BILL ANALYSIS Ó
AB 266
Page 1
ASSEMBLY THIRD READING
AB
266 (Bonta, et al.)
As Amended June 2, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+--------------------+--------------------|
|Business & |13-0 |Bonilla, Baker, | |
|Professions | |Bloom, Burke, | |
| | |Chang, Dodd, | |
| | |Eggman, Gatto, | |
| | |Holden, Mullin, | |
| | |Ting, Wilk, Wood | |
| | | | |
|----------------+------+--------------------+--------------------|
|Appropriations |12-0 |Gomez, Bonta, | |
| | |Calderon, Daly, | |
| | |Eggman, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Gordon, Holden, | |
| | |Quirk, Rendon, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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AB 266
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SUMMARY: Establishes a licensing and regulatory framework for
medical cannabis under the Medical Cannabis Regulation and Control
Act (Act), and would establish the Office of Marijuana Regulation
within the Office of the Governor, the Division of Medical
Cannabis Regulation within the State Board of Equalization, the
Division of Medical Cannabis Manufacturing and Testing within the
California Department of Public Health, and the Division of
Medical Cannabis Cultivation within the California Department of
Food and Agriculture, and would set forth the duties of the
respective regulatory authorities. Specifically, this bill:
Definitions
1)Defines terms, including:
a) "Commercial cannabis activity" means any cultivation,
possession, manufacture, processing, storing, laboratory
testing, labeling, transporting, distribution, or sale of
cannabis or cannabis product, or any Internet platform that
facilitates any of these functions for the purpose of selling
medical cannabis or medical cannabis products to qualified
patients or caregivers, except as provided;
b) "Licensed cultivation site" means a person that plants,
grows, cultivates, harvests, dries, or processes medical
cannabis, or that does all or any combination of those
activities, and that is issued a state license pursuant to
these provisions and a local license or permit;
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c) "Licensed dispensing facility" means a person that
provides medical cannabis, medical cannabis products, or
devices for the use of medical cannabis or medical cannabis
products, either individually or in any combination, that is
issued a state license pursuant to these provisions and a
local license or permit;
d) "Licensed manufacturer" means a person that conducts the
production, preparation, propagation, compounding, or
processing of medical cannabis or medical cannabis products,
either directly or indirectly or by extraction processes, or
independently by means of chemical synthesis or by a
combination of extraction and chemical synthesis, and
includes a location that packages or repackages medical
cannabis or medical cannabis products or labeling or
relabeling of its container, and that have been issued a
state license pursuant to this part;
e) "Licensed transporter" means a person issued a state
license by the Board of Equalization (BOE) to transport
medical cannabis or medical cannabis products above a limit
determined by the BOE to and from facilities that have been
issued conditional licenses pursuant to these provisions;
f) "Licensing authority" means the state agency responsible
for granting and renewing state licenses and regulating the
relevant licensees:
i) For licensed cultivators, the licensing authority is
the Division of Medical Cannabis Cultivation in the
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California Department of Food and Agriculture (CDFA).
ii) For dispensaries and transporters, the licensing
authority is the BOE.
iii) For licensed manufacturers and certified testing
laboratories, the licensing authority is the Division of
Medical Cannabis and Testing within the California
Department of Public Health (CDPH).
Administrative Provisions
2)Creates the Governor's Office of Marijuana Regulation (Office),
under the supervision and control of the Director of the Office
of Marijuana Regulation (Director), appointed by the Governor,
which shall have overall executive authority and responsibility
for implementation of all aspects of marijuana regulation
pursuant to this Act.
3)Makes the Director the appointing power of all employees within
the Office, and makes all heads of divisions, bureaus and other
employees in the Office responsible to the Director for the
proper carrying out of the duties and responsibilities of their
respective positions.
4)Requires the Director to consult with state agencies possessing
expertise in licensure and enforcement, including the Department
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of Alcoholic Beverage Control and the Department of Consumer
Affairs.
5)Requires the Office to coordinate and provide oversight of all
activities described in the Act, and to lead all state and local
authorities regarding the tracking of medical cannabis, medical
cannabis products, and licensees pursuant to the Act.
6)Requires the Office to maintain a registry of all permit holders
and a record of all licenses and commercial cannabis activity of
the permit holder throughout the length of licensure and for a
minimum of seven years following the expiration of each license,
and to make limited licensee information available to a licensee
to verify whether it is engaging with a properly licensed
entity.
7)Establishes the following entities to report to and be directly
accountable to the Office for their respective designated
responsibilities within the regulatory and enforcement
framework, as follows:
a) Division of Medical Cannabis Regulation, which is
established within the BOE, which shall be administered by a
person who is appointed by the BOE to administer the Act as
it pertains to commercial cannabis activity relating to
dispensaries and transporters.
b) Division of Medical Cannabis Manufacturing and Testing,
which is established within the CDPH, which shall be
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administered by a person who is appointed by the Governor to
administer the Act as it pertains to manufacturing, testing,
and certification of testing laboratories for medical
cannabis and medical cannabis products.
c) Division of Medical Cannabis Cultivation which is
established within the CDFA, which shall be administered by a
person who is appointed by the Governor to administer this
Act as it pertains to cultivation of medical cannabis.
d) The California Environmental Protection Agency and the
California Natural Resources Agency shall coordinate and
direct the following entities in the discharge of their
designated regulatory responsibilities:
i) The State Water Resources Control Board (SWRCB) shall
promulgate regulations related to discharge into waterways,
and diversion therefrom, resulting from marijuana
cultivation.
ii) The Department of Fish and Wildlife shall promulgate
regulations for the protection of any species affected by
cultivation activity, and regulations for any
cultivation-related development, including alteration of
waterways.
e) The Department of Justice (DOJ) shall perform criminal
background checks of applicants for licensure; develop
uniform security standards for dispensaries and all phases of
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transport covered by this Act; and provide supplemental
enforcement on an as-needed basis at the request of the
Office.
8)Gives the Office and licensing authorities the authority
necessary to implement this Act, including:
a) Establishing rules or regulations necessary to carry out
the purposes and intent of this Act and to exercise the
powers and perform the duties conferred by this Act, which
shall not limit the authority of a city, county, or city and
county specified in this Act or in the California
Constitution Article XI, Section 7, or any other law. The
Office shall review all regulations and guidance promulgated
by the licensing authorities in the administration of this
Act to ensure no duplication, overlap, or inconsistent
regulations occur.
b) Issuing state licenses to persons for the cultivation,
manufacture, transportation, and sale of medical cannabis
within the state, and setting application, licensing, and
renewal fees for state licenses.
c) Establishing standards for commercial cannabis activity,
and establishing procedures for the issuance, renewal,
suspension, denial, and revocation of state licenses.
d) Imposing a penalty authorized by this Act or any rule or
regulation adopted pursuant to this Act, and taking action
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with respect to an application for a state license in
accordance with procedures established pursuant to this Act.
e) Overseeing the operation of the Medical Cannabis
Regulation Fund, established pursuant to this Act.
f) Consulting with other state or local agencies,
departments, representatives of the medical cannabis
community, or public or private entities for the purposes of
establishing statewide standards and regulations.
9)Provides that protection of the public shall be the highest
priority for the Office and the licensing authorities in
exercising its licensing, regulatory, and disciplinary functions
pursuant to the Act.
10)Requires the Office, by March 1, 2016, to convene a task force
which shall advise the Office on the development of standards,
and be responsible for recommending to the Office the
appropriate roles of each state entity as it pertains to this
Act and guidelines on communication and information sharing
between state entities, and with local agencies, and to submit a
report on this information to the Legislature by August 1, 2016.
Requires the task force to be comprised of representatives of
medical cannabis consumer advocates, environmental experts,
public health experts, medical cannabis industry
representatives, related regulatory authorities, labor, and law
enforcement.
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11)Requires the Director to prepare and submit to the Legislature
each year, beginning on or before March 1, an annual report on
the Office's activities, including specified information.
Enforcement and Local Control Provisions
12)Requires each licensing authority to work in conjunction with
law enforcement agencies for the purposes of implementing,
administering, and enforcing the Act and taking appropriate
actions against licensees and others for failure to comply.
13)Provides that Director and persons employed by the licensing
authorities for the administration and enforcement of the Act
are peace officers in the enforcement of the penal provisions of
the Act, the regulations adopted pursuant to the Act, and any
other penal provisions prohibiting or regulating the
cultivation, processing, storing, manufacturing, testing,
transporting, or selling of medical cannabis, and that these
persons are authorized, while acting as peace officers, to
enforce any penal provisions of state law while in the course of
their employment.
14)Requires the Office, in consultation with local governments, to
develop an enforcement framework that clarifies the enforcement
roles of the state and local governments, and authorizes local
agencies to enforce any state statutory or regulatory standard.
15)Authorizes a city to enforce these provisions for licensed
facilities located within an incorporated area of a city, and
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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, and authorizes a
county to enforce these provisions for licensed facilities
located within the unincorporated area of a county.
16)Provides that is the intent of the Legislature to provide for
statewide regulation of commercial cannabis activity and the
enforcement of laws relating to commercial cannabis activities
without preempting city, county, or city and county ordinances
regulating or banning those activities.
17)Authorizes the director of a licensing authority or 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.
18)Requires a state or local agency to immediately notify the
Office and the appropriate licensing authority of any violations
or arrests made for violations over which the licensing
authority has jurisdiction that involve a licensee or licensed
premises, and requires the Office or licensing authority to
promptly investigate whether grounds exist for suspension or
revocation of the state license.
19)Requires the Office to establish procedures to provide state
and local law enforcement, upon their request, with 24-hour
access to information to verify a state license, track
transportation manifests, and track the inventories of
state-licensed facilities.
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20)Authorizes licensing authorities and relevant local agencies to
examine the books and records of a licensee and to visit and
inspect the premises as deemed necessary, and requires the
cultivation and dispensing facilities to be subject to an annual
audit, as specified by the licensing authority, in order to
ensure proper documentation is kept at each facility.
21)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 cannabis 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. Provides
that it is the intent of the Legislature to recognize the unique
circumstances of the City of Los Angeles with respect to Measure
D and associated rules related to commercial cannabis activity.
22)Provides that actions of a licensee or provisional licensee,
its employees, and its agents, that are permitted pursuant to a
state or provisional license and a license or permit issued by
the local jurisdiction, following the requirements of applicable
local ordinances, and that are conducted in accordance with this
Act, are lawful under state law, as specified, and that conduct
within the scope of a license but not fully in compliance with
the Act shall not be subject to the enforcement provisions of
the Act and shall not be subject to the penal provisions
generally prohibited cannabis-related activity, unless and until
the license is revoked.
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23)Provides that a person who engages in commercial cannabis
activity and operates an unlicensed facility, building,
structure, vehicle, mobile unity, or location in violation of
the Act is subject to civil penalties of twice the amount of the
license fee for each violation, and each day of operation
constitutes a separate violation.
24)Provides that the Act does not prevent a local government from:
adopting local ordinances inconsistent with the Act, as
specified; providing for the administrative, civil, or criminal
enforcement of those local ordinances; establishing a fee or tax
for the operation of a licensee within its jurisdiction; or
enacting and enforcing other laws or ordinances pursuant to the
California Constitution.
25)Provides that nothing in the Act provides a local government
from adopting or enforcing an ordinance or other law that bans
or regulates the location, operation, or establishment of a
licensee or other person that engages in commercial cannabis
activity.
Licensing Provisions
26)Exempts from licensure patients who do not provide, donate,
sell, or distribute cannabis to any other person or entity, and
primary caregivers who otherwise provide cannabis exclusively
for the personal medical purposes of no more than five specified
qualified patients for whom he or she is the primary caregiver,
as specified.
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27)Authorizes the state to conduct state licensure activities and
to regulate commercial cannabis activity pursuant to the Act,
and authorizes local governments to grant permits and regulate
commercial cannabis activity within their jurisdiction pursuant
to local ordinances.
28)Requires a licensing authority to issue state licenses to
qualified applicants engaging in commercial cannabis activities,
and beginning January 1, 2018, prohibits a person from engaging
in those activities without a state license and a local permit.
29)Requires local permits to be determined by local ordinances,
and that licensing authorities issuing state licenses shall have
sole authority to revoke a state license, and that local
agencies issuing local permits shall have the sole authority to
revoke a local permit.
30)Requires, if a local agency notifies the Office or a licensing
authority that a licensee or applicant within its jurisdiction
is in violation of local ordinances relating to commercial
cannabis activity, a licensing authority to revoke the state
license within 20 working days.
31)On or before July 1, 2017, require a licensing authority to
promulgate regulations for implementation and enforcement of the
Act, including:
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a) A description of the various specific forms of commercial
cannabis activity to be authorized by the various types of
licenses.
b) Procedures for the issuance, renewal, suspension, denial,
and revocation of state licenses, and for the appeal of a
denial, suspension, or revocation of those licenses, and a
time period not to exceed 90 days to approve or deny a
conditional license.
c) Qualifications for licensees and security requirements.
d) Requirements to ensure that all licensees and certified
testing laboratories conform with applicable standards
equivalent to state statutory environmental, agricultural,
consumer protection, and food and product safety
requirements.
32)Provides that each application approved by the respective
licensing authority is separate and distinct, and requires each
approved license application to be reported to the Office within
24 hours.
33)Requires each licensing authority to adopt regulations as
needed to implement the relevant licensing program within one
year following the establishment of provisional licenses, as
specified.
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34)Requires an applicant for a state license, among other things,
to:
a) Pay required fees and provide specified information to the
licensing authority, including detailed operating procedures,
including procedures for facility and operational security,
prevention of diversion, employee screening, storage of
medical cannabis, personnel policies, and recordkeeping
procedures.
b) Provide fingerprint images, including for each person
within an ownership interest in, or participating in the
direction, control, or management of, the proposed facility.
c) If applicable, provide documentation that the applicant
will be in compliance with all local ordinances and
regulations, including Measure D and evidence of the legal
right to occupy and use an established location.
d) For an applicant with 20 or more employees, provide a
statement that the applicant will enter into, or demonstrate
that it has already entered into, and abide by the terms of a
labor peace agreement.
35)Requires regulatory authorities, upon receipt of an application
and fee, to make a thorough investigation to determine whether
the applicant and the premises for which a license is applied
qualify for a license and whether the Act has been complied
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with.
36)Authorizes a regulatory authority to place reasonable
conditions upon licensure if grounds exist for denial of the
license and the licensing authority finds those grounds may be
removed by the imposition of those conditions. Provides that
specified limitations shall not be waived.
37)Requires a licensing authority to deny the application for
licensure or renewal, or suspend or revoke a state license if:
a) The applicant makes or authorizes an untrue or misleading
statement, engages in fraudulent or grossly negligent
conduct, or fails to comply with this Act, or engages in
conduct that constitutes grounds for denial of licensure;
b) Local agencies have notified the licensing authority or
the Office and provided evidence that a licensee or applicant
is in violation of local ordinances relating to medical
cannabis activities;
c) The applicant fails to meet the requirements of this Act
or any applicable local ordinance.
d) Granting or continuation of a license would be contrary to
the public welfare or morals, or the applicant has violated
any law prohibiting conduct involving moral turpitude.
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e) The applicant fails to state with sufficient specificity
the jurisdiction and location at which the applicant proposes
to establish operations or fails to provide notarized proof
that the owner of real property or landlord has acknowledged
and consented to the tenant's activities.
f) The applicant, or any of its officers, directors, or
owners, has been convicted of a felony criminal conviction
for drug trafficking involving a minor, a violent felony, a
serious felony, a felony involved fraud or deceit, or any
other felony, as determined by the licensing authority.
g) The applicant has been sanctioned by a regulatory
authority or a local government for unlicensed medical
cannabis activities or has had a license revoked in the last
three years.
h) The applicant, or any of its officers, directors, or
owners, has been subject to fines or penalty for cultivation
or production of a controlled substance on public or private
lands, as specified.
38)Authorizes a licensing authority to issue a state license and
send proof of issuance to the applicant, if the applicant has
not committed an act or crime constituting grounds for denial of
licensure, and requires a licensing authority to prescribe
conditions upon which a person whose state license has
previously been denied, suspended, or revoked may be issued a
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state license.
39)Authorizes the Office to adopt regulations to limit the number
of state licenses issued upon a finding that the otherwise
unrestricted issuance of state licenses is dangerous to public
health and safety.
Regulation of Medical Cannabis
40)Prohibits, beginning on July 1, 2017, except as specified under
the Compassionate Use Act of 1996 and the Medical Marijuana
Program, persons from selling medical cannabis to a patient or
caregiver other than at a licensed dispensing facility or
through delivery from a licensed dispensing facility; growing
medical cannabis other than at a licensed cultivation site;
manufacturing medical cannabis or medical cannabis products
without a license; or transporting medical cannabis from one
facility to another without a license.
41)Requires licensees to keep accurate records at the licensed
premises, as specified, and authorizes the Office and an
appropriate state or local agency to examine the books and
records of a state licensee, and to visit and inspect the
premises of a state licensee.
42)Authorizes a licensee to only hold a state license in up to two
separate license categories, as specified, and specifies that it
is the intent of the Legislature to further develop which
licensees may hold more than one license type.
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43)Deletes the criminal immunity for qualified patients, persons
with valid identification cards, and the designated primary
caregivers of qualified patients and persons with identification
cards who collectively and cooperatively cultivate marijuana for
medical purposes 180 days after the Division of Medical Cannabis
Regulation within the BOE posts a notice on its Internet Web
site that the licensing authorities have commenced issuing
provisional licenses under the Act.
Provisional Licensing
44)Requires each licensing authority to, as soon as practicable,
allow a qualified applicant to apply for, and receive, a
provisional license to engage in commercial cannabis activity so
as to ensure an adequate supply of medical cannabis upon full
implementation of the Act, and to establish appropriate fees for
the issuance of the provisional license.
45)Requires each licensing authority to, if the applicant meets
all the requirements, issue a provisional license to individuals
and entities the licensing authority determines were, during the
three months prior to January 1, 2016, regularly cultivating,
processing, manufacturing, transporting, or distributing medical
cannabis collectively or cooperatively in full compliance with
any applicable local ordinance to continue to do so until the
licensee's application for state licensure has been approved or
denied, but no later than 90 days after the licensing authority
begins accepting applications for regular state licenses.
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46)Beginning July 1, 2017, all commercial cannabis activity shall
be conducted between licensees of commercial cannabis activity
pursuant to the Act, except as specified.
Licensing Categories
47)Requires the Division of Medical Cannabis Cultivation within
the CDFA to promulgate regulations governing the licensing of
cultivation sites, and:
a) Requires the Secretary of CDFA to declare medical cannabis
to be an agricultural product.
b) Requires the CDFA to develop standards for the production
and labeling of all edible medical cannabis products,
standards for the use of pesticides and rodenticides in
cultivation, and in consultation with the CDPH, maximum
tolerances for pesticides, rodenticides, and other foreign
object residue in harvested cannabis.
c) Gives the CDFA the authority to implement the Act, and
adopt regulations that, among other things, require that
indoor and outdoor cannabis cultivation by licensees in
conducted in accordance with state and local laws and best
practices, as specified.
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d) Requires state licenses issued by the Division of Medical
Cannabis Cultivation to be tiered based on square footage and
the number of plants on the property, as specified.
e) Requires all license fees to be deposited into the Medical
Cannabis Cultivation Fees Account, to be available upon
appropriation for the purposes of fully funding and
administering these provisions.
f) Provides that it is the intent of the Legislature to
establish appropriate protocols for the collection of the
specific location of cultivation sites.
48)Requires the BOE to promulgate regulations governing the
licensing and regulation of wholesalers, dispensing facilities,
and transporters, and:
a) Requires state enforcement to be conducted in coordination
with local authorities.
b) Requires state licenses issued by the BOE to be tiered
based on type of activity and the number of employee, as
specified.
c) Requires licensed transporters, prior to transporting or
delivering medical cannabis or medical cannabis products, to:
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i) Complete an electronic shipping manifest, as
prescribed by the licensing authority, and to securely
transmit the manifest to the licensing authority and the
licensee that will receive the shipment.
i) During transportation or delivery, maintain a physical
copy of the shipping manifest and make it available to
agents of the licensing authority, local law enforcement
officers, or any other designated enforcement agency.
a) Requires a licensee receiving the shipment to submit to
the licensing authority a record verifying receipt of the
shipment and details of the shipment.
b) Requires the licensing authority to develop a database
containing the electronic shipping manifests, which shall
include specified information and be designed to flag
irregularities for a regulatory authority to investigate.
c) Requires all license fees collected by the licensing
authority to be deposited into the Medical Cannabis Retail
Fees Account, to be made available, upon appropriation, for
the purposes of fully funding and administering the Act.
49)Requires the Division of Medical Cannabis Manufacturing and
Testing within the CDPH to promulgate regulations governing the
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licensing of cannabis manufacturers, and:
a) Requires licenses to be tiered based on the number of
pounds of medical cannabis each year used to product medical
cannabis products and whether volatile or nonvolatile
solvents are used, as specified, and for testing licensees.
b) Requires license fees to be deposited into the Medical
Cannabis Manufacturing and Testing Fees Account, to be made
available upon appropriation for the purposes of fully
funding and administering the Act.
c) Requires the CDPH to promulgate standards for
certification of testing laboratories to perform random
sample testing of medical cannabis products, including
standards for onsite testing, as specified, which shall apply
to all entities engaged in the testing of medical cannabis
pursuant to these provisions.
d) Prohibits a certified testing laboratory from acquiring,
processing, possessing, storing, transferring, transporting,
or dispensing medical cannabis or medical cannabis products
except through a patient, primary caregiver, or a facility
issued a state license.
e) Require the CDPH to develop procedures to ensure that
testing of cannabis occurs prior to delivery to a dispensary
or other business, and, among other things, specify how often
licensees shall test cannabis.
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Health and Safety Standards
50)Requires the Division of Medical Cannabis Manufacturing and
Testing to promulgate health and safety standards applicable to
all medical cannabis and medical cannabis products, including
maximum potency standards, and standards for licensed
manufacturers of medical cannabis and medical cannabis products,
including edible products. Requires standards to:
a) Prescribe sanitation standards consistent with the
California Retail Food Code for food preparation, storage,
handling, and sale of edible medical cannabis products, and
requires facilities in which these products are prepared to
meet applicable building, health, and safety standards.
b) Require that edible medical cannabis products produced,
distributed, provided, donated, or sold by 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.
51)Prior to sale or distribution at a licensed dispensing
facility, requires edible medical cannabis products to be
labeled and in a tamper-evident package, and requires labels and
packages to meet specified requirements, including listing
pharmacologically active ingredients, the tetrahydrocannabinol
content, and having a warning of the delayed effect of the
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product. Packages and labels shall not be made attractive to
children.
52)Requires 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.
Funding and Taxation Provisions
53)Authorizes the Office and other state agencies to assist state
taxation authorities in the development of uniform policies for
the state taxation of state licensees.
54)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.
55)Requires each licensing authority to establish a scale of
application, licensing and renewal fees, based on the cost of
administering and enforcing the Act, as specified.
56)Establishes the Medical Cannabis Regulation Fund.
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57)Requires all fines or penalties to be deposited into the
Medical Cannabis Fines and Penalties Account, which shall be
available, upon appropriation, to the Office for purposes of
funding the enforcement grant program.
58)Requires the Office to establish a grant program to allocate
moneys from the Medical Cannabis Fines and Penalties Account to
state and local entities to assist with medical cannabis
regulation and enforcement of the Act and applicable local laws
and to remedy the environmental impacts of cannabis cultivation,
as specified.
59)Provides that the funds for establishment and support of the
regulatory activities pursuant to the Act may be advanced as a
General Fund or special fund loan, and shall be repaid by the
initial proceeds from fees collected pursuant to the Act, by
January 1, 2022.
Physician and Advertising Provisions
60)Requires the Medical Board of California (MBC) to prioritize
cases involving physicians who recommend cannabis to patients
for medical purposes without a good faith prior examination of
the patient and medical reason therefor.
61)Makes it a misdemeanor for a physician and surgeon to recommend
medical cannabis to a patient to accept, solicit, or offer any
form of remuneration from or to a facility licensed to engage in
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medical marijuana activities if the physician and surgeon or his
or her immediately family have a financial interest in that
facility, as specified.
62)Makes it unprofessional conduct for a physician and surgeon to
be employed by, or have an agreement with, a mandatory
commercial licensee under the Act or a dispensary to provide
recommendations for medical cannabis.
63)Requires the MBC to consult with the California Marijuana
Research Program, known as the Center for Medicinal Cannabis
Research, on developing and adopting medical guidelines for the
appropriate administration and use of medical cannabis.
64)Prohibits a physician and surgeon from recommending medical
cannabis to a patient unless that person is the patient's
attending physician, as defined under existing law.
Labor Provisions
65)Requires the Division of Labor Standards Enforcement (Division)
to do all of the following:
a) Maintain minimum standards for the competency and training
of employees of a licensed cultivation site or dispensary
through a system of testing and certification, and to issue
certification cards to certified employees.
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b) Establish registration fees in an amount reasonably
necessary to implement these provisions, not to exceed $25
for the initial registration, and prohibits annual renewal
fees, and places those fees in the Medical Cannabis
Cultivation Fee Account and the Medical Cannabis Retail Fee
Account.
c) By January 1, 2017, develop a certification program for
cannabis employees, and requires, on January 1, 2019,
certification for all employees, except as specified.
66)On January 1, 2019, requires the Labor Commissioner to maintain
a process for referring cases to the appropriate regulatory
authority when it has determined that a violation, as specified,
has occurred, and upon receipt of a referral by the Labor
Commissioner, requires the appropriate licensing authority to
open an investigation, as specified.
67)Requires, by January 1, 2017, the Division of Occupational
Safety and Health in the Department of Industrial Relations to
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 and
requires, by July 1, 2017, the advisory committee to present its
findings and recommendations for consideration to the board, and
the board to render a decision regarding the adoption of
industry-specific regulations.
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68)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: According to the Assembly Appropriations
Committee:
1)Significant annual costs, likely in excess of $10 million
(Medical Cannabis Regulation Fund / General Fund (GF) or special
funds), to create the Division of Medical Cannabis Regulation
within the BOE to license dispensaries and transporters.
Significant costs would be incurred before fees are collected,
and this bill does not specify a funding source startup costs.
Funds would likely come from the GF for at least the first year,
until sufficient fee revenue is generated.
2)Annual costs, likely in the range of several million dollars to
the Department of Public Health for regulation of manufacturing
and testing (Medical Cannabis Regulation Fund / GF or special
funds), as well as Department of Food and Agriculture for
regulation of cultivation sites (Medical Cannabis Regulation
Fund / GF or special funds). Funds would likely come from the GF
or special funds for at least first year until sufficient fee
revenue is generated.
3)This bill establishes unspecified fees that must be sufficient
to cover regulatory costs. The costs of creating and
maintaining the regulatory infrastructure would require
significant application fees. For purpose of illustration, the
average fee to cover a $20 million cost, if there were 2,000
annual applications, would be $10,000 per application.
4)Minor and absorbable costs to the MBC associated with provisions
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defining specified employment and prescribing behavior as
unprofessional conduct.
5)One-time costs to Department of Industrial Relations to certify
cultivation and dispensing employees, adopting regulations
related to apprenticeship programs, and examining the need for
industry-specific regulations, in the range of $1.3 million (GF
or special funds), and $900,000 annually ongoing (fee-supported
Cannabis Certification Fund / GF or special funds).
6)Unknown costs, potentially in the range of $1 million GF to
California Highway Patrol to develop a test determining whether
a driver is operating a vehicle under the influence of cannabis,
and to develop related protocols.
7)Minor ongoing costs to DOJ for background checks, covered by
applicant fees.
Tax and penalty revenue:
1)Unknown moderate local revenue increase, potentially in the
millions of dollars, from a permissive and unspecified local
tax.
2)Unknown fine and penalty will be deposited in the fines and
penalties account in the Fund. Penalties are specified as twice
license fees, which are unknown. Additionally, each regulatory
authority is authorized to define fines and penalties.
Potential GF revenue if actions are brought by the Attorney
General.
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COMMENTS:
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 forward."
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. However, since the passage of Proposition 215 (1996) 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.
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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
Cannabis. By exempting qualified patients and caregivers from
prosecution for using or from collectively or cooperatively
cultivating medical marijuana, the CUA and the MMP essentially
authorized the cultivation and use of medical marijuana. These
laws have triggered the growth of medical marijuana dispensaries
in many localities, and in response, local governments have sought
to exercise their police powers to regulate or ban activities
relating to medical marijuana. After numerous court cases and
years of uncertainty relating to the ability of local governments
to control medical marijuana activities, particularly relating to
the ability to control the zoning, operation, and existence of
medical marijuana dispensaries, the California Supreme Court
(Court), in City of Riverside v. Inland Empire Patients (2013) 56
Cal. 4th 729, held that California's medical marijuana statutes do
not preempt a local ban on facilities that distribute medical
marijuana. The Court held that nothing in the CUA or the MMP
expressly or impliedly limited the inherent authority of a local
jurisdiction, by its own ordinances, to regulate the use of its
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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.
United States Department of Justice (USDOJ) Guidance Regarding
Marijuana Enforcement. On August 29, 2013, the USDOJ issued a
memorandum that updated its guidance to all United States
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, it also noted that USDOJ is
committed to using its limited investigative and prosecutorial
resources to address the most significant threats. 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 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
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activity."
Medical Cannabis Industry in California. According to the
author's Sunrise Questionnaire, submitted to the Assembly Business
and Professions Committee pursuant to Government Code Section 9148
et seq., there are multiple occupational groups interested in
state regulation, representing a growing marijuana industry.
Because marijuana remains federally prohibited, it is not
recognized by the federal government as having any medicinal
value. United States 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%
pending completion of a statewide survey, ban the cultivation and
sale of medical marijuana altogether. It is not yet legal for
recreational use in California. 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 one Web site, 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.
According to the Sunrise Questionnaire, there is significant
public demand for uniform standards in the field of health and
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safety, and many local 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 regulation, harm to
consumers is very likely given that no health and safety standards
exist for marijuana, so there are none to be enforced.
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 modified vertical integration
approach by allowing licensees to hold more than one license type
for certain license categories. In addition, the commercial
market in Washington is supervised by the Washington State Liquor
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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.
According to the Brookings Institute, since the early 1990s,
United States public opinion has trended in favor of marijuana
legalization. Currently, a majority of Americans support
legalization by a margin of seven points-52% to 45%, 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 cannabis, it may also serve a
dual role by serving as a basis for a recreational cannabis
scheme.
Analysis Prepared by: Eunie Linden / B. & P. /
(916) 319-3301 FN: 0000882
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