BILL ANALYSIS Ó AB 266 Page 1 Date of Hearing: April 28, 2015 ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS Susan Bonilla, Chair AB 266 (Cooley and Lackey) - As Amended April 14, 2015 SUBJECT: Medical marijuana. SUMMARY: Establishes a licensing and regulatory framework for the cultivation, processing, transportation, testing, recommendation and sale of medical marijuana to be administered by the Bureau of Medical Marijuana Regulation (Bureau) within the Department of Consumer Affairs (DCA). EXISTING LAW: 1)Recognizes the authority of cities and counties to make and enforce, within their borders, all local, police, sanitary, and other ordinances and regulations not in conflict with general interest laws. (Cal. Const. Article XI sec. 7) 2)Prohibits the possession, possession with intent to sell, cultivation, sale, transportation, importation, or furnishing of marijuana, except as otherwise provided by law. (Health and Safety Code (HSC) Sections 11357, 11358, 11359, and 11360) AB 266 Page 2 3)Prohibits prosecution of a patient or a patient's primary caregiver, under the Compassionate Use Act of 1996 (CUA), an initiative measure, for possessing or cultivating marijuana for personal medical purposes of the patient upon the written or oral recommendation or approval of a physician. (HSC Section 11362.5) 4)Licenses and regulates physicians and surgeons, including osteopathic physicians, under the Medical Practice Act (Act) by the Medical Board of California (MBC) within the DCA. (Business and Professions Code (BPC) Section 2000 et seq.)5)Defines "attending physician" as an individual who possesses a license in good standing to practice medicine or osteopathy issued by the Medical Board of California (MBC) or the Osteopathic Medical Board of California (OMB) and who has taken responsibility for an aspect of the medical care, treatment, diagnosis, counseling, or referral of a patient and who has conducted a medical examination of that patient before recording in the patient's medical record the physician's assessment of whether the patient has a serious medical condition and whether the medical use of marijuana is appropriate. (HSC Section 11362.7(a)) 6)Defines "primary caregiver," for purposes of the CUA, as the individual designated by a patient who has consistently assumed responsibility for the housing, health, or safety of that person. (HSC Section 11362.7(d)) 7)Requires the California Department of Public Health to establish and maintain a voluntary Medical Marijuana Program for qualified patients to apply for identification cards, and county health departments to issue identification cards to qualified patients and their caregivers. (HSC Section 11362.7 et seq.) AB 266 Page 3 8)Provides that qualified patients, persons with valid identification cards, and their designated primary caregivers who associate in order to collectively or cooperatively to cultivate marijuana, are not subject to criminal liability solely on that basis. (HSC Section 11362.775) THIS BILL: Administration Provisions 1)Creates the Bureau, within DCA, to be supervised and controlled by the Bureau Chief, and vests in the Chief the duty of enforcing and administering these provisions. 2)Defines the following terms: a) "Certified testing laboratory" means a laboratory that is certified by the Bureau to perform random sample testing of medical marijuana pursuant to the certification standards for these facilities promulgated by the Bureau; b) "Licensed cultivation site" means a facility that plants, grows, cultivates, harvests, dries, or processes medical marijuana, or that does all or any combination of those activities, and that is issued a conditional license pursuant to these provisions; c) "Licensed dispensing facility" means a dispensary or other facility that provides medical marijuana, medical AB 266 Page 4 marijuana products, or devices for the use of medical marijuana or medical marijuana products, either individually or in any combination, that is issued a conditional license pursuant to these provisions; d) "Licensed manufacturer" means a person who extracts, prepares, derives, produces, compounds, or repackages medical marijuana or medical marijuana products into consumable and non-consumable forms, or that does all or any combination of those activities, and that is issued a conditional license pursuant to these provisions; e) "Licensed transporter" means an individual or entity issued a conditional license by the Bureau to transport medical marijuana to and from facilities that have been issued conditional licenses pursuant to these provisions. 3)Requires DCA to advance funds as a loan for the establishment and support of the Bureau, to be repaid by the initial proceeds from fees collected pursuant to these provisions. 4)Authorizes the Bureau to issue conditional licenses for the cultivation, manufacture, transportation, storage, distribution and sale of medical marijuana, to collect fees in connection with these actions, and to create additional licenses. 5)Authorizes the Bureau to establish rules or regulations necessary to carry out these provisions, and provides that these rules and regulations shall not limit the authority of a city, county, or city and county. AB 266 Page 5 6)Authorizes the Bureau to do all of the following: a) Issue conditional licenses to persons for the cultivation, manufacture, transportation, storage, distribution, provision, donation, testing, and sale of medical marijuana; b) Establish standards for the cultivation, manufacturing, transportation, storage, distribution, provision, donation, and sale of medical marijuana and medical marijuana products. c) Consult with other state or local agencies, departments, representatives of the medical marijuana community, or public or private entities for the purposes of establishing statewide standards and regulations. d) Certify laboratories to perform testing of medical marijuana. 7)On or before July 1, 2017, requires the Bureau to promulgate regulations for implementation and enforcement of these provisions, including all of the following: a) Procedures for the issuance, renewal, suspension, denial, and revocation of conditional licenses, and for the appeal of a denial, suspension, or revocation of those licenses, and a time period to approve or deny a AB 266 Page 6 conditional license. b) Application, licensing, and renewal fees. The bill also requires: i) The fees to fund the reasonable costs of administration, and costs incurred by the Bureau, the Department of Justice, or local law enforcement and other public safety entities, for enforcement of these provisions; and ii) A licensed cultivation site to be assessed a sufficient amount to cover the reasonable regulatory costs to the state of enforcing the environmental impact provisions relating to these facilities, which shall be paid in addition to any other fees charged by the Bureau or local agency, to be distributed proportionally to the following agencies responsible for enforcing the environmental impact of these sites: the State Water Board, the Department of Fish and Wildlife, the Department of Forestry and Fire Protection, the Department of Pesticide Regulation and the Department of Food and Agriculture. iii) The Bureau to establish a separate schedule of licensing fees for non-profit entities if the entity's non-profit status is verified by an audit. iv) The Medical Marijuana Regulation Fund, to be continuously appropriated, within the State Treasury, and all fees collected to be deposited into the fund. AB 266 Page 7 v) The Bureau to administer a grant program to allocate moneys from the fund to state and local entities for the purpose of assisting with medical marijuana regulation and enforcement. vi) The Special Account for Environmental Enforcement to be established, within the fund, to be continuously appropriated for distribution to the entities used to enforce the environmental regulation of licensed cultivation sites. vii) All moneys collected as a result of penalties to be deposited into the General Fund. c) Qualifications for licensees. 8)Requires the Bureau to keep a complete record of all facilities issued a conditional license and to provide summary information on licensees, upon request. 9)Requires the Bureau to provide state and local law enforcement, upon their request, with 24-hour access to information to verify and track transportation and inventories of licensees. 10)Eliminates the ability of primary caregivers to organize themselves as cooperatives or collectives of caregivers, and exempts from licensure requirements: AB 266 Page 8 a) Patients who cultivate, possess, store, manufacture, or transport marijuana exclusively for his or her personal use and who do not sell, distribute, donate, or provide marijuana to any other person or entity; and b) Primary caregivers who cultivate, possess, store, manufacture, or transport marijuana exclusively for the personal medical purposes to no more than five specified qualified patients. 11)Except as specified under the Compassionate Use Act of 1996 and the Medical Marijuana Program, prohibits persons from selling or providing medical marijuana, growing medical marijuana, or manufacturing medical marijuana or medical marijuana products without a license, and prohibits the transport of medical marijuana from one licensed facility to another without using a licensed transporter. 12)Prohibits a licensed dispensing facility from acquiring, cultivating, processing, possessing, storing, manufacturing, distributing, selling, delivering, transferring, transporting, or dispensing medical marijuana plants or medical marijuana products except through a licensed cultivation site or a licensed manufacturer. Licensing Provisions 13)Exempts from licensure: AB 266 Page 9 a) Patients who cultivate, possess, store, manufacture, or transport marijuana exclusively for his or her personal medical use, and does not sell, distribute, donate, or provide medical marijuana to any other person or entity. b) A primary caregiver who cultivates, possesses, stores, manufactures, transports, or provides marijuana exclusively for the personal medical purposes to no more than five specified qualified patients for whom he or she is the primary caregiver, as specified. 14)Beginning July 1, 2017: a) Requires the Bureau to issue conditional licenses for all authorized activity, including cultivation, storage, transport, and dispensing of medical marijuana. b) Provides that a license issued pursuant to these provisions is subject to compliance with all local ordinances and regulations determined to be applicable by the local government of the jurisdiction in which the licensee operates. c) Prohibits a licensed facility from commencing activity under the authority of a conditional license until the applicant has obtained, in addition to the conditional license, a license or permit from the local jurisdiction in which he or she proposes to operate, following the requirements of the applicable local license. AB 266 Page 10 15)Requires an applicant for a conditional license to: a) Pay required fees, and register with and provide specified information to the Bureau, including the address or GPS coordinates of the licensed site, and, in the case of a dispensary, the name and address of each licensed cultivation site and manufacturer that will obtain medical marijuana or medical marijuana products; b) Provide detailed operating procedures, including procedures for facility and operational security, prevention of diversion, employee screening, storage of medical marijuana, personnel policies, and recordkeeping procedures; c) Provide fingerprint images, including for each person participating in the direction, control, or management of, or having a financial interest in, the proposed facility; d) Identify all local ordinances applicable to the operation of the proposed facility and provide evidence that the proposed facility is a permitted use at that location under local zoning and other ordinances; and e) Provide a statement, signed under penalty of perjury, that the application information is true. 16)Requires each location and each discrete use of a single location to require a conditional license, and provides that AB 266 Page 11 each application for a conditional license is separate and distinct, and prohibits the following: a) A single licensee holding a cultivation site license and a dispensary license, except as specified. b) A transporter or certified testing laboratory from holding any other license, or the owner of a testing laboratory from holding any other license or holding ownership interest in any other licensee. 17)Requires a conditional license to be denied, or suspended or revoked, for a past felony conviction for the possession for sale, sale, manufacture, transportation, or cultivation of a controlled substance, a felony criminal conviction for drug trafficking or for embezzlement, or involving fraud or deceit, or any violent or serious felony conviction. 18)Authorizes the Bureau to deny, suspend, or revoke a conditional license if the licensee: a) Makes or authorizes an untrue or misleading statement, or a statement that should be known to be untrue or misleading; b) Engages in any other conduct constituting fraud or gross negligence or engages in conduct that constitute grounds for denial of a license; or, AB 266 Page 12 c) Fails to comply with these provisions or violates any applicable local ordinance, as specified. 19)Requires a conditional license to be denied if the Bureau determines the applicant: a) Fails to meet any requirements of these provisions, or any applicable local ordinance or regulation. If a local government adopts an ordinance or resolution authorizing medical marijuana to be cultivated, manufactured, stored, distributed, or sold within its jurisdiction, it shall submit to the Bureau documentation detailing their renewal requirements. b) Has knowingly answered a question or request for information falsely, failed to provide requested information, or is unable to establish he or she has been a resident of the state for 12 months. c) Has been sanctioned by the Bureau or a local government for medical marijuana activities or has had a license revoked in the past five years, or will engage in medical marijuana activities that will violate any applicable local law or ordinance. 20)Makes a conditional license subject to the restrictions of the local jurisdiction in which it operates or proposes to operate. 21)Authorizes the Bureau to limit the number of conditional AB 266 Page 13 licenses issued pursuant to this part upon a finding that the otherwise unrestricted issuance of conditional licenses is dangerous to the public health and safety. Health, Safety, and Environmental Standards 22)On or before July 1, 2017, requires the Bureau to promulgate regulations for minimum statewide health and safety standards and quality assurance standards for medical marijuana licensing activities, including the following: a) Requirements to ensure that all licensees and certified testing laboratories conform with standards equivalent to state statutory environmental, agricultural, consumer protection, and food and product safety requirements; provides that these standards shall be in addition to, and not limited to, any other state and local requirement; and provides that these standards, at a minimum, do the following: i) Prescribes sanitation standards consistent with the California Retail Food Code for food preparation, storage, handling, and sale of edible medical marijuana products, and requires facilities in which these products are prepared to meet applicable building, health, and safety standards; ii) Requires that edible medical marijuana products produced, distributed, provided, donated, or sold by AB 266 Page 14 licensees shall be limited to non-potentially hazardous food and that facilities in which these products are prepared shall be constructed in accordance with applicable building and health and safety standards, as specified; iii) Provides that weighing or measuring devices used in connection with the sale or distribution of medical marijuana to meet weights and measurements standards; iv) Requires the application of pesticides, in connection with indoor or outdoor cultivation of medical marijuana, to meet pest control operation standards under the Food and Agricultural Code; v) Requires that indoor and outdoor marijuana cultivation by licensees is conducted in accordance with state and local laws and best practices related to land conversion, grading, electricity usage, water usage, agricultural discharges, and similar matters; and, vi) Develops procedures to ensure that testing of marijuana occurs prior to delivery and requires the destruction of harvested batches whose testing samples indicate non-compliance with health and safety standards, except as specified. AB 266 Page 15 23)Requires the State Department of Public Health to promulgate standards for certification of testing laboratories to perform random sample testing of all medical marijuana products, including standards for onsite testing, as specified, which shall apply to all entities engaged in the testing of medical marijuana pursuant to these provisions. 24)Requires medical marijuana and medical marijuana products to be tested by a certified testing laboratory. 25)Requires a licensed facility to contract with certified testing laboratories for regular, random sample testing of representative samples, of all medical marijuana cultivated or intended for sale or distribution, and to bear the cost of that testing. 26)Requires facilities to maintain records of testing reports and to provide those results upon requests. 27)On or before July 1, 2017, requires the Bureau to establish quality assurance protocols to ensure uniform testing standards for all medical marijuana sold, cultivated, or manufactured by facilities issued a conditional license and develop, in consultation with outside entities at its discretion, a list of certified testing laboratories that can perform uniform testing in compliance with this article and to post that list on its website. 28)Requires quality assurance protocols between all licensees to guarantee safe and reliable medicinal marijuana delivery to AB 266 Page 16 all patients, which shall include the following: a) Safety testing of all medical marijuana, prior to packaging, for sale and patient exposure, to identify and eliminate microbiological contaminants and chemical residue; b) Labeling of all medical marijuana products that include, at a minimum: a list of all pharmacologically active ingredients, including tetrahydrocannabinol (THC) and cannabidiol (CBD) content and the recommended dosage. 29)Provides that edible medical marijuana products are deemed to be unadulterated foods, and must comply with the health and safety standards for prepared foods, as specified. 30)Requires edible medical marijuana products to comply with maximum potency standards for THC and THC concentrates set forth in the Bureau's regulations and to meet certain labeling and packaging requirements, as specified. Transportation and Security Provisions 31)Requires a licensed transporter to only ship to facilities issued a conditional license and only in response to a request for a specific quantity and variety from those facilities. 32)Requires a licensed transporter, prior to transporting any medical marijuana product, to complete a shipping manifest as AB 266 Page 17 prescribed by the Bureau and to securely transmit a copy of the manifest to the licensee that will receive the medical marijuana product, and to the Bureau, prior to transport, and required the transporter and the licensee receiving the shipment to maintain each manifest and make it available to local code enforcement and law enforcement, and the Bureau, upon request. 33)Requires all transport vehicles to be staffed with a minimum of two employees. 34)Prohibits a local jurisdiction from preventing transportation through or to a facility issued a conditional license by a conditionally licensed transporter who acts in compliance with these provisions. 35)Requires a conditionally licensed facility to implement sufficient security measures to deter and prevent unauthorized entrance into areas containing medical marijuana or medical marijuana products and theft of medical marijuana at those licensed facilities, as specified. 36)Requires licensed facilities to notify appropriate law enforcement authorities within 24 hours after discovering: discrepancies during inventory; diversion, theft, loss, or any criminal activity; loss or unauthorized alteration of records; or any other breach of security. 37)Requires licensed cultivation sites to weigh, inventory, and account on video all medical marijuana to be transported prior to leaving its location, and within eight hours after arrival AB 266 Page 18 at the destination, requires the licensed dispensing facility to re-weigh, re-inventory, and account for on video all transported marijuana. 38)Requires the Bureau to require an annual audit of all conditionally licensed facilities, to be paid for by the licensee, which shall be submitted to local code enforcement offices, or the appropriate local enforcement entity, within 30 days. Enforcement Provisions 39)Provides that local agencies shall have the primary responsibility for enforcement of minimum statewide health and safety standards and quality assurance standards for medical marijuana activities in accordance with the Bureau's regulations. 40)Provides that a state agency is not required to enforce local laws or regulations regarding the site or operation of a facility issued a conditional license. 41)Authorizes a city to enforce these provisions for licensed facilities located within an unincorporated area of a city. Requires the city to assume complete responsibility for any regulatory function relating to those licensees within city limits that would otherwise be performed by the county, without liability, cost, or expense to the county. 42)Authorizes a county to enforce these provisions for licensed AB 266 Page 19 facilities located within the unincorporated part of a county. 43)Provides that a willful violation of licensing requirements, including an attempt to falsify information on an application or defraud or mislead a state or local agency, shall be punishable by a civil fine of up to $35,000 for each violation, and up to $10,000 for each technical violation. 44)Authorizes a district attorney, county counsel, city attorney, or city prosecutor to bring an action to enjoin a violation or the threatened violation of these provisions, as specified. 45)Provides that actions of a licensee, its employees, and its agents, that are permitted pursuant to both a conditional license and a license or permit issued by the local jurisdiction, following the requirements of applicable local ordinances and other regulations, are lawful under state law, as specified. Local Government and Taxation Provisions 46)Provides that these provisions in no way supersede the provisions of Measure D, approved by the voters of the City of Los Angeles on May 21, 2013, and that marijuana businesses and dispensaries subject to the provisions of Measure D and its qualified immunity shall continue to be subject to the ordinances and regulations of the City of Los Angeles. AB 266 Page 20 47)Authorizes the Bureau to assist state taxation authorities in the development of uniform policies for the state taxation of licensees. 48)Authorizes the Board of Supervisors in any county to impose, by ordinance, a tax on the privilege of cultivating, dispensing, producing, processing, storing, providing, donating, selling or distributing marijuana by a licensee, as specified. Physician and Advertising Provisions 49)Requires the MBC to prioritize cases involving physicians who recommend marijuana to patients for medical purposes without a good faith prior examination of the patient and medical reason therefor. 50)Makes it a misdemeanor for a physician and surgeon who recommends medical marijuana to a patient to accept, solicit, or offer any form of remuneration from or to a facility licensed to engage in medical marijuana activities if the physician and surgeon or his or her immediately family have a financial interest in that facility, as specified. 51)Requires the MBC to consult with the California Marijuana Research Program, known as the Center for Medicinal Cannabis AB 266 Page 21 Research, on developing and adopting medical guidelines for the appropriate administration and use of medical marijuana. 52)Prohibits a physician and surgeon from recommending medical marijuana to a patient unless that person is the patient's attending physician, as defined under existing law. 53)Requires an examination conducted by a physician and surgeon involving the use of telehealth to comply with applicable federal and state laws and regulations, including compliance with the Health Insurance Portability and Accountability Act of 1996. 54)Requires advertising for physician recommendations for medical marijuana to meet all requirements to bear a prescribed notice for consumers and comply with false advertising prohibitions for healing arts practitioners, as specified, and prohibits price advertising that is fraudulent, deceitful, or misleading. Labor Provisions 55)Requires the Division of Labor Standards Enforcement (Division) to do all of the following: a) Maintain minimum standards for the competency and AB 266 Page 22 training of employees of a licensed cultivation site or a licensing dispensing facility, or "cannabis employees," through a system of testing and certification; b) Requires persons who work as cannabis employees to be certified by the Division; c) Establishes additional grounds for disciplinary proceedings, including suspension of revocation of the conditional license issued pursuant to these provisions, as specified; and d) Refer cases to the Bureau when it is determined that a violation has occurred, and requires the Bureau to open an investigation and take disciplinary action within 60 days of receipt of the referral. 56) Authorizes uncertified persons to perform work for which certification is otherwise required in order to acquire the necessary on-the-job experience for certification, as specified. 57)Establishes the Cannabis Certification Fund as a special account in the State Treasury to be used, upon appropriation, to validate and certify cannabis employees, as specified. 58)Requires the Division of Occupational Safety and Health in the Department of Industrial Relations to develop industry-specific regulations related to the activities of licensed facilities, including provisions for the AB 266 Page 23 establishment of labor peace agreements and an apprenticeship program to ensure professional standards among industry employees, as specified. 59)Requires the Division of Apprenticeship Standards to investigate, approve, or reject applications for apprenticeship programs for employees of a licensed cultivation site or dispensing facility, as specified. FISCAL EFFECT: Unknown. This bill is keyed fiscal by the Legislative Counsel. COMMENTS: 1)Purpose. This bill is sponsored by the League of California Cities and the California Police Chiefs Association . According to the author, "After nearly 20 years of access to medical marijuana without a reasonable framework for distribution, it is time for us to take a serious look at putting such a framework into place, whether voters are called upon to decide on legislation in 2016 or not. Periodic litigation and the lack of uniform health and safety standards are just two examples of how the status quo has not served the general public or patients with bona fide medical needs well. This measure seeks to tackle those problems head-on, but to do so in a fashion that builds consensus on this issue as we move AB 266 Page 24 forward." 2)The Compassionate Use Act (CUA) and SB 420. In 1996, voters approved the CUA, which allowed patients and primary caregivers to obtain and use medical marijuana, as recommended by a physician, and prohibited physicians from being punished or denied any right or privilege for making a medical marijuana recommendation to a patient. In 2003, SB 420 (Vasconcellos), Chapter 875, Statutes of 2003, established the Medical Marijuana Program (MMP), which allowed patients and primary caregivers to collectively and cooperatively cultivate medical marijuana, and established a medical marijuana card program for patients to use on a voluntary basis. The card can be used to verify that a patient has authorization to possess, grow, transport, or use medical marijuana in California, and that a caregiver has authorization to possess, grow, and transport medical marijuana in California. The MMP facilitates the registration of qualified patients and their caregivers through a statewide identification system, and qualified patients and their caregivers may apply for and be issued an identification card through their county of residence. Upon issuance of the card, it is registered with an online database which law enforcement can use to verify whether a card is valid. Under the MPP, a person is required to get a recommendation for medical marijuana from an attending physician, which is defined to mean someone who, " ?has taken responsibility for an aspect of the medical care, treatment, diagnosis, counseling, or referral of a patient and who has conducted a medical examination of that patient before recording in the patient's medical record the physician's assessment of whether the patient has a serious medical condition and whether the AB 266 Page 25 medical use of marijuana is appropriate." Written documentation of this recommendation is required to be submitted to the county in order to receive a medical marijuana card. However, since the passage of Proposition 215 and SB 420, the state has not adopted a framework to provide for appropriate licensure and regulation of medical marijuana. As a result, in the nearly 20 years since the passage of Proposition 215, there has been an explosion of medical marijuana collectives and cooperatives that are largely left to the enforcement of local governments, resulting in the creation of a patchwork of local regulations for these industries and with little statewide involvement. The California Attorney General's Compassionate Use Guidelines. SB 420 required the California Attorney General to "?develop and adopt appropriate guidelines to ensure the security and non-diversion of marijuana grown for medical use by patients qualified under the Compassionate Use Act of 1996." In 2008, the Attorney General issued guidelines to: 1) ensure that marijuana grown for medical purposes remains secure and does not find its way to non-patients or illicit markets, 2) help law enforcement agencies perform their duties effectively and in accordance with California law, and 3) help patients and primary caregivers understand how they may cultivate, transport, possess, and use medical marijuana under California law. According to a 2011 letter, after a series of meeting with stakeholders to assess whether to clarify the 2008 guidelines to stop the exploitation of California's medical marijuana laws by gangs, criminal enterprises, and others, the Attorney General decided to postpone the issuance of new guidelines because of pending litigation and to urge the Legislature to amend the law to establish clear rules governing access to medical marijuana. California Supreme Court Affirms Local Control Over Medical Marijuana. By exempting qualified patients and caregivers AB 266 Page 26 from prosecution for using or from collectively or cooperatively cultivating medical marijuana, the CUA and the MPP essentially authorized the cultivation and use of medical marijuana. These laws have triggered the growth of medical marijuana dispensaries in many localities, and in response, local governments have sought to exercise their police powers to regulate or ban activities relating to medical marijuana. After numerous court cases and years of uncertainty relating to the ability of local governments to control medical marijuana activities, particularly relating to the ability to control the zoning, operation, and existence of medical marijuana dispensaries, the California Supreme Court, in City of Riverside v. Inland Empire Patients (2013) 56 Cal. 4th 729, held that California's medical marijuana statutes do not preempt a local ban on facilities that distribute medical marijuana. The court held that nothing in the CUA or the MMP expressly or impliedly limited the inherent authority of a local jurisdiction, by its own ordinances, to regulate the use of its land, including the authority to provide that facilities for the distribution of medical marijuana will not be permitted to operate within its borders. Federal Controlled Substances Act. Despite the CUA and SB 420, marijuana is still illegal under state and federal law. Under California law, marijuana is listed as a hallucinogenic substance in Schedule I of the California Uniform Controlled Substances Act. Yet, the CUA prohibits prosecution for obtaining, distributing, or using marijuana for medical purposes. However, under the federal Controlled Substances Act, it is unlawful for any person to manufacture, distribute, dispense or possess a controlled substance, including marijuana, whether or not it is for a medical purpose. As a result, patients, caregivers, and dispensary operators, who engage in activities relating to medical marijuana, may still vulnerable to federal arrest and prosecution. AB 266 Page 27 According to the California Attorney General's guidelines, the difference between state and federal law gives rise to confusion. However, California has tried to avoid this conflict by deciding not to use the state's powers to punish certain marijuana offenses under state law when a physician has recommended its use to treat a serious medical condition. U.S. Department of Justice (USDOJ) Guidance Regarding Marijuana Enforcement. On August 29, 2013, the USDOJ issued a memorandum that updated its guidance to all U.S. Attorneys in light of state ballot initiatives to legalize under state law the possession of small amounts of marijuana and provide for the regulation of marijuana production, processing, and sale. While the memorandum noted that illegal distribution and sale of marijuana is a serious crime that provides a significant source of revenue to large-scale criminal enterprises, gangs, and cartels, it also noted that USDOJ is committed to using its limited investigative and prosecutorial resources to address the most significant threats, which include: preventing distribution to minors; preventing revenue from marijuana from going to criminal enterprises; preventing diversion to other states where marijuana is not legal under state law; preventing state-authorized marijuana from being a cover for trafficking in other illegal drugs or illegal activity; preventing violence in cultivating and distributing marijuana; preventing drugged driving and other public health problems from marijuana use; and preventing growing, possessing or using marijuana on public lands or on federal property. According to the USDOJ, "In jurisdictions that have enacted laws legalizing marijuana in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale, and possession of marijuana, conduct in compliance with those laws AB 266 Page 28 and regulations is less likely to threaten the federal priorities set forth above?In those circumstances, consistent with the traditional allocation of federal-state efforts in this area, enforcement of state law by state and local law enforcement and regulatory bodies should remain the primary means of addressing marijuana-related activity." Medical Marijuana Industry in California. Regulated industry. According to the author's Sunrise Questionnaire, submitted to the Committee pursuant to Government Code Section 9148 et seq., there are multiple occupational groups interested in state regulation, representing a growing marijuana industry including: cultivators, manufacturers, distributors, researchers, dispensary operators, testing laboratories, producers of marijuana edibles, and those involved in transport of the product, from large shipments to discrete deliveries to individual patients. As this industry is virtually unregulated today, and to a large degree operates in the shadows for fear of local, state, and federal enforcement action, there may be other occupational groups with a stake in the proposed regulation of which sponsors are currently unaware. Because marijuana remains federally prohibited, being classified as a Schedule I drug by the U.S. Food and Drug Administration, the U.S. Department of Justice, and the U.S. Drug Enforcement Administration, it is not recognized by the federal government as having any medicinal value. In addition, practitioners in this industry are denied banking services in FDIC-insured institutions due to the federal ban, and must execute all transactions in cash. U.S. Attorneys with jurisdiction over California and neighboring states remain capable of launching enforcement actions at any time. In addition, many California jurisdictions, roughly estimated by the League of California Cities at 50 percent pending completion of a statewide survey, ban the cultivation and sale of medical marijuana altogether. It is not yet fully legal for recreational use in California. AB 266 Page 29 The regulatory, legal, financial and enforcement arms of the federal government - aided in many instances by state and local government, who rely on the Fed for guidance -- contribute significantly to a climate in which it is not yet possible for practitioners to operate with sufficient openness to form an association of the type this question inquires about. As a result, while some local governments have established comprehensive licensing and regulatory schemes, many practitioners in this industry are part of an underground economy that is unregulated, unlicensed, and untaxed. According to the author's Sunrise Questionnaire, and the Emerald Growers Association, there are an estimated 30,000 cultivation sites in the tri-county area of Humboldt-Mendocino-Trinity, and an estimated additional 10,000 cultivation sites throughout California. According to www.weedmaps.com, there are over 4,000 medical marijuana dispensaries operating within California. The Los Angeles Time reports (as of April 1, 2014) that there are more than 1,100 medical marijuana dispensaries within the Los Angeles city limits alone that are actively registered to pay business tax in Los Angeles. Other than these sources, neither the sponsors of this bill, nor the industry it seeks to regulate have any means of providing a reasonably accurate statewide estimate of the total number of practitioners. Need for regulation. As the bill's legislative findings state, "Despite the passage of the Compassionate Use Act of 1996 and the MMPA, because of the lack of an effective statewide system for regulating and controlling medical marijuana, cities, counties and local law enforcement officials have been confronted with uncertainty about the legality of some medical marijuana cultivation and AB 266 Page 30 distribution activities. The current state of affairs makes law enforcement difficult and endangers patient safety because of an inability to monitor the supply of medical marijuana in the state and the lack of quality control, testing, and labeling requirements." In addition, because marijuana remains a Schedule I drug, no legitimate pharmacy may dispense marijuana, and federal and state food and drug laws do not apply. For this reason, a person (such as patient with epilepsy) suffering ill effects from marijuana that is high in THC content, has no meaningful redress under California law today, because there are no health and safety standards, no potency standards, no labeling standards, and no testing standards to invoke in alleging any kind of violation. So long as there are no standards by which to gauge competent conduct by a practitioner in any of these areas, no consumer or potential plaintiff harmed by marijuana will have a basis on which to argue that a practitioner should be held accountable. The same is true of a cancer patient who ingests a THC-rich edible product to stimulate his appetite, where that product turns out to be far more potent than he imagined, inducing 12 hours of hallucinations during which he suffers severe physical injury; he too will have no legal redress. For patients, there is a critical need for meaningful regulatory standards addressing testing, purity, potency, labeling, the identification and elimination of contaminants, and secure protocols for processing and transport of the product. AB 266 Page 31 According to the Sunrise Questionnaire, there is significant public demand for uniform standards in the field of health and safety, including maximum potency standards, product packaging and labeling standards, maximum tolerances for contaminants such as mold, fungus, pesticides, rodenticides, fecal matter, and other foreign substances. Among local government entities, many jurisdictions would like to see a uniform state regulatory structure, and have refused to allow cultivation or sale of marijuana within their boundaries in the absence of such a structure. There is also widespread public demand for marijuana cultivation standards that mirror established agricultural standards and that will alleviate environmental degradation. According to the author, without such regulation, harm to consumers is very likely given that no health and safety standards exist for marijuana, so there are none to be enforced. The same is true in regard to requirements for packaging, labeling, and seed-to-sale tracking. Hazard to the public is magnified in the case of edibles due to the concentrated nature of the marijuana they contain, and depending on the strain, its attendant psychotropic and hallucinogenic properties, combined with the current total absence of regulatory standards. Additionally, edibles are not currently labeled to disclose any potential allergens. AB 266 Licensing and Regulatory Framework. According to the AB 266 Page 32 author, this bill will address many of these concerns by doing all of the following: Requiring the establishment of uniform health and safety standards, and requiring mandatory, random sample product testing, both of which are referenced with greater specificity below. In addition, multiple additional provisions of the proposed regulation will preclude consumer injury, as follows: o Replaces the existing cooperative and collective model by establishing a licensing requirement for all operators in the stream of commerce associated with medical marijuana. o Requiring the establishment of cultivation standards. o Establishing both the Medical Marijuana Regulation Fund, and the Special Account for Environmental Enforcement, addressing both the funding needs triggered by this entire regulatory structure, as well as the requirement for the enforcement of environmental laws and related clean-up at licensing cultivation sites, which will have a direct impact on consumer safety. o Requiring certification of laboratories, and AB 266 Page 33 certification standards, to perform testing of medical marijuana, for the purpose of identifying various contaminants in the marijuana and determining their concentration. o Requiring the establishment of sanitation standards in connection with edible marijuana products and additional regulations pertaining to edible marijuana products. o Establishing standards for pesticides and rodenticides to be used in cultivation of medical marijuana. o Establishing standards for statewide health and safety regulations, and quality assurance (testing) regulations related to cultivation, storage, transport, manufacture, and sale of all medical marijuana produced in California. o Requiring entities that dispense, cultivate, manufacture, transport, furnish, or test medical marijuana to be appropriately licensed. The objective of this provision is to effectively replace the current cooperative/collective model with licensed operators throughout the stream of product cultivation, testing, distribution, and sale. o Establishing a revenue stream for enforcement activities by the relevant state agencies pertaining to environmental clean-up and enforcement of existing AB 266 Page 34 law at all licensed cultivation sites. Marijuana Frameworks Established in Other States. California is the only state that permits for medical marijuana in the absence of a robust state-wide regulator system. The following states have state-wide medical marijuana regulatory systems: Alaska, Arizona, Colorado, Washington DC, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont and Washington. In addition, Colorado, Washington and Oregon have established recreational marijuana licensing schemes. Both Washington and Colorado created systems of legal production and sale, subject to licensing, regulation and taxation. However, the laws impose different industry structures and build on their existing medical systems in different ways. Colorado allows entrepreneurs to produce cannabis and sell it at retail, and such businesses are, at least initially, required to produce the majority of the marijuana they sell (vertical integration), while Washington state maintains clear separation between marijuana growers, processors and retailers (horizontal integration). Both models seek to, however, reduce diversion and increase accountability. This bill adopts a horizontal integration approach. In addition, the commercial market in Washington is supervised by the Washington State Liquor Control Board, while Colorado's law vests authority to regulate the commercial market in the newly created Marijuana Enforcement Division of the Department of Revenue. Colorado's medical marijuana program is also under that Division - prior to the recreational initiative, the Medical Marijuana Enforcement Division was regulating that part of the market. AB 266 Page 35 According to the Brookings Institute, since the early 1990s, U.S. public opinion has trended in favor of marijuana legalization. Currently, a majority of Americans support legalization by a margin of seven points-52 percent to 45 percent, according to findings from a Pew Research Center survey in March 2013. Support for marijuana legalization has risen sharply since 2010, by 11 percentage points. This increasing support for marijuana legalization is present in California as well, with recent polls showing that a majority of Californians support marijuana legalization. Currently, there are an estimated four different marijuana initiatives attempting to qualify for the 2016 ballot. In order for any marijuana scheme to be effective, it should address all parts of the industry, including establishing a robust licensing and regulatory scheme, a taxation scheme, incorporate health and safety standards, in addition to ensuring that the public is protected; however, if the measure is too prescriptive, it may hamper the ability to address any unintended consequences or fill in any policy gaps without having to go back to the ballot. As a result, if the State is able to create a comprehensive framework for medical marijuana, it may also serve a dual role by serving as a basis for a recreational marijuana scheme. 1)Current Related Legislation. AB 26 (Jones-Sawyer) of the current legislative session, would enact the Medical Cannabis Regulation and Control Act to license and regulate medical cannabis, and would create the Division of Medical Cannabis Regulation and Enforcement within the Department of Alcoholic Beverage Control to administer the act. STATUS: This bill is in the Assembly Business and Professions Committee. AB 266 Page 36 AB 34 (Bonta) of the current legislation, session would enact the Medical Cannabis Regulation and Control Act to license and regulate medical cannabis, and would establish the Division of Medical Cannabis Regulation and Enforcement within the Department of Alcoholic Beverage Control to administer the act. STATUS: This bill is scheduled to be heard in the Assembly Business and Professions Committee) AB 243 (Wood) of the current legislation session, would require all medical marijuana cultivation (MMC) to be conducted in accordance with state and local laws and best practices, as specified, and would require state agencies to address environmental impacts of MMC and coordinate with local governments in enforcement efforts, and establishes a MMC permitting system. STATUS: This bill is scheduled to be heard in the Assembly Environmental Safety and Toxic Materials Committee. SB 673 (McGuire) of the current legislation session, would establish within the Department of Consumer Affairs a Bureau of Medical Marijuana Regulation, under the supervision and control of the Chief of the Bureau of Medical Marijuana Regulation, and would require the bureau to license and regulate dispensing facilities, cultivation sites, transporters, and manufacturers of medical marijuana and medical marijuana products, subject to local ordinances, and enforced primarily at the local level. STATUS: This bill is scheduled to be heard in the Senate Governance and Finance Committee. 2)Prior Related Legislation. AB 1262 (Correa) of 2014, would have established a licensing and regulatory framework for the cultivation, processing, transportation, testing, AB 266 Page 37 recommendation and sale of medical marijuana to be administered by the Department of Consumer Affairs (DCA) and enforced primarily at the local level. NOTE: This bill was held in the Assembly Appropriations Committee. AB 1894 (Ammiano) of 2014, would have enacted the Medical Cannabis Regulation and Control Act to license and regulate the cultivation, manufacture, testing, transportation, storage, distribution, and sale of medical cannabis, and would create the Division of Medical Cannabis Regulation and Enforcement within the Department of Alcoholic Beverage Control. NOTE: This bill was held on the Assembly Floor. AB 473 (Ammiano) of 2013, would have enacted the Medical Marijuana Regulation and Control Act to license and regulate the cultivation, manufacturing, testing, transportation, distribution, and sales of medical marijuana and medical marijuana products, and would create the Division of Medical Marijuana Regulation and Enforcement within the Department of Alcoholic Beverage Control. NOTE: This bill was held on the Assembly Floor. AB 604 (Ammiano) of 2013, would have enacted the Medical Cannabis Regulation and Control Act to license and regulate the cultivation, manufacture, testing, transportation, storage, distribution, and sale of medical cannabis, and would create the Division of Medical Cannabis Regulation and Enforcement within ABC. NOTE: This bill was held in the Senate Public Safety Committee. AB 2312 (Ammiano) of 2012, would have established the Medical Marijuana Regulation and Control Act, authorizing local taxes on medical cannabis and creating a board to regulate the AB 266 Page 38 medical cannabis industry. NOTE: This bill was held in the Senate Committee on Business, Professions and Economic Development. SB 1182 (Leno) of 2012, would have provided that a cooperative or collective that operates within the Attorney General's (AG) guidelines shall not be subject to prosecution for marijuana possession or commerce, as specified. NOTE: This bill was held on the Senate Floor. AB 1300 (Blumenfield), Chapter 196, Statutes of 2011, provided that a local government entity may enact an ordinance regulating the location, operation or establishment of a medical marijuana cooperative or collective; authorizes local government entities to enforce such ordinances through civil or criminal remedies and actions; and authorizes a local government entity to enact any ordinance that is consistent with the Medical Marijuana Program. SB 626 (Calderon) of 2011, would have required the Board of Equalization (BOE) to establish a nine-member task force to conduct a study to determine ways to enhance collections of sales and use taxes on retail sales of marijuana and ensure proper regulation of the cultivation, transportation, and distribution of marijuana and marijuana products. NOTE: This bill was held in the Senate Appropriations Committee. AB 390 (Ammiano) of 2009, would have legalized the possession, sale, cultivation and other conduct relating to marijuana and required the Department of Alcoholic Beverage Control to administer and enforce the terms of legalized marijuana. NOTE: This bill was held in the Assembly Health Committee. SB 420 (Vasconcellos), Chapter 875, Statutes of 2003, established the Medical Marijuana Program Act, a statewide, AB 266 Page 39 voluntary program for the issuance of identification cards to identify persons authorized to engage in the medical use of marijuana under the Compassionate Use Act. Proposition 215, of the November 1996 General Election, prohibits prosecution for the possession and cultivation of cannabis by a patient or a patient's primary caregiver with a physician's written or oral recommendation. ARGUMENTS IN SUPPORT: The League of California Cities and the California Police Chiefs Association write a letter as co-sponsors and support the regulation of medical marijuana because "Although initially presented to voters as another medical remedy for patients in need, the implementation of Proposition 215 has been marked by chaos, defined by no statewide regulatory framework in the nearly twenty years since, and period litigation on the meaning of the initiative and the extent of local control. Among the most troublesome issues with Proposition 215 are the non-existent quality controls for consumers with respect to potency and the presence of carcinogenic pesticides or other contaminants; and retail outlets and cultivation sites that often become potential magnets for criminal activity and the ability of virtually anyone to obtain a medical marijuana recommendation from a compliant doctor. [This bill] establishes an improved regulatory structure to ensure that Prop. 215 works as originally envisioned to assist patients with legitimate medical needs, in a manner that comports with the needs of law enforcement, local governments, patient advocates, local community organizations, and medical professionals." AB 266 Page 40 The United Food and Commercial Workers Union writes a letter in support and states, "a 'cannabis worker apprenticeship program and certification program' will ensure the rights of workers are protected, health and safety standards are maintained and ongoing product knowledge and skills development are sustained with consistency throughout the cannabis industry similar to pharmacy laboratory technicians, nursing assistants, dental hygienists, physical therapists, and cosmetologists." The League of California Cities - Redwood Empire Division , The League of California Cities - Los Angeles County Division , City of Concord , City of Chino Hills , City of Clayton , City of Fountain Valley , City of Garden Grove , City of Indian Wells , City of Lakeport , City of Merced , City of Montclair , The City of Rancho Cucamonga , City of Torrance , and City of Sacramento all write letters in support and cite, "Most of the previous legislation in this area has often sought to preempt local control, only partially addressed the significant public safety concerns raised by medical marijuana, and failed to address important health and safety issues that are inevitably triggers by a regulatory process for any medicine. For this reason, [this bill] with its public safety, local control, and public health provisions represents a shift in focus that began with last year's SB 1262 by Senator Correa. As municipal government officials, we are on the front lines on this issue along with our local police departments, and have to cope with the effects of the current chaotic regulatory structure for medical marijuana on a daily basis. We appreciate the responsible approach that protects patient access while protecting local AB 266 Page 41 control and addressing public safety issues exhibited in the bill." ARGUMENTS IN OPPOSITION: The California Medical Association (CMA) writes a letter opposing unless amended and states, "While much of the language contained in AB 266 relating to physician recommendations of medical cannabis was negotiated with CMA in prior bills, unfortunately AB 266 contains unnecessary and potentially confusing language with respect to exams conducted via telehealth and the application of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Despite HIPAA's current broad application to medical exams conducted via telehealth, AB 266 contains duplicative language requiring exams conducted by physicians where medical cannabis is recommended to be HIPAA compliant. The sponsors argue, incorrectly, that because Marijuana is designated by the federal government as a Schedule I drug (a category which recognizes no accepted medical benefit), it is not clear as to whether HIPAA standards currently apply to medical marijuana recommendation in the State of California." California NORML , Coalition for Cannabis Policy Reform , Marijuana Policy Project , Law Enforcement Against Prohibition , Emerald Grower Association all write a letter in opposition and cite several concerns with AB 266. "It abolishes the legal basis for existing cultivation collectives and dispensaries (HSC 11362.775) immediately, but doesn't initiate conditional licensing until July 1, 2017 (Sec. 18110a), leaving existing operations in a legal vacuum." They also state, "AB 266 does nothing to fulfill Prop 215's mandate for 'safe and affordable' access to medical marijuana for patients in medical need. Local AB 266 Page 42 governments would still be authorized to ban distribution entirely, perpetrating demand for illegal black and gray market suppliers in many parts of the state." They point that "AB 266 imposes excessively burdensome and costly regulations that will do nothing to improve patient access or public safety. Chapter 4 requires even the most trivial shipments of marijuana to be transported in specially equipped delivery vehicles staffed with two employees." They claim that "Section 18112(a) unacceptably bans licensing of any person with a prior felony drug trafficking offense, including marijuana crimes. This would wrongly exclude many highly qualified, honest individuals who have made valuable contributions to the development of medical cannabis in California." POLICY ISSUES FOR CONSIDERATION: This bill would establish a novel licensing and regulatory scheme for medical marijuana, which covers every aspect of the medical marijuana industry, from seed to sale. In addition to tasking the newly-created Bureau with myriad duties involved in this new scheme, the bill also places enforcement responsibilities primarily on local governments, as well as establish a dual licensure scheme, which requires a close partnership between the Bureau and local governments. In addition, the bill seeks to strengthen the ability of environmental enforcement agencies to better enforce medical marijuana cultivation, and would require the establishment of a comprehensive set of health and safety standards for medical AB 266 Page 43 marijuana and medical marijuana products. As would be expected for any new regulatory program of this scale and scope, a number of outstanding issues and questions will need to be addressed in order to ensure that the program has the greatest chance of success. 1)Establishing a Bureau within the Department of Consumer Affairs. The DCA houses 41 regulatory entities (25 boards, nine bureaus, four committees, two programs, and one commission). These entities establish minimum qualifications and levels of competency for licensure. They also license, register, or certify practitioners, investigate complaints and discipline violators. The committees, commission and boards are semi-autonomous bodies whose members are appointed by the Governor and the Legislature. The DCA provides them with administrative support. The DCA's operations are funded exclusively by license fees. The DCA's area of expertise includes professional licensure and regulation, primarily of licensed professionals, as opposed to businesses, and the DCA's oversight is typically over fragmented chunks of licensed professionals, as opposed to entire swaths of industries. For example, while boards within the DCA may each have jurisdiction over physicians, nurses, and pharmacists, the DCA is not responsible for overseeing the entire health care industry. In addition, the DCA's primary purpose to protect consumers is carried out by AB 266 Page 44 setting standards and enforcing applicable laws and regulations relating to a certain profession or license category, which is largely through a complaint-driven process. While many DCA regulatory entities may adopt complex regulations relating to a particular profession, the type of expertise required to establish and implement, at wholesale, such a comprehensive program that covers all aspects of medical marijuana activities, will pose great challenge to any state entity, including the DCA. Successful implementation of any medical marijuana program will require strong leadership and involvement from the Administration to prioritize implementation so that it meets federal guidance and prevents the potential for illegitimate activities, to coordinate efforts among all affected entities that will play a role in establishing a robust and effective licensing and regulatory framework, all of which the Bureau's success will rely heavily on, in addition to having sufficient resources to ensure that all staffing and other needs will be met. 2)Bureau's Ability to Absorb New Responsibilities. Among other things, this bill would require the Bureau to adopt regulations that establish standards for cultivation, manufacturing, transportation, storage, distribution, and sale of medical marijuana. These regulations are thereby required to cover everything from licensure, which is within the DCA's core duties, to comprehensive health and safety standards for AB 266 Page 45 medical marijuana, including establishing the maximum potency standards for THC. This bill would delay implementation of these regulations, and licensure provisions, until July 1, 2017, thereby giving the Bureau 18 months to adopt regulations. In addition, the bill authorizes the Bureau to consult with other state and local agencies, industry, and public and private entities to establish these regulations. This bill would also require the Bureau to keep a complete record of all facilities issued a conditional license, and would require the Bureau to establish procedures to provide state and local law enforcement, upon their request, with 24-hour access to information to verify conditional licenses and track inventories and transportation. Due to the extensive number and type of regulations required to be adopted, in addition to the level of outside expertise the Bureau will need to rely on, the author may wish to consider whether 18 months will be enough time to establish all of these standards, or if the Bureau should be given more time to adopt these standards, or be authorized to adopt temporary emergency regulations. Should this bill pass, the author should strongly consider requiring the Bureau to establish an advisory taskforce with the requisite expertise to assist the DCA during this rulemaking process and to clarify the appropriate roles of each state entity that is, or would be, affected by medical marijuana activities. Such an advisory taskforce should include representatives from DPH, CDFA, State Water Board and other environmental departments, the Attorney General's Office AB 266 Page 46 (especially critical to help navigate the federal and changing legal landscape), local governments, medical marijuana experts, and industry representatives. In addition, while the bill authorizes the Bureau to assist state taxation authorities in the development of uniform policies for the state taxation of licensees, the author should consider requiring the Bureau to work with the State Board of Equalization (BOE) on establishing clear policies for the state taxation of licensees, and include the BOE in any taskforce activities. The author should also consider working with the DCA to determine the feasibility, timeline, and cost to establish a database system that would meet these new requirements to assist in tracking licensees', shipments, and other information to help and product, i.e."seed to sale" tracking, and whether this could be established as a separate database from the DCA's BreEZe system, which has encountered extreme difficulties. 3)Patient Access to Care. This bill delays implementation of many of these provisions, including promulgating regulations and issuing and requiring conditional licenses until July 1, 2017. However, the bill would delete the provisions authorizing patients and caregivers to be exempt from state AB 266 Page 47 criminal sanctions for "collectively or cooperatively" cultivating medical marijuana. As a result, the author may consider similarly delaying the implementation of that provision until six months after the Bureau begins issuing conditional licenses, or until January 1, 2018. The bill also limits exemptions for patients who do not sell, distribute, donate, or provide marijuana to any other person or entity, and limits the exemption for patient caregivers who serve five or less qualified patients for whom he or she is a caregiver. The author may wish to consider whether patients should be exempt for distributing marijuana without compensation, and whether limiting the number of patients a primary caregiver may serve might limit access to care for certain patients, for example, those in rural areas. In addition, while this bill prohibits the issuance of a license if the applicant has a past felony conviction for the possession for sale, sale, manufacture, transportation, or cultivation of a controlled substance, the author may wish to consider exempting felony convictions for offenses relating solely to medical marijuana activities brought on behalf of the federal government if that applicant has not had any similar enforcement actions taken against them by the local government. This would allow businesses that have been complying with local ordinances to continue those locally-sanctioned business operations. On a similar note, the author may wish to consider specifically authorizing a facility that is operating in accordance with local regulations, and who submits an application for state AB 266 Page 48 conditional licensure, to continue to operate until its application is approved or denied by the Bureau. In addition, the bill currently authorizes the Bureau to adopt regulations to limit the number of conditional licenses issued upon a finding that the otherwise unrestricted issuance of conditional licenses is dangerous to the public health and safety. Because this licensure scheme relies upon dual license, the author may wish to consider whether it is necessary to empower the Bureau to restrict the number of licenses issued when the local government would have the last say on whether a business would receive necessary local approval to operate or not. 4)Dual Licensure and Enforcement. The bill requires facilities, manufacturers, cultivation sites, and transporters to be licensed by the Bureau, and requires enforcement of these provisions and health, safety, and other standards to be carried out by primarily at the local level. In addition, this bill enacts a dual licensure scheme that requires a licensee to obtain both a state conditional license and a local license or permit prior to engaging in any medical marijuana activities. As a result, there may be some inevitable confusion between the Bureau and local governments in their enforcement roles, which may be further complicated by the fact that licensure depends on having both approvals, and that an enforcement action taken by a state or local government will inevitably affect their equivalent state or local license, and trigger enforcement. The author may wish to clarify the enforcement duties of state and local agencies under the bill, and require the Bureau to ensure open AB 266 Page 49 communication and collaboration with local governments. The bill authorizes reasonable costs incurred by law enforcement and other public safety entities for enforcing these provisions to recover those costs. While this limits recovery to "reasonable costs," the author may wish to consider if this language might allow some local jurisdictions to heavily focus enforcement efforts on this activity, since any reasonable costs for enforcement could be recovered, which would leave less money for other jurisdictions, the Bureau, or other state agencies to use for enforcement. This bill also requires the Bureau to require an annual audit of all conditionally licensed facilities, which shall be paid for by the licensee. The author may wish to specify the type of audit (e.g. financial, in-depth, etc.) that should be required, and whether placing annual auditing requirements on every licensee is too burdensome for the Bureau, and consider biannual audits or allowing the Bureau to prioritization its audits. 5)Audits. The bill currently requires annual audits of licensees to be performed by the Bureau. Annual audits for each conditionally licensed entity would include those facilities that are not currently licensed. As a result, the author may wish to only require the Bureau to audit those facilities that are dually licensed. In addition, the author may want to grant the Bureau more discretion in its ability to AB 266 Page 50 audit licensees, including determining whether an annual audit is required, instead of, for example, a bi-annual audit, and the ability to prioritize which licensees should be audited based on Bureau resources and level of potential harm to consumers or other factors that would indicate those licensees at greater risk of violating state or local laws. 6)Laboratory Certification. This bill directs the Bureau to certify laboratories for the testing of medical marijuana, and requires certification to be consistent with general requirements for the competence of testing and calibration activities using methods established by the International Organization for Standardization, specifically ISO/IEC 17025. The bill also requires the Department of Public Health (DPH) to promulgate standards for certification of testing laboratories. The International Laboratory Accreditation Cooperation (ILAC) is a well-respected industry organization that has several accreditation bodies that are considered complaint with ISO/IEC 17011, which is the standard by which accreditation bodies are to operate, and are qualified to attest that a laboratory meets the standards found in ISO/IEC 17025 and ISO/EIC 17020 (which is the visual inspection standard). For example, the American Association for Laboratory Accreditation in Maryland is an ILAC-approved accreditation body that has developed a Cannabis Testing Laboratory Program specifically designed to raise the standard in laboratory testing relating to medical marijuana. The author should consider whether laboratory certification using an outside accreditation body may be a more appropriate entity for this process, or whether DPH, which is already responsible for promulgating certification regulations and AB 266 Page 51 certifies some clinical laboratories, should certify these testing laboratories, with the ability to rely upon an outside accreditation body as part of its certification. AMENDMENTS: 1)Physician Interactions with Patients Are Already Covered by HIPAA. This bill requires examinations, conducted by physicians via telehealth for medical marijuana recommendations, to comply with applicable federal and state laws, including HIPAA. However, HIPAA, which establishes a set of national standards for the protection of certain health information, already applies to any health care provider, including physicians, who transmit health information in electronic form. As a result, this requirement would already exist, and specifying that physicians must comply with a specific federal law that already applies may cause confusion and unnecessary duplication. Accordingly, the author may wish to consider deleting this provision of the bill. On page 9, strike lines 5-11, inclusive. 2)Clarifying Licensure Provisions. The bill requires a dual licensure framework, thereby requiring both a conditional AB 266 Page 52 state license and a local license or permit in order to operate. The bill also has various provisions that limit medical marijuana activities to licensed facilities. The author may wish to clarify that such licensed facilities must be dually licensed in order to interact with one another by making the following changes: On page 10, line 8, after "part" insert: and a local license or permit, as specified in subdivision (c) of Section 18110. On page 10, line 13, after "part" insert: and a local license or permit, as specified in subdivision (c) of Section 18110 . On page 10, line 19, after "part" insert: and a local license or permit, as specified in subdivision (c) of Section 18110 . On line 23, after "part" insert: The transportation security requirements in Section 18122 shall only apply to licensed transporters . 3)Clarifying Enforcement. The author may wish to clarify the enforcement duties of state and local agencies under the bill, and require the Bureau to ensure open communication and collaboration with local governments. As such, the following amendment is suggested: On page 24, line 31, insert: (a) The bureau shall, in consultation with local governments, develop an enforcement framework that clarifies the enforcement roles of the state and local governments, designating local governments with primary enforcement responsibility;, maximizes the capabilities and resources of local enforcement agencies; and AB 266 Page 53 ensures that there is communication and collaboration between the bureau, relevant state agencies, and local governments to enhance and streamline enforcement efforts . 4)Patient Access to Care. This bill delays implementation of many of these provisions, including promulgating regulations and issuing and requiring conditional licenses until July 1, 2017. However, the bill would delete the provisions authorizing patients and caregivers to be exempt from state criminal sanctions for "collectively or cooperatively" cultivating medical marijuana. As a result, the author may consider similarly delaying the implementation of that provision until six months after the Bureau begins issuing conditional licenses, or until January 1, 2018. On page 37, line 2, insert: (d) This section shall become operative on January 1, 2018 . 5)Security and Transportation Provisions. This bill would, among other things, require all persons who transport medical marijuana to obtain a transporter license, and would require transportation requirements to be adhered to, including transmitting shipping manifests for each shipment, and requiring transport vehicles to be staffed with at least two employees. In addition, this bill would require all shipments to be weighed, inventoried, and accounted for, on video, prior AB 266 Page 54 to leavings its location and within eight hours after arrival at its destination. While these requirements might make sense to apply to large shipments of medical marijuana, it may not make sense to apply these conditions on smaller shipments, such as for patient deliveries. As a result, the author may wish to consider only triggering these heightened transportation and security requirements when the shipment is above a certain amount. On page 9, line 30, insert: "Delivery services" means an individual or entity issued a conditional license by the bureau pursuant to this part and a local license or permit as specified in subdivision (c) of Section 18110, to deliver medical marijuana or medical marijuana products, up to an amount determined by the bureau, to patients, testing laboratories, or to events or locations where it will be used solely for promotional purposes. Delivery services shall not be required to obtain a transporter license . On page 10, line 21, after "marijuana" insert: or medical marijuana above a certain amount, as determined by the bureau, and on line 23, after "part" insert: The transportation security requirements in Section 18122 shall only apply to licensed transporters . AB 266 Page 55 On page 32, line 7, after "marijuana" insert: This subdivision shall only apply to medical marijuana above a certain threshold amount, as determined by the bureau . 6)Testing, Health, Safety, and Auditing Standards. The author should clarify that the Bureau's authority includes testing, and specify who is responsible for those costs. The Bureau should also ensure that there are requirements for the Bureau to engage with other state departments that it will rely upon for subject matter expertise in developing health, safety, and appropriate environmental and cultivation standards. In this vein, the author should adopt the following changes: On page 12, line 26, after "storage," insert: testing , On page 13, line 2, after "regulations" insert: The bureau shall, at a minimum, consult with the State Department of Public Health and the Department of Food and Agriculture when developing these standards . AB 266 Page 56 On page 14, line 21, after "business," insert: and specify that the cost of testing shall be borne by the licensed cultivators, how often licensees should test marijuana , While the author may wish to give the Bureau greater discretion in determining how often audits should occur, whether audits should only be required of dually licensed facilities, and whether the Bureau may prioritize audits based on amount of resources and risk of harm to the public, the author should, at a minimum, authorize the Bureau to determine the type of audit that should be conducted. On page 32, line 8, strike:auditand insert:audit, as specified by the bureau, 1)Labeling of Edible Marijuana Products. The bill would require, among other things, that medical marijuana products, including edibles, be labeled and include specified information, such as a list of THC and CBD content and clear recommended dosage. AB 266 Page 57 Because medicinal marijuana varies in terms of the levels and types of active ingredient, THC or CBD, for example, and what it is used for varies among patients, it may be difficult to develop a standard "dosage" for products. As a result, the author may wish to consider clarifying labeling standards in regards to medical marijuana products and requiring products to instead state the amount of THC per milligrams in each serving, and the total amount of THC in a package. In addition, the author should consider striking provisions that requires edible products to be in opaque packaging and prohibit any packaging from containing photos or images of food, which may cause confusion for consumers and employees. The author should also include a warning to let consumers know that the intoxicating effects of edible medical marijuana products may be delayed to prevent consumers from consuming more than is necessary to alleviate symptoms. On page 40, line 9, strike:Theand delete lines 10-11 On page 40, lines 16-17, strike:an opaque andand insert: a On page 40, line 28, insert: (D) The statement "THE INTOXICATING EFFECTS OF THIS PRODUCT MAY BE DELAYED BY TWO AB 266 Page 58 HOURS ." On page 40, lines 34-35, strike:clear recommended dosage, and the size or volume of recommended doseand insert: the THC amount in milligrams per serving, servings per package, and the THC amount in milligrams for the package total On page 40, strike lines 37-38 2)Labor Provisions. Because this Committee's primary jurisdiction does not include labor and employment, Committee Staff consulted with the Assembly Labor and Employment Committee to review and develop proposed amendments to the bill. These amendments would simplify the cannabis employee certification, training, and apprenticeship program for cultivation sites and dispensaries, and would require the Division of Labor Standards Enforcement, by January 1, 2017, to convene an advisory committee to evaluate whether there is a need to develop industry-specific regulations related to the activities of licensed facilities, and would require the committee to present to the Occupational Safety and Health Standards Board its findings and recommendations for consideration by the board, and would require the board, by July 1, 2017, to render a decision regarding the adoption of AB 266 Page 59 industry-specific regulations. On page 18, line 40, insert: Enter into, or demonstrate that it has already entered into, and abide by the terms of a "labor peace agreement" as defined in subdivision (h) of Section 18100. The bureau may consult with the Division of Labor Standards Enforcement to ensure that the "labor peace agreement" meets the requirements of subdivision (h) of Section 18100 . On page 26, line 17, insert: (b) Establish registration fees in an amount reasonably necessary to implement this section, not to exceed twenty-five dollars ($25) for the initial registration. There shall be no fee for annual renewal of registration. Fees shall be placed in the Cannabis Certification Fund, established pursuant to Section 18135 . On page 26, strike lines 17-40, inclusive. On page 27, strike lines 1-13, inclusive, and on lines 24-25, strike:federal Office of Apprenticeship program or a state apprenticeship program authorized by the federal Office of AB 266 Page 60 Apprenticeshipand insert: state-approved apprenticeship program On page 27, line 31, strike:Certification is not required for any person employed pursuant to Section 18134and insert: An uncertified person may perform work for which certification is otherwise required in order to acquire the necessary on-the-job experience for certification provided that the person shall be under the direct supervision of a cannabis employee certified pursuant to Section 18131 who is responsible for supervising no more than one uncertified person. The Division of Labor Standards Enforcement may develop additional criteria governing this subdivision . On page 28, strike lines 21-40, inclusive. On page 29, strike lines 1-40, inclusive. On page 30, strike lines 1-27, inclusive. AB 266 Page 61 On page 41, line 12, strike:1158.5and insert: 147.5 On page 41, line 13, insert: By January 1, 2017, the division shall convene an advisory committee to evaluate whether there is a need to develop industry-specific regulations related to the activities of facilities issued a conditional license pursuant to Part 5 (commencing with Section 18100) of Division 7 of the Business and Professions Code . (b) By July 1, 2017, the advisory committee shall present its findings and recommendations for consideration to the board. No later than July 1, 2017, the board shall render a decision regarding the adoption of industry-specific regulations ." REGISTERED SUPPORT: League of California Cities (sponsors) AB 266 Page 62 California Police Chiefs Associations (sponsors) United Food and Commercial Workers Union - Western States Council League of California Cities - Redwood Empire Division League of California Cities - Los Angeles County Division California Contract Cities Association California Narcotic Officers Association California College and University Police Chiefs' Association California Association of Code Enforcement Officers Association for Los Angeles Deputy Sheriffs Los Angeles Police Protective League Riverside Sheriffs' Association California Communities United Institute AB 266 Page 63 City of Concord City of Chino Hills City of Clayton City of Downey City of Encinitas City of Fountain Valley City of Garden Grove City of Indian Wells City of Lakeport City of Merced City of Montclair City of Ontario AB 266 Page 64 The City of Rancho Cucamonga City of Torrance City of Sacramento Conscious Cannabis Ventures, support as a work in progress Heritage Associates, support as a work in progress International Faith Based Coalition REGISTERED OPPOSITION: California Medical Association California NORML Coalition for Cannabis Policy Reform Marijuana Policy Project AB 266 Page 65 Law Enforcement Against Prohibition Emerald Grower Association Analysis Prepared by:Eunie Linden / B. & P. / (916) 319-3301, Christian Jagusch / B. & P. / (916) 319-3301