Amended in Senate July 13, 2015

Amended in Senate June 30, 2015

Amended in Assembly June 2, 2015

Amended in Assembly May 11, 2015

Amended in Assembly May 5, 2015

Amended in Assembly April 14, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 266


Introduced by Assembly Members Bonta, Cooley, 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 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 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 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.begin delete 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.end delete 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 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 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 Governor’s Office of Medical Cannabis Regulation posts a notice on its Internet Web site that the licensing authorities have commenced issuing provisional licenses, would repeal those provisions.

(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.

(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.

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

(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.

(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:

P5    1

SECTION 1.  

The Legislature finds and declares all of the
2following:

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

9(b) Federal enforcement authorities have recognized that in
10 states that have authorized cannabis use and have enacted strong
11and effective regulatory and enforcement systems to control the
12cultivation, distribution, sale, and possession of cannabis, conduct
13in compliance with those regulatory and enforcement systems is
14less likely to threaten federal priorities, and, thus, less likely to
15require federal enforcement intervention (See: Memorandum For
16All United States Attorneys--Guidance Regarding Marijuana
P6    1Enforcement, by James M. Cole, Deputy Attorney General, August
229, 2013).

3(c) Greater certainty and minimum statewide standards are
4urgently needed regarding the obligations of medical cannabis
5facilities, and for the imposition and enforcement of regulations
6to prevent unlawful cultivation and the diversion of cannabis to
7nonmedical use.

8(d) The purpose of this act is to establish for California a robust
9medical cannabis regulatory and enforcement system to ensure
10that conduct in compliance with California’s medical cannabis
11laws does not threaten the federal priorities as set forth in the James
12M. Cole memorandum, and, therefore, does not require federal
13enforcement intervention.

14(e) The California Constitution grants cities and counties the
15authority to make and enforce, within their borders, “all local
16police, sanitary, and other ordinances and regulations not in conflict
17with the general laws.” This inherent local police power includes
18broad authority to determine, for purposes of public health, safety,
19and welfare, the appropriate uses of land within the local
20jurisdiction’s borders. The police power, therefore, allows each
21city and county to determine whether or not a medical cannabis
22dispensary or other facility that makes medical cannabis available
23may operate within its borders. This authority has been upheld by
24City of Riverside v. Inland Empire Patients Health and Wellness
25Center, Inc. (2013) 56 Cal.4th 729, and County of Los Angeles v.
26Hill (2011) 192 Cal.App.4th 861. Nothing in this act shall diminish,
27erode, or modify that authority.

28(f) If a city or county determines that a dispensary or other
29facility that makes medical cannabis available may operate within
30its borders, then there is a need for the state to license these
31dispensaries and other facilities for the purpose of adopting and
32enforcing protocols for security standards at dispensaries and in
33the transportation of medical cannabis, as well as health and safety
34standards to ensure patient safety. This licensing requirement is
35not intended in any way nor shall it be construed to preempt local
36ordinances, regulations, or enforcement actions regarding the sale
37and use of medical cannabis, including, but not limited to, security,
38signage, lighting, and inspections.

39(g) begin deleteNothing end deletebegin insertTo the extent that this act does not conflict with or
40violate Section 11362.5 of the Health and Safety Code, nothing end insert
in
P7    1this act or Article 2 (commencing with Section 11357) or Article
22.5 (commencing with Section 11362.7) of Chapter 6 of Division
310 of the Health and Safety Code is intended to preempt any local
4ordinance regulating or banning the cultivation, processing,
5manufacturing, testing, transportation, distribution, provision,
6 donation, or sale of medical cannabis, or to otherwise prevent or
7limit a city, county, or city and county from adopting or enforcing
8a zoning ordinance or other law, ordinance, or regulation that bans
9or regulates the location, operation, or establishment of any
10individual or other person that cultivates, processes, possesses,
11stores, manufactures, tests, transports, distributes, provides,
12donates, or sells cannabis.

13(h) Nothing in this act is intended to interfere with an employer’s
14rights and obligations to maintain a drug and alcohol free
15workplace or to require an employer to permit or accommodate
16the use, consumption, possession, transfer, display, transportation,
17sale, or growth of cannabis in the workplace, or to affect the ability
18of employers to have policies prohibiting the use of cannabis by
19employees and prospective employees, or otherwise complying
20with state and federal law.

21(i) Nothing in this act shall be construed to promote or facilitate
22the nonmedical, recreational possession, sale, or use of cannabis.

23(j) Nothing in this act shall have a diminishing effect on the
24protections granted to a patient or primary caregiver pursuant to
25the Compassionate Use Act of 1996.

26

SEC. 2.  

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

28

2220.05.  

(a) In order to ensure that its resources are maximized
29for the protection of the public, the Medical Board of California
30shall prioritize its investigative and prosecutorial resources to
31ensure that physicians and surgeons representing the greatest threat
32of harm are identified and disciplined expeditiously. Cases
33involving any of the following allegations shall be handled on a
34priority basis, as follows, with the highest priority being given to
35cases in the first paragraph:

36(1) Gross negligence, incompetence, or repeated negligent acts
37that involve death or serious bodily injury to one or more patients,
38such that the physician and surgeon represents a danger to the
39public.

P8    1(2) Drug or alcohol abuse by a physician and surgeon involving
2death or serious bodily injury to a patient.

3(3) Repeated acts of clearly excessive prescribing, furnishing,
4or administering of controlled substances, or repeated acts of
5prescribing, dispensing, or furnishing of controlled substances, or
6recommending cannabis to patients for medical purposes without
7a good faith prior examination of the patient and medical reason
8therefor. However, in no event shall a physician and surgeon
9prescribing, furnishing, or administering controlled substances for
10intractable pain consistent with lawful prescribing, including, but
11not limited to, Sections 725, 2241.5, and 2241.6 of this code and
12Sections 11159.2 and 124961 of the Health and Safety Code, be
13prosecuted for excessive prescribing and prompt review of the
14applicability of these provisions shall be made in any complaint
15that may implicate these provisions.

16(4) Sexual misconduct with one or more patients during a course
17of treatment or an examination.

18(5) Practicing medicine while under the influence of drugs or
19alcohol.

20(b) The board may by regulation prioritize cases involving an
21allegation of conduct that is not described in subdivision (a). Those
22cases prioritized by regulation shall not be assigned a priority equal
23to or higher than the priorities established in subdivision (a).

24(c) The Medical Board of California shall indicate in its annual
25report mandated by Section 2312 the number of temporary
26restraining orders, interim suspension orders, and disciplinary
27 actions that are taken in each priority category specified in
28subdivisions (a) and (b).

29

SEC. 3.  

Section 2242 of the Business and Professions Code is
30amended to read:

31

2242.  

(a) Prescribing, dispensing, or furnishing dangerous
32drugs as defined in Section 4022 without an appropriate prior
33examination and a medical indication, constitutes unprofessional
34conduct. Recommending medical cannabis to a patient for a
35medical purpose without an appropriate prior examination and a
36medical indication constitutes unprofessional conduct.

37(b) No licensee shall be found to have committed unprofessional
38conduct within the meaning of this section if, at the time the drugs
39were prescribed, dispensed, or furnished, any of the following
40applies:

P9    1(1) The licensee was a designated physician and surgeon or
2podiatrist serving in the absence of the patient’s physician and
3surgeon or podiatrist, as the case may be, and if the drugs were
4prescribed, dispensed, or furnished only as necessary to maintain
5the patient until the return of his or her practitioner, but in any case
6no longer than 72 hours.

7(2) The licensee transmitted the order for the drugs to a
8registered nurse or to a licensed vocational nurse in an inpatient
9facility, and if both of the following conditions exist:

10(A) The practitioner had consulted with the registered nurse or
11licensed vocational nurse who had reviewed the patient’s records.

12(B) The practitioner was designated as the practitioner to serve
13in the absence of the patient’s physician and surgeon or podiatrist,
14as the case may be.

15(3) The licensee was a designated practitioner serving in the
16absence of the patient’s physician and surgeon or podiatrist, as the
17case may be, and was in possession of or had utilized the patient’s
18records and ordered the renewal of a medically indicated
19prescription for an amount not exceeding the original prescription
20in strength or amount or for more than one refill.

21(4) The licensee was acting in accordance with Section 120582
22of the Health and Safety Code.

23

SEC. 4.  

Section 2264 of the Business and Professions Code is
24amended to read:

25

2264.  

(a) The employing, directly or indirectly, the aiding, or
26the abetting of any unlicensed person or any suspended, revoked,
27or unlicensed practitioner to engage in the practice of medicine or
28any other mode of treating the sick or afflicted which requires a
29license to practice constitutes unprofessional conduct.

30(b) Employment by, or other agreement with, a mandatory
31commercial licensee acting pursuant to the Medical Cannabis
32Regulation and Control Act or a dispensary to provide
33recommendations for medical cannabis constitutes unprofessional
34conduct.

35

SEC. 5.  

Article 25 (commencing with Section 2525) is added
36to Chapter 5 of Division 2 of the Business and Professions Code,
37to read:

 

P10   1Article 25.  Recommending Medical Cannabis
2

 

3

2525.  

(a) It is unlawful for a physician and surgeon who
4recommends cannabis to a patient for a medical purpose to accept,
5solicit, or offer any form of remuneration from or to a facility
6issued a state license pursuant to Chapter 3.5 (commencing with
7Section 19300) of Division 8, if the physician and surgeon or his
8or her immediate family have a financial interest in that facility.

9(b) For the purposes of this section, “financial interest” shall
10have the same meaning as in Section 650.01.

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

12

2525.1.  

The Medical Board of California shall consult with
13the California Marijuana Research Program, known as the Center
14for Medicinal Cannabis Research, authorized pursuant to Section
1511362.9 of the Health and Safety Code, on developing and adopting
16medical guidelines for the appropriate administration and use of
17medical cannabis.

18

2525.2.  

A physician and surgeon shall not recommend medical
19cannabis to a patient, unless that person is the patient’s attending
20physician, as defined by subdivision (a) of Section 11362.7 of the
21Health and Safety Code.

22

SEC. 6.  

Chapter 3.5 (commencing with Section 19300) is added
23to Division 8 of the Business and Professions Code, to read:

24 

25Chapter  3.5. Medical Cannabis
26

 

27Article 1.  Definitions
28

 

29

19300.  

For purposes of this chapter, the following definitions
30shall apply:

31(a) “Cannabinoid” means a chemical compound that is unique
32to and derived from cannabis, also known as phytocannabinoid.

33(b) “Cannabis” means all parts of the plant Cannabis sativa L.,
34Cannabis indica, or Cannabis ruderalis, whether growing or not;
35the seeds thereof; the resin, whether crude or purified, extracted
36from any part of the plant; and every compound, manufacture, salt,
37derivative, mixture, or preparation of the plant, its seeds, or resin.
38“Cannabis” does not include the mature stalks of the plant, fiber
39produced from the stalks, oil or cake made from the seeds of the
40plant, any other compound, manufacture, salt, derivative, mixture,
P11   1or preparation of the mature stalks (except the resin extracted
2therefrom), fiber, oil, or cake, or the sterilized seed of the plant
3which is incapable of germination. “Cannabis” also means the
4separated resin, whether crude or purified, obtained from marijuana.
5Without limiting the definition, “cannabis” also means marijuana
6as defined by Section 11018 of the Health and Safety Code as
7enacted by Chapter 1407 of the Statutes of 1972.

8(c) “Cannabis concentrate” means manufactured cannabis that
9has undergone a process to concentrate the cannabinoid active
10ingredient, thereby increasing the product’s potency.

11(d) “Caregiver” or “primary caregiver” has the same meaning
12as that term is defined in Section 11362.7 of the Health and Safety
13Code.

14(e) “Certified testing laboratory” means a laboratory that is
15certified by the State Department of Public Health to perform
16random sample testing of medical cannabis pursuant to the
17certification standards for these facilities promulgated by the
18department.

19(f) “Commercial cannabis activity” means any cultivation,
20 possession, manufacture, processing, storing, laboratory testing,
21labeling, transporting, distribution, or sale of cannabis or cannabis
22product, or any technology platform that enables qualified patients
23or primary caregivers to arrange for or facilitate any of the
24above-described functions with a third party, except as set forth
25in Section 19316.

26(g) “Cultivation” means any activity involving the planting,
27growing, harvesting, drying, processing, or trimming of cannabis.

28(h) “Delivery” means the commercial transfer of medical
29cannabis or medical cannabis products from a dispensary to a
30primary caregiver or qualified patient, as defined in Section
3111362.7 of the Health and Safety Code.

32(i) “Delivery service” means a person issued a state license by
33the State Board of Equalization pursuant to this chapter and a local
34license or permit, to deliver medical cannabis or medical cannabis
35products, up to an amount determined by the department, to
36patients, testing laboratories, or to events or locations where it will
37be used solely for promotional purposes. A delivery service shall
38not be required to obtain a transporter license.

39(j) “Director” means the director of the Office of Medical
40Cannabis Regulation.

P12   1(k) “Dispensary” means a physical retail establishment operating
2from a fixed location, including mobile deliveriesbegin insert that are expressly
3authorized by local ordinanceend insert
originating from the location, that
4makes retail sales of medical cannabis or medical cannabis
5products.

6(l) “Dispensing” means any activity involving the retail sale of
7medical cannabis or medical cannabis products from a dispensary.

8(m) “Distribution” means the first sale of cannabis in this state.
9Distribution does not include the sale of cannabis from a cultivator
10to a distributor.

11(n) “Distributor” means a person who is engaged in the business
12of purchasing medical cannabis in this state from a licensed
13cultivator and who then distributes the medical cannabis to a
14manufacturer or dispensary.

15(o) “Dried flower” means all dead medical cannabis that has
16been harvested, dried, cured, or otherwise processed, excluding
17leaves and stems.

18(p) “Edible cannabis product” means manufactured cannabis
19that is intended to be used, in whole or in part, for human
20consumption, including, but not limited to, chewing gum.

21(q) “Fund” means the Medical Cannabis Regulation Fund
22established pursuant to Section 19361.

23(r) “Identification program” means the universal identification
24certificate program for licensees.

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

P13   1(t) “Licensed cultivation site” means a person that plants, grows,
2cultivates, harvests, dries, or processes medical cannabis, or that
3does all or any combination of those activities, and that is issued
4a state license pursuant to this chapter and a local license or permit.

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

10(v) “Licensed manufacturer” means a person that conducts the
11production, preparation, propagation, compounding, or processing
12of medical cannabis or medical cannabis products, either directly
13or indirectly or by extraction processes, or independently by means
14of chemical synthesis or by a combination of extraction and
15chemical synthesis, and includes a location that packages or
16repackages medical cannabis or medical cannabis products or
17labeling or relabeling of its container, and that has been issued
18 both a local license or permit and a state license pursuant to this
19chapter.

20(w) “Licensed transporter” means a person issued a state license
21by the Board of Equalization to transport medical cannabis or
22medical cannabis products above a limit determined by the board
23 between facilities that have been issued a state license or to
24dispensing facilities in the City of Los Angeles pursuant to this
25chapter.

26(x) “Licensee” means a person issued a state license under this
27chapter to engage in commercial cannabis activity.

28(y) “Licensing authority” means the state agency responsible
29for granting and renewing state licenses and regulating the relevant
30licensees. For licensed cultivators, the licensing authority is the
31Division of Medical Cannabis Cultivation in the Department of
32Food and Agriculture. For dispensaries and transporters, the
33 licensing authority is the Division of Medical Cannabis Regulation
34within the State Board of Equalization. For licensed manufacturers
35and certified testing laboratories, the licensing authority is the
36Division of Medical Cannabis Manufacturing and Testing within
37the State Department of Public Health.

38(z) “Live plants” means living medical cannabis flowers and
39plants, including seeds, immature plants, and vegetative stage
40plants.

P14   1(aa) “Manufactured cannabis” means raw cannabis that has
2undergone a process whereby the raw agricultural product has
3been transformed into a concentrate, an edible product, or a topical
4product.

5(ab) “Manufacturing site” means a location that produces,
6prepares, propagates, compounds, or processes medical cannabis
7or medical cannabis products, directly or indirectly, by extraction
8processes, independently by means of chemical synthesis, or by a
9combination of extraction and chemical synthesis, and is owned
10and operated by a licensee for these activities pursuant to this
11chapter.

12(ac) “Medical cannabis,” “medical cannabis product,” or
13“cannabis product” means a product containing cannabis, including,
14but not limited to, concentrates and extractions, intended to be sold
15for use by medical cannabis patients in California pursuant to the
16Compassionate Use Act of 1996 (Proposition 215).

17(ad) “Nursery” means a licensee that produces only clones,
18immature plants, seeds, and other agricultural products used
19specifically for the planting, propagation, and cultivation of medical
20cannabis.

21(ae) “Office” means the Governor’s Office of Medical Cannabis
22Regulation.

23(af) “Permit,” “local license,” or “local permit” means an official
24document granted by a local jurisdiction that specifically authorizes
25a person to conduct commercial cannabis activity in the local
26jurisdiction.

27(ag) “Person” means an individual, firm, partnership, joint
28venture, association, corporation, limited liability company, estate,
29trust, business trust, receiver, syndicate, or any other group or
30combination acting as a unit and includes the plural as well as the
31singular number.

32(ah) “State license ” or “license” means a state license issued
33pursuant to this chapter.

34(ai) “Topical cannabis” means a product intended for external
35use.

36(aj) “Transport” means the transfer of medical cannabis or
37medical cannabis products from the permitted business location
38of one licensee to the permitted business location of another
39licensee, or to dispensing facilities in the City of Los Angeles, for
P15   1the purposes of conducting commercial cannabis activity authorized
2by licensees pursuant to this chapter.

3 

4Article 2.  Administration
5

 

6

19301.  

This chapter shall be known, and may be cited, as the
7Medical Cannabis Regulation and Control Act.

8

19302.  

(a) There is hereby created within the office of the
9Governor, the Governor’s Office of Medical Cannabis Regulation,
10under the supervision and control of the Director of the Office of
11Medical Cannabis Regulation, who shall be appointed by the
12Governor, subject to Senate confirmation. The Governor shall
13appoint the director at a salary to be fixed and determined by the
14director with the approval of the Director of Finance.

15(b) The director shall be the appointing power of all employees
16within the office, and all heads of divisions, bureaus, and other
17employees in the office shall be responsible to the director for the
18proper carrying out of the duties and responsibilities of their
19respective positions.

20(c) In developing a regulatory framework pursuant to this
21chapter, the director shall consult with state agencies possessing
22expertise in licensure and enforcement, including, but not limited
23to, the Department of Alcoholic Beverage Control and the
24Department of Consumer Affairs.

25(d) The office shall have overall executive authority and
26responsibility for implementation of all aspects of cannabis
27regulation pursuant to this chapter.

28(e) The office shall coordinate and provide oversight of all
29activities described in this chapter. The office shall lead all state
30and local authorities regarding the tracking of medical cannabis,
31medical cannabis products, and licensees pursuant to this chapter.
32All departments and divisions specified in Section 19304 shall
33report directly to the office. Any information technology systems
34created to store and process data related to commercial cannabis
35licensing shall be integrated, and all licensing data shall be
36immediately available to each licensing authority and to the office.

37

19303.  

The office shall maintain a registry of all permit holders
38and shall maintain a record of all state licenses and commercial
39cannabis activity of the permit holder throughout the length of
40licensure and for a minimum of seven years following the
P16   1expiration of each license. The office shall make limited licensee
2information available to a licensee so that it may verify whether
3it is engaging in commercial cannabis activities with a properly
4licensed entity.

5

19304.  

begin delete(a)end deletebegin deleteend deleteThe following entities shall report to and be directly
6accountable to the office for their respective designated
7responsibilities within the regulatory and enforcement framework,
8as follows:

begin delete

27 9(1)

end delete

10begin insert(a)end insert The Division of Medical Cannabis Regulation, which is
11established within the State Board of Equalization, shall do all of
12the following:

begin delete

30 13(A)

end delete

14begin insert(1)end insert Be administered by a person who isbegin delete appointedend deletebegin insert hiredend insert by the begin delete15 Governor, subject to Senate confirmation.end delete begin insert State Board of
16Equalization, and who shall serve in accordance with the State
17Civil Service Act (Part 2 (commencing with Section 18500) of
18Division 5 of Title 2 of the Government Code).end insert

begin delete

32 19(B)

end delete

20begin insert(2)end insert Administer this chapter, as it pertains to commercial cannabis
21activity relating to dispensaries and transporters.

begin delete

34 22(2)

end delete

23begin insert(b)end insert The Division of Medical Cannabis Manufacturing and
24Testing, which is established within the State Department of Public
25Health, shall do all of the following:

begin delete

37 26(A)

end delete

27begin insert(1)end insert Be administered by a person who is appointed by the
28begin delete Governor, subject to Senate confirmation.end deletebegin insert State Department of
29Public Health, and who shall serve in accordance with the State
30Civil Service Act (Part 2 (commencing with Section 18500) of
31Division 5 of Title 2 of the Government Code).end insert

begin delete

P18 1 32(B)

end delete

33begin insert(2)end insert Administer this chapter, as it pertains to manufacturing,
34testing, and certification of testing laboratories for medical cannabis
35and medical cannabis products.

begin delete

4 36(3)

end delete

37begin insert(c)end insert The Division of Medical Cannabis Cultivation, which is
38established within the Department of Food and Agriculture, shall
39do all of the following:

begin delete

7 40(A)

end delete

P17   1begin insert(1)end insert Be administered by a person who is appointed by the
2begin delete Governor, subject to Senate confirmation.end deletebegin insert Department of Food
3and Agriculture, and who shall serve in accordance with the State
4Civil Service Act (Part 2 (commencing with Section 18500) of
5Division 5 of Title 2 of the Government Code).end insert

begin delete

9 6(B)

end delete

7begin insert(2)end insert Administer this chapter as it pertains to cultivation of medical
8cannabis.

begin delete

11 9(4)

end delete

10begin insert(d)end insert The California Environmental Protection Agency and the
11California Natural Resources Agency shall coordinate and direct
12the following entities in the discharge of their designated regulatory
13responsibilities:

begin delete

15 14(A)

end delete

15begin insert(1)end insert The State Water Resources Control Board shall promulgate
16regulations related to discharge into waterways, and diversion
17therefrom, resulting from cannabis cultivation.

begin delete

18 18(B)

end delete

19begin insert(2)end insert The Department of Fish and Wildlife shall promulgate
20regulations for the protection of any species affected by cultivation
21activity, and regulations for any cultivation-related development,
22including alteration of waterways.

begin insert

23(3) The Department of Pesticide Regulation shall promulgate
24regulations consistent with Division 6 (commencing with Section
2511401) of the Food and Agricultural Code.

end insert
begin delete

22 26(5)

end delete

27begin insert(e)end insert The Department of Justice shall conduct the following
28activities:

begin delete

24 29(A)

end delete

30begin insert(1)end insert Perform criminal background checks of applicants for
31licensure.

begin delete

26 32(B)

end delete

33begin insert(2)end insert Develop uniform security standards for dispensaries and all
34phases of transport covered by this chapter.

begin delete

28 35(C)

end delete

36begin insert(3)end insert Provide supplemental enforcement on an as-needed basis at
37the request of the office.

38

19305.  

(a) The office and licensing authorities shall have the
39authority necessary for the implementation of this chapter,
40including, but not limited to, all of the following:

P18   1(1) Establishing rules or regulations necessary to carry out the
2purposes and intent of this chapter and to enable the office and
3licensing authorities to exercise the powers and perform the duties
4conferred by this chapter and in accordance with Chapter 3.5
5(commencing with Section 11340) of Part 1 of Division 3 of Title
62 of the Government Code. These rules and regulations shall not
7limit the authority of a city, county, or city and county specified
8in Article 3 (commencing with Section 19307), or specified in
9Section 7 of Article XI of the California Constitution, or any other
10law. For the performance of its duties, the office has the powers
11set forth in Article 2 (commencing with Section 11180) of Chapter
122 of Part 1 of Division 3 of Title 2 of the Government Code. The
13office shall review all regulations and guidance promulgated by
14licensing authorities in the administration of this chapter to ensure
15no duplication, overlap, or inconsistent regulations occur between
16licensing authorities.

17(2) Prescribing, adopting, and enforcing emergency regulations
18as necessary to implement this chapter. Emergency regulations
19prescribed, adopted, or enforced pursuant to this section shall be
20adopted in accordance with Chapter 3.5 (commencing with Section
2111340) of Part 1 of Division 3 of Title 2 of the Government Code.
22For purposes of that chapter, including Section 11349.6 of the
23Government Code, the adoption of the regulation is an emergency
24and shall be considered by the Office of Administrative Law as
25necessary for the immediate preservation of the public peace, health
26and safety, and general welfare.

27(3) Issuing state licenses to persons for the cultivation,
28distribution, manufacture, transportation, and retail sale of medical
29cannabis within the state.

30(4) Setting application, licensing, and renewal fees for state
31licenses issued pursuant to this chapter.

32(5) Establishing standards for commercial cannabis activity.

33(6) Establishing procedures for the issuance, renewal,
34suspension, denial, and revocation of state licenses.

35(7) Imposing a penalty authorized by this chapter or any rule
36or regulation adopted pursuant to this chapter.

37(8) Taking action with respect to an application for a state
38license in accordance with procedures established pursuant to this
39chapter.

P19   1(9) Overseeing the operation of the Medical Cannabis Regulation
2Fund, established pursuant to Section 19361.

3(10) Consulting with other state or local agencies, departments,
4representatives of the medical cannabis community, or public or
5private entities for the purposes of establishing statewide standards
6and regulations.

7(b) Protection of the public’s health and safety shall be the
8highest priority for the office and the licensing authorities in
9exercising the licensing, regulatory, and disciplinary functions
10pursuant to this chapter. Whenever the protection of the public’s
11health and safety is inconsistent with other interests sought to be
12promoted, the protection of the public’s health and safety shall be
13paramount.

14

19306.  

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

27(b) The task force shall be comprised of 15 members, each of
28whom shallbegin delete serveend deletebegin insert be appointed toend insert a two-year term, as follows:

29(1) Four members to be appointed by the Governor, as follows:

30(A) A member representing counties.

31(B) A member representing cities.

32(C) A member representing local law enforcement.

33(D) A member representing state law enforcement.

34(2) Three members to be appointed by thebegin insert Speaker of theend insert
35 Assembly, as follows:

36(A) A member representing labor.

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

38(C) A member with public health expertise.

39(3) Three members to be appointed by thebegin delete Senate,end deletebegin insert Senate
40Committee on Rules,end insert
as follows:

P20   1(A) A member representing qualified medical cannabis patients
2and caregivers.

3(B) A member with environmental expertise.

4(C) A member representing physicians. This member shall have
5a minimum of two years experience recommending medical
6cannabis to qualified patients.

7(4) The director or chief of each of the following state agencies,
8or his or her designee:

9(A) The Department of Food and Agriculture.

10(B) State Department of Public Health.

11(C) State Board of Equalization.

12(D) Department of Justice.

13(E) Department of the California Highway Patrol.

14(c) Task force members shall serve on a voluntary basis and
15shall be responsible for costs associated with their participation in
16the task force. The licensing authorities shall not be responsible
17for travel costs incurred by task force members or otherwise
18compensating task force members for costs associated with their
19participation in the task force.

20(d) Each member shall only have one vote in determinations of
21the task force.

begin insert
22

begin insert19306.5.end insert  

(a) The task force established in Section 19306 shall
23work with representatives of medical cannabis patient groups and
24physicians and shall, on or before July 1, 2016, establish best
25practices and guidelines to ensure qualified patients have adequate
26access to medical cannabis and medical cannabis products. These
27best practices and guidelines shall be sent in a report to the
28Legislature and to all local authorities that have implemented
29local ordinances that ban exempt individuals of this chapter from
30engaging in cultivation or possession of medical cannabis or
31medical cannabis products within their jurisdictions.

32(b) The report shall be submitted in compliance with Section
339795 of the Government Code.

34(c) This section shall remain in effect only until January 1, 2017,
35and as of that date is repealed, unless a later enacted statute, that
36is enacted before January 1, 2017, deletes or extends that date.

end insert

 

P21   1Article 3.  Enforcement and Local Control
2

 

3

19307.  

(a) Each licensing authority shall work in conjunction
4with local agencies for the purposes of implementing,
5administering, and enforcing this chapter, and any regulations
6adopted pursuant to this chapter and taking appropriate action
7against licensees and others who fail to comply with this chapter
8or the regulations adopted pursuant to this chapter.

begin delete

9(b) Except for persons employed by the State Board of
10Equalization, the director and the persons employed by the
11licensing authorities for the administration and enforcement of this
12chapter are, for purposes of this chapter, peace officers in the
13enforcement of the penal provisions of this chapter, the regulations
14adopted pursuant to this chapter, and any other penal provisions
15of law prohibiting or regulating the cultivation, processing, storing,
16 manufacturing, testing, transporting, or selling of medical cannabis.
17These persons may, while acting as peace officers, enforce any
18penal provisions of state law applicable to this chapter while in
19the course of their employment.

20(c) The regulatory directors, persons employed by the licensing
21authorities for the administration and enforcement of this chapter,
22peace officers listed in Section 830.1 of the Penal Code, persons
23listed in Section 830.11 of the Penal Code, and officers listed in
24Section 830.6 of the Penal Code, while acting in the course and
25scope of their employment as peace officers,

end delete

26begin insert(b)end insertbegin insertend insertbegin insertPeace officersend insert may, in enforcing this chapter, visit and
27inspect the premises of a licensee pursuant to subdivision (f) of
28Section 19326.

begin delete

21 29(d)

end delete

30begin insert(c)end insert Peace officers of the Department of the California Highway
31Patrol, members of the University of California and California
32State University police departments, and peace officers of the
33Department of Parks and Recreation, as defined in subdivisions
34(a), (b), (c), and (f) of Section 830.2 of the Penal Code, may, in
35enforcing this chapter, visit and inspect the premises of a licensee
36 pursuant to subdivision (f) of Section 19326.

37

19308.  

(a) By January 1, 2017, the office shall, in consultation
38with local governments, develop an enforcement framework that
39clarifies the enforcement roles of the state and local governments
P22   1consistent with this chapter. Local agencies are authorized to
2enforce any state statutory or regulatory standard.

3(b) A state agency is not required by this section to enforce a
4city, county, city and county, or local law, ordinance, rule, or
5regulation regarding the site or operation of a facility or transporter
6issued a state license.

7

19309.  

(a) For facilities issued a state license that are located
8within the incorporated area of a city, the city shall have full power
9and authority to enforce this chapter and the rules, regulations, and
10standards promulgated by the office. Notwithstanding Sections
11101375, 101400, and 101405 of the Health and Safety Code or
12any contract entered into pursuant thereto, or any other law, the
13city shall further assume complete responsibility for any regulatory
14function relating to those licensees within the city limits that would
15otherwise be performed by the county or any county officer or
16employee, including a county health officer, without liability, cost,
17or expense to the county.

18(b) For licensed facilities located within the unincorporated area
19of a county, the county shall have full power and authority to
20enforce this chapter and the rules, regulations, and standards
21promulgated by the office.

22(c) begin deleteAll standards and regulations promulgated pursuant to this
23chapter shall be the minimum standards and regulations for
24obtaining and maintaining a state license. end delete
State agencies shall
25collaborate with local agencies to enforce state standards and
26regulations to the extent that it is within the scope of other statutory
27responsibilities of local agencies and to the extent that resources
28for this enforcement are availablebegin insert and appropriated by the local
29governing bodyend insert
to the local agencies.begin delete This section shall not limit
30any other state or local requirements.end delete

31(d) Pursuant to Section 7 of Article XI of the California
32Constitution, a city, county, or city and county may adopt
33ordinances that establish additional standards, requirements, and
34regulations for local licenses and permits for commercial cannabis
35activity. For all conflicts between the state and local standards,
36requirements, and regulations regarding health and safety, testing,
37security, and worker protections, the state shall preempt local
38ordinances.

39(e) Nothing in this chapter, or any regulations promulgated
40thereunder, shall be deemed to limit the authority or remedies of
P23   1a city, county, or city and county under any provision of law,
2including, but not limited to, Section 7 of Article XI of the
3California Constitution.

4

19310.  

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

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

24(c) This chapter shall not be construed to limit a state or local
25agency’s ability to investigate unlawful activity in relation to a
26state license.

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

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

39

19312.  

(a) This chapter shall in no way supersede the
40provisions of Measure D, approved by the voters of the City of
P24   1Los Angeles on the May 21, 2013, ballot for the city, which
2provides potential limited immunity to medical cannabis businesses
3 as defined by Measure D consistent with the terms of the measure
4and local ordinances. Notwithstanding the provisions of this part,
5cannabis businesses within the City of Los Angeles shall continue
6to be subject to Measure D and any and all other applicable
7ordinances and regulations of the City of Los Angeles.

8(b) It is the intent of the Legislature to recognize the unique
9circumstances of the City of Los Angeles with respect to Measure
10D and associated rules related to commercial cannabis activity. In
11light of these unique circumstances, the provisions of Sections
1219319 and 19338 shall apply in the City of Los Angeles.

13(c) The State Board of Equalization shall enter into a
14memorandum of understanding with the City of Los Angeles to
15establish protocols for the following:

16(1) Tracking businesses granted immunity pursuant to Measure
17D, as approved by the voters of the City of Los Angeles at the May
1821, 2013, general election.

19(2) Tracking medical cannabis and medical cannabis products
20to and from the City of Los Angeles.

21(3) Allowing for the legal transfer of medical cannabis and
22medical cannabis products from outside the jurisdiction of the City
23of Los Angeles to within the city by licensees conducting
24commercial cannabis activities outside of the city.

25

19313.  

(a) The actions of a licensee or provisional licensee,
26its employees, and its agents, that are permitted pursuant to both
27a state license or provisional license and a license or permit issued
28by the local jurisdiction following the requirements of the
29applicable local ordinances, and that are conducted in accordance
30with the requirements of this chapter and regulations adopted
31pursuant to this chapter, are not unlawful under state law and shall
32not be an offense subject to arrest, prosecution, or other sanction
33under state law or be subject to a civil fine or be a basis for seizure
34or forfeiture of assets under state law.

35(b) The actions of a person who, in good faith and upon
36investigation, allows his or her property to be used by a licensee
37 or provisional licensee, its employees, and its agents, as permitted
38pursuant to both a state license and a license or permit issued by
39the local jurisdiction following the requirements of the applicable
40local ordinances, are not unlawful under state law and shall not be
P25   1an offense subject to arrest, prosecution, or other sanction under
2state law, or be subject to a civil fine or be a basis for seizure or
3forfeiture of assets under state law.

4(c) Conduct that is within the scope of a license issued pursuant
5to this chapter and permitted by local ordinance but not fully in
6compliance with this chapter shall be subject to the enforcement
7provisions of this chapter and shall not be subject to the penal
8provisions of state law generally prohibiting cannabis-related
9activity, unless and until the license is revoked.

10(d) This section shall not be deemed to limit the authority or
11 remedies of a city, county, or city and county under any provision
12of law, including, without limitation, Section 7 of Article XI of
13the California Constitution.

14

19314.  

(a) A person engaging in commercial cannabis activity
15without a license required by this chapter shall be subject to civil
16penalties of up to twice the amount of the license fee for each
17violation, and the office, licensing authority, or court may order
18the destruction of medical cannabis associated with that violation.
19Each day of operation shall constitute a separate violation of this
20section. All civil penalties imposed and collected pursuant to this
21section shall be deposited into the Medical Cannabis Fines and
22Penalties Account established pursuant to Section 19361. A day
23of operation is defined to mean any period of time within a 24-hour
24period. This section shall not apply to unlicensed facilities in the
25City of Los Angeles.

26(b) If an action for civil penalties is brought by the Attorney
27General, the penalty collected shall be deposited into the General
28Fund. If the action is brought by a district attorney or county
29counsel, the penalty collected shall be paid to the treasurer of the
30county in which the judgment was entered. If the action is brought
31by a city attorney or city prosecutor, the penalty collected shall be
32paid to the treasurer of the city in which the judgment was entered.

33(c) Notwithstanding subdivision (a), criminal penalties shall
34continue to apply to an unlicensed person or entity engaging in
35commercial cannabis activity in violation of this chapter, including,
36but not limited to, those individuals covered under Section 11362.7
37of the Health and Safety Code.

38

19315.  

(a) begin deleteThis end deletebegin insertTo the extent that this chapter does not
39interfere with or violate Section 11362.5 of the Health and Safety
40Code, this end insert
chapter does not, nor do Article 2 (commencing with
P26   1Section 11357) and Article 2.5 (commencing with Section 11362.7)
2of Chapter 6 of Division 10 of the Health and Safety Code, prevent
3a city, county, or city and county from doing any of the following:

4(1) Adopting local ordinances, whether consistent or inconsistent
5with this chapter, that do the following:

6(A) Regulate the location, operation, or establishment of a
7licensee or a person that cultivates, processes, possesses, stores,
8manufactures, tests, transports, distributes, or sells medical
9cannabis.

10(B) Prohibitbegin insert commercialend insert cannabis activity within their
11jurisdiction.

12(2) Providing for the administrative, civil, or criminal
13enforcement of the ordinances described in paragraph (1).

14(3) Establishing a fee for the operation within its jurisdiction of
15any of the following:

16(A) A licensee.

17(B) Another person that cultivates, processes, possesses, stores,
18manufactures, tests, transports, distributes, or sells medical
19cannabis or medical cannabis products.

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

21(4) Enacting and enforcing other laws or ordinances pursuant
22to the authority granted by Section 7 of Article XI of the California
23Constitution.

24(b) begin deleteNothing end deletebegin insertTo the extent that this chapter does not interfere
25with or violate Section 11362.5 of the Health and Safety Code,
26nothing end insert
in this chapter or in Article 2 (commencing with Section
2711357) or Article 2.5 (commencing with Section 11362.7) of
28Chapter 6 of Division 10 of the Health and Safety Code, shall
29prevent a city, county, or city and county from adopting or
30enforcing a zoning ordinance or other law, ordinance, or regulation
31that bans or regulates the location, operation, or establishment of
32a licensee or other person that engages inbegin insert commercialend insert cannabis
33activity.

34 

35Article 4.  Licensure
36

 

37

19316.  

(a) This chapter shall not apply to, and shall have no
38diminishing effect on the protections granted to, a patient or a
39primary caregiver pursuant to the Compassionate Use Act of 1996.

P27   1(b) (1) A qualified patient who cultivates, possesses, stores,
2manufactures, or transports cannabis exclusively for his or her
3personal medical use but who does not provide, donate, sell, or
4distribute cannabis to any other person is not, thereby, engaged in
5commercial cannabis activity and is, therefore, exempt from the
6licensure requirements of this chapter.

7(2) A primary caregiver who cultivates, possesses, stores,
8manufactures, transports, donates, or provides cannabis exclusively
9for the personal medical purposes of no more than five specified
10qualified patients for whom he or she is the primary caregiver
11within the meaning of Section 11362.7 of the Health and Safety
12Code but who does not receive remuneration for these activities
13except for compensation in full compliance with subdivision (c)
14of Section 11362.765 of the Health and Safety Code is not engaged
15in commercial cannabis activity and is, therefore, exempt from the
16licensure requirements of this chapter.

17(c) begin deleteExemption end deletebegin insertTo the extent that this chapter does not interfere
18with or violate Section 11362.5 of the Health and Safety Code,
19exemption end insert
from the license requirements of this chapter shall not
20limit or prevent a city, county, or city and county from regulating
21or banning the cultivation, storage, manufacture, transport,
22provision, or other activity by the exempt person, or impair the
23enforcement of that regulation or ban.

24

19317.  

begin deleteThe end deletebegin insertTo the extent that this chapter does not interfere
25with or violate Section 11362.5 of the Health and Safety Code, the end insert

26state shall have the right and authority to conduct state licensure
27activities and to regulate commercial cannabis activity pursuant
28to this chapter. Local governments have the right and authority to
29regulatebegin insert commercialend insert cannabis activity within their jurisdiction,
30including granting or refusing to grant permits pursuant to local
31ordinances. In the exercise of these rights and powers, the state
32and each of its agencies, and all local agencies, are hereby deemed
33not to be engaged in activities requiring licensure under this
34chapter.

35

19318.  

(a) Licensing authorities may issue state licenses only
36to qualified applicants engaging in commercial cannabis activity
37pursuant to this chapter. Except as specified in Sectionbegin delete 19318.1,end delete
38begin insert 19318.5,end insert beginning January 1, 2018, no person shall engage in
39commercial cannabis activity without possessingbegin insert bothend insert a state
40license and a localbegin delete permit.end deletebegin insert permit, license, or other authorization.end insert
P28   1 For purposes of this section, “state license” includes a provisional
2license issued pursuant to Article 6 (commencing with Section
319330).

4(b) Local permits shall be determined by local ordinances.
5Licensing authorities issuing state licenses shall have sole authority
6to revoke a state license. Local agencies issuing local permits shall
7have sole authority to revoke a local permit.

8(c) Each applicant for a state license shall provide notice to
9every affected local jurisdiction at the same time the state
10application is filed. The office shall confirm with the applicant a
11list of each affected local jurisdictions, including those jurisdictions
12affected by potential deliveries by the applicant.

13(d) The issuance of a state license shall not, in and of itself,
14authorize the recipient to begin business operations. The state
15license shall certify, at a minimum, that the applicant has paid the
16state licensing fee, successfully passed a criminal background
17check, and met state residency requirements.

18(e) Even if a state license has been granted pursuant to this
19chapter, a facility shall not operate in a local jurisdiction that
20prohibits the establishment of that type of business. A facility shall
21not commence activity under the authority of a state license until
22the applicant has obtained, in addition to the state license, a license
23or permit from the local jurisdiction in which he or she proposes
24to operate, following the requirements of the applicable local
25ordinances.

26(f) If a local government agency notifies the office or a licensing
27authority and provides evidence that a licensee or applicant within
28its jurisdiction is in violation of local ordinances relating to
29begin insert commercialend insert cannabis activities, the licensing authority shall
30schedule a hearing to determine whether the evidence is sufficient
31to constitute grounds for the revocation of the license within 20
32workingbegin delete days.end deletebegin insert days pursuant to Section 19323.end insert

33(g) Revocation of a state license or local license or permit shall
34terminate the ability of a medical cannabis business to operate
35withinbegin delete California.end deletebegin insert California until the licensing authority or local
36jurisdiction reinstates or reissues the state license or local license
37or permit.end insert

38

19318.5.  

(a) A licensing authority shall not issue a license to
39an applicant who proposes to operate within the City of Los
40Angeles, regardless of the activity for which the license is sought.

P29   1(b) A medical cannabis business, as defined by Measure D,
2within the City of Los Angeles shall comply with all standards
3and regulations applicable to the commercial cannabis activity or
4activities engaged in by that medical cannabis business with respect
5to all of the following:

6(1) Standards for the production, labeling, and manufacture of
7medical cannabis and medical cannabis products, in accordance
8with Article 7 (commencing with Section 19332) and Article 10
9(commencing with Section 19342).

10(2) Standards regarding the application of pesticides, in
11accordance with Article 7 (commencing with Section 19332).

12(3) Regulations to be promulgated by the State Board of
13Equalization, in accordance with Article 8 (commencing with
14Section 19334), governing dispensing facilities and transporters
15to the extent that those regulations relate to health and safety
16standards, environmental standards, worker protections, or security
17requirements.

18(4) Security measures regarding transported medical cannabis,
19in accordance with Section 19337.

20(5) Standards to be promulgated by the Division of Medical
21Cannabis Manufacturing and Testing regarding health and safety,
22in accordance with Article 10 (commencing with Section 19342).

23(c) The City of Los Angeles shall have the full power, authority,
24and discretion to enforce all standards and regulations required by
25this section.

26

19319.  

(a) A licensing authority shall promulgate regulations
27for implementation and enforcement of this chapter, including,
28but not limited to, all of the following:

29(1) A description of the various specific forms of commercial
30cannabis activity to be authorized by the various types of licenses.

31(2) Procedures for the issuance, renewal, suspension, denial,
32and revocation of a state license.

33(3) Procedures for appeal of fines and the appeal of denial,
34suspension, or revocation of a state license.

35(4) Application, licensing, and renewal forms and fees. All fees
36shall be established on a scaled basis, depending on the size or tier
37of the license.

38(5) Time periods, not to exceed 90 days, by which the licensing
39authority shall approve or deny an application for a state license.
40The failure of the licensing authority to act upon an application
P30   1for licensure within the time prescribed shall not be deemed
2approval of the application.

3(6) Qualifications for licensees.

4(7) Security requirements, including, but not limited to,
5procedures for limiting access to facilities and for the screening
6of employees. All screening processes shall adhere to guidance
7and best practices established by the United States Equal
8Employment Opportunity Commission, including, but not limited
9to, those on hiring practices relating to the consideration of arrest
10and conviction records in employment decisions under Title VII
11of the Civil Rights Act of 1964.

12(8) Requirements to ensure that all licensees and certified testing
13laboratories conform with applicable standards equivalent to state
14statutory environmental, agricultural, consumer protection, and
15food and product safety requirements. These standards shall be in
16addition, and not limited, to any other state and local requirements.

17(9) Develop procedures to ensure each licensee holds and
18maintains a seller’s permit required pursuant to Part 1 (commencing
19with Section 6001) of Division 2 of the Revenue and Taxation
20Code.

21(b) Each state license application approved by the respective
22licensing authority pursuant to this chapter is separate and distinct.

23(c) A state license application approved by a licensing authority
24pursuant to this chapter shall be valid for a period not to exceed
25one year from the date of approval unless revoked or suspended
26earlier than that date pursuant to this chapter or the rules or
27regulations adopted pursuant to this chapter.

28(d) Each licensing authority may adopt regulations for additional
29licenses for cannabis activity within its statutory jurisdiction
30pursuant to this chapter, as deemed necessary.

31(e) Each state license application approved by a licensing
32authority shall be reported to the office within 24 hours of its
33approval.

34(f) A licensing authority shall not issue a state license unless
35the applicant has met all of the requirements of this chapter.

36(g) The regulations shall not limit the authority of a city, county,
37or city and county pursuant to Section 7 of Article XI of the
38California Constitution or any other law. The regulations shall do
39all of the following:

P31   1(1) Establish procedures for approval, renewal, or denial of
2applications for state licensure for each and every aspect of
3commercial cannabis activity, including, but not limited to,
4cultivation, possession, manufacture, processing, storing, laboratory
5testing, labeling, transporting, distribution, and sale of cannabis.

6(2) Establish applicant qualifications.

7(3) Establish state licensee employee qualifications, including,
8but not limited to, training and screening requirements. All
9screening processes shall adhere to guidance and best practices
10established by the United States Equal Employment Opportunity
11Commission, including, but not limited to, those relating to hiring
12practices on the consideration of arrest and conviction records in
13employment decisions under Title VII of the Civil Rights Act of
141964.

15(4) Establish state licensee security requirements, including,
16but not limited to, procedures to limit access to facilities and to
17prevent diversion of product to nonmedical use.

18(5) Establish procedures and protocols for identifying, managing,
19and disposing of contaminated, adulterated, deteriorated, or excess
20product.

21(6) Establish advertising, marketing, signage, and labeling
22requirements and restrictions.

23(7) Establish procedures for the suspension, revocation, or
24surrender of a state license, and establishing related fines and
25penalties to be assessed against licensees for violations of this
26chapter.

27

19320.  

(a) An applicant for a state license shall do all of the
28following:

29(1) Pay the fee or fees required by this chapter for each state
30license for which an application is submitted.

31(2) Register with the licensing authority on forms prescribed
32by the licensing authority. The forms shall contain sufficient
33information to identify the licensee, including all of the following:

34(A) Name of the owner or owners of a proposed facility,
35including all persons or entities having an ownership interest other
36than a security interest, lien, or encumbrance on property that will
37be used by the applicant.

38(B) The name, address, and date of birth of each principal officer
39and board member.

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

P32   1(3) Provide a description, in writing, of the scope of business
2of the proposed facility.

3(4) Provide evidence that the applicant and owner have been
4legal full-time residents of the state for not less thanbegin delete fourend deletebegin insert threeend insert
5 years. For purposes of this paragraph, “applicant” means the owner
6or owners of a proposed facility, including all persons or entities
7having an ownership interest other than a security interest, lien,
8or encumbrance on property that will be used by the facility.

9(5) Provide detailed operating procedures, in writing, for the
10proposed facility, which shall include, but not be limited to,
11procedures for facility and operational security, prevention of
12diversion, employee screening, storage of medical cannabis,
13personnel policies, and recordkeeping procedures. All screening
14processes shall adhere to guidance and best practices established
15by the United States Equal Employment Opportunity Commission,
16including, but not limited to, those relating to hiring practices on
17the consideration of arrest and conviction records in employment
18decisions under Title VII of the Civil Rights Act of 1964.

19(6) Submit the applicant’s fingerprint images as follows:

20(A) For purposes of this paragraph, “applicant” means the owner
21or owners of a proposed facility, including all persons or entities
22 having an ownership interest other than a security interest, lien,
23or encumbrance on property that will be used by the facility. If the
24owner is an entity, fingerprints shall be submitted for each person
25participating in the direction, control, or management of, or having
26a financial interest in, the proposed facility.

27(B) The applicant shall electronically submit to the Department
28 of Justice fingerprint images and related information required by
29the Department of Justice for the purpose of obtaining information
30as to the existence and content of a record of state or federal
31convictions and arrests, and information as to the existence and
32content of a record of state or federal convictions and arrests for
33which the Department of Justice establishes that the person is free
34on bail or on his or her own recognizance, pending trial or appeal.

35(C) The Department of Justice shall provide a response to the
36licensing authority pursuant to paragraph (1) of subdivision (p) of
37Section 11105 of the Penal Code.

38(D) The licensing authority shall request from the Department
39of Justice subsequent notification service, as provided pursuant to
40Section 11105.2 of the Penal Code, for applicants.

P33   1(E) The Department of Justice shall charge the applicant a fee
2sufficient to cover the reasonable cost of processing the requests
3described in this paragraph.

4(7) Provide documentation issued by the local jurisdiction in
5which the proposed business is operating or will operate certifying
6that the applicant is or will be in compliance with all local
7ordinances and regulations.

8(8) Provide evidence of the legal right to occupy and use an
9established location.

10(9) If the proposed facility is a cultivator or a dispensary, provide
11evidence that the proposed facility is located beyond at least a 600
12foot radius from a school, as required by Section 11362.768 of the
13Health and Safety Code.

14(10) Provide a statement, signed by the applicant under penalty
15of perjury, that the information provided is true.

16(11) (A) For an applicant with 20 or more employees, provide
17a statement that the applicant will enter into, or demonstrate that
18it has already entered into, and abide by the terms of a labor peace
19agreement.

20(B) For the purposes of this paragraph, “employee” does not
21include a supervisor.

22(C) For purposes of this paragraph, “supervisor” means an
23individual having authority, in the interest of the licensee, to hire,
24transfer, suspend, lay off, recall, promote, discharge, assign,
25reward, or discipline other employees, or responsibility to direct
26them or to adjust their grievances, or effectively to recommend
27such action, if, in connection with the foregoing, the exercise of
28that authority is not of a merely routine or clerical nature, but
29requires the use of independent judgment.

30(D) Provide the applicant’s seller’s permit number issued
31pursuant to Part 1 (commencing with Section 6001) of Division 2
32of the Revenue and Taxation Code, or indicate that the applicant
33is currently applying for a seller’s permit.

34(12) Provide any other information required by the licensing
35authority.

36(13) For an applicant seeking a cultivation license, provide a
37statement declaring the applicant is an “agricultural employer,” as
38defined in the Alatorre-Zenovich-Dunlap-Berman Agricultural
39Labor Relations Act of 1975 (Part 3.5 (commencing with Section
P34   11140) of Division 2 of the Labor Code), to the extent not prohibited
2by law.

3(14) For an applicant seeking a cultivator, distributor, or
4dispensary license, provide a notarized statement from the owner
5of real property or their agent where the cultivation, distribution,
6manufacturing, or dispensing commercial medical cannabis
7activities will occur, as proof to demonstrate the landowner has
8acknowledged and consented to permit cultivation, distribution,
9or dispensary activities to be conducted on the property by the
10tenant applicant.

11(b) Each location and each discrete use of a single location shall
12require a separate state license. Each application for a state license
13is separate and distinct, and the licensing authority may charge a
14separate fee for each.

15(c) For applicants seeking a state license to cultivate, distribute,
16or manufacture, the application shall also include a detailed
17description of the operating procedures for all of the following, as
18applicable:

19(1) Cultivation.

20(2) Extraction and infusion methods.

21(3) The transportation process.

22(4) Inventory procedures.

23(5) Quality control procedures.

24

19321.  

(a) Upon receipt of an application for licensure and
25the applicable fee, each licensing authority shall make a thorough
26investigation to determine whether the applicant and the premises
27for which a state license is applied qualify for the state license and
28whether this chapter has been complied with, and shall investigate
29all matters connected therewith that may affect the public welfare
30and morals.

31(b) A licensing authority shall deny an application if either the
32applicant or the premises for which a state license is applied do
33not qualify for licensure under this chapter.

34(c) A licensing authority may place reasonable conditions upon
35licensure if grounds exist for denial of the state license, and the
36licensing authority finds those grounds may be removed by the
37imposition of those conditions. However, the limitations set forth
38in paragraphsbegin delete (15)end deletebegin insert (6), (15),end insert and (18) of subdivision (d) shall not
39be waived.

P35   1(d) Each licensing authoritybegin delete mayend deletebegin insert shallend insert deny the application for
2licensure or renewal, or suspend or revoke a state license, if any
3of the following conditions apply:

4(1) An entity making or authorizing in any manner or by any
5means a written or oral statement that is untrue or misleading and
6that is known, or that by exercise of reasonable care should be
7known, to be untrue or misleading.

8(2) Conduct that constitutes fraud.

9(3) Conduct constituting gross negligence.

10(4) Failure to comply with the provisions of this chapter or any
11rule or regulation adopted pursuant to this chapter.

12(5) Conduct that constitutes grounds for denial of licensure
13pursuant to Chapter 2 (commencing with Section 480) of Division
141.5.

15(6) Local agencies have notified the licensing authority or the
16office and provided evidence that a licensee or applicant within
17its jurisdiction is in violation of local ordinances relating to medical
18cannabis activities.

19(7) The applicant fails to meet the requirements of this chapter
20or any regulation adopted pursuant to this chapter or any applicable
21city, county, or city and county ordinance or regulation. If a local
22government adopts an ordinance or resolution authorizing medical
23cannabis to be cultivated, manufactured, stored, distributed, or
24sold within its jurisdiction, it may submit to the office
25documentation detailing their renewal requirements. Failure to
26submit an ordinance or resolution to the office shall not impair the
27enforceability of the ordinance or resolution. Ordinances or
28resolutions that are not submitted pursuant to this subdivision shall
29not be considered in denial of licensure pursuant to this chapter.

30(8) Granting or continuation of a state license would be contrary
31to the public’s safety.

32(9) The applicant holding or seeking a state license has been
33convicted of a misdemeanor involving moral turpitude, excluding
34misdemeanors involving marijuana.

35(10) The application has failed to state with sufficient specificity
36the jurisdiction and location at which the applicant proposes to
37establish operations.

38(11) The applicant, or any of its officers, directors, or owners,
39is under 21 years of age.

P36   1(12) The applicant fails to provide notarized written proof that
2the owner of real property or landlord has acknowledged and
3consented to its tenant’s proposed cultivation or dispensing of
4medical cannabis or medical cannabis products.

5(13) The applicant has failed to provide information requested.

6(14) The applicant, or any of its officers, directors, or owners,
7has been convicted of a felony criminal conviction for the
8possession for sale, sale, manufacture, transportation, or cultivation
9of a controlled substance, including a narcotic drug classified in
10Schedule II, III, IV, or V, but excluding marijuana, for drug
11trafficking involving a minor, felonies subject to enhancements
12Section 11370.4 or 11379.8 of the Health and Safety Code, a
13violent felony, as specified in subdivision (c) of Section 667.5 of
14the Penal Code, a serious felony as specified in subdivision (c) of
15Section 1192.7 of the Penal Code, a felony offense involving fraud
16or deceit, or any other felony that, in the licensing authority’s
17determination, would impair the applicant’s ability to appropriately
18operate as a state licensee. The licensing authority may, at its
19discretion, issue a state license to an applicant that has obtained a
20certificate of rehabilitation pursuant to Section 4852.13 of the
21Penal Code.begin insert It is the intent of the Legislature to further determine
22the suitability of applicants for licensure with prior felonies specific
23to cannabis.end insert

24(15) The applicant, or any of its officers, directors, or owners,
25is a licensed physician making patient recommendations for
26medical cannabis.

27(16) The applicant, or any of its officers, directors, or owners,
28has been sanctioned by a licensing authority, the office, or a city,
29county, or a city and county for unlicensed commercial medical
30cannabis activities or has had a license revoked under this chapter
31in the previous three years.

32(17) The applicant, or any of its officers, directors, or owners,
33has been subject to fines or penalty for cultivation or production
34of a controlled substance on public or private lands pursuant to
35Section 12025 of the Fish and Game Code.

36(18) The proposed commercial medical cannabis activity will
37violate any applicable local law or ordinance.

38(19) The applicant has had 20 employees or more in the past
39year and failed to enter into a labor peace agreement.

P37   1(20)  The applicant or the owner is unable to establish that he
2or she has been a resident of the state for not less thanbegin delete fourend deletebegin insert threeend insert
3 years.

4(21) Failure to obtain and maintain a valid seller’s permit
5requires pursuant to Part 1 (commencing with Section 6001) of
6the Revenue and Taxation Code.

7(e) Applicants shall be notified of a denied application in writing
8via personal service or mail addressed to the address of the
9applicant or licensee set forth in the application. The denial letter
10shall contain the detailed reasons for which the application was
11denied. The applicant shall have the right to appeal the denial and
12be given a hearing within 30 days of the appeal. On appeal, the
13decision shall be upheld unless the applicant demonstrates that the
14applicant is in fact eligible for licensure and the application is in
15compliance with this chapter.

16

19322.  

(a) A licensing authority may refuse to issue, reinstate,
17or renew a state license, or may suspend a state license for failure
18of a licensee to resolve all outstanding final liabilities, including,
19but not limited to, taxes, additions to tax, penalties, interest, and
20fees that have been assessed by the State Board of Equalization.

21(1) Until the final liabilities covered by this section are satisfied,
22a person named on a state license that has been suspended pursuant
23to this section shall be prohibited from serving in any capacity that
24is subject to licensure pursuant to this chapter, but may act as a
25nonsupervising employee.

26(2) All state licenses issued with the same personnel of record
27that have been assessed an outstanding liability covered by this
28section shall be suspended until the debt has been satisfied or until
29the indebted personnel of record disassociate themselves from the
30licensee.

31(b) The refusal to issue a state license or the suspension of a
32state license as provided by this section shall occur only if the
33licensing authority has mailed a notice, prior to the refusal or
34suspension, that indicates that the state license will be refused or
35suspended by a date certain. This preliminary notice shall be mailed
36to the licensee at least 60 days before the date certain.

37(c) This section shall not apply to any outstanding final liability
38if the licensee has entered into an installment payment agreement
39for that liability with the State Board of Equalization and is in
40compliance with the terms of that agreement.

P38   1

19323.  

(a) Provided the applicant has not committed an act or
2crime constituting grounds for the denial of licensure under Section
319321, a licensing authority may issue a state license and send a
4proof of issuance to the applicant.

5(b) A licensing authority shall, by regulation, prescribe
6conditions upon which a person whose state license has previously
7been denied, suspended, or revoked, may be issued a state license.

8

19324.  

The office may adopt regulations to limit the number
9of state licenses issued pursuant to this chapter upon a finding that
10the otherwise unrestricted issuance of state licenses is dangerous
11to the public’s health and safety.

12 

13Article 5.  Regulation of Medical Cannabis
14

 

15

19325.  

(a) Except as provided in Section 11362.5 of the Health
16and Safety Code and Section 19316, a person shall not sell,
17distribute, provide, or donate medical cannabis or medical cannabis
18products to a patient or caregiver other than at a licensed dispensing
19facility or through delivery from a licensed dispensing facility.

20(b) Except as provided in Section 11362.5 of, and Article 2.5
21(commencing with Section 11362.7) of Chapter 6 of Division 10
22of, the Health and Safety Code and Section 19316, a person shall
23not cultivate medical cannabis other than at a licensed cultivation
24site.

25(c) Except as provided in Section 11362.5 of, and Article 2.5
26(commencing with Section 11362.7) of Chapter 6 of Division 10
27of, the Health and Safety Code and Section 19316, a person other
28than a licensed manufacturer shall not manufacture or process
29medical cannabis or medical cannabis products.

30(d) A person other than a licensed transporter shall not transport
31medical cannabis from one facility issued a state license to another,
32unless otherwise specified in this chapter.

33(e) All licensees holding cultivation or manufacturing licenses
34shall send all medical cannabis and medical cannabis products
35cultivated or manufactured to a licensed processor for processing
36and testing prior to retail or sale of medical cannabis or medical
37cannabis products or to a dispensary, qualified patient, or caregiver,
38 according to the allowances by their license. Those licensees
39holding a Type 10A license in addition to a cultivation license
40shall send all medical cannabis to a licensed processor prior to
P39   1dispensing any product. Medical cannabis and medical cannabis
2products shall not be returned to a cultivation or manufacturing
3licensee unless that licensee is also a licensed dispensary. The
4licensing authority shall fine a licensee who violates this
5subdivision in an amount determined by the licensing authority to
6be reasonable.

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

13(2) Upon certification by the Type 8 licensee that the product
14is fit for manufacturing or retail, all medical cannabis and medical
15cannabis products shall be processed by a certified processor prior
16to retail or dispensing to ensure the quantity and content of the
17medical cannabis or medical cannabis product, and for tracking
18and taxation purposes by the state. Licensed processors shall
19package or seal all medical cannabis and medical cannabis products
20in tamper-evident packaging and use a unique identifier, such as
21a batch and lot number or bar code, to identify and track the
22medical cannabis or medical cannabis products. All packaging and
23sealing shall be completed prior to any medical cannabis or medical
24cannabis products being transported or delivered to a licensee,
25qualified patient, or caregiver.

26(g) Medical cannabis and medical cannabis products shall be
27tested by a certified testing laboratory, prior to retail sale or
28dispensing, as follows:

29(1) Medical cannabis from dried flower shall, at a minimum,
30be tested for potency, pesticides, mold,begin insert rodenticide,end insert and other
31contaminants.

32(2) Medical cannabis extracts shall, at a minimum, be tested for
33potency and purity of the product.

34(3) This chapter shall not prohibit a licensee from performing
35on-site testing for the purposes of quality assurance of the product
36in conjunction with reasonable business operations. On-site testing
37by the licensee shall not be certified by the Division of Medical
38Cannabis Manufacturing and Testing.

39(h) For purposes of this section, “license” includes a provisional
40license issued pursuant to Section 19330.

P40   1(i) This section shall become operative on July 1, 2017.

2

19326.  

(a) A licensee shall not cultivate, process, store,
3manufacture, transport, or sell medical cannabis in the state unless
4accurate records are kept at the licensed premises of the growing,
5processing, storing, manufacturing, transporting, or selling by the
6licensee.

7(b) A licensee shall keep, at the licensed premises, accurate
8records of the specific commercial cannabis activity conducted by
9the licensee. The records shall include, at a minimum, all of the
10following for each batch of product:

11(1) The name and address of the supplier.

12(2) The dates on which the product was received.

13(3) The amounts, form, and batch and lot number.

14(4) The location of the cultivation site.

15(5) The name of the employee who received the product.

16(6) Records demonstrating compliance by the licensee with state
17and federal rules and regulations regarding reporting and taxation
18of income received.

19(7) Receipts for all expenditures incurred by the licensee and
20banking records, if any, for all funds obtained or expended in the
21performance of any activity under the authority of the state license.

22(c) Records shall be kept for a minimum of seven years
23following approval of a state license.

24(d) The office, the local enforcement agency designated in
25accordance with Section 19309, and any other appropriate state
26or local agency may examine the books and records of a state
27licensee and may visit and inspect the premises of a state licensee,
28as the office or state or local agency deems necessary to perform
29its duties under this chapter. All inspections shall be conducted
30during standard business hours of the licensed facility.begin insert Licensees
31or employees or representatives of licensees are prohibited from
32refusing, impeding, or interfering with an inspection pursuant to
33this chapter or local ordinance. A violation shall be a misdemeanor
34punishable by up to one year in county jail and a fine up to five
35thousand dollars ($5,000) or by civil penalties of up to five
36thousand dollars ($5,000).end insert

37(e) Books or records requested by the office or an appropriate
38state or local agency shall be provided by the licensee no later than
39five business days after the request is made.

P41   1(f) The office, the local enforcement agency designated pursuant
2to Section 19309, or any other state or local agency may enter and
3inspect the premises of a facility issued a state license between the
4hours of 8 a.m. and 8 p.m. on any day that the facility is open, or
5at any reasonable time, to ensure compliance and enforcement of
6the provisions of this chapter or a local ordinance.

7(g) If a licensee or an employee of a licensee refuses, impedes,
8obstructs, or interferes with an inspection pursuant to this section,
9the state license may be summarily suspended and the licensing
10authority shall directly commence proceedings for the revocation
11of the state license.

12(h) If a licensee or an employee of a licensee fails to maintain
13or provide the books and records required pursuant to this section,
14the licensee shall be subject to a civil fine of fifteen thousand
15dollars ($15,000) per individual violation.

16(i) All cultivator, distributor, and dispensing licensees shall be
17subject to inspection, as specified by the licensing authority, in
18order to ensure compliance with this chapter, including, but not
19limited to, maintaining proper documentation at each site or
20facility.

21

19327.  

(a) A licensee may only hold a state license in up to
22two separate license categories, as follows:

23(1) Type 1, 1A, 2, and 2A licensees, or a combination thereof,
24may apply for a Type 6 or 7 state license, or a combination thereof.

25(2) Type 6 and 7 licensees, or a combination thereof, may apply
26for a Type 1, 1A, 2, 2A state license, or a combination thereof.

27(3) Type 6 and 7 licensees, or a combination thereof, may apply
28for a Type 10A state license.

29(4) Type 10A licensees may apply for a Type 6 and 7 state
30license, or a combination thereof.

31(5) Type 1, 1A, 2, 2A licensees, or a combination thereof, may
32apply for a Type 10A state license.

33(6) Type 10A licensees, may apply for Type 1, 1A, 2, 2A state
34license, or a combination thereof.

35(b) Except as provided in subdivision (a), a person or entity that
36holds a state license is prohibited from licensure for any other
37activity authorized under this chapter, and is prohibited from
38holding an ownership interest in real property, personal property,
39or other assets associated or used in any other license category.

P42   1(c) A licensee conducting commercial cannabis activity in a
2jurisdiction that, prior to January 1, 2016, imposed a local
3ordinance requiring a qualified businesses or individuals to
4cultivate, manufacture, and dispense medical cannabis or medical
5cannabis products, with all commercial cannabis activity being
6conducted by a single licensee, may maintain their current
7categories of licensure.

8

19327.2.  

A licenseebegin delete with a Type 10 or Type 10A state licenseend delete
9 shall not also be licensed as a retailer of alcoholic beverages
10pursuant to Division 9 (commencing with Section 23000).

11

19328.  

Each licensing authority shall make recommendations
12to the Legislature pertaining to the establishment of an appeals
13and judicial review process for persons aggrieved by a final
14decision of the licensing authority.

15

19329.  

This chapter and Article 2 (commencing with Section
1611357) and Article 2.5 (commencing with Section 11362.7) of
17Chapter 6 of Division 10 of the Health and Safety Code shall not
18interfere with an employer’s rights and obligations to maintain a
19drug and alcohol free workplace or require an employer to permit
20or accommodate the use, consumption, possession, transfer,
21display, transportation, sale, or growth of cannabis in the workplace
22or affect the ability of employers to have policies prohibiting the
23use of cannabis by employees and prospective employees, or
24prevent employers from complying with state or federal law.

25 

26Article 6.  Provisional Licensing
27

 

28

19330.  

(a) Each licensing authority shall, as soon as practicable
29following January 1, 2016, allow a qualified applicant for licensure
30to apply for, receive, and renew a provisional license to engage in
31commercial cannabis activity so as to ensure an adequate supply
32of medical cannabis upon full implementation of this chapter. The
33provisional license shall have a scheduled expiration date, as
34determined by the licensing authority.

35(b) Each licensing authority shall establish appropriate fees not
36to exceed the reasonable regulatory costs to the licensing authority
37for the issuance and renewal of a provisional license under its
38jurisdiction.

39(c) Each licensing authority shall, if the applicant meets all the
40requirements in this section, issue a provisional license to
P43   1individuals and entities that the licensing authority determines
2were, during the three months prior to March 1, 2016, regularly
3cultivating, processing, manufacturing, transporting, or distributing
4medical cannabis collectively or cooperatively in full compliance
5with any applicable local ordinance, and to continue to do so until
6the licensee’s application for a state license has been approved or
7denied under this chapter, but no later than 90 days after the
8licensing authority begins accepting applications for regular state
9licenses. The licensing authority may consult with relevant local
10agencies in making a determination on whether a provisional
11license applicant is in compliance with applicable ordinances.
12Priority for provisional licensure shall be given to those businesses
13in compliance with local ordinances prior to September 1, 2015.

14(d) To qualify for a provisional license, an applicant shall
15disclose to the appropriate licensing authority all of the following
16information in writing:

17(1) The names, addresses, and dates of birth of each principal
18officer, owner, or board member.

19(2) The common street address and assessor’s parcel number
20of the property at which the licensee conducts activity under the
21authority of the license.

22(3) The common street address and assessor’s parcel number
23of the property at which cultivation activity was or is to be
24conducted.

25(4) For the three months prior to March 1, 2016, the quantity
26of cannabis cultivated, processed, manufactured, tested, transported,
27or sold at a location, and the quantity expected to be cultivated,
28processed, manufactured, tested, transported, or sold from March
291, 2016, to September 1, 2016, inclusive. The licensee shall make
30its records of current activity, and activity for the three months
31prior to March 1, 2016, available to the licensing authority upon
32request.

33(5) For an applicant seeking a license to cultivate, distribute, or
34dispense medical cannabis, a notarized statement from the owner
35of real property or landlord where the licensed activities will occur,
36as proof to demonstrate the landowner has acknowledged and
37consented to permit the proposed activities to be conducted on the
38property by the tenant applicant.

39(e) Upon receipt of the application materials and fee, if the
40applicant meets all the requirements of this section and if the
P44   1applicant has not committed any act or crime constituting grounds
2for the denial of licensure, the licensing authority shall issue or
3renew a provisional license and send a proof of issuance or renewal
4to the applicant.

5(f) Notwithstanding any other provision of this section, a
6licensing authority shall not issue or renew a provisional license
7to an individual or entity, or for a premises, against whom there
8are pending state or local administrative or judicial proceedings
9or actions initiated by a city, county, or city and county under an
10applicable local ordinance, or who has been determined through
11those proceedings to have violated a local ordinance related to
12cannabis activity, or that knowingly provides false or fraudulent
13information on an application for licensure.

14(g) A provisional licensee shall comply with all standards and
15requirements applicable to a licensee under this chapter, including,
16but not limited to, the production, recordkeeping, security, and
17transportation requirements and standards.

18(h) Beginning July 1, 2017, all commercial cannabis activity
19shall be conducted between licensees of commercial cannabis
20activity. If the licensing authority has not promulgated its respective
21regulations by that date, the licensing authority shall provide an
22extension for all provisional licenses for applicants abiding by the
23provisions of this chapter.

24(i) A provisional license issued pursuant to this section shall
25automatically terminate upon a licensing agency’s issuance of a
26regular state license.

27 

28Article 7.  Licensed Cultivation Sites
29

 

30

19332.  

(a) The Division of Medical Cannabis Cultivation in
31the Department of Food and Agriculture shall promulgate
32regulations governing the licensing of cultivation sites. For
33purposes of this chapter, the Secretary of the Department of Food
34and Agriculture shall declare medical cannabis to be an agricultural
35product. Thebegin delete department shallend deletebegin insert division shall, in consultation with
36the State Department of Public Health and the Department of
37Pesticide Regulation,end insert
develop standards for the production and
38labeling of all edible medical cannabis products, standards for the
39use of pesticides and rodenticides in cultivation,begin delete and, in
40consultation with the State Department of Public Health,end delete
begin insert andend insert
P45   1 maximum tolerances for pesticides, rodenticides, and other foreign
2object residue in harvested cannabis.

3(b) The Department of Food and Agriculture shall have the
4authority necessary for the implementation of this chapter.
5Department regulations shall do all of the following:

6(1) Provide that weighing or measuring devices used in
7connection with the sale or distribution of medical cannabis are
8required to meet standards equivalent to Division 5 (commencing
9with Section 12001).

begin delete

10(2) Require that the application of pesticides or other pest control
11in connection with the indoor or outdoor cultivation of medical
12cannabis shall meet standards equivalent to Division 6
13(commencing with Section 11401) of the Food and Agricultural
14Code and its implementing regulations.

end delete
begin delete

P48 1 15(3)

end delete

16begin insert(2)end insert Require that indoor and outdoor cannabis cultivation by
17licensees is conducted in accordance with state and local laws and
18best practices related to land conversion, grading, electricity usage,
19water usage, agricultural discharges, and similar matters.

20begin insert(c)end insertbegin insertend insertbegin insertThe Department of Pesticide Regulation shall promulgate
21regulations that require that the application of pesticides or other
22pest control in connection with the indoor or outdoor cultivation
23of medical cannabis meets standards equivalent to Division 6
24(commencing with Section 11401) of the Food and Agricultural
25Code and its implementing regulations.end insert

begin delete

5 26(c)

end delete

27begin insert(d)end insert State licenses to be issued by the Division of Medical
28Cannabis Cultivation are as follows:

29(1) Type 1, or “specialty outdoor,” for outdoor cultivation of
30less than 5,000 square feet of total canopy size on one premises.

31(2) Type 1A, or “specialty indoor,” for indoor cultivation of
32less than 5,000 square feet of total canopy size on one premises.

33(3) Type 2, or “small outdoor,” for outdoor cultivation between
345,001 and 10,000 square feet of total canopy size on one premises.

35(4) Type 2A, or “small indoor,” for indoor cultivation between
365,001 and 10,000 square feet of total canopy size on one premises.

37(5) Type 3, or “outdoor,” for outdoor cultivation between 10,001
38and 44,000 square feet of total canopy size on one premises. The
39Division of Medical Cannabis Cultivation shall limit the number
40of licenses allowed of this type.

P46   1(6) Type 4, or “nursery,” for cultivation of medical cannabis
2solely as a nursery. Type 4 licensees may transport live plants.

begin delete

37 3(d)

end delete

4begin insert(e)end insert All license fees collected by the division pursuant to this
5chapter shall be deposited into the Medical Cannabis Cultivation
6Fees Account, which is hereby established within the fund. All
7moneys within this account are available upon appropriation by
8the Legislature to the division solely for the purposes of fully
9funding and administering this chapter, including, but not limited
10to, the costs incurred by the division for its administrative expenses
11and costs and the costs of regulation.

begin delete

5 12(e)

end delete

13begin insert(f)end insert It is the intent of the Legislature to establish appropriate
14protocols for the collection of the specific location of cultivation
15 sites.

16

19333.  

An employee engaged in commercial cannabis
17cultivation activity shall be subject to Wage Order 4-2001 of the
18Industrial Welfare Commission.

19 

20Article 8.  Licensed Distributors, Dispensaries, and Transporters
21

 

22

19334.  

(a) The State Board of Equalization shall promulgate
23regulations governing the licensing and regulation of distributors,
24dispensing facilities, and transporters. State enforcement shall be
25conducted in coordination with local authorities.

26(b) By March 1, 2016, the State Board of Equalization shall
27submit a request for proposal to the public regarding a tracking
28program for medical cannabis and medical cannabis products as
29part of the anti-diversion effort. The State Board of Equalization
30shall choose a supplier and begin full implementation of the
31program prior to the issuance of state licenses pursuant to this
32chapter.

begin delete

27 33(b)

end delete

34begin insert(c)end insert State licenses to be issued by the State Board of Equalization
35are as follows:

36(1) Type 10, or “dispensary,” for the retail of medical cannabis
37or medical cannabis products. This license shall allow for delivery
38begin delete upon local approval.end deletebegin insert where expressly authorized by local
39ordinance, pursuant to subdivision (b) of Section 19340.end insert

P47   1(2) Type 10A or “special dispensary status,” for dispensers who
2have no more than three licensed dispensary facilities. This license
3 shall allow for delivery begin delete with local approval.end delete begin insert where expressly
4authorized by local ordinance, pursuant to subdivision (b) of
5Section 19340.end insert

6(3) Type 11, or “distributor,” for the processing and certification
7of the content of all medical cannabis or medical cannabis products
8that are transported or delivered by licensees. A Type 11 licensee
9shall not hold a license in any other license category and shall not
10own, or have an ownership interest in, a facility licensed pursuant
11to this chapter other than a security interest, lien, or encumbrance
12on property that is used by a licensee.

13(4) Type 12, or “transport,” for transporters of medical cannabis
14or medical cannabis products.

15

19334.5.  

(a) The State Board of Equalization shall adopt a
16medical cannabis and medical cannabis products track and trace
17process for reporting the movement of cannabis items throughout
18the distribution chain that also employs secure packaging and that
19is capable of providing information that captures, at a minimum,
20all of the following:

21(1) The licensee receiving the product.

22(2) The transaction date.

23(3) Any other information deemed necessary by the State Board
24of Equalization for the taxation and regulation of medical cannabis
25and medical cannabis products.

begin delete

26(b) It is the intent of the Legislature, in subsequent legislation,
27to adequately fund the medical cannabis and medical cannabis
28products track and trace process.

end delete
begin insert

29(b) The State Board of Equalization shall receive initial funding
30for subdivision (b) of Section 19334 and this section pursuant to
31subdivision (d) of Section 19361.

end insert
32

19335.  

(a) The provisions of Chapter 4 (commencing with
33Section 55121) of Part 30 of Division 2 of the Revenue and
34Taxation Code shall apply with respect to the State Board of
35Equalization’s collection of the fees, civil fines, and penalties
36imposed pursuant to this chapter.

37(b) The provisions of Chapter 8 (commencing with Section
3855381) of Part 30 of Division 2 of the Revenue and Taxation Code
39shall apply with respect to the disclosure of information under this
40chapter.

 

P21   1Article 9.  Licensed Transporters
2

 

3

19336.  

(a) A licensee authorized to transport, or transport and
4deliver, medical cannabis and medical cannabis products shall do
5so only as set forth in this chapter.

6(b) Prior to transporting or delivering medical cannabis or
7medical cannabis products, a licensee authorized to transport or
8deliver medical cannabis or medical cannabis products shall do
9both of the following:

10(1) Complete an electronic shipping manifest as prescribed by
11the licensing authority. All delivery shipping manifests shall not
12identify the qualified patient or primary caregiver by name or
13address.

14(2) Securely transmit the manifest to the licensing authority and
15the licensee that will receive the medical cannabis product, as
16applicable.

17(c) During transportation or delivery, the licensed transporter
18shall maintain a physical copy of the shipping manifest and make
19it available upon request to agents of the licensing authority, local
20law enforcement officers, or any other designated enforcement
21agency.

22(d) The licensee receiving the shipment shall maintain each
23electronic shipping manifest and shall make it available upon
24request to agents of the licensing authority, local law enforcement
25officers, or any other designated enforcement agency.

26(e) Upon receipt of the transported shipment, a licensee shall
27submit to the licensing agency a record verifying receipt of the
28shipment and the details of the shipment.

29

19336.5.  

An entity licensed pursuant to Section 19332, 19334,
30or 19342 may transport between licensees medical cannabis or
31medical cannabis products with a total retailbegin delete value less than theend delete
32begin insert value, weight of medical cannabis, and weight of medical cannabis
33products, below theend insert
statewidebegin delete monetaryend delete threshold, which shall be
34adopted by regulation by the licensing authority after review by
35the task force and the office.

36

19337.  

(a) Transported and delivered medical cannabis or
37medical cannabis products shall be transported only in a storage
38compartment that is securely affixed to the interior of the
39transporting vehicle and that is not visible from outside the vehicle.
40This requirement shall only apply to licensees transporting medical
P49   1cannabis or medical cannabis products with a total retail value of
2at least an amount equal to a statewide monetary threshold, which
3shall be adopted by regulation by the licensing authority after
4review by the task force and the office.

5(b) Except as provided in Section 19340, a vehicle transporting
6medical cannabis or medical cannabis products shall travel only
7directly between licensed facilities, unless otherwise authorized
8under its license. All transport and deliveries shall be conducted
9between 8:00 a.m. and 8:00 p.m. Transportation and delivery of
10shipments do not have to be completed in a single day.

11(c) All transport or delivery vehicles shall be staffed with a
12minimum of two direct employees of the licensee. At least one
13employee shall remain with the vehicle at all times when the
14vehicle contains medical cannabis. This requirement shall only
15apply to licensees transporting medical cannabis or medical
16cannabis products with a total retail value of at least an amount
17equal to a statewide monetary threshold, which shall be adopted
18by regulation by the licensing authority after review by the task
19force and the office.

20(d) Each transport or delivery team member shall possess
21documentation of licensing and a government-issued identification
22card at all times when transporting or delivering medical cannabis
23and shall produce it upon the request of agents of any licensing
24authority or a law enforcement official.

25(e) This section shall be enforced by the Department of the
26California Highway Patrol in collaboration with local agencies.

27

19337.1.  

Notwithstanding Section 19337, a licensed transporter
28may transport medical cannabis products to an unlicensed
29dispensing facility within the City of Los Angeles, provided the
30following requirements are met:

31(a) The licensed transporter shall comply with subdivisions (b)
32and (c) of Section 19336, except that, in complying with paragraph
33(2) of subdivision (b), the licensed transporter shall securely
34transmit the manifest to the licensing authority and the unlicensed
35dispensing facility that will receive the medical cannabis products.

36(b) The licensed transporter shall record and maintain, in both
37physical and electronic format, the following information with
38respect to the delivery of medical cannabis products to the
39unlicensed dispensing facility:

40(1) The date of delivery.

P50   1(2) The address of delivery.

2(3) The name of the individual who completed the delivery.

3(4) The name of the individual at the facility who received the
4delivery.

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

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

7(7) The quantity, or weight, and variety of all medical cannabis
8products delivered.

9(8) The source of all medical cannabis delivered.

10(9) The monetary amount charged and received for all medical
11cannabis products delivered.

12(c) The recorded information specified in subdivision (b) shall
13be transmitted within five days to the City of Los Angeles, in a
14manner to be determined and specified by the City of Los Angeles.

15(d) The records required by this section shall be maintained and
16made available in accordance with the provisions of Section 19326.

17

19338.  

(a) The licensing authority shall develop a database
18containing the electronic shipping manifests, which shall include,
19but not be limited to, the following information:

20(1) The quantity, or weight, and variety of products shipped.

21(2) The estimated times of departure and arrival.

22(3) The quantity, or weight, and variety of products received.

23(4) The actual time of arrival.

24(5) A categorization of the product.

25(b) The database shall be designed to flag irregularities for a
26licensing authority to investigate. An authorized enforcement
27authority may, at any time, inspect shipments and request
28documentation for current inventory.

29

19339.  

(a) This chapter shall not be construed to authorize or
30permit a licensee to transport or deliver, or cause to be transported
31or delivered, cannabis or cannabis products outside the state, unless
32authorized by federal law.

33(b) A local jurisdiction shall not prevent transportation of
34medical cannabis or medical cannabis products on public roads
35by a licensee transporting medical cannabis or medical cannabis
36products that acts in compliance with this chapter.

37(c) A local jurisdiction shall not prevent delivery of medical
38cannabis or medical cannabis products on public roads by a licensee
39that acts in compliance with this chapter and applicable local
40ordinances.

P51   1

19340.  

(a) All mobile, vehicular, and technology platforms
2that enable qualified patients or primary caregivers to arrange for
3any of the above-described functions with a third party are
4prohibited, except as authorized by thisbegin delete chapter.end deletebegin insert chapter and local
5ordinance.end insert

6(b) Upon approval of the licensing authority, a licensee
7authorized to provide delivery services shallbegin delete abide byend deletebegin insert comply withend insert
8 the following:

9(1) The city, county, or city and county in which the premises
10of the licensee is located, and in which each delivery is made, must
11specifically permit delivery service by ordinance referring to this
12section.

13(2) All employees delivering medical cannabis or medical
14cannabis products must carry a current license authorizing those
15services with them during deliveries, and must present that license
16upon request to state and local law enforcement, employees of
17regulatory authorities, and other state and local agencies enforcing
18this chapter.

19(3) Delivery of medical cannabis or medical cannabis products
20pursuant to this section shall comply withbegin delete subdivision (c)end delete
21begin insert subdivisions (c) and (d)end insert of Section 19336 and subdivisions (a),
22(c), and (d) of Section 19337.

23(c) A county shall have the authority to impose a tax, pursuant
24to Section 19355, on each delivery transaction completed by a
25licensee.

26(d) Whenever a licensing authority has knowledge that a licensee
27has transported or delivered, or arranged or facilitated the transport
28or delivery of, medical cannabis or medical cannabis products in
29violation of this chapter, the licensing authority shall summarily
30suspend that facility’s license and shall without delay commence
31proceedings for the revocation of the license in accordance with
32this chapter.

33(e) All license fees collected by the licensing authority pursuant
34to this chapter shall be deposited into the Medical Cannabis Retail
35Fees Account, which is hereby established within the fund. All
36moneys within the Medical Cannabis Retail Fees Account are
37available upon appropriation to the State Board of Equalization,
38solely for the purposes of fully funding and administering this
39chapter, including, but not limited to, the costs incurred by the
P52   1board for its administrative expenses and costs and the costs of
2regulation.

3

19341.  

Notwithstanding any other law or the wage orders of
4the Industrial Welfare Commission, a driver employed to transport
5medical cannabis or medical cannabis products shall be entitled
6to overtime pay pursuant to Section 510 of the Labor Code.

7 

8Article 10.  Licensed Manufacturers and Certified Laboratories
9

 

10

19342.  

(a) The Division of Medical Cannabis Manufacturing
11and Testing within the State Department of Public Health shall
12promulgate regulations governing the licensing of cannabis
13manufacturers.

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

15(1) Type 6, or “manufacturing level 1,” for manufacturing sites
16that produce medical cannabis products using nonvolatile solvents.

17(2) Type 7, or “manufacturing level 2,” for manufacturing sites
18that produce medical cannabis products using volatile solvents.
19The division shall limit the number of licenses of this type.

20(3) Type 8, or “testing,” for testing of medical cannabis and
21medical cannabis products. Type 8 licensees shall have their
22facilities certified according to regulations set forth by the division.
23A Type 8 licensee shall not hold a license in another license
24category of this chapter and shall not own or have ownership
25interest in a facility licensed pursuant to thisbegin delete chapter, other than a
26security interest, lien, or encumbrance on property that will be
27used by the licensee.end delete
begin insert chapter.end insert

28(c) All license fees collected by the division pursuant to this
29chapter shall be deposited into the Medical Cannabis
30Manufacturing Fees Account, which is hereby established within
31the fund. All moneys within the Medical Cannabis Manufacturing
32Fees Account are available upon appropriation by the Legislature
33to the division, solely for the purposes of fully funding and
34administering this chapter, including, but not limited to, the costs
35incurred by the division for its administrative expenses and costs
36and the costs of regulation.

37

19343.  

(a) The State Department of Public Health shall
38promulgate standards for certification of testing laboratories to
39perform random sample testing of all medical cannabis and medical
40cannabis products, including standards for onsite testing.

P53   1(b) Certification of testing laboratories shall be consistent with
2general requirements for the competence of testing and calibration
3activities, including sampling, using standard methods established
4by the International Organization for Standardization, specifically
5ISO/IEC 17020 and ISO/IEC 17025.

6(c) These requirements shall apply to all entities, including
7third-party laboratories, engaged in the testing of medical cannabis
8pursuant to this chapter.

9

19344.  

(a) A laboratory certified by the department to perform
10random sample testing of medical cannabis or medical cannabis
11products shall not acquire or receive medical cannabis or medical
12cannabis products except from a licensed facility in accordance
13with this chapter, and shall not distribute, sell, deliver, transfer,
14transport, or dispense medical cannabis or medical cannabis
15products except to the licensed facility from which the medical
16cannabis or medical cannabis products were acquired or received.
17All transfer or transportation shall be performed pursuant to a
18specified chain of custody protocol.

19(b) The department shall develop procedures to ensure that
20testing of cannabis occurs prior to delivery to dispensaries or any
21other business, and specify how often licensees shall test cannabis,
22that the cost of testing shall be borne by the licensed cultivators,
23and requiring destruction of harvested batches whose testing
24samples indicate noncompliance with health and safety standards
25promulgated by the department, unless remedial measures can
26bring the cannabis into compliance with quality assurance standards
27as promulgated by the department.

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

32(d) All certification fees collected by the department pursuant
33to this chapter shall be deposited into the Medical Cannabis Testing
34Fees Account, which is hereby established within the fund. All
35moneys in the Medical Cannabis Testing Fees Account shall be
36available to the division upon appropriation of the Legislature
37solely for the purpose of fully funding administration of this
38chapter, including, but not limited to, the costs incurred by the
39division for the administrative expenses and costs and the costs of
40regulation.

P54   1

19345.  

(a) The Division of Medical Cannabis Manufacturing
2and Testing within the State Department of Public Health shall
3promulgate the following standards:

4(1) Health and safety standards applicable to all medical
5cannabis, and medical cannabis products, including maximum
6potency standards for medical cannabis products.

7(2) Standards for licensed manufacturers of medical cannabis
8and medical cannabis products, including, but not limited to, edible
9products.

10(b) At a minimum, the standards required by this section shall
11do all of the following:

12(1) Prescribe sanitation standards equivalent to the California
13Retail Food Code (Part 7 (commencing with Section 113700) of
14Division 104 of the Health and Safety Code) for food preparation,
15storage, handling, and sale of edible medical cannabis products.
16For purposes of this chapter, edible medical cannabis products are
17deemed to be unadulterated food products.

18(2) Require that edible medical cannabis products produced,
19distributed, provided, donated, or sold by licensees shall be limited
20to nonpotentially hazardous food, as established by the State
21Department of Public Health pursuant to Section 114365.5 of the
22Health and Safety Code.

23(3) Require that facilities in which edible medical cannabis
24products are prepared shall be constructed in accordance with
25applicable building standards, health and safety standards, and
26other state laws.

27(4) Require that all edible medical cannabis products shall be
28packaged at the original point of preparation.

29(c) No person shall engage in the manufacture, packing, or
30holding of processed food containing edible cannabis unless the
31person has a valid registration from the department pursuant to
32Section 110460 of the Health and Safety Code. Health and safety
33standards prescribed by this section or promulgated through
34regulation may be enforced by local environmental health
35departments.

36

19346.  

(a) Prior to sale or distribution at a licensed dispensing
37facility or an unlicensed dispensing facility in the City of Los
38Angeles, medical cannabis products shall be labeled and in a
39tamper-evident package. Labels and packages of medical cannabis
40products shall meet the following requirements:

P55   1(1) Medical cannabis packages and labels shall not be made to
2be attractive to children.

3(2) All medical cannabis product labels shall include the
4following information, prominently displayed and in a clear and
5legible font:

6(A) Manufacture date and source.

7(B) The statement “KEEP OUT OF REACH OF CHILDREN
8AND ANIMALS” in bold print.

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

10(D) The statement “THE INTOXICATING EFFECTS OF THIS
11PRODUCT MAY BE DELAYED BY UP TO TWO HOURS.”

12(E) For packages containing only dried cannabis, the net weight
13of medical cannabis in the package.

14(F) A warning if nuts or other known allergens are used.

15(G) List of pharmacologically active ingredients, including, but
16not limited to,begin insert tetrahydrocannabinol (THC), cannabidiol (CBD),
17and otherend insert
cannabinoid content, thebegin insert THC and otherend insert cannabinoid
18amount in milligrams per serving, servings per package, and the
19begin insert THC and otherend insert cannabinoid amount in milligrams for the package
20total.

21(H) Clear indication, in bold type, that the product contains
22medical cannabis.

23(I) Identification of the source and date of cultivation and
24manufacture.

25(J) The date of sale.

26(K) Any other requirement set by the department.

27(b) Only generic food names may be used to describe edible
28medical cannabis products.

29 

30Article 11.  Cannabis Employee Certification and Apprenticeship
31

 

32

19350.  

This article applies only to cultivation sites and
33dispensaries.

34

19351.  

The Division of Labor Standards Enforcement shall do
35all of the following:

36(a) Maintain minimum standards for the competency and training
37of employees of a licensed cultivator or dispensary through a
38system of testing and certification.

P56   1(b) Maintain an advisory committee and panels as necessary to
2carry out its functions under this article. There shall be employer
3representation on the committee and panels.

4(c) Adopt regulations as determined to be necessary to
5implement this article.

6(d) Issue certification cards to employees certified pursuant to
7this article.

8(e) Establish registration fees in an amount reasonably necessary
9to implement this article, not to exceed twenty-five dollars ($25)
10for the initial registration. There shall be no fee for annual renewal
11of registration. Fees collected for cultivation sites and dispensaries
12shall be placed into the Medical Cannabis Cultivation Fee Account
13and the Medical Cannabis Retail Fee Account, respectively.

14

19352.  

(a) By January 1, 2017, the Division of Labor Standards
15Enforcement shall develop a certification program for cannabis
16employees. Commencing January 1, 2019, except as provided in
17subdivision (c), certification shall be required of all persons who
18perform work as cannabis employees.

19(b) Individuals desiring to be certified shall submit an
20application for certification and examination.

21(c) (1) Certification is not required for registered apprentices
22working as cannabis employees as part of a state-approved
23apprenticeship program. An apprentice who is within one year of
24completion of his or her term of apprenticeship shall be permitted
25to take the certification examination and, upon passing the
26examination, shall be certified immediately upon completion of
27the term of apprenticeship.

28(2) Commencing January 1, 2019, an uncertified person may
29perform work for which certification is otherwise required in order
30to acquire the necessary on-the-job experience for certification
31provided that the person shall be under the direct supervision of a
32cannabis employee certified pursuant to this section who is
33responsible for supervising no more than one uncertified person.

34(3) The Division of Labor Standards Enforcement may develop
35additional criteria governing this subdivision.

36

19353.  

(a) The following shall constitute additional grounds
37for disciplinary proceedings, including suspension or revocation
38of the license issued pursuant to this chapter:

P57   1(1) The licensee willfully employs one or more uncertified
2persons to perform work as cannabis employees in violation of
3this article.

4(2) The licensee willfully fails to provide adequate supervision
5of uncertified workers.

6(3) The licensee willfully fails to provide adequate supervision
7of apprentices.

8(b) The Labor Commissioner shall maintain a process for
9referring cases to the appropriate licensing authority when it has
10been determined that a violation of this section has likely occurred.
11The Labor Commissioner shall have a memorandum of
12understanding with the regulatory authorities in furtherance of this
13section.

14(c) Upon receipt of a referral by the Labor Commissioner
15alleging a violation under this section, the appropriate licensing
16authority shall open an investigation. Disciplinary action against
17the licensee shall be initiated within 60 days of the receipt of the
18referral. The licensing authority may initiate disciplinary action
19against a licensee upon his or her own investigation, the filing of
20a complaint, or a finding that results from a referral from the Labor
21Commissioner alleging a violation under this section. Failure of
22the employer or employee to provide evidence of certification or
23apprentice status shall create a rebuttable presumption of violation
24of this section.

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

26 

27Article 12.  Taxation
28

 

29

19355.  

The office and other state agencies may assist state
30taxation authorities in the development of uniform policies for the
31state taxation of state licensees.

32

19356.  

It is the intent of the Legislature to grant authority to
33the board of supervisors of a county to impose appropriate taxes
34on facilities licensed pursuant to this chapter.

35 

36Article 13.  Funding
37

 

38

19360.  

Each licensing authority shall establish a scale of
39application, licensing, and renewal fees, based upon the cost of
40enforcing this chapter, as follows:

P58   1(a) Each licensing authority shall charge each licensee a
2licensure or renewal fee. The licensure or renewal fee shall be
3calculated to cover the costs of administering this chapter. The
4licensure fee may vary depending upon the varying costs associated
5with administering the various regulatory requirements of this
6chapter as they relate to the nature and scope of the different
7licensure activities,begin insert including, but not limited to, the track and
8trace program required pursuant to Section 19334.5,end insert
but shall not
9exceed the reasonable regulatory costs to the licensing authority.

10(b) The total fees assessed pursuant to this chapter, including,
11but not limited to, provisional license fees set forth in Section
1219330, shall be set at an amount that will fairly and proportionately
13generate sufficient total revenue to fully cover the total costs of
14administering this chapter.

15(c) All license fees shall be set on a scaled basis by the licensing
16authority, dependant on the size of the business.

17

19361.  

(a) The Medical Cannabis Regulation Fund is hereby
18established within the State Treasury. Notwithstanding Section
1916305.7 of the Government Code, the fund shall include any
20interest and dividends earned on the moneys in the fund.

21(b) Except as otherwise provided, all moneys collected pursuant
22to this chapter as a result of fines or penalties imposed under this
23chapter shall be deposited directly into the Medical Cannabis Fines
24and Penalties Account, which is hereby established within the
25fund, and shall be available, upon appropriation by the Legislature
26to the office, for the purposes of funding the enforcement grant
27program pursuant to subdivision (c).

28(c) (1) The office shall establish a grant program to allocate
29moneys from the Medical Cannabis Fines and Penalties Account
30to state and local entities for the following purposes:

31(A) To assist with medical cannabis regulation and the
32enforcement of this chapter and other state and local laws
33applicable to cannabis activities.

34(B) For allocation to state and local agencies and law
35enforcement to remedy the environmental impacts of cannabis
36cultivation.

37(2) The costs of the grant program under this subdivision shall,
38upon appropriation by the Legislature, be paid for with moneys in
39the Medical Cannabis Fines and Penalties Account.

P59   1(d) (1) Funds for the establishment and support of the regulatory
2activities pursuant to this chapter may be advanced as a General
3Fund or special fund loan, and shall be repaid by the initial
4proceeds from fees collected pursuant to this chapter or any rule
5or regulation adopted pursuant to this chapter, by January 1, 2022.

6(2) Funds advanced pursuant to this subdivision shall be
7appropriated to the office, which shall distribute the moneys to the
8appropriate licensing authorities, as necessary to implement the
9provisions of this chapter.

10 

11Article 14.  Reporting
12

 

13

19363.  

On or before March 1 of each year, the director shall
14prepare and submit to the Legislature an annual report on the
15office’s activities and post the report on the office's Internet Web
16site. The report shall include, but not be limited to, the following
17information for the previous fiscal year:

18(a) The amount of funds allocated and spent by the office and
19licensing authorities for medical cannabis licensing, enforcement,
20and administration.

21(b) The number of state licenses issued, renewed, denied,
22suspended, and revoked, by state license category.

23(c) The average time for processing state license applications,
24by state license category.

25(d) The number and type of enforcement activities conducted
26by the licensing authorities and by local law enforcement agencies
27in conjunction with the licensing authorities or the office.

28(e) The number, type, and amount of penalties, fines, and other
29disciplinary actions taken by the licensing authorities.

30 

31Article 15.  Privacy
32

 

33

19365.  

(a) Information identifying the names of patients, their
34medical conditions, or the names of their primary caregivers
35received and contained in records kept by the office or licensing
36authorities for the purposes of administering this chapter are
37confidential and shall not be disclosed pursuant to the California
38Public Records Act (Chapter 3.5 (commencing with Section 6250)
39of Division 7 of Title 1 of the Government Code), except as
40necessary for authorized employees of the State of California or
P60   1any city, county, or city and county to perform official duties
2pursuant to this chapter, or a local ordinance.

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

4(1) Employees of any of the office or licensing authorities
5notifying state or local agencies about information submitted to
6the agency that the employee suspects is falsified or fraudulent.

7(2) Notifications from any of the office or licensing authorities
8to state or local agencies about apparent violations of this chapter
9or applicable local ordinance.

10(3) Verification of requests by state or local agencies to confirm
11licenses and certificates issued by the regulatory authorities or
12other state agency.

13(4) Provision of information requested pursuant to a court order
14or subpoena issued by a court or an administrative agency or local
15governing body authorized by law to issue subpoenas.

16(c) Information shall not be disclosed by any state or local
17agency beyond what is necessary to achieve the goals of a specific
18investigation, notification, or the parameters of a specific court
19order or subpoena.

20

SEC. 7.  

Section 11362.775 of the Health and Safety Code is
21amended to read:

22

11362.775.  

(a) Subject to subdivision (b), qualified patients,
23persons with valid identification cards, and the designated primary
24caregivers of qualified patients and persons with identification
25cards, who associate within the State of California in order to
26collectively or cooperatively cultivate cannabis for medical
27purposes, shall not solely on the basis of that fact be subject to
28state criminal sanctions under Section 11357, 11358, 11359, 11360,
2911366, 11366.5, or 11570.

30(b) This section shall remain in effect only until 180 days after
31the Governor’s Office of Medical Cannabis Regulation posts a
32notice on its Internet Web site that the licensing authorities have
33commenced issuing provisional licenses pursuant to the Medical
34Cannabis Regulation and Control Act (Chapter 3.5 (commencing
35with Section 19300) of Division 8 of the Business and Professions
36Code), and as of that date is repealed.

37

SEC. 8.  

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

38

147.5.  

(a) By January 1, 2017, the Division of Occupational
39Safety and Health shall convene an advisory committee to evaluate
40whether there is a need to develop industry-specific regulations
P61   1related to the activities of facilities issued a license pursuant to
2Chapter 3.5 (commencing with Section 19300) of Division 8 of
3the Business and Professions Code.

4(b) By July 1, 2017, the advisory committee shall present to the
5board its findings and recommendations for consideration by the
6board. By July 1, 2017, the board shall render a decision regarding
7the adoption of industry-specific regulations pursuant to this
8section.

9

SEC. 9.  

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

10

3094.  

The Division of Apprenticeship Standards shall
11investigate, approve, or reject applications for apprenticeship
12programs for employees of a licensee subject to Article 11
13(commencing with Section 19350) of Chapter 3.5 of Division 8
14of the Business and Professions Code. The Division of
15Apprenticeship Standards shall adopt regulations necessary to
16implement and regulate the establishment of the apprenticeship
17programs described in this section.

18

SEC. 10.  

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

19

2402.5.  

The Department of the California Highway Patrol shall
20establish protocols to determine whether a driver is operating a
21vehicle under the influence of cannabis, and shall develop protocols
22setting forth best practices to assist law enforcement agencies. The
23costs to the Department of the California Highway Patrol of
24implementing this subdivision shall, upon appropriation by the
25Legislature, be paid for with appropriations from moneys in the
26Fines and Penalties Account of the Medical Cannabis Regulation
27Fund.

28

SEC. 11.  

The provisions of this act are severable. If any
29provision of this act or its application is held invalid, that invalidity
30shall not affect other provisions or applications that can be given
31effect without the invalid provision or application.

32

SEC. 12.  

The Legislature finds and declares that Section 6 of
33this act, which adds Chapter 3.5 (commencing with Section 19300)
34to Division 8 of the Business and Professions Code, imposes a
35limitation on the public’s right of access to the meetings of public
36bodies or the writings of public officials and agencies within the
37meaning of Section 3 of Article I of the California Constitution.
38Pursuant to that constitutional provision, the Legislature makes
39the following findings to demonstrate the interest protected by this
40limitation and the need for protecting that interest:

P62   1It is necessary to maintain the confidentiality of patient and
2physician information provided to the regulatory authorities in
3order to protect the private medical information of patients who
4use medical cannabis and to preserve the essential confidentiality
5of the physician and patient relationship.

6

SEC. 13.  

No reimbursement is required by this act pursuant to
7Section 6 of Article XIII B of the California Constitution for certain
8costs that may be incurred by a local agency or school district
9because, in that regard, this act creates a new crime or infraction,
10eliminates a crime or infraction, or changes the penalty for a crime
11or infraction, within the meaning of Section 17556 of the
12Government Code, or changes the definition of a crime within the
13meaning of Section 6 of Article XIII B of the California
14Constitution.

15However, if the Commission on State Mandates determines that
16this act contains other costs mandated by the state, reimbursement
17to local agencies and school districts for those costs shall be made
18pursuant to Part 7 (commencing with Section 17500) of Division
194 of Title 2 of the Government Code.



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