, 11360,
11366, 11366.5, or 11570.
   (b) This section shall remain in effect only until 180 days after
the  Division of Medical Cannabis Regulation within the State
Board of Equalization   Governor's Office of Medical
Cannabis Regulation  posts a notice on its Internet Web site
that the licensing authorities have commenced issuing provisional
licenses pursuant to the Medical Cannabis Regulation and Control Act
(Chapter 3.5 (commencing with Section 19300) of Division 8 of the
Business and Professions Code), and as of that date is repealed.
  SEC. 8.  Section 147.5 is added to the Labor Code, to read:
   147.5.  (a) By January 1, 2017, the Division of Occupational
Safety and Health shall convene an advisory committee to evaluate
whether there is a need to develop industry-specific regulations
related to the activities of facilities issued a license pursuant to
Chapter 3.5 (commencing with Section 19300) of Division 8 of the
Business and Professions Code.
   (b) By July 1, 2017, the advisory committee shall present to the
board its findings and recommendations for consideration by the
board. By July 1, 2017, the board shall render a decision regarding
the adoption of industry-specific regulations pursuant to this
section.
  SEC. 9.  Section 3094 is added to the Labor Code, to read:
   3094.  The Division of Apprenticeship Standards shall investigate,
approve, or reject applications for apprenticeship programs for
employees of a licensee subject to Article 11 (commencing with
Section 19350) of Chapter 3.5 of Division 8 of the Business and
Professions Code. The Division of Apprenticeship Standards shall
adopt regulations necessary to implement and regulate the
establishment of the apprenticeship programs described in this
section.
  SEC. 10.  Section 2402.5 is added to the Vehicle Code, to read:
   2402.5.  The Department of the California Highway Patrol shall
establish protocols to determine whether a driver is operating a
vehicle under the influence of cannabis, and shall develop protocols
setting forth best practices to assist law enforcement agencies. The
costs to the Department of the California Highway Patrol of
implementing this subdivision shall, upon appropriation by the
Legislature, be paid for with appropriations from moneys in the Fines
and Penalties Account of the Medical Cannabis Regulation Fund.
  SEC. 11.  The provisions of this act are severable. If any
provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
  SEC. 12.  The Legislature finds and declares that Section 6 of this
act, which adds Chapter 3.5 (commencing with Section 19300) to
Division 8 of the Business and Professions Code, imposes a limitation
on the public's right of access to the meetings of public bodies or
the writings of public officials and agencies within the meaning of
Section 3 of Article I of the California Constitution. Pursuant to
that constitutional provision, the Legislature makes the following
findings to demonstrate the interest protected by this limitation and
the need for protecting that interest:
   It is necessary to maintain the confidentiality of patient and
physician information provided to the regulatory authorities in order
to protect the private medical information of patients who use
medical cannabis and to preserve the essential confidentiality of the
physician and patient relationship.
  SEC. 13.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution for
certain costs that may be incurred by a local agency or school
district because, in that regard, this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
   However, if the Commission on State Mandates determines that this
act contains other costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division 4 of
Title 2 of the Government Code.