BILL ANALYSIS Ó SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: AB 266 --------------------------------------------------------------- |AUTHOR: |Bonta | |---------------+-----------------------------------------------| |VERSION: |June 30, 2015 | --------------------------------------------------------------- --------------------------------------------------------------- |HEARING DATE: |July 8, 2015 | | | --------------------------------------------------------------- --------------------------------------------------------------- |CONSULTANT: |Reyes Diaz | --------------------------------------------------------------- SUBJECT : Medical cannabis. SUMMARY : Establishes a joint state-local agency licensing and regulatory framework for medical cannabis under the Medical Cannabis Regulation and Control Act, and establishes the Office of Medical Cannabis 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 Department of Public Health, and the Division of Medical Cannabis Cultivation within the Department of Food and Agriculture, and sets forth the duties of the respective regulatory authorities. Existing law: 1)Requires the Medical Board of California (MBC) within the Department of Consumer Affairs (DCA) to license, certify, and regulate physician and surgeons (physician) under the Medical Practice Act. Requires the MBC to take action against a physician who is charged with unprofessional conduct, as specified. Requires the MBC to prioritize its investigative and prosecutorial resources to ensure that physicians representing the greatest threat of harm are identified and disciplined expeditiously, including those with repeated acts of excessive prescribing, furnishing, or administering of controlled substances, or repeated acts of prescribing, dispensing, or furnishing of controlled substances without a good faith prior examination of the patient and medical reason therefor. 2)Prohibits physicians from being punished or denied any right or privilege for having recommended medical marijuana/medical cannabis (MM) to a patient. AB 266 (Bonta) Page 2 of ? 3)Specifies that prescribing, dispensing, or furnishing dangerous drugs without an appropriate prior examination and a medical indication, by a physician, constitutes unprofessional conduct. 4)Specifies that the employing, directly or indirectly, the aiding, or the abetting of any unlicensed person or any suspended, revoked, or unlicensed practitioner to engage in the practice of medicine or any other mode of treating the sick or afflicted, which requires a license to practice, constitutes unprofessional conduct. 5)Prohibits criminal prosecution, pursuant to the Compassionate Use Act (CUA) of 1996, also known as Proposition 215, of a "qualified patient," as defined, with specified illnesses or a patient's "primary caregiver," as defined, for the possession or cultivation of MM upon the written or oral recommendation or approval of an "attending physician," as defined. Encourages federal and state governments to implement a plan to provide for the safe and affordable distribution of MM to those who need it. Specifies that existing law related to MM is not to be construed to supersede legislation prohibiting conduct that endangers others or to condone the diversion of MM for nonmedical purposes. 6)Defines "qualified patient" as a person who is entitled to the protections in the CUA but who does not have a MM identification card (MMIC). Defines "primary caregiver" as an individual designated by a qualified patient who has consistently assumed responsibility for the housing, health, or safety of that person. Defines "attending physician" as an individual who possesses a license in good standing to practice medicine or osteopathy issued by the MBC or the Osteopathic Medical Board of California and who has taken responsibility for an aspect of the medical care, treatment, diagnosis, counseling, or referral of a patient and who has conducted an appropriate medical examination, as specified, and determines if MM is appropriate. 7)Prohibits qualified patients and primary caregivers with MMICs who associate within the state in order to, among other activities, possess, cultivate, process, and transport MM collectively or cooperatively from, solely on that basis, being subject to state criminal sanctions under state laws that prohibit those activities otherwise. AB 266 (Bonta) Page 3 of ? 8)Requires the Department of Public Health (DPH) to establish and maintain a voluntary Medical Marijuana Program (MMP) by which patients can apply for MMICs when deemed appropriate by his or her attending physician. Requires county health departments to issue MMICs, as specified, to patients and primary caregivers who voluntarily register for the MMP. Specifies that MMICs are valid for one year and may be renewed annually. Requires DPH to develop a system by which state and local law enforcement officers can immediately verify the MMIC's validity. Prohibits state or local law enforcement officers from refusing to accept MMICs unless there is reasonable cause to believe that the MMIC is being used fraudulently or its information is false or fraudulent. 9)Makes it a misdemeanor offense to, among other things, fraudulently represent a medical condition or provide any material misinformation to a physician, health department designee, or to law enforcement, for the purpose of falsely obtaining MMICs; fraudulently use any person's MMIC in order to acquire, possess, cultivate, transport, use, produce, or distribute MM; counterfeit, tamper with, or fraudulently produce MMICs; and breach any confidentiality requirements pertaining to the MMIC program. 10)Requires a person who seeks an MMIC to pay a fee and provide to the county health department a name, proof of residency, written physician's recommendation, physician's name and contact information, the primary caregiver's name and duties, and the qualified patient's and primary caregiver's government-issued photo ID. 11)Prohibits anything in the MMP from preventing a city or other local governing body from adopting local ordinances that regulate the location, operation, or establishment of a MM cooperative or collective, or prohibiting one from operating within its borders; enforcing local ordinances for civil or criminal purposes; or enacting other laws consistent with the MMP. 12)Designates marijuana as a hallucinogenic substance in Schedule I of the California Uniform Controlled Substances Act. 13)States legislative intent for the state to commission AB 266 (Bonta) Page 4 of ? objective scientific research by the University of California (UC), and if the Regents of the UC accept the responsibility, the UC is required to create the California Marijuana Research Program (CMRP) to develop and conduct studies intended to ascertain the general medical safety and efficacy of MM and to develop guidelines for the appropriate administration and use of MM; requires the CMRP to use a peer review process, as specified, to guard against funding research that is biased; requires the CMRP to report to the Legislature, as specified; and requires the President of the UC to appoint a multidisciplinary Scientific Advisory Council to provide policy guidance. This bill: Administration 1)Establishes the Medical Cannabis Regulation and Control Act. 2)Creates, within the office of the Governor, the Office of Medical Cannabis Regulation (OMCR), under the supervision and control of the Director of the OMCR. 3)Requires the OMCR Director to consult with state agencies possessing expertise in licensure and enforcement when developing a regulatory framework pursuant to the provisions of this bill. Gives the OMCR overall executive authority and responsibility for implementation of all expects of MM regulation, as well as coordination and oversight of all activities. 4)Requires the OMCR to maintain a registry of all permit holders and maintain a record of all state licenses and "commercial cannabis activity of the permit holder throughout the length of licensure and for a minimum of seven years following the expiration of each license. Requires OMCR to make limited licensee information available to a licensee so that it may verify whether it is engaging in commercial cannabis activities with a properly licensed entity. 5)Establishes the following entities that are required to report and be directly accountable to the OMCR for their respective designated responsibilities within the regulatory and enforcement framework, each to be administered by a Governor's appointee, subject to Senate confirmation: AB 266 (Bonta) Page 5 of ? a) The Division of Medical Cannabis Regulation, within the State Board of Equalization (BOE), to administer provisions of this bill related to dispensaries and transporters; b) The Division of Medical Cannabis Manufacturing and Testing, within DPH, to administer provisions of this bill related to manufacturing, testing, and certification of testing laboratories for MM and MM products; and, c) The Division of Medical Cannabis Cultivation, within the Department of Food and Agriculture (DFA), to administer provisions of this bill pertaining to cultivation of MM. 6)Requires the California Environmental Protection Agency and the California Natural Resources Agency to coordinate and direct the following entities in the discharge of their designated regulatory responsibilities: a) The State Water Resources Control Board in promulgating regulations related to discharge into waterways, and diversion therefrom, resulting from MM cultivation; and, b) The Department of Fish and Wildlife in promulgating regulations for the protection of any species affected by cultivation activity, and regulations for any cultivation-related development, including alteration of waterways. 7)Requires the Department of Justice (DOJ) to conduct the following activities: a) Conduct criminal background checks of applicants for licensure; b) Develop uniform security standards for dispensaries and all phases of transport covered by provisions of this bill; and, c) Provide supplemental enforcement on an as-needed basis at the request of the OMCR. 8)Gives authority to OMCR and licensing authorities to implement provisions of this bill, including, but not limited to, establishing rules and regulations; prescribing, adopting, and enforcing emergency regulations as necessary; issuing state AB 266 (Bonta) Page 6 of ? licenses to persons for the cultivation, distribution, manufacture, transportation, and retail sale of MM within the state; setting application, licensing, and renewal fees for state licenses; establishing standards for commercial cannabis activity; establishing procedures for the issuance, renewal, suspension, denial, and revocation of state licenses; imposing penalties; taking action with respect to an application for a state license; overseeing the operation of the Medical Cannabis Regulation Fund; and consulting with other state or local agencies, departments, representatives of the MM community, or public or private entities for the purposes of establishing statewide standards and regulations. Requires the public's health and safety to be the highest priority for the OMCR and the licensing authorities in exercising licensing, regulatory, and disciplinary functions. 9)Requires the OMCR, by April 1, 2016, to convene a task force to advise the OMCR on the development of standards, recommending appropriate roles for each state entity, and recommending guidelines on communication and information sharing between state entities, and with local agencies. Requires the task force to submit a report on the standards, determinations, and guidelines for implementation of provisions of this bill to the Legislature and affected state entities by August 1, 2016. Requires the task force to be comprised of 15 members, each of whom is required to serve a two-year term, as specified. 10)Requires each task force member to serve on a voluntary basis and to be responsible for costs associated with participation. Specifies that the licensing authorities are not responsible for travel costs incurred by task force members or for otherwise compensating task force members for costs associated with their participation. Recommending MM 11)Makes it unlawful for a physician who recommends MM to accept, solicit, or offer any form of remuneration from or to a MM facility issued a state license if the physician or his or her immediate family have a financial interest in that facility. Makes a violation of this provision a misdemeanor. 12)Requires the MBC to consult with the CMRP on developing and adopting medical guidelines for the appropriate administration AB 266 (Bonta) Page 7 of ? and use of MM. 13)Prohibits a physician from recommending MM to a patient, unless that person is the patient's attending physician. 14)Adds to the MBC's list of cases to investigate, on a priority basis, a physician recommending MM to patients for medical purposes without a good faith prior examination of the patient and medical reason therefor. 15)Specifies that recommending MM to a patient for a medical purpose without an appropriate prior examination and a medical indication constitutes unprofessional conduct. 16)Specifies that a person who practices medicine who is employed by, or has any other agreement with, a mandatory commercial licensee acting pursuant to the provisions of this bill or a dispensary to provide recommendations for MM constitutes unprofessional conduct. Enforcement and local control 17)Requires each licensing authority to work in conjunction with local agencies for the purposes of implementing, administering, and enforcing provisions of this bill, and any regulations adopted, and taking appropriate action against licensees and others who fail to comply with the bill's provisions or regulations. Specifies that, except for employees of the BOE, the director and employees of licensing authorities who administer and enforce provisions of this bill are peace officers in enforcing penal provisions, regulations, and any other penal provisions of law prohibiting or regulating the cultivation, processing, storing, manufacturing, testing, transporting, or selling of MM. 18)Specifies that these persons, while acting as peace officers, may enforce any penal provisions of state law while in the course of their employment. Allows these peace officers to visit and inspect the premises of a licensee. 19)Specifies that peace officers of the California Highway Patrol (CHP), members of the University of California and California State University police departments, and peace officers of the Department of Parks and Recreation, as specified, may visit and inspect the premises of a licensee. AB 266 (Bonta) Page 8 of ? 20)Requires the OMCR, by January 1, 2017, in consultation with local governments, to develop an enforcement framework that clarifies the enforcement roles of the state and local governments consistent with provisions of this bill. Specifies that local agencies are authorized to enforce any state statutory or regulatory standard. Specifies that a state agency is not required to enforce a city, county, city and county, or local law, ordinance, rule, or regulation regarding the site or operation of a facility or transporter issued a state license. 21)Gives cities full power and authority to enforce rules, regulations, and standards promulgated by the OMCR for facilities that are issued a state license and are located within the incorporated area of a city. Requires a city to further assume complete responsibility for any regulatory function relating to those licensees within city limits that would otherwise be performed by the county or any county officer or employee, including a county health officer, without liability, cost, or expense to the county. Gives counties full power and authority to enforce rules, regulations, and standards promulgated by the OMCR for licensed facilities located within the unincorporated area of a county. 22)Requires all standards and regulations promulgated to be the minimum standards and regulations for obtaining and maintaining a state license. Requires state agencies to collaborate with local agencies to enforce state standards and regulations to the extent it is within the scope of other statutory responsibilities of local agencies and to the extent that resources for enforcement are available to the local agencies. Allows a city, county, or city and county to adopt ordinances that establish additional standards, requirements, and regulations for local licenses and permits for commercial cannabis activity. Requires the state to preempt local ordinances for all conflicts between state and local standards, requirements, and regulations regarding health and safety, testing, security, and worker protections. 23)Allows 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 any provision of this bill, including, but not AB 266 (Bonta) Page 9 of ? limited to, a licensee's failure to correct objectionable conditions. Requires a state or local agency to immediately notify the OMCR and the appropriate licensing authority of violations or arrests made for violations over which the licensing authority has jurisdiction that involve a licensee or licensed premises. 24)Requires the OMCR to establish procedures to provide any relevant state or local agencies and all licensing authorities, upon their request, with 24-hour access to information to verify a state license, track transportation manifests, and track the inventories of facilities issued a state license, as specified. 25)Prohibits the enforcement and local control provisions of this bill from superseding the provisions of Measure D, approved by the voters of the City of Los Angeles (L.A.) on the May 21, 2013, ballot, which provides potential limited immunity to MM businesses, as specified. Requires MM businesses within L.A. to continue to be subject to Measure D and any and all other applicable ordinances and regulations of L.A. Requires the BOE to enter into a memorandum of understanding with L.A. to establish protocols for the following: a) Tracking businesses granted immunity pursuant to Measure D; b) Tracking MM and MM products to and from L.A; and, c) Allowing for the legal transfer or MM and MM products from outside the jurisdiction of L.A. to within the city by licensees conducting commercial cannabis activities outside of the city. 26) Requires a person engaging in commercial cannabis activity without a license to be subject to civil penalties of up to twice the amount of the licensee fee for each violation. Allows the OMCR, licensing authority, or court to order the destruction of MM associated with the violation. 27)Specifies that the provisions of this bill do not prevent a city, county, or city and county from doing any of the following: a) Adopting local ordinances, whether consistent AB 266 (Bonta) Page 10 of ? or inconsistent with enforcement and local control provisions, that do the following: i. Regulate the location, operation, or establishment of a licensee or a person that cultivates, processes, possesses, stores, manufactures, tests, transports, distributes, or sells MM. ii. Prohibit MM activity within their jurisdiction. b) Providing for the administrative, civil, or criminal enforcement of the ordinances described in a.) above. c) Establishing a fee for the operation within its jurisdiction of any of the following: i. A licensee. ii. Another person that cultivates, processes, possesses, stores, manufactures, tests, transports, distributes, or sells MM or MM products. iii. A person exempt from licensure. d) Enacting and enforcing other laws and ordinances to preserve local control. 28)Requires CHP to establish protocols to determine whether a driver is operating a vehicle under the influence of MM and requires CHP to develop protocols setting forth best practices to assist law enforcement agencies. Licensure 29)Requires DFA to license cultivators; BOE to license dispensaries and transporters; and DPH to license manufacturers and certified testing laboratories. 30)Specifies that the licensure provisions of this bill do not apply to: a) qualified patients, pursuant to the CUA, who cultivate, possess, store, manufacture, or transport MM exclusively for personal medical use but who do not provide, donate, sell, or distribute MM to any other person; or b) primary caregivers who cultivate, possess, store, manufacture, AB 266 (Bonta) Page 11 of ? transport, donate, or provide MM exclusively for the personal medical purposes of no more than five specified qualified patients for whom he or she is the primary caregiver, but who does not receive remuneration for these activities except for compensation in full compliance with provisions of the MMP. 31)Specifies that exemption from licensure for qualified patients and primary caregivers does not limit or prevent a city, county, or city and county from regulating or banning the cultivation, storage, manufacture, transport, provision, or other activity by the exempt person, or impair the enforcement of that regulation or ban. 32)Requires licensing authorities to promulgate regulations for implementation and enforcement of licensure, including, among various requirements, an applicant's qualifications and a state licensee's employee qualifications, including training and screening. 33)Allows licensing authorities to issue state licenses only to qualified applicants engaging in commercial cannabis activity and prohibits, beginning January 1, 2018, a person from engaging in commercial cannabis activity without possessing a state license and a local permit. Requires local permits to be determined by local ordinances. Gives authority to revoke state licenses and local permits to the respective licensing authorities and local agencies. Prohibits a licensing authority from issuing a license to an applicant who proposes to operate within L.A., regardless of the activity for which the license is sought. 34) Requires an applicant for a state license to, among other requirements: pay a fee; register with the licensing authority; provide a written description of the scope of business of the proposed facility; provide evidence that the applicant and owner have been legal full-time residents of the state for not less than four years; provide detailed written operating procedures; submit the applicant's fingerprints to the DOJ; and, provide any information required by the licensing authority. 35)Specifies that revocation of a state license or local license or permit, terminates the ability of a MM business to operate within the state. Requires licensing authorities to, by regulation, prescribe conditions upon which a person whose AB 266 (Bonta) Page 12 of ? state license has previously been denied, suspended, or revoked may be issued a state license. 36)Allows each licensing authority to deny an application for licensure or renewal, or suspend or revoke a state license for various reasons, including, but not limited to, making untrue statements, conduct that constitutes fraud or gross negligence, failure to comply with any rule or regulation, failure to submit requested information, and if an applicant, or any of its officers, directors, or owners, have been convicted of a felony criminal conviction for the possession for sale, sale, manufacture, transportation, or cultivation of a controlled substance, including a narcotic drug classified in Schedule II, III, IV, or V (but excluding marijuana), for drug trafficking involving a minor, a violent felony, a serious felony, a felony offense involving fraud or deceit, or any other felony that, in the licensing authority's determination, would impair the applicant's ability to appropriately operate as a state licensee. Allows a licensing authority, at its discretion, to issue a state license to an applicant that has obtained a certificate of rehabilitation (a Governor's pardon). Regulation of MM 37)Repeals existing law that allows qualified patients and their primary caregivers to collectively or cooperatively cultivate MM for medical purposes 180 days after the OMCR posts a notice on its Internet Web site that licensing authorities have commenced issuing provisional licenses, as specified. 38)Requires all licensees holding cultivation or manufacturing licenses to send all MM and MM products to a licensed processor for processing and testing prior to retail or sale of MM or MM products to a dispensary, qualified patient, or caregiver. Requires MM and MM products to be tested by a certified testing laboratory, licensed by DPH, prior to retail sale or dispensing to test for potency, pesticides, mold, and other contaminants of MM dried flower and for potency and purity of MM extracts. 39)Requires BOE to adopt a MM and MM product track and trace process for reporting the movement of MM items throughout the distribution chain that also employs secure packaging and that is capable of providing information that captures, at a AB 266 (Bonta) Page 13 of ? minimum, the licensee receiving the product; the transaction date; and any other information deemed necessary by BOE for the taxation and regulation of MM and MM products. 40)Requires licensing authorities to develop a database containing the electronic shipping manifests to be designed to flag irregularities for a licensing authority to investigate. 41)Prohibits MM packages and labels from being made to be attractive to children. Requires MM product labels to include, but not limited to, the following statements: "Keep out of reach of children and animals"; "For medical use only"; "The intoxicating effects of this product may be delayed by up to two hours"; and warnings if nuts or other known allergens are used. Cannabis employee certification and apprenticeship 42)Requires the Division of Labor Standards Enforcement (DLSE), within the Department of Industrial Relations (DIR), to maintain minimum standards for the competency and training of employees of a licensed cultivator or dispensary through a system of testing and certification; maintain an advisory committee and panels as necessary; adopt regulations; issue certification cards to certified employees; and establish registration fees. Requires, by January 1, 2017, the DSLE to develop a certification program for cannabis employees. Requires all employees performing work as cannabis employees to be certified by January 1, 2019. Taxation 43)Allows the OMCR and other state agencies to assist state taxation authorities in the development of uniform policies for the state taxation of state licensees. States legislative intent to grant authority to the board of supervisors of a county to impose appropriate taxes on facilities licensed pursuant to provisions of this bill. Reporting 44)Requires, on or before March 1 of each year, the director of the OMCR to prepare and submit to the Legislature an annual report on OMCR's activities and post it on OMCR's Internet Web site to include, but not be limited to: AB 266 (Bonta) Page 14 of ? a) The amount of funds allocated and spent by OMCR and licensing authorities for MM licensing, enforcement, and administration; b) The number of state licenses issued, renewed, denied, suspended, and revoked, by state license category; c) The average time for processing state license applications, by state license category; d) The number and type of enforcement activities conducted by the licensing authorities and by local law enforcement agencies in conjunction with the licensing authorities or the OMCR; and, e) The number, type, and amount of penalties, fines, and other disciplinary actions taken by the licensing authorities. Privacy 45)Deems as confidential any information identifying the names of qualified patients, their medical conditions, or the names of their primary caregivers received and contained in records kept by the OMCR or licensing authorities for the purposes of administering provisions of this bill, and prohibits disclosure pursuant to the California Public Records Act. 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 DPH for regulation of manufacturing and testing (Medical Cannabis Regulation Fund/GF or special funds), as well as DFA 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 the first year until AB 266 (Bonta) Page 15 of ? 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 defining specified employment and prescribing behavior as unprofessional conduct. 5)One-time costs to DIR 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 CHP 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 AB 266 (Bonta) Page 16 of ? regulatory authority is authorized to define fines and penalties. Potential GF revenue if actions are brought by the Attorney General. PRIOR VOTES : ----------------------------------------------------------------- |Assembly Floor: |62 - 8 | |------------------------------------+----------------------------| |Assembly Appropriations Committee: |12 - 0 | |------------------------------------+----------------------------| |Assembly Business and Professions |13 - 0 | |Committee: | | ----------------------------------------------------------------- COMMENTS : 1)Author's statement. According to the author, after becoming the first state in the nation to allow the use of MM with the approval of Proposition 215, California has fallen behind the nation and failed to implement a comprehensive licensing and regulatory structure to ensure patient access and protect our environment, public safety, and public health. AB 266 approaches regulation applying existing regulatory frameworks to the industry while adapting for the unique and historical circumstances surrounding MM. AB 266 respects local decisions on the regulation of MM, including the decision to ban, and incorporates local control throughout the regulatory process, including the issuance of state and local licenses. AB 266 protects patients by requiring compliance with stringent regulatory requirements, preserves the environment by building on the existing interagency task force work in this field, and ensures that workers in the cannabis industry are treated fairly and receive equal protections. AB 266 combines the input of stakeholders throughout the state to create thoughtful, effective regulations that fit within our existing regulatory frameworks for other products, comply with federal goals, and create a better system for the entire life cycle of MM treatment. 2)MBC policy on MM. In October 2014, the MBC revised its statement, originally issued in May 2004, on the CUA and a physician's role in recommending MM. The MBC states that physicians who recommend MM will not be subject to AB 266 (Bonta) Page 17 of ? investigation or disciplinary action by the MBC if the decision to recommend MM is made in accordance with accepted standards of medical responsibility, which MBC states is not specifically defined. The statement also indicates that a mere complaint that a physician is recommending MM will not generate an investigation absent information that a physician is not adhering to accepted medical standards. According to the MBC, while MM is not subject to reporting to the DOJ's Controlled Substance Utilization Review and Evaluation System, MM recommendations are treated like any prescription for a controlled substance, meaning there are no added training requirements for prescribing a certain type of controlled substance. The MBC also indicates that it does not track complaints by controlled substance but rather by allegations against a physician, such as unprofessional conduct. 3)CUA. Since the approval of the CUA by voters in 1996, state law has allowed Californians access to MM, and prohibits punitive action against physicians for making MM recommendations. The CUA established the right of patients to obtain and use MM to treat specified illnesses and any other illness for which it provides relief. The CUA prohibits prosecution for cultivating or possessing MM for qualified patients and their primary caregivers. Additionally, the CUA specifically protects physicians who recommend the use of MM to patients, and exempts qualified patients and their primary caregivers from California drug laws prohibiting possession and cultivation of MM. Proponents of MM regulation argue that very little has been done to implement the CUA. Instead of a comprehensive implementation plan, numerous uncoordinated bills have been introduced in the Legislature. Further, the courts have only provided a small measure of clarity and certainty in this area. 4)MMP. The MMP was established by SB 420 (Vasconcellos, Chapter 875, Statutes of 2003) to create a state-authorized system by which qualified patients and their primary caregivers could obtain MMICs, along with a registry database for verification of the MMICs. Participation by patients and primary caregivers in the MMP is voluntary. The Web-based registry allows law enforcement and the public to verify the validity of a qualified patient or primary caregiver's MMIC as authorization to possess, cultivate, transport, and/or use MM within the state. Under the MMP, the local county health department issues MMICs and collects fees. The MMIC is valid AB 266 (Bonta) Page 18 of ? for one year, after which it may be renewed. A primary caregiver's card expires when the patient's card expires. Patients are responsible for notifying the county within seven days when they change primary caregivers and must instruct the previous primary caregiver to return the MMIC to the county for confidential destruction. In order to receive an MMIC, patients must reside in the county where they apply, present the physician recommendation for MM, and pay the fee required by the county. If the primary caregiver lives in a different county, he or she must obtain an MMIC in the county where the patient lives. A patient or primary caregiver is not required to obtain an MMIC or to participate in the MMP in order to use, obtain, possess, or cultivate MM upon the recommendation of a physician pursuant to the CUA. 5)Recent Court Cases and Rulings. The Legislature sought to clarify the CUA in 2003 through SB 420 by establishing the MMP. SB 420 set limits on the amounts of MM to be legally grown and possessed. However, the California Supreme Court ruled in People v. Kelly (2010) 47 Cal.4th 1008 that the MMP section limiting quantities of MM is unconstitutional because it amends a voter initiative, and the CUA did not specifically include legislative authority to amend it. Additionally, the U.S. Supreme Court ruled in Gonzales v. Raich (2005) 545 U.S. 1 that the federal government can enforce marijuana prohibition despite state MM laws. Meanwhile, many city and county officials have expressed confusion about the scope of state MM law, and some have passed ordinances that have been overturned by the courts. The California Supreme Court recently granted review in several cases related to the rights of MM qualified patients and dispensaries, specifically the legality of local rules regarding the operation and location of dispensaries and cultivation sites. Pack v. City of Long Beach (review granted Jan. 18, 2012, S197169) was dismissed as being moot because the issue the Court was considering resolved itself. The original ordinance at issue was repealed and replaced by Ordinance No. 12-0004, which bans MM in the county. In 2013, the Court, in City of Riverside v. Inland Empire Patient's Health and Wellness Center, upheld that local governments have inherent zoning power. The issue in this case was whether California's MM statutes preempt a local ban on AB 266 (Bonta) Page 19 of ? facilities that distribute MM. The Court concluded they do not and upheld the City of Riverside's implementation of a ban on MM dispensaries and on any facility that is prohibited by federal or state law. People v. G3 Holistic (review granted Jan. 18, 2012, S198395) was dismissed and remanded based on the Riverside case. 6)California Attorney General's Compassionate Use Guidelines. SB 420 additionally required the California Attorney General to adopt guidelines to ensure the security and non-diversion of MM. To fulfill this mandate, in August 2008, the Attorney General published Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use. The Guidelines are intended to: a) ensure that MM remains secure and does not find its way to non-patients or illicit markets, b) help law enforcement agencies perform their duties effectively and in accordance with California law, and c) help qualified patients and primary caregivers understand how they may cultivate, transport, possess, and use MM under California law. 7)Marijuana: A Schedule I Drug. Even though California voters enacted the CUA to permit the use of MM by persons deemed qualified by their physicians, marijuana still is an illegal drug both under federal and state law, and its use, possession, distribution, cultivation, or sale carries criminal penalties. Under California law, marijuana is listed as a hallucinogenic substance in Schedule I of the California Uniform Controlled Substances Act. Under federal law, possession of marijuana, even by medical users, continues to be a crime. The federal Controlled Substances Act specifies that, except as provided, it is unlawful for any person knowingly or intentionally to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense a controlled substance. The only exception provided in the federal Controlled Substances Act for marijuana is for use in government-controlled research projects. 8)U. S. Department of Justice Guidance Regarding Marijuana Enforcement. In August of 2013, the U.S. Department of Justice (USDOJ) issued a memorandum titled "Guidance Regarding Marijuana Enforcement" to all U.S. Attorneys. The memorandum updated the prior guidance given by USDOJ regarding marijuana enforcement under the federal Controlled Substances Act, in AB 266 (Bonta) Page 20 of ? light of state ballot initiatives that legalize marijuana under state laws and that provide for the possession and use of small amounts of marijuana. While affirming that marijuana is still, at the federal level, considered a dangerous drug and that the illegal distribution and sale of marijuana is a serious crime, the memorandum outlines enforcement priorities that are particularly important to the federal government, including: 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. The document clearly lays out the federal expectation for the states that have legalized marijuana, even if only for medical purposes, that they will develop a robust system of regulation and enforcement, and that such a system will reduce the likelihood of federal enforcement activity. 9)Regulation in other states. Currently, twenty-three states and the District of Columbia have laws related to MM or create a cannabis program or legal provisions to allow for the medical use of marijuana. These states also typically have a patient registry to provide for some protection against arrest for possession of MM, up to a certain amount. Twelve additional states have laws providing for limited access to MM products strictly for medical purposes. In these states, a focus is on authorizing access to accommodate clinical research and clinical research trials, such as experimental treatments of seizure disorders or epilepsy. Four states authorize the recreational use of marijuana. In Alaska, adults age 21 and older can now transport, buy, or possess up to one ounce of marijuana and six plants. Oregon voters approved a similar measure allowing adults to possess up to one ounce of marijuana in public and eight ounces in their homes, set to take effect July 1. Most recently, a measure approved by voters went into effect in the District of Columbia that legalizes possession of small amounts of marijuana. Colorado and Washington previously passed similar AB 266 (Bonta) Page 21 of ? ballot measures legalizing marijuana in 2012. 10)Lessons learned from other states. The experiences of other states have helped to inform the current conversation in California. Notably, this bill establishes standards for transport of MM products and security surrounding transport, proper preparation, and labeling of edible MM products and requirements for testing of products. Other states have attempted to ensure safety for the transit of these products, particularly given the high value of products and tendency toward cash transactions in the industry. However in Washington and Oregon, third-party carriers are not permitted, creating challenges for transport of products. Colorado authorizes third-party carriers with proper documentation to transport these products. Private transport companies which often employ armed personnel are being utilized in states that authorize MM use and regulate marijuana for recreational purposes. Efforts to create a regulatory environment specifically for the transport of products could also result in an increase in the use of private security firms here. With regards to edible MM products, concerns have been raised over the lack of proper labeling and dosage in other states, and efforts aimed at preventing accidental ingestion (such as labeling requirements) are taking shape. Edible products often produce delayed and longer-lasting results than other methods of delivery, and consumers may be harmed by a lack of accuracy in information about the potency of edible MM products and a lack of awareness by patients of the amount of THC they may be ingesting. This bill also sets standards for testing MM products and the certification of testing laboratories. A report to the Oregon Legislature noted that, in the absence of any guidance from the United States Department of Agriculture and the Food and Drug Administration, many state regulatory agencies have determined that some safety testing of MM products is better than no safety testing, but that assumption creates other challenges when testing is done at unregulated or potentially substandard facilities, and products potentially end up being sold with certificates of safety that may not be true or authentic and could in fact be misleading. Health risks have been cited for MM products that are treated with pesticides or other contaminants, and proper testing by certified laboratories, as this bill establishes, is seen as an important measure to ensure product quality. 11)Double referral. This bill will be referred to the Senate AB 266 (Bonta) Page 22 of ? Governance and Finance Committee if it passes out of this committee. 12)Related legislation. SB 643 (McGuire), establishes within DCA a Bureau of MM Regulation, under the supervision and control of the Chief of the Bureau of MM Regulation, and requires the bureau to license and regulate dispensing facilities, cultivation sites, transporters, and manufacturers of MM and MM products, subject to local ordinances, and enforced primarily at the local level. SB 643 is set for hearing in the Assembly Business and Professions Committee on July 7, 2015. AB 243 (Wood), requires all MM cultivation to be conducted in accordance with state and local laws and best practices, as specified, and requires state agencies to address environmental impacts of MM cultivation and coordinate with local governments in enforcement efforts. AB 243 is set for hearing in the Senate Governance and Finance Committee on July 8, 2015. AB 26 (Jones-Sawyer) and AB 34 (Bonta) were substantively similar to previous legislative efforts and aimed to enact the Medical Cannabis Regulation and Control Act and would have created the Division of Medical Cannabis Regulation and Enforcement within the Department of Alcoholic Beverage Control (ABC). AB 266 (Cooley) was very similar to SB 643 and also would have created a Bureau of MM Regulation within DCA. These three bills were merged to create this current bill. 13)Prior legislation. SB 1262 (Correa, 2014), was very similar to a previous version of this bill and SB 643, and would have created a Bureau of MM Regulation within DCA. SB 1262 was held under submission in the Assembly Committee on Appropriations. AB 1894 (Ammiano, 2014), would have established the Medical Cannabis Regulation and Control Act and created the Division of Medical Cannabis Regulation and Enforcement within the ABC for the purpose of registering people for the cultivation, manufacture, testing, transportation, storage, distribution, and sale of MM within the state subject to specified exemptions for a city or county; provided that the ABC director and its employees who administer and enforce provisions of the Act are peace officers; required the ABC to work with law enforcement entities to implement and enforce AB 266 (Bonta) Page 23 of ? the rules and regulations regarding MM and to take appropriate action against businesses and individuals that fail to comply with the law; and authorized a board of supervisors of a county and the governing body of a city to levy, increase, or extend transactions and use taxes on the retail sale of or storage, use, or other consumption of MM or MM-infused products. AB 1894 failed on the Assembly floor. AB 604 (Ammiano, 2013), was substantially similar to AB 1894. AB 604 failed in the Senate Committee on Public Safety. SB 439 (Steinberg, 2013), would have exempted MM collectives and cooperatives from criminal liability for possession, cultivation, possession for sale, sale, transport, importation, and furnishing MM; also clarified MBC enforcement of MM recommendations, what constitutes unprofessional conduct, and the bar on the corporate practice of medicine. SB 439 was last set for hearing in the Assembly Committee on Health on August, 13, 2013. The hearing was canceled at the author's request. On April 21, 2014, SB 439 was gutted and amended to a new purpose. AB 473 (Ammiano, 2013), would have enacted the MM Regulation and Control Act, and created a Division of MM Regulation and Enforcement in the ABC to regulate the cultivation, manufacture, testing, transportation, distribution, and sale of MM. AB 473 failed passage on the Assembly Floor. AB 2312 (Ammiano, 2012), would have established a nine-member Board of MM Enforcement within DCA to regulate the MM industry and to collect fees from MM businesses to be deposited into a new MM Fund. AB 2312 would have authorized local taxes on MM up to five percent. AB 2312 was never heard in the Senate Committee on Business, Professions, and Economic Development. AB 2465 (Campos, 2012), would have made patient and primary caregiver MMICs mandatory and required MM collectives to keep copies of members' MMICs. AB 2465 was never heard in the Assembly Committee on Public Safety. SB 1182 (Leno, 2012), would have exempted a MM cooperative or collective that operates within the Attorney General's guidelines from being subject to prosecution for MM possession or commerce, as specified; exempted such an entity and its employees, officers, and members from being subject to AB 266 (Bonta) Page 24 of ? prosecution for MM commerce because the entity or its employees, officers, or members received compensation for actual expenses incurred in carrying out activities in compliance with the guidelines. SB 1182 died on the Senate Inactive File. SB 129 (Leno, 2012), would have prohibited employment discrimination on the basis of a person's status as an MM patient or on the basis of the person's positive drug test for MM, provided that the person is a qualified patient and the use of MM does not occur at the place of employment or during hours of employment. SB 129 died on the Senate Inactive File. AB 1300 (Blumenfield, Chapter 196, Statutes of 2011), permits a local government to enact an ordinance regulating the location, operation, or establishment of an MM cooperative or collective. Authorizes a local government to enforce such ordinances through civil or criminal remedies and actions; authorizes the local government to enact any ordinance that is consistent with the MMP. AB 1017 (Ammiano, 2011), would have made the cultivation of marijuana, except as allowed by the MMP, punishable as a misdemeanor with a penalty of imprisonment in a county jail for a period of not more than one year. AB 1017 died on the Assembly Inactive File. AB 223 (Ammiano, 2011), would have specified that the CUA does not authorize a person with an MMIC to engage in the smoking of MM within 600 feet of the grounds of a school, recreation center, or youth center, unless it occurs within a residence or within a MM cooperative, collective, or dispensary. AB 223 was never heard in the Assembly Committee on Public Safety. SB 626 (Calderon, 2011), would have required the 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 MM and ensure proper regulation of the cultivation, transportation, and distribution of MM and MM-based products. SB 626 was held under submission in the Senate Committee on Appropriations. SB 847 (Correa, 2011), would have prohibited any entity that possesses, cultivates, or distributes MM from locating within 600 feet of a residential area unless a local ordinance has AB 266 (Bonta) Page 25 of ? been adopted to specifically regulate the location of these entities in relation to residential use. SB 847 was vetoed by Governor Brown who stated that he had signed AB 1300, which gave cities and counties authority to regulate MM dispensaries and that SB 847 went in the opposite direction by preempting local control and prescribing the precise locations where dispensaries may not be located. AB 2650 (Buchanan, Chapter 603, Statutes of 2010), prohibits an MM cooperative, collective, dispensary, operator, establishment, or provider authorized by law to possess, cultivate, or distribute MM that has a storefront or mobile retail outlet from being located within a 600-foot radius of any public or private school providing instruction in kindergarten or grades 1 to 12, except as specified; provides that local ordinances, adopted prior to January 1, 2011, that regulate the location or establishment of MM establishments are not preempted by its provisions. SB 1098 (Migden, 2008), would have required the BOE to administer a tax amnesty program, as specified, for MM dispensaries, as defined. SB 1089 was never heard in the Senate Committee on Revenue and Taxation. SB 420 (Vasconcellos), established the MMP Act, a statewide, voluntary program for the issuance of MMICs to identify persons authorized to engage in the use of MM. SB 295 (Vasconcellos, Chapter 704, Statutes of 2003), eliminated the CMRP's three-year duration limit, which was established pursuant to SB 847. SB 847 (Vasconcellos, Chapter 750, Statutes of 1999), provided that the UC Regents, if they elected to do so, could implement a 3-year program, the CMRP, under which funds would be provided for studies intended to ascertain the general medical safety and efficacy of MM and, if found valuable, to develop medical guidelines for the appropriate administration and use of MM. 14)Support. Supporters of this bill, comprised of cities, write to state that this bill gives what the state has lacked since voters approved the CUA: a responsible framework for MM distribution that upholds local control, addresses public safety concerns, and includes important health and safety AB 266 (Bonta) Page 26 of ? requirements. Supporters argue that past legislative attempts sought to preempt local control. Supporters further argue that they are on the front lines on the issue of MM along with local police departments, and have to cope with the effects of the current chaotic regulatory structure for MM on a daily basis. Supporters believe that local governments should have a prominent role in any framework for MM, including meaningful enforcement powers. 15)Support if amended. The California State Association of Counties (CSAC) states that there are additional amendments they would like to see, including clarifying the state's overall role in the regulatory structure, deleting language related to unadulterated food products under the definition of edibles, the addition of a county supervisor to the list of representatives on the task force, and clarifying the language related to the county taxing authority. The Rural County Representatives of California share the same outstanding concerns as CSAC, with the addition of needed strengthening of the license requirements and addressing responsibility for edible MM product standards. 16)Oppose unless amended. The American Civil Liberties Union (ACLU) of California writes in opposition based on the bill's language to allow local jurisdictions to completely ban qualified patients from possessing or cultivating MM, in violation of the CUA. ACLU also states that the bill imposes licensing and employment restrictions that are vague and may lead to the unnecessary denial of employment and/or licensing to large numbers of people with non-violent criminal convictions, particularly people of color. Legal Services for Prisoners with Children (LSPC) writes in opposition that the provision of this bill prohibiting people with felonies from participating in the newly regulated MM industry creates a barrier to successful community reentry, and would like to see that provision removed. LSPC argues that this provision needlessly entrenches stigma and marginalization without increasing public safety or economic opportunity. LSPC further states that even people with long, successful, responsible experience in the MM industry would be excluded. LSPC states that the "War on Drugs" has been applied unfairly across racial lines. The Fresno Cannabis Association (FSA) writes in opposition unless the bill is amended to prohibit local bans on MM dispensaries and/or cultivation. FSA states that many local governments have banned all forms of personal AB 266 (Bonta) Page 27 of ? cultivation with more bans likely. FSA argues that MM is a medicine, and no justification can be provided for allowing local jurisdictions to ban legal medicine from being produced or distributed. 17)Policy comments. a) The CUA, which the California Supreme Court has ruled does not specifically include legislative authority to amend it, specifies that current law prohibiting the possession and cultivation of MM does not apply to a patient, or the patient's primary caregiver, who possesses or cultivates MM for his or her personal medical purposes. The author may wish to consider whether the provision in this bill that allows local governments to ban MM activity is consistent with the CUA. b) This bill effectively eliminates the cooperative model once the OMCR posts a notice that licensing authorities have commenced issuing provisional licenses. Coupled with allowing local governments to completely ban MM cultivation within their jurisdictions, qualified patients and their primary caregivers may potentially be left with no viable or cost-effective options for obtaining MM, especially in rural areas. The author may wish to consider whether an ultimate ban ensures the health and safety of all Californians, including qualified patients and their primary caregivers who would not have access to MM envisioned under the CUA. c) The author has stated that the requirement for an applicant or owner of a facility to prove that they have been residents of the state for not less than four years was a request from the MM industry to help curb competition. Other MM regulation bills this legislative session have had varied residency requirements, from as little as requiring an applicant and owner to be a California resident to requiring a minimum of three years residency. The author may wish to consider whether a four-year residency requirement may be too restrictive. d) This bill specifies that revocation of a state license or local license or permit terminates the ability of a MM business to operate within the state. This bill also requires licensing authorities to prescribe AB 266 (Bonta) Page 28 of ? conditions upon which a person whose state license has previously been denied, suspended, or revoked may be issued a state license. The author may wish to consider addressing these two conflicting provisions and clarify whether or not a licensee who has had a license revoked can ever be licensed again. SUPPORT AND OPPOSITION : Support: City of Burbank City of Camarillo City of Chino Hills City of Concord City of Diamond Bar City of Sacramento City of Torrance Honorable Board of Equalization Member George Runner Oppose: American Civil Liberties Union of California (unless amended) Fresno Cannabis Association (unless amended) Legal Services for Prisoners with Children (unless amended) -- END --