Amended in Assembly April 13, 2016

Amended in Assembly April 4, 2016

Amended in Assembly March 18, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 1575


Introduced by Assembly Members Bonta, Cooley, Jones-Sawyer, Lackey, and Wood

January 4, 2016


An act to amend Sections 19300, 19300.5, 19302, 19302.1, 19306, 19310, 19316, 19320, 19321, 19322, 19326, 19332, 19332.5, 19334, 19335, 19340, 19342, 19344, 19347, 19350, 19351, and 19360 of, to amend the heading of Article 5 (commencing with Section 19326) of Chapter 3.5 of Division 8 of, to amend the heading of Chapter 3.5 (commencing with Section 19300) of Division 8 of, to amend and add Section 19328 of, to add Sections 19310.5, 19319.5, and 19322.5 to, and to repeal Section 19318 of, the Business and Professions Code, to amend Sections 12025 and 12029 of the Fish and Game Code, to amend Section 52334 of the Food and Agricultural Code, and to amend Sections 11352, 11362.765, 11362.775, 11362.777, and 11379 of the Health and Safety Code, relating to medical cannabis.

LEGISLATIVE COUNSEL’S DIGEST

AB 1575, as amended, Bonta. Medical cannabis.

(1) Existing law, the Medical Marijuana Regulation and Safety Act, establishes the licensing and regulation of medicalbegin delete marijuana.end deletebegin insert marijuana by the Bureau of Medical Marijuana Regulation.end insert The act requires the Board of Equalization, in consultation with the Department of Food and Agriculture, to adopt a system for reporting the movement of commercial cannabis and cannabis products.

This bill would rename the act as the Medical Cannabis Regulation and Safetybegin delete Act.end deletebegin insert Act and would rename the licensing authority the Bureau of Medical Cannabis Regulation and would make the bureau, commencing January 1, 2023, subject to review by the appropriate policy committees of the Legislature.end insert The bill would also require the Board of Equalization to form an advisory group made up of representatives from financial institutions, the medical cannabis industry, law enforcement, and state and federal banking regulators to examine strategies such as integrated point-of-sale systems with state track and trace systems and other measures that will improve financial monitoring of medical cannabis businesses. The bill would require the board, by July 1, 2017, to submit a report to the Legislature with proposed changes to state law or regulations that will improve financial monitoring of medical cannabis businesses and compliance with federal law. The bill would require the Department of Business Oversight to create an enhanced financial monitoring certification for entities licensed under the act that further enables them to comply with federal banking regulations and would authorize the Department of Business Oversight to charge a fee for this certification, as specified. After the Bureau of Medical Cannabis Regulation posts a notice on its Internet Web site that the licensing authorities have commenced issuing licenses pursuant to the act, the bill would provide that a financial institution that provides financial services customarily provided by financial institutions to other entities to a current licensee under the act is exempt from any criminal law of the state, provided that the financial institution has verified the licensee has a valid license in good standing. The bill would authorize the bureau to provide information to a financial institution to verify the status of a licensee.

(2) Under the act, a city, county, or city and county is authorized to adopt an ordinance that establishes standards, requirements, and regulations for local licenses and permits for commercial marijuana activity that exceed statewide standards.

The bill would generally prohibit a city, county, or city and county from adopting an ordinance for packaging safety standards that exceeds statewide standards and would require the State Department of Public Health to establish uniform statewide packaging safety standards.

(3) Existing law requires a cultivator or manufacturer to send all medical marijuana and medical marijuana products cultivated and manufactured to a distributor for quality assurance and inspection. Under the act, all packaging and sealing of medical marijuana or medical marijuana products is required to be completed prior to their being transported or delivered to a licensee, qualified patient, or caregiver.

This bill would exempt a cultivator from the requirement of sending medical cannabis to a distributor for quality assurance and inspection if the medical cannabis is to be used, sold, or otherwise provided to a manufacturer for further manufacturing. The bill also would require the Bureau of Medical Cannabis Regulation to specify the manner in which medical cannabis and medical cannabis products meant for wholesale purposes are required to be packaged and sealed prior to transport, testing, quality assurance, quality control testing, or distribution.

(4) The act generally establishes categories of licenses that may be issued and limits a licensee to holding a state license in up to 2 separate license categories. The act provides that, upon licensure, a business shall not be subject to that limitation in a jurisdiction that adopted a local ordinance, prior to July 1, 2015, allowing or requiring qualified businesses to cultivate, manufacture, and dispense medical marijuana or medical marijuana products, with all commercial marijuana activity being conducted by a single qualified business. The act repeals these provisions on January 1, 2026.

This bill would, instead, repeal only the latter provision effective January 1, 2026.

(5) The act specifically establishes a “nursery license,” to be issued by the Department of Food and Agriculture, for the cultivation of medical marijuana solely as a nursery, and authorizes a licensee with a nursery license to transport live plants.

This bill would specify that a licensee with a nursery license may transport live immature plants, subject to specified tracking, security, and related requirements.

(6) The act specifically establishes a “dispensary license,” to be issued by the bureau, and requires a licensed dispensary to implement sufficient security measures, including, at a minimum, certain specified security measures, such as establishing limited access areas accessible only to authorized dispensary personnel. The act authorizes a dispensary to deliver in a city, county, or city and county that does not explicitly prohibit delivery by local ordinance.

This bill would require dispensaries to implement the additional security measure of requiring all medical cannabis and medical cannabis products used for display purposes, samples, or immediate sale to be stored out of reach of any individual who is not employed by the dispensary. The bill would require the bureau to establish specified regulations regarding delivery of medical cannabis and medical cannabis products by a dispensary and specified requirements for all dispensary employees who deliver medical cannabis or medical cannabis products.

(7) Under the act, each licensing authority is required to establish a scale of application, licensing, and renewal fees based on the cost of enforcing the act.

This bill would specify that these fees shall be in addition to, and shall not limit, any fees or taxes imposed by any city, county, or city and county in which the licensee operates.

(8) The act requires a licensed testing laboratory to analyze samples of medical marijuana or medical marijuana products according to either the most current version of the cannabis inflorescence monograph published by the American Herbal Pharmacopoeia or a scientifically valid methodology that, in the opinion of the accrediting body, is demonstrably equal or superior.

This bill would, instead, require a licensed testing laboratory to analyze samples in the final form in which the patient will consume the medical cannabis or medical cannabis product using a scientifically valid methodology approved by the accrediting body.

(9) Existing law authorizes the University of California to create the California Marijuana Research Program, the purpose of which is to develop and conduct studies intended to ascertain the general medical safety and efficacy of marijuana, and if found valuable, to develop medical guidelines for the appropriate administration and use of marijuana.

This bill would provide that it is not a violation of state law or any local ordinance or regulation for a business or research institution that has state authorization to engage in the research of medical cannabis, medical cannabis products, or devices used for the medical use of cannabis or cannabis products, to possess, transport, purchase, or otherwise obtain from a licensee who is authorized to provide or deliver medical cannabis small amounts of medical cannabis or medical cannabis products to conduct research and development related to medical cannabis or medical cannabis products. The bill would require a business or research institution engaged in the research of medical cannabis to obtain written authorization from its local jurisdiction that it has met all requirements of the local ordinance to conduct research on medical cannabis, medical cannabis products, or devices used for the medical use of cannabis or cannabis products. The bill would provide that it is not a violation of state law for certain licensees to sell medical cannabis or medical cannabis products in an amount not to exceed 8 ounces per month to a business or research institution engaged in the research of medical cannabis if the business or research institution provides to the licensee a copy of the written authorization to conduct research within their jurisdiction and a copy of the local ordinance, and would require the licensee to keep on file that written authorization for at least 3 years and make it available upon request to local authorities for auditing purposes.

(10) Existing law imposes various civil penalties for a violation of specified provisions of law in connection with the production or cultivation of a controlled substance, including marijuana, on land under the management of specified state and federal agencies or within the ownership of a timberland production zone, as prescribed. Existing law also imposes various civil penalties for a violation of those specified provisions of law in connection with the production or cultivation of a controlled substance, including marijuana, on land that the person owns, leases, or otherwise uses or occupies with the consent of the landowner.

The bill would provide that activities that are in full compliance with the Medical Cannabis Regulation and Safety Act are not subject to the above-described civil penalties.

(11) The California Seed Law regulates seed sold in California, and prohibits a city, county, or district from adopting or enforcing an ordinance that regulates plants, crops, or seeds without the consent of the Secretary of Food and Agriculture.

This bill would provide that an ordinance that regulates cannabis or marijuana, or medical cannabis or medical marijuana, as defined, shall not require the consent of the secretary.

(12) Under existing law, collectives and cooperatives that cultivate cannabis are not, solely on that basis, subject to certain criminal penalties, including unauthorized possession, cultivation, and transportation of marijuana. This exception for collectives and cooperatives expires one year after the Bureau of Medical Marijuana Regulation posts a notice on its Internet Web site that the bureau has commenced issuing licenses pursuant to the act and existing law is repealed on the date the bureau issues a license.

This bill would, instead, provide that the above exception is repealed one year after the bureau posts its notice on its Internet Web site. The bill would also specify that a collective or cooperative subject to this exception may operate on a for-profit basis, a not-for-profit basis, or any combinationbegin delete thereof.end deletebegin insert thereof, but would provide the protections of the exception to for-end insertbegin insertprofit collectives and cooperatives only if they have a valid Board of Equalization seller’s permit and a valid local license, permit, or other authorization.end insert The bill would also specify that a licensee under the act may operate on a for-profit basis, a not-for-profit basis, or any combination thereof.

The bill would provide that it is unlawful to display an advertisement, as defined, for qualified patients, persons with valid identification cards, and the designated primary caregivers of qualified patients and persons with identification cards, who associate within the state in order collectively or cooperatively to cultivate cannabis for medical purposes, without first verifying a valid Board of Equalization issued seller’s permit. The bill would make a violation of that provision an infraction, punishable by a fine of $500. By creating a new crime, the bill would impose a state-mandated local program. One year after the bureau posts the above-described notice on its Internet Web site, the bill would require all advertisements for licensees to include the valid state license number of the licensee, and would authorize the bureau to provide information to verify that a state license is active and in good standing for purposes of complying with this provision.

(13) Existing law provides that a qualified patient or a person with an identification card, a designated primary caregiver, and any individual who provides assistance to a qualified patient or a person with an identification card, or his or her designated primary caregiver, are not, solely on that basis, subject to certain criminal penalties, including unauthorized possession, cultivation, and transportation of marijuana. Existing law specifies that this provision does not authorize any individual or group to cultivate or distribute marijuana.

This bill would instead specify that this provision does not authorize any individual or group to cultivate or distribute cannabis in any manner other than set forth in the Medical Cannabis Regulation and Safety Act or in the Compassionate Use Act of 1996.

(14) Existing law makes it a crime to transport, import into this state, sell, furnish, administer, or give away, or offers to transport, import into this state, sell, furnish, administer, or give away, or attempt to import into this state or transport, or to transport for sale between counties of the state any controlled substance, including marijuana.

This bill would except from these provisions any commercial cannabis activity by a holder of a state license who is in full compliance with the Medical Cannabis Regulation and Safety Act and all applicable local ordinances.

(15) This bill would also make technical, nonsubstantive changes to the provisions of the act, including changing the term marijuana to cannabis throughout.

(16) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P7    1

SECTION 1.  

The heading of Chapter 3.5 (commencing with
2Section 19300) of Division 8 of the Business and Professions Code
3 is amended to read:

4 

5Chapter  3.5. Medical Cannabis Regulation and Safety
6Act
7

 

8

SEC. 2.  

Section 19300 of the Business and Professions Code
9 is amended to read:

10

19300.  

This act shall be known and may be cited as the Medical
11Cannabis Regulation and Safety Act.

12

SEC. 3.  

Section 19300.5 of the Business and Professions Code
13 is amended to read:

14

19300.5.  

For purposes of this chapter, the following definitions
15shall apply:

16(a) “Accrediting body” means a nonprofit organization that
17requires conformance to ISO/IEC 17025 requirements and is a
18signatory to the International Laboratory Accreditation Cooperation
19Mutual Recognition Arrangement for Testing.

20(b) “Applicant,” for purposes of Article 4 (commencing with
21Section 19319), means the following:

22(1) (A) Owner or owners of a proposed facility.

23(B) An “owner” means a person having an aggregate ownership
24interest, other than a security interest, lien, or encumbrance, of 5
P8    1percent or more in the licensee or who has the power to direct, or
2cause to be directed, the management or control of the licensee.

3(2) If the applicant is a publicly traded company, “owner” means
4the chief executive officer, a member of the board of directors, or
5a person or entity with an aggregate ownership interest of 5 percent
6or more. If the applicant is a nonprofit entity, “owner” means both
7the chief executive officer and any member of the board of
8directors.

9(c) “Batch” means a specific quantity of medical cannabis or
10medical cannabis product that is intended to have uniform character
11and quality, within specified limits, and is produced according to
12a single manufacturing order during the same cycle of manufacture.

13(d) “Bureau” means the Bureau of Medical Cannabis Regulation
14within the Department of Consumer Affairs.

15(e) “Cannabinoid” or “phytocannabinoid” means a chemical
16compound that is unique to and derived from cannabis.

17(f) “Cannabis” or “marijuana” means all parts of the plant
18Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis,
19whether growing or not; the seeds thereof; the resin, whether crude
20or purified, extracted from any part of the plant; and every
21compound, manufacture, salt, derivative, mixture, or preparation
22of the plant, its seeds, or resin. “Cannabis” or “marijuana” also
23means the separated resin, whether crude or purified, obtained
24from marijuana. “Cannabis” or “marijuana” also means marijuana
25as defined by Section 11018 of the Health and Safety Code as
26enacted by Chapter 1407 of the Statutes of 1972. “Cannabis” or
27“marijuana” does not include the mature stalks of the plant, fiber
28produced from the stalks, oil or cake made from the seeds of the
29plant, any other compound, manufacture, salt, derivative, mixture,
30or preparation of the mature stalks (except the resin extracted
31therefrom), fiber, oil, or cake, or the sterilized seed of the plant
32that is incapable of germination. For the purposes of this chapter,
33“cannabis” or “marijuana” does not mean “industrial hemp” as
34defined by Section 11018.5 of the Health and Safety Code.

35(g) “Cannabis concentrate” or “marijuana concentrate” means
36manufactured cannabis that has undergone a process to concentrate
37the cannabinoid active ingredient, thereby increasing the product’s
38potency. An edible medical cannabis product is not considered
39food, as defined by Section 109935 of the Health and Safety Code,
P9    1or a drug, as defined by Section 109925 of the Health and Safety
2Code.

3(h) “Caregiver” or “primary caregiver” has the same meaning
4as that term is defined in Section 11362.7 of the Health and Safety
5Code.

6(i) “Certificate of accreditation” means a certificate issued by
7an accrediting body to a licensed testing laboratory, entity, or site
8to be registered in the state.

9(j) “Chief” means Chief of the Bureau of Medical Cannabis
10Regulation within the Department of Consumer Affairs.

11(k) “Commercial cannabis activity” or “commercial marijuana
12activity” includes cultivation, possession, manufacture, processing,
13storing, laboratory testing, labeling, transporting, distribution, or
14sale of medical cannabis or a medical cannabis product, except as
15set forth in Section 19319, related to qualifying patients and
16primary caregivers.

17(l) “Cultivation” means any activity involving the planting,
18growing, harvesting, drying, curing, grading, or trimming of
19 cannabis.

20(m) “Cultivation site” means a facility where medical cannabis
21is planted, grown, harvested, dried, cured, graded, or trimmed, or
22that does all or any combination of those activities, that is owned
23and operated by a person who holds a valid state license and a
24valid local license, permit, or other authorization.

25(n) “Cultivator” means a person that conducts the planting,
26growing, harvesting, drying, curing, grading, or trimming of
27medical cannabis and that holds both a valid state license and a
28valid local license, permit, or other authorization.

29(o) “Delivery” means the commercial transfer of medical
30cannabis or medical cannabis products from a dispensary, up to
31an amount determined by the bureau, to a primary caregiver or
32qualified patient as defined in Section 11362.7 of the Health and
33Safety Code, or a testing laboratory. “Delivery” also includes the
34use by a dispensary of any technology platform owned and
35controlled by the dispensary, or independently licensed under this
36chapter, that enables qualified patients or primary caregivers to
37arrange for or facilitate the commercial transfer by a licensed
38dispensary of medical cannabis or medical cannabis products.

39(p) “Dispensary” means a commercial facility with a fixed
40location, whether or not there is direct access by customers, where
P10   1medical cannabis or medical cannabis products are offered, either
2individually or in any combination, for retail sale, including an
3establishment that delivers, unless delivery is expressly prohibited
4by local ordinance, medical cannabis and medical cannabis
5products as part of a retail sale.

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

8(r) “Distribution” means the procurement, sale, and transport
9of medical cannabis and medical cannabis products between entities
10licensed pursuant to this chapter.

11(s) “Distributor” means a person licensed under this chapter to
12engage in the business of purchasing or taking custody of medical
13cannabis from a licensed cultivator, or medical cannabis products
14from a licensed manufacturer, for sale or transfer to a licensed
15dispensary and who holds a valid state license pursuant to this
16chapter and a valid local license, permit, or other authorization at
17the physical location of the distributor.

18(t) “Dried flower” means all dead medical cannabis that has
19been harvested, dried, cured, or otherwise processed, excluding
20leaves and stems.

21(u) “Edible cannabis product” or “edible marijuana product”
22means manufactured cannabis that is intended to be used, in whole
23or in part, for human consumption, including, but not limited to,
24chewing gum. An edible medical cannabis product is not
25considered food as defined by Section 109935 of the Health and
26Safety Code or a drug as defined by Section 109925 of the Health
27and Safety Code.

28(v) “Fund” means the Medical Cannabis Regulation and Safety
29Act Fund established pursuant to Section 19351.

30(w) “Identification program” means the universal identification
31certificate program for commercial medical cannabis activity
32authorized by this chapter.

33(x) “Labor peace agreement” means an agreement between a
34licensee and a bona fide labor organization that, at a minimum,
35protects the state’s proprietary interests by prohibiting labor
36organizations and members from engaging in picketing, work
37stoppages, boycotts, and any other economic interference with the
38applicant’s business. This agreement means that the applicant has
39agreed not to disrupt efforts by the bona fide labor organization
40to communicate with, and attempt to organize and represent, the
P11   1applicant’s employees. The agreement shall provide a bona fide
2labor organization access at reasonable times to areas in which the
3 applicant’s employees work, for the purpose of meeting with
4employees to discuss their right to representation, employment
5rights under state law, and terms and conditions of employment.
6This type of agreement shall not mandate a particular method of
7election or certification of the bona fide labor organization.

8(y) “Licensee” means a person issued a state license under this
9chapter to engage in commercial cannabis activity.

10(z) “Licensing authority” means the state agency responsible
11for the issuance, renewal, or reinstatement of the license, or the
12state agency authorized to take disciplinary action against the
13licensee.

14(aa) “Live plants” means living medical cannabis flowers and
15plants, including seeds, immature plants, and vegetative stage
16plants.

17(ab) “Lot” means a batch, or a specifically identified portion of
18a batch, having uniform character and quality within specified
19limits. In the case of medical cannabis or a medical cannabis
20product produced by a continuous process, “lot” means a
21specifically identified amount produced in a unit of time or a
22quantity in a manner that ensures its having uniform character and
23quality within specified limits.

24(ac) “Manufactured cannabis” or “manufactured marijuana”
25means raw cannabis that has undergone a process whereby the raw
26agricultural product has been transformed into a concentrate, an
27edible cannabis product, or a topical product.

28(ad) “Manufacturer” means a person that conducts the
29production, preparation, propagation, or compounding of
30manufactured medical cannabis, as described in subdivision (ac),
31or medical cannabis products either directly or indirectly or by
32extraction methods, or independently by means of chemical
33synthesis or by a combination of extraction and chemical synthesis
34at a fixed location that packages or repackages medical cannabis
35or medical cannabis products or labels or relabels its container,
36that holds a valid state license pursuant to this chapter, and that
37holds a valid local license, permit, or other authorization.

38(ae) “Manufacturing site” means a location that produces,
39prepares, propagates, or compounds manufactured medical
40cannabis or medical cannabis products, directly or indirectly, by
P12   1extraction methods, independently by means of chemical synthesis,
2or by a combination of extraction and chemical synthesis, and is
3owned and operated by a person that holds a valid state license
4pursuant to this chapter and a valid local license, permit, or other
5authorization.

6(af) “Medical cannabis,” “medical cannabis product,” “cannabis
7product,” “medical marijuana,” “medical marijuana product,” or
8“marijuana product” means a product containing cannabis,
9including, but not limited to, concentrates and extractions, intended
10to be sold for use by medical cannabis patients in California
11pursuant to the Compassionate Use Act of 1996 (Proposition 215),
12found at Section 11362.5 of the Health and Safety Code. For the
13purposes of this chapter, “medical cannabis” or “medical
14marijuana” does not include “industrial hemp” as defined by
15Section 81000 of the Food and Agricultural Code or Section
1611018.5 of the Health and Safety Code.

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

21(ah) “Permit,” “local license,” or “local permit” means an
22official document granted by a local jurisdiction that specifically
23authorizes a person to conduct commercial cannabis activity in
24the local jurisdiction.

25(ai) “Person” means an individual, firm, partnership, joint
26venture, association, corporation, limited liability company, estate,
27trust, business trust, receiver, syndicate, or any other group or
28combination acting as a unit and includes the plural as well as the
29singular number.

30(aj) “State license” or “license” means a state license issued
31pursuant to this chapter.

32(ak) “Topical product” means a product manufactured such that
33its final stage is in the form of a topical drug, as defined by the
34Center for Drug Evaluation and Research under the federal Food
35and Drug Administration. A topical product is not considered a
36drug as defined by Section 109925 of the Health and Safety Code.

37(al) “Testing laboratory” means a facility, entity, or site in the
38state that offers or performs tests of medical cannabis or medical
39cannabis products and that is both of the following:

P13   1(1) Accredited by an accrediting body that is independent from
2all other persons involved in the medical cannabis industry in the
3state.

4(2) Registered with the State Department of Public Health.

16 5(am) “Transport” means the transfer of medical cannabis or
6medical cannabis products from the permitted business location
7of one licensee to the permitted business location of another
8licensee, for the purposes of conducting commercial cannabis
9activity authorized pursuant to this chapter.

10(an) “Transporter” means a person issued a state license by the
11bureau to transport medical cannabis or medical cannabis products
12in an amount above a threshold determined by the bureau between
13facilities that have been issued a state license pursuant to this
14chapter.

15

SEC. 4.  

Section 19302 of the Business and Professions Code
16 is amended to read:

17

19302.  

begin insert(a)end insertbegin insertend insert There is in the Department of Consumer Affairs
18the Bureau of Medical Cannabis Regulation, under the supervision
19and control of the director. The director shall administer and
20enforce the provisions of this chapter.

begin insert

21
(b) Commencing January 1, 2023, the bureau shall be subject
22to review by the appropriate policy committees of the Legislature.

end insert
23

SEC. 5.  

Section 19302.1 of the Business and Professions Code
24 is amended to read:

25

19302.1.  

(a) The Governor shall appoint a chief of the bureau,
26subject to confirmation by the Senate, at a salary to be fixed and
27determined by the Director of Consumer Affairs with the approval
28of the Director of Finance. The chief shall serve under the direction
29and supervision of the Director of Consumer Affairs and at the
30pleasure of the Governor.

31(b) Every power granted to or duty imposed upon the director
32under this chapter may be exercised or performed in the name of
33the director by a deputy or assistant director or by the chief, subject
34to conditions and limitations that the director may prescribe. In
35addition to every power granted or duty imposed with this chapter,
36the director shall have all other powers and duties generally
37applicable in relation to bureaus that are part of the Department
38of Consumer Affairs.

P14   1(c) The director may employ and appoint all employees
2necessary to properly administer the work of the bureau, in
3accordance with civil service laws and regulations.

4(d) The Department of Consumer Affairs shall have the sole
5authority to create, issue, renew, discipline, suspend, or revoke
6licenses for the transportation, storage unrelated to manufacturing
7activities, distribution, and sale of medical cannabis within the
8state and to collect fees in connection with activities the bureau
9regulates. The bureau may create licenses in addition to those
10identified in this chapter that the bureau deems necessary to
11effectuate its duties under this chapter.

12(e) The Department of Food and Agriculture shall administer
13the provisions of this chapter related to and associated with the
14cultivation of medical cannabis. The Department of Food and
15Agriculture may create, issue, and suspend or revoke cultivation
16licenses for violations of this chapter.

17(f) The State Department of Public Health shall administer the
18provisions of this chapter related to and associated with the
19manufacturing and testing of medical cannabis. The State
20Department of Public Health may create, issue, and suspend or
21revoke manufacturing and testing licenses for a violation of this
22chapter. The State Department of Public Health shall seek and
23include feedback from the scientific community and cannabis
24testing industry when promulgating testing regulations. The State
25Department of Public Health shall review and update medical
26cannabis testing standards on an annual basis, incorporating new
27testing technology, such as DNA testing for contaminants.

28

SEC. 6.  

Section 19306 of the Business and Professions Code
29 is amended to read:

30

19306.  

(a) The bureau may convene an advisory committee
31to advise the bureau and licensing authorities on the development
32of standards and regulations pursuant to this chapter, including
33best practices and guidelines to ensure qualified patients have
34adequate access to medical cannabis and medical cannabis
35products. The advisory committee members shall be determined
36by the chief.

37(b) The advisory committee members may include, but are not
38limited to, representatives of the medical cannabis industry,
39representatives of medical cannabis cultivators, appropriate local
40and state agencies, appropriate local and state law enforcement,
P15   1physicians, environmental and public health experts, and medical
2cannabis patient advocates.

3

SEC. 7.  

Section 19310 of the Business and Professions Code
4 is amended to read:

5

19310.  

The licensing authority may, on its own motion at any
6time before a penalty assessment is placed into effect and without
7any further proceedings, review the penalty, but that review shall
8be limited to its reduction.

9

SEC. 8.  

Section 19310.5 is added to the Business and
10Professions Code
, to read:

11

19310.5.  

(a) It is the intent of the Legislature to enact a statute
12that improves the medical cannabis industry’s ability to comply
13with federal law and regulations that would allow improved access
14to banking services.

15(b) (1) The State Board of Equalization shall form an advisory
16group made up of representatives from financial institutions, the
17medical cannabis industry, law enforcement, and state and federal
18banking regulators. By July 1, 2017, the board shall submit a report
19to the Legislature with proposed changes to state law or regulations
20that will improve financial monitoring of medical cannabis
21businesses and improve compliance with federal law.

22(2) A report submitted pursuant to paragraph (1) shall be
23submitted in compliance with Section 9795 of the Government
24Code. The requirement for submitting a report imposed in
25paragraph (1) is inoperative on July 1, 2021, pursuant to Section
2610231.5 of the Government Code.

27(c) The advisory group shall examine strategies, such as the use
28of integrated point-of-sale systems with state track and trace
29systems and other measures that will improve financial monitoring
30of medical cannabis businesses.

31(d) (1) The Department of Business Oversight shall create an
32enhanced financial monitoring certification for entities licensed
33pursuant to this chapter that further enables those entities to comply
34with the federal banking regulations under the federal Bank Secrecy
35Act. The Department of Business Oversight shall consider
36including requirements to use electronic financial monitoring that
37enables real-time sales inventory tracking and other tools that allow
38a bank or credit union to readily access information they are
39required to monitor under the federal Bank Secrecy Act.

P16   1(2) The Department of Business Oversight may collect fees
2from applicants requesting the enhanced financial monitoring
3certification in an amount sufficient to fund the actual reasonable
4costs of implementing subdivision (d).

5(3) After the Bureau of Medical Cannabis Regulation posts a
6notice on its Internet Web site that the licensing authorities have
7commenced issuing licenses pursuant to the Medical Cannabis
8Regulation and Safety Act, a financial institution that provides
9financial services customarily provided by financial institutions
10to other entities to a current licensee under the Medical Cannabis
11Regulation and Safety Act is exempt from any criminal law of this
12state, provided that the financial institution has verified the licensee
13has a valid license in good standing.

14(4) The Bureau of Medical Cannabis Regulation may provide
15information to a financial institution to verify the status of a
16licensee.

17

SEC. 9.  

Section 19316 of the Business and Professions Code
18 is amended to read:

19

19316.  

(a) (1) Except as described in paragraph (2), and
20pursuant to Section 7 of Article XI of the California Constitution,
21a city, county, or city and county may adopt ordinances that
22establish additional standards, requirements, and regulations for
23local licenses and permits for commercial cannabis activity.
24Standards, requirements, and regulations regarding health and
25safety, testing, security, and worker protections established by the
26state shall be the minimum standards for all licensees statewide.

27(2) Packaging safety standards shall be uniform across the state
28and shall be established by the State Department of Public Health.

29(3) For purposes of this subdivision, packaging safety standards
30do not include packaging requirements related to appellations of
31origin or other branding or marketing materials.

32(b) For facilities issued a state license that are located within
33the incorporated area of a city, the city shall have full power and
34authority to enforce this chapter and the regulations promulgated
35by the bureau or any licensing authority, if delegated by the state.
36Notwithstanding Sections 101375, 101400, and 101405 of the
37Health and Safety Code or any contract entered into pursuant
38thereto, or any other law, the city shall further assume complete
39responsibility for any regulatory function relating to those licensees
40within the city limits that would otherwise be performed by the
P17   1county or any county officer or employee, including a county
2health officer, without liability, cost, or expense to the county.

3(c) Nothing in this chapter, or any regulations promulgated
4thereunder, shall be deemed to limit the authority or remedies of
5a city, county, or city and county under any provision of law,
6including, but not limited to, Section 7 of Article XI of the
7California Constitution.

8

SEC. 10.  

Section 19318 of the Business and Professions Code
9 is repealed.

10

SEC. 11.  

Section 19319.5 is added to the Business and
11Professions Code
, to read:

12

19319.5.  

(a) It is not a violation of this chapter or any other
13state law, for a business or research institution engaged in the
14research of medical cannabis, medical cannabis products, or devices
15used for the medical use of cannabis or cannabis products, to
16possess, transport, purchase, or otherwise legally obtain from a
17licensee who is permitted to provide or deliver medical cannabis
18pursuant to subdivisions (n) and (o) of Section 19300.7, small
19amounts of medical cannabis or medical cannabis products, not to
20exceed eight ounces per month, as necessary to conduct research
21and development related to medical cannabis or medical cannabis
22products in a city, county, or city and county that expressly
23authorizes that activity by local ordinance. A business or research
24institution engaged in the research of medical cannabis shall obtain
25written authorization from its local jurisdiction that the business
26or institution has met all requirements of the local ordinance to
27conduct research on medical cannabis, medical cannabis products,
28or devices used for the medical use of cannabis or cannabis
29products.

30(b) It is not a violation of this chapter or any other state law for
31a licensee, pursuant to subdivisions (n) and (o) of Section 19300.7,
32to sell medical cannabis or medical cannabis products in an amount
33not to exceed eight ounces per month to a business or research
34institution engaged in the research of medical cannabis, if the
35business or research institution provides to the licensee a copy of
36the written authorization to conduct research within the business’s
37or institution’s jurisdiction and a copy of the local ordinance. The
38licensee shall keep on file that written authorization for at least
39three years and make it available upon request to local authorities
40for auditing purposes.

P18   1

SEC. 12.  

Section 19320 of the Business and Professions Code,
2as added by Section 4 of Chapter 689 of the Statutes of 2015, is
3amended to read:

4

19320.  

(a) Licensing authorities administering this chapter
5may issue state licenses only to qualified applicants engaging in
6commercial cannabis activity pursuant to this chapter. One year
7after the Bureau of Medicalbegin delete Marijuanaend delete Cannabis Regulation posts
8a notice on its Internet Web site that the licensing authorities have
9commenced issuing licenses, no person shall engage in commercial
10cannabis activity without possessing both a state license and a
11local permit, license, or other authorization. An entity seeking
12licensure pursuant to this chapter shall obtain a local license,
13permit, or other authorization prior to applying for state licensure.
14State licensing entities shall not issue a license to any applicant
15that is unable to provide documentation confirming authorization
16to operate from the local government in which the applicant
17proposes to operate. A licensee shall not commence activity under
18the authority of a state license until the applicant has obtained, in
19addition to the state license, a license or permit from the local
20jurisdiction in which he or she proposes to operate, following the
21requirements of the applicable local ordinance.

22(b) Revocation of a local license, permit, or other authorization
23shall terminate the ability of a medical cannabis business to operate
24within that local jurisdiction until the local jurisdiction reinstates
25or reissues the local license, permit, or other required authorization.
26Local authorities shall notify the bureau upon revocation of a local
27license. The bureau shall inform relevant licensing authorities.

28(c) Revocation of a state license shall terminate the ability of a
29medical cannabis licensee to operate within California until the
30licensing authority reinstates or reissues the state license. Each
31licensee shall obtain a separate license for each location where it
32engages in commercial medical cannabis activity. However,
33transporters only need to obtain licenses for each physical location
34where the licensee conducts business while not in transport, or any
35equipment that is not currently transporting medical cannabis or
36medical cannabis products, permanently resides.

37(d) In addition to the provisions of this chapter, local
38jurisdictions retain the power to assess fees and taxes, as applicable,
39on facilities that are licensed pursuant to this chapter and the
40business activities of those licensees.

P19   1(e) Nothing in this chapter shall be construed to supersede or
2limit state agencies, including the State Water Resources Control
3Board and Department of Fish and Wildlife, from establishing fees
4to support their medical cannabis regulatory programs.

5

SEC. 13.  

Section 19320 of the Business and Professions Code,
6as added by Section 8 of Chapter 719 of the Statutes of 2015, is
7amended to read:

8

19320.  

(a) Licensing authorities administering this chapter
9may issue state licenses only to qualified applicants engaging in
10commercial cannabis activity pursuant to this chapter. One year
11after the Bureau of Medicalbegin delete Marijuanaend delete Cannabis Regulation posts
12a notice on its Internet Web site that the licensing authorities have
13commenced issuing licenses, no person shall engage in commercial
14cannabis activity without possessing both a state license and a
15local permit, license, or other authorization. An entity seeking
16licensure pursuant to this chapter shall obtain a local license,
17permit, or other authorization prior to applying for state licensure.
18State licensing entities shall not issue a license to any applicant
19that is unable to provide documentation confirming authorization
20to operate from the local government in which the applicant
21proposes to operate. A licensee shall not commence activity under
22the authority of a state license until the applicant has obtained, in
23addition to the state license, a license or permit from the local
24jurisdiction in which he or she proposes to operate, following the
25requirements of the applicable local ordinance.

26(b) Revocation of a local license, permit, or other authorization
27shall terminate the ability of a medical cannabis business to operate
28within that local jurisdiction until the local jurisdiction reinstates
29or reissues the local license, permit, or other required authorization.
30Local authorities shall notify the bureau upon revocation of a local
31license. The bureau shall inform relevant licensing authorities.

32(c) Revocation of a state license shall terminate the ability of a
33medical cannabis licensee to operate within California until the
34licensing authority reinstates or reissues the state license. Each
35licensee shall obtain a separate license for each location where it
36engages in commercial medical cannabis activity. However,
37transporters only need to obtain licenses for each physical location
38where the licensee conducts business while not in transport, or any
39equipment that is not currently transporting medical cannabis or
40medical cannabis products, permanently resides.

P20   1(d) In addition to the provisions of this chapter, local
2jurisdictions retain the power to assess fees and taxes, as applicable,
3on facilities that are licensed pursuant to this chapter and the
4business activities of those licensees.

5(e) Nothing in this chapter shall be construed to supersede or
6limit state agencies, including the State Water Resources Control
7Board and Department of Fish and Wildlife, from establishing fees
8to support their medical cannabis regulatory programs.

9

SEC. 14.  

Section 19321 of the Business and Professions Code
10 is amended to read:

11

19321.  

(a) The Department of Consumer Affairs, the
12Department of Food and Agriculture, and the State Department of
13Public Health shall promulgate regulations for implementation of
14their respective responsibilities in the administration of this chapter.
15The secretary or director of each licensing authority may prescribe,
16adopt, and enforce emergency regulations necessary to implement
17this chapter.

18(b) Except as described in subdivision (e), a state license issued
19pursuant to this section shall be valid for 12 months from the date
20of issuance. The state license shall be renewed annually. Each
21licensing authority shall establish procedures for the renewal of a
22state license.

23(c) Notwithstanding subdivision (a) of Section 19320, a facility
24or entity that is operating in compliance with local zoning
25ordinances and other state and local requirements on or before
26January 1, 2018, may continue its operations until its application
27for licensure is approved or denied pursuant to this chapter. In
28issuing licenses, the licensing authority shall prioritize a facility
29or entity that can demonstrate to the licensing authority’s
30satisfaction that it was in operation and in good standing with the
31local jurisdiction by January 1, 2016.

32(d) Issuance of a state license or a determination of compliance
33with local law by the licensing authority shall in no way limit the
34ability of the City of Los Angeles to prosecute any person or entity
35for a violation of, or otherwise enforce, Proposition D, approved
36by the voters of the City of Los Angeles on the May 21, 2013,
37ballot for the city, or the city’s zoning laws. Nor may issuance of
38a state license or determination of compliance with local law by
39the licensing authority be deemed to establish, or be relied upon,
40in determining satisfaction with the immunity requirements of
P21   1Proposition D or local zoning law, in court or in any other context
2or forum.

3

SEC. 15.  

Section 19322 of the Business and Professions Code
4 is amended to read:

5

19322.  

(a) A person or entity shall not submit an application
6for a state license pursuant to this chapter unless that person or
7entity first receives a license, permit, or authorization from a local
8jurisdiction. An applicant for any type of state license issued
9pursuant to this chapter shall do all of the following:

10(1) Electronically submit to the Department of Justice fingerprint
11images and related information required by the Department of
12Justice for the purpose of obtaining information as to the existence
13 and content of a record of state or federal convictions and arrests,
14and information as to the existence and content of a record of state
15or federal convictions and arrests for which the Department of
16Justice establishes that the person is free on bail or on his or her
17own recognizance, pending trial or appeal.

18(A) The Department of Justice shall provide a response to the
19licensing authority pursuant to paragraph (1) of subdivision (p) of
20Section 11105 of the Penal Code.

21(B) The licensing authority shall request from the Department
22of Justice subsequent notification service, as provided pursuant to
23Section 11105.2 of the Penal Code, for applicants.

24(C) The Department of Justice shall charge the applicant a fee
25sufficient to cover the reasonable cost of processing the requests
26 described in this paragraph.

27(2) Provide documentation issued by the local jurisdiction in
28which the proposed business is operating certifying that the
29applicant is or will be in compliance with all local ordinances and
30regulations.

31(3) Provide evidence of the legal right to occupy and use the
32proposed location. For an applicant seeking a cultivator, distributor,
33manufacturing, or dispensary license, provide a statement from
34the owner of real property or their agent where the cultivation,
35distribution, manufacturing, or dispensing commercial medical
36cannabis activities will occur, as proof to demonstrate the
37landowner has acknowledged and consented to permit cultivation,
38distribution, manufacturing, or dispensary activities to be conducted
39on the property by the tenant applicant.

P22   1(4) If the application is for a cultivator or dispensary license,
2provide evidence that the proposed location is located beyond at
3least a 600-foot radius from a school, as required by Section
411362.768 of the Health and Safety Code.

5(5) Provide a statement, signed by the applicant under penalty
6of perjury, that the information provided is complete, true, and
7accurate.

8(6) (A) For an applicant with 20 or more employees, provide
9a statement that the applicant will enter into, or demonstrate that
10it has already entered into, and abide by the terms of a labor peace
11agreement.

12(B) For the purposes of this paragraph, “employee” does not
13include a supervisor.

14(C) For purposes of this paragraph, “supervisor” means an
15individual having authority, in the interest of the licensee, to hire,
16transfer, suspend, lay off, recall, promote, discharge, assign,
17reward, or discipline other employees, or responsibility to direct
18them or to adjust their grievances, or effectively to recommend
19such action, if, in connection with the foregoing, the exercise of
20that authority is not of a merely routine or clerical nature, but
21requires the use of independent judgment.

22(7) Provide the applicant’s valid seller’s permit number issued
23pursuant to Part 1 (commencing with Section 6001) of Division 2
24of the Revenue and Taxation Code or indicate that the applicant
25is currently applying for a seller’s permit.

26(8) Provide any other information required by the licensing
27authority.

28(9) For an applicant seeking a cultivation license, provide a
29statement declaring the applicant is an “agricultural employer,” as
30defined in the Alatorre-Zenovich-Dunlap-Berman Agricultural
31Labor Relations Act of 1975 (Part 3.5 (commencing with Section
321140) of Division 2 of the Labor Code), to the extent not prohibited
33by law.

34(10) For an applicant seeking licensure as a testing laboratory,
35register with the State Department of Public Health and provide
36any information required by the State Department of Public Health.

37(11) Pay all applicable fees required for licensure by the
38licensing authority.

39(b) For applicants seeking licensure to cultivate, distribute, or
40 manufacture medical cannabis or medical cannabis products, the
P23   1application shall also include a detailed description of the
2applicant’s operating procedures for all of the following, as
3required by the licensing authority:

4(1) Cultivation.

5(2) Extraction and infusion methods.

6(3) The transportation process.

7(4) Inventory procedures.

8(5) Quality control procedures.

9

SEC. 16.  

Section 19322.5 is added to the Business and
10Professions Code
, to read:

11

19322.5.  

A licensee may operate as a for-profit business, as a
12not-for-profit entity, or as a combination of both.

13

SEC. 17.  

The heading of Article 5 (commencing with Section
1419326) of Chapter 3.5 of Division 8 of the Business and Professions
15Code
is amended to read:

16 

17Article 5.  Medical Cannabis Regulation
18

 

19

SEC. 18.  

Section 19326 of the Business and Professions Code
20 is amended to read:

21

19326.  

(a) A person other than a transporter shall not transport
22medical cannabis or medical cannabis products from one licensee
23to another licensee, unless otherwise specified in this chapter.

24(b) (1) A cultivator or a manufacturer shall send medical
25cannabis and medical cannabis products cultivated or manufactured
26to a distributor, as defined in Section 19300.5, for quality assurance
27and inspection by the distributor and for a batch testing by a testing
28laboratory prior to distribution to a dispensary, except as provided
29in paragraph (2). Those licensees holding a Type 10A license in
30addition to a cultivation license or a manufacturing license shall
31send medical cannabis and medical cannabis products to a
32distributor for presale inspection and for a batch testing by a testing
33laboratory prior to dispensing any product. The licensing authority
34shall fine a licensee who violates this subdivision in an amount
35determined by the licensing authority to be reasonable.

36(2) A cultivator is not required to send medical cannabis to a
37distributor if the medical cannabis is to be used, sold, or otherwise
38distributed by methods approved pursuant to this chapter to a
39manufacturer for further manufacturing.

P24   1(c) (1) Upon receipt of medical cannabis or medical cannabis
2products from a cultivator or a manufacturer, the distributor shall
3first ensure a random sample of the medical cannabis or medical
4cannabis product is tested by a testing laboratory.

5(2) Upon issuance of a certificate of analysis by the testing
6laboratory that the product is fit for manufacturing or retail, the
7cultivator or manufacturer shall send medical cannabis and medical
8cannabis products from the approved associated batch to the
9distributor. All medical cannabis and medical cannabis products
10shall then undergo a quality assurance review by the distributor
11prior to distribution to ensure the identity, quality, and content of
12the medical cannabis or medical cannabis product, and for tracking
13and taxation purposes by the state. Cultivators and manufacturers
14shall package or seal all medical cannabis and medical cannabis
15products in tamper-evident packaging and use a unique identifier,
16as prescribed by the Department of Food and Agriculture, for the
17purpose of identifying and tracking medical cannabis or medical
18cannabis products. Medical cannabis and medical cannabis products
19shall be labeled as required by Section 19347, except as otherwise
20specified in this chapter. All packaging and sealing shall be
21completed prior to medical cannabis or medical cannabis products
22being transported or delivered to a licensee, qualified patient, or
23caregiver, except as otherwise specified in this chapter. The bureau
24shall specify the manner in which medical cannabis and medical
25cannabis products meant for wholesale purposes shall be packaged
26and sealed prior to transport, testing, quality assurance, quality
27control testing, or distribution.

28(3) This section does not limit the ability of a cultivator,
29manufacturer, or dispensary to directly enter into contracts with
30one another indicating the price and quantity of medical cannabis
31or medical cannabis products to be distributed. However, a
32distributor responsible for executing the contract is authorized to
33collect a fee for the services rendered, including, but not limited
34to, costs incurred by a testing laboratory, as well as applicable state
35or local taxes and fees.

36(d) Medical cannabis and medical cannabis products shall be
37tested by a testing laboratory, prior to retail sale or dispensing, as
38follows:

P25   1(1) Medical cannabis from dried flower shall, at a minimum,
2be tested for concentration, pesticides, mold, and other
3contaminants.

4(2) Medical cannabis extracts shall, at a minimum, be tested for
5concentration and purity of the product.

6(3) This chapter shall not prohibit a licensee from performing
7on-site testing for the purposes of quality assurance of the product
8in conjunction with reasonable business operations. On-site testing
9by the licensee shall not be certified by the State Department of
10Public Health.

11(e) All commercial cannabis activity shall be conducted between
12licensees.

13(f) The bureau shall promulgate regulations relating to the
14amounts of each batch of medical cannabis or medical cannabis
15product that a cultivator or manufacturer is required to send to a
16distributor for inspection and a testing laboratory for testing. The
17regulations shall focus on reducing diversion, ensuring the quality
18of the product for the health and safety of patients, and allowing
19for efficiency in enforcement.

20

SEC. 19.  

Section 19328 of the Business and Professions Code
21 is amended to read:

22

19328.  

(a) Except as specified in paragraph (9), a licensee may
23only hold a state license in up to two separate license categories,
24as follows:

25(1) Type 1, 1A, 1B, 2, 2A, or 2B licensees may also hold either
26a Type 6 or 7 state license.

27(2) Type 6 or 7 licensees, or a combination thereof, may also
28hold either a Type 1, 1A, 1B, 2, 2A, or 2B state license.

29(3) Type 6 or 7 licensees, or a combination thereof, may also
30hold a Type 10A state license.

31(4) Type 10A licensees may also hold either a Type 6 or 7 state
32license, or a combination thereof.

33(5) Type 1, 1A, 1B, 2, 2A, or 2B licensees, or a combination
34thereof, may also hold a Type 10A state license.

35(6) Type 10A licensees may apply for Type 1, 1A, 1B, 2, 2A,
36or 2B state license, or a combination thereof.

37(7) Type 11 licensees shall apply for a Type 12 state license,
38but shall not apply for any other type of state license.

39(8) Type 12 licensees may apply for a Type 11 state license.

P26   1(9) A Type 10A licensee may apply for a Type 6 or 7 state
2license and hold a 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B, 4 or
3 combination thereof if, under the 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B,
44 or combination of licenses thereof, no more than four acres of
5total canopy size of cultivation by the licensee is occurring
6throughout the state during the period that the respective licenses
7are valid. All cultivation pursuant to this section shall comply with
8local ordinances. By January 1, 2025, the bureau shall review the
9appropriateness of continuing licensure under this paragraph and
10shall report its recommendation for elimination or extension of
11these provisions to the Legislature.

12(b) Except as provided in subdivision (a), a person or entity that
13holds a state license is prohibited from licensure for any other
14activity authorized under this chapter, and is prohibited from
15holding an ownership interest in real property, personal property,
16or other assets associated with or used in any other license category.

17(c) (1) In a jurisdiction that adopted a local ordinance, prior to
18July 1, 2015, allowing or requiring qualified businesses to cultivate,
19manufacture, and dispense medical cannabis or medical cannabis
20products, with all commercial cannabis activity being conducted
21by a single qualified business, upon licensure that business shall
22not be subject to subdivision (a) if it meets all of the following
23conditions:

24(A) The business was cultivating, manufacturing, and dispensing
25medical cannabis or medical cannabis products on July 1, 2015,
26and has continuously done so since that date.

27(B) The business has been in full compliance with all applicable
28 local ordinances at all times prior to licensure.

29(C) The business is registered with the State Board of
30Equalization for tax purposes.

31(2) A business licensed pursuant to paragraph (1) is not required
32to conduct all cultivation or manufacturing within the bounds of
33a single local jurisdiction, but all cultivation and manufacturing
34shall have commenced prior to July 1, 2015, and have been in full
35compliance with applicable local ordinances.

36(d) This section shall remain in effect only until January 1, 2026,
37and as of that date is repealed.

38

SEC. 20.  

Section 19328 is added to the Business and
39Professions Code
, to read:

P27   1

19328.  

(a) A licensee may only hold a state license in up to
2two separate license categories, as follows:

3(1) Type 1, 1A, 1B, 2, 2A, or 2B licensees may also hold either
4a Type 6 or 7 state license.

5(2) Type 6 or 7 licensees, or a combination thereof, may also
6hold either a Type 1, 1A, 1B, 2, 2A, or 2B state license.

7(3) Type 6 or 7 licensees, or a combination thereof, may also
8hold a Type 10A state license.

9(4) Type 10A licensees may also hold either a Type 6 or 7 state
10license, or a combination thereof.

11(5) Type 1, 1A, 1B, 2, 2A, or 2B licensees, or a combination
12thereof, may also hold a Type 10A state license.

13(6) Type 10A licensees may apply for Type 1, 1A, 1B, 2, 2A,
14or 2B state license, or a combination thereof.

15(7) Type 11 licensees shall apply for a Type 12 state license,
16but shall not apply for any other type of state license.

17(8) Type 12 licensees may apply for a Type 11 state license.

18(9) A Type 10A licensee may apply for a Type 6 or 7 state
19license and hold a 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B, 4 or
20combination thereof if, under the 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B,
214 or combination of licenses thereof, no more than four acres of
22total canopy size of cultivation by the licensee is occurring
23throughout the state during the period that the respective licenses
24are valid. All cultivation pursuant to this section shall comply with
25local ordinances.

26(b) Except as provided in subdivision (a), a person or entity that
27holds a state license is prohibited from licensure for any other
28activity authorized under this chapter, and is prohibited from
29holding an ownership interest in real property, personal property,
30or other assets associated with or used in any other license category.

31(c) This section shall become operative on January 1, 2026.

32

SEC. 21.  

Section 19332 of the Business and Professions Code,
33as added by Section 1 of Chapter 688 of the Statutes of 2015, is
34amended to read:

35

19332.  

(a) The Department of Food and Agriculture shall
36promulgate regulations governing the licensing of indoor and
37outdoor cultivation sites.

38(b) The Department of Pesticide Regulation, in consultation
39with the Department of Food and Agriculture, shall develop
40standards for the use of pesticides in cultivation, and maximum
P28   1tolerances for pesticides and other foreign object residue in
2harvested cannabis.

3(c) The State Department of Public Health shall develop
4standards for the production and labeling of all edible medical
5cannabis products.

6(d) The Department of Food and Agriculture, in consultation
7with the Department of Fish and Wildlife and the State Water
8Resources Control Board, shall ensure that individual and
9cumulative effects of water diversion and discharge associated
10with cultivation do not affect the instream flows needed for fish
11spawning, migration, and rearing, and the flows needed to maintain
12natural flow variability.

13(e) The Department of Food and Agriculture shall have the
14authority necessary to implement the regulations it adopts pursuant
15to this chapter. The regulations shall do all of the following:

16(1) Provide that weighing or measuring devices used in
17connection with the sale or distribution of medical cannabis are
18required to meet standards equivalent to Division 5 (commencing
19 with Section 12001).

20(2) Require that medical cannabis cultivation by licensees is
21conducted in accordance with state and local laws related to land
22conversion, grading, electricity usage, water usage, agricultural
23discharges, and similar matters. Nothing in this chapter, and no
24regulation adopted by the department, shall be construed to
25supersede or limit the authority of the State Water Resources
26Control Board, regional water quality control boards, or the
27Department of Fish and Wildlife to implement and enforce their
28statutory obligations or to adopt regulations to protect water quality,
29water supply, and natural resources.

30(3) Establish procedures for the issuance and revocation of
31unique identifiers for activities associated with a medical cannabis
32cultivation license, pursuant to Article 8 (commencing with Section
3319337). All medical cannabis shall be labeled with the unique
34identifier issued by the Department of Food and Agriculture.

35(4) Prescribe standards, in consultation with the bureau, for the
36reporting of information as necessary related to unique identifiers,
37pursuant to Article 8 (commencing with Section 19337).

38(f) The Department of Pesticide Regulation, in consultation with
39the State Water Resources Control Board, shall promulgate
40regulations that require that the application of pesticides or other
P29   1pest control in connection with the indoor or outdoor cultivation
2of medical cannabis meets standards equivalent to Division 6
3(commencing with Section 11401) of the Food and Agricultural
4Code and its implementing regulations.

5(g) State cultivator license types issued by the Department of
6Food and Agriculture include:

7(1) Type 1, or “specialty outdoor,” for outdoor cultivation using
8no artificial lighting of less than or equal to 5,000 square feet of
9total canopy size on one premises, or up to 50 mature plants on
10noncontiguous plots.

11(2) Type 1A, or “specialty indoor,” for indoor cultivation using
12exclusively artificial lighting of less than or equal to 5,000 square
13feet of total canopy size on one premises.

14(3) Type 1B, or “specialty mixed-light,” for cultivation using a
15combination of natural and supplemental artificial lighting at a
16maximum threshold to be determined by the licensing authority,
17of less than or equal to 5,000 square feet of total canopy size on
18one premises.

19(4) Type 2, or “small outdoor,” for outdoor cultivation using
20no artificial lighting between 5,001 and 10,000 square feet,
21inclusive, of total canopy size on one premises.

22(5) Type 2A, or “small indoor,” for indoor cultivation using
23exclusively artificial lighting between 5,001 and 10,000 square
24 feet, inclusive, of total canopy size on one premises.

25(6) Type 2B, or “small mixed-light,” for cultivation using a
26combination of natural and supplemental artificial lighting at a
27maximum threshold to be determined by the licensing authority,
28between 5,001 and 10,000 square feet, inclusive, of total canopy
29size on one premises.

30(7) Type 3, or “outdoor,” for outdoor cultivation using no
31artificial lighting from 10,001 square feet to one acre, inclusive,
32of total canopy size on one premises. The Department of Food and
33Agriculture shall limit the number of licenses allowed of this type.

34(8) Type 3A, or “indoor,” for indoor cultivation using
35exclusively artificial lighting between 10,001 and 22,000 square
36feet, inclusive, of total canopy size on one premises. The
37Department of Food and Agriculture shall limit the number of
38licenses allowed of this type.

39(9) Type 3B, or “mixed-light,” for cultivation using a
40combination of natural and supplemental artificial lighting at a
P30   1maximum threshold to be determined by the licensing authority,
2between 10,001 and 22,000 square feet, inclusive, of total canopy
3size on one premises. The Department of Food and Agriculture
4shall limit the number of licenses allowed of this type.

5(10) Type 4, or “nursery,” for cultivation of medical cannabis
6solely as a nursery. A Type 4 licensee may transport live immature
7plants, subject to the tracking, security, and related requirements
8in accordance with Article 7 (commencing with Section 19334),
9Article 7.5 (commencing with Section 19335), and Article 8
10(commencing with Section 19337).

11

SEC. 22.  

Section 19332 of the Business and Professions Code,
12as added by Section 13 of Chapter 719 of the Statutes of 2015, is
13amended to read:

14

19332.  

(a) The Department of Food and Agriculture shall
15promulgate regulations governing the licensing of indoor and
16outdoor cultivation sites.

17(b) The Department of Pesticide Regulation, in consultation
18with the Department of Food and Agriculture, shall develop
19standards for the use of pesticides in cultivation, and maximum
20tolerances for pesticides and other foreign object residue in
21harvested cannabis.

22(c) The State Department of Public Health shall develop
23standards for the production and labeling of all edible medical
24cannabis products.

25(d) The Department of Food and Agriculture, in consultation
26with the Department of Fish and Wildlife and the State Water
27Resources Control Board, shall ensure that individual and
28cumulative effects of water diversion and discharge associated
29with cultivation do not affect the instream flows needed for fish
30spawning, migration, and rearing, and the flows needed to maintain
31natural flow variability.

32(e) The Department of Food and Agriculture shall have the
33authority necessary to implement the regulations it adopts pursuant
34to this chapter. The regulations shall do all of the following:

35(1) Provide that weighing or measuring devices used in
36connection with the sale or distribution of medical cannabis are
37required to meet standards equivalent to Division 5 (commencing
38 with Section 12001).

39(2) Require that medical cannabis cultivation by licensees is
40conducted in accordance with state and local laws related to land
P31   1conversion, grading, electricity usage, water usage, agricultural
2discharges, and similar matters. Nothing in this chapter, and no
3regulation adopted by the department, shall be construed to
4supersede or limit the authority of the State Water Resources
5Control Board, regional water quality control boards, or the
6Department of Fish and Wildlife to implement and enforce their
7statutory obligations or to adopt regulations to protect water quality,
8water supply, and natural resources.

9(3) Establish procedures for the issuance and revocation of
10unique identifiers for activities associated with a medical cannabis
11cultivation license, pursuant to Article 8 (commencing with Section
1219337). All medical cannabis shall be labeled with the unique
13identifier issued by the Department of Food and Agriculture.

14(4) Prescribe standards, in consultation with the bureau, for the
15reporting of information as necessary related to unique identifiers,
16pursuant to Article 8 (commencing with Section 19337).

17(f) The Department of Pesticide Regulation, in consultation with
18the State Water Resources Control Board, shall promulgate
19regulations that require that the application of pesticides or other
20pest control in connection with the indoor or outdoor cultivation
21of medical cannabis meets standards equivalent to Division 6
22(commencing with Section 11401) of the Food and Agricultural
23Code and its implementing regulations.

24(g) State cultivator license types issued by the Department of
25Food and Agriculture include:

26(1) Type 1, or “specialty outdoor,” for outdoor cultivation using
27no artificial lighting of less than or equal to 5,000 square feet of
28total canopy size on one premises, or up to 50 mature plants on
29noncontiguous plots.

30(2) Type 1A, or “specialty indoor,” for indoor cultivation using
31exclusively artificial lighting of less than or equal to 5,000 square
32feet of total canopy size on one premises.

33(3) Type 1B, or “specialty mixed-light,” for cultivation using a
34combination of natural and supplemental artificial lighting at a
35maximum threshold to be determined by the licensing authority,
36of less than or equal to 5,000 square feet of total canopy size on
37one premises.

38(4) Type 2, or “small outdoor,” for outdoor cultivation using
39no artificial lighting between 5,001 and 10,000 square feet,
40inclusive, of total canopy size on one premises.

P32   1(5) Type 2A, or “small indoor,” for indoor cultivation using
2exclusively artificial lighting between 5,001 and 10,000 square
3feet, inclusive, of total canopy size on one premises.

4(6) Type 2B, or “small mixed-light,” for cultivation using a
5combination of natural and supplemental artificial lighting at a
6maximum threshold to be determined by the licensing authority,
7between 5,001 and 10,000 square feet, inclusive, of total canopy
8size on one premises.

9(7) Type 3, or “outdoor,” for outdoor cultivation using no
10artificial lighting from 10,001 square feet to one acre, inclusive,
11of total canopy size on one premises. The Department of Food and
12Agriculture shall limit the number of licenses allowed of this type.

13(8) Type 3A, or “indoor,” for indoor cultivation using
14exclusively artificial lighting between 10,001 and 22,000 square
15feet, inclusive, of total canopy size on one premises. The
16Department of Food and Agriculture shall limit the number of
17licenses allowed of this type.

18(9) Type 3B, or “mixed-light,” for cultivation using a
19combination of natural and supplemental artificial lighting at a
20maximum threshold to be determined by the licensing authority,
21between 10,001 and 22,000 square feet, inclusive, of total canopy
22size on one premises. The Department of Food and Agriculture
23shall limit the number of licenses allowed of this type.

24(10) Type 4, or “nursery,” for cultivation of medical cannabis
25solely as a nursery. A Type 4 licensee may transport live immature
26plants, subject to the tracking, security, and related requirements
27in accordance with Article 7 (commencing with Section 19334),
28Article 7.5 (commencing with Section 19335), and Article 8
29(commencing with Section 19337).

30

SEC. 23.  

Section 19332.5 of the Business and Professions
31Code
is amended to read:

32

19332.5.  

(a) Not later than January 1, 2020, the Department
33of Food and Agriculture in conjunction with the bureau, shall make
34available a certified organic designation and organic certification
35program for medical cannabis, if permitted under federal law and
36the National Organic Program (Section 6517 of the federal Organic
37Foods Production Act of 1990 (7 U.S.C. Sec. 6501 et seq.)), and
38Article 7 (commencing with Section 110810) of Chapter 5 of Part
395 of Division 104 of the Health and Safety Code.

P33   1(b) The bureau may establish appellations of origin for medical
2cannabis grown in California.

3(c) It is unlawful for medical cannabis to be marketed, labeled,
4or sold as grown in a California county when the medical cannabis
5was not grown in that county.

6(d) It is unlawful to use the name of a California county in the
7labeling, marketing, or packaging of medical cannabis products
8unless the product was grown in that county.

9

SEC. 24.  

Section 19334 of the Business and Professions Code
10 is amended to read:

11

19334.  

(a) State licenses to be issued by the Department of
12Consumer Affairs are as follows:

13(1) (A) “Dispensary,” as defined in this chapter.

14(B) A dispensary may be one of the following:

15(i) “Storefront dispensary” for licensees who have a dispensary
16with direct physical access for the public.

17(ii) “Nonstorefront dispensary” for licensees who have a
18dispensary that does not have a storefront with direct physical
19access for the public.

20(iii) “Special dispensary” for licensees who have no more than
21three dispensary facilities.

22(C) Any of the dispensaries listed in subparagraph (B) may
23deliver in a city, county, or city and county that does not expressly
24prohibit delivery by local ordinance.

25(2) “Distributor,” or “Type 11 licensee,” for the distribution of
26medical cannabis and medical cannabis products from manufacturer
27to dispensary. A distributor shall hold a Type 12, or transporter,
28license and register each location where product is stored for the
29purposes of distribution. A distributor shall not hold a license in
30a cultivation, manufacturing, dispensing, or testing license category
31and shall not own, or have an ownership interest in, a facility
32 licensed in those categories other than a security interest, lien, or
33encumbrance on property that is used by a licensee. A distributor
34shall be bonded and insured at a minimum level established by the
35licensing authority.

36(3)  “Transporter” or “Type 12 licensee” for transporters of
37medical cannabis or medical cannabis products between licensees.
38A transporter shall be bonded and insured at a minimum level
39established by the licensing authority.

40(b) The bureau shall establish both of the following:

P34   1(1) Minimum security requirements for the commercial
2transportation and delivery of medical cannabis and medical
3cannabis products.

4(2) Advertising, marketing, signage, and other labeling
5requirements and restrictions, including a prohibition on
6advertising, marketing, and other promotion of the medical
7cannabis or medical cannabis products provided by a person not
8in full compliance with this chapter.

9(A) The bureau may provide information to verify a state license
10is active and in good standing for purposes of complying with this
11paragraph.

12(B) One year after the bureau posts a notice on its Internet Web
13site that the licensing authorities have commenced issuing licenses
14pursuant to the Medical Marijuana Regulation and Safety Act, all
15advertisements for licensees under this chapter shall include the
16valid state license number of the licensee.

17(c) A dispensary shall implement sufficient security measures
18to both deter and prevent unauthorized entrance into areas
19containing medical cannabis or medical cannabis products and
20theft of medical cannabis or medical cannabis products at the
21dispensary. These security measures shall include, but not be
22limited to, all of the following:

23(1) Preventing individuals from remaining on the premises of
24the dispensary if they are not engaging in activity expressly related
25to the operations of the dispensary.

26(2) Establishing limited access areas accessible only to
27authorized dispensary personnel.

28(3) Storing all finished medical cannabis and medical cannabis
29products in a secured and locked room, safe, or vault, and in a
30manner as to prevent diversion, theft, and loss, except for limited
31amounts of cannabis used for display purposes, samples, or
32immediate sale.

33(4) Requiring all medical cannabis and medical cannabis
34products used for display purposes, samples, or immediate sale to
35be stored out of reach of any individual who is not employed by
36the dispensary.

37(d) A dispensary shall notify the licensing authority and the
38appropriate law enforcement authorities within 24 hours after
39discovering any of the following:

P35   1(1) Significant discrepancies identified during inventory. The
2level of significance shall be determined by the bureau.

3(2) Diversion, theft, loss, or any criminal activity involving the
4dispensary or any agent or employee of the dispensary.

5(3) The loss or unauthorized alteration of records related to
6cannabis, registered qualifying patients, primary caregivers, or
7dispensary employees or agents.

8(4) Any other breach of security.

9

SEC. 25.  

Section 19335 of the Business and Professions Code
10 is amended to read:

11

19335.  

(a) The Department of Food and Agriculture, in
12consultation with the bureau, shall establish a track and trace
13program for reporting the movement of medical cannabis items
14throughout the distribution chain that utilizes a unique identifier
15pursuant to Section 11362.777 of the Health and Safety Code and
16secure packaging and is capable of providing information that
17captures, at a minimum, all of the following:

18(1) The licensee receiving the product.

19(2) The transaction date.

20(3) The cultivator from which the product originates, including
21the associated unique identifier, pursuant to Section 11362.777 of
22the Health and Safety Code.

23(b) (1) The Department of Food and Agriculture shall create
24an electronic database containing the electronic shipping manifests,
25which shall include, but not be limited to, the following
26information:

27(A) The quantity, or weight, and variety of products shipped.

28(B) The estimated times of departure and arrival.

29(C) The quantity, or weight, and variety of products received.

30(D) The actual time of departure and arrival.

31(E) A categorization of the product.

32(F) The license number and the unique identifier pursuant to
33Section 11362.777 of the Health and Safety Code issued by the
34licensing authority for all licensees involved in the shipping
35process, including cultivators, transporters, distributors, and
36dispensaries.

37(2) (A) The database shall be designed to flag irregularities for
38all licensing authorities in this chapter to investigate.
39Notwithstanding Section 30, all licensing authorities pursuant to
40this chapter may access the database and share information related
P36   1to licensees under this chapter, including social security and
2individual taxpayer identifications.

3(B) The Department of Food and Agriculture shall immediately
4inform the bureau upon the finding of an irregularity or suspicious
5finding related to a licensee, applicant, or commercial cannabis
6activity for investigatory purposes.

7(3) Licensing authorities and state and local agencies may, at
8any time, inspect shipments and request documentation for current
9inventory.

10(4) The bureau shall have 24-hour access to the electronic
11database administered by the Department of Food and Agriculture.

12(5) The Department of Food and Agriculture shall be authorized
13to enter into memoranda of understandings with licensing
14authorities for data sharing purposes, as deemed necessary by the
15Department of Food and Agriculture.

16(6) Information received and contained in records kept by the
17Department of Food and Agriculture or licensing authorities for
18the purposes of administering this section are confidential and
19shall not be disclosed pursuant to the California Public Records
20Act (Chapter 3.5 (commencing with Section 6250) of Division 7
21of Title 1 of the Government Code), except as necessary for
22authorized employees of the State of California or any city, county,
23or city and county to perform official duties pursuant to this chapter
24or a local ordinance.

25(7) Upon the request of a state or local law enforcement agency,
26licensing authorities shall allow access to or provide information
27contained within the database to assist law enforcement in their
28duties and responsibilities pursuant to this chapter.

29

SEC. 26.  

Section 19340 of the Business and Professions Code
30 is amended to read:

31

19340.  

(a) Deliveries, as defined in this chapter, can only be
32made by a dispensary and in a city, county, or city and county that
33does not explicitly prohibit it by local ordinance.

34(b) Upon approval of the licensing authority, a licensed
35dispensary that delivers medical cannabis or medical cannabis
36products shall comply with both of the following:

37(1) The city, county, or city and county in which the licensed
38dispensary is located, and in which each delivery is made, do not,
39by ordinance, explicitly prohibit delivery.

P37   1(2) All employees of a dispensary delivering medical cannabis
2or medical cannabis products shall carry a copy of the dispensary’s
3current license authorizing those services with them during
4deliveries and the employee’s government-issued identification,
5and shall present that license and identification upon request to
6state and local law enforcement, employees of regulatory
7authorities, and other state and local agencies enforcing this
8chapter.

9(c) A county shall have the authority to impose a tax, pursuant
10to Article 11 (commencing with Section 19348), on each delivery
11transaction completed by a licensee.

12(d) During delivery, the licensee shall maintain a physical copy
13of the delivery request and shall make it available upon request of
14the licensing authority and law enforcement officers. The delivery
15request documentation shall comply with state and federal law
16regarding the protection of confidential medical information.

17(e) The qualified patient or primary caregiver requesting the
18delivery shall maintain a copy of the delivery request and shall
19make it available, upon request, to the licensing authority and law
20enforcement officers.

21(f) A local jurisdiction shall not prevent carriage of medical
22cannabis or medical cannabis products on public roads by a licensee
23acting in compliance with this chapter.

24(g) The bureau shall establish the following regulations
25regarding the delivery of medical cannabis and medical cannabis
26products:

27(1) Employee training standards that ensure qualified patients
28and primary caregivers have adequate information regarding the
29medical cannabis or medical cannabis products that a dispensary
30delivers, and to provide employees with information regarding
31state and federal laws and regulations.

32(2) Protocols to provide qualified patients and primary caregivers
33with information regarding laws, regulations, and policies relevant
34to providing medical cannabis or medical cannabis products to
35qualified patients and primary caregivers in the local jurisdiction
36in which the dispensary is located and the area in which the medical
37cannabis or medical cannabis products are being delivered.

38(3) A system for registering and maintaining the status of all
39delivery personnel of dispensaries, including protocols for
40suspending the registrations of individuals who move out of this
P38   1state, who discontinue employment at a dispensary, or who are
2under suspension or inspection by a dispensary or local or state
3law enforcement. This system shall be made available to local and
4state law enforcement, qualified patients, primary caregivers, and
5any other entity deemed appropriate by the bureau. Any fees
6associated with registration of delivery personnel shall be set by
7the bureau and shall not exceed the reasonable amount necessary
8 to cover the costs to regulate the delivery personnel and maintain
9the system.

10(4) The operating hours for delivery.

11(5) A requirement that each dispensary employee who delivers
12medical cannabis or medical cannabis products contract with only
13one dispensary at time.

14(6) Minimum requirements for patient information that is stored
15by each delivery operation, including, but not limited to, the contact
16information for the patient and, if applicable, his or her primary
17caregiver, the physician’s recommendation, and the identification
18card issued pursuant to Article 2.5 (commencing with Section
1911362.7) of Chapter 6 of Division 10 of the Health and Safety
20Code. All identifying information obtained about a qualified patient
21or primary caregiver shall be obtained and stored in compliance
22with the Confidentiality of Medical Information Act (Part 2.6
23(commencing with Section 56) of Division 1 of the Civil Code)
24and all other privacy laws and regulations.

25(h) The bureau shall establish requirements for all dispensary
26employees who deliver medical cannabis or medical cannabis
27products, including, but not limited to, the following:

28(1) Possession of a valid driver’s license issued by the
29Department of Motor Vehicles.

30(2) Provide the bureau with a current address.

31(3) Provide the bureau with necessary automobile and insurance
32information.

33(4) Registration with the bureau.

34

SEC. 27.  

Section 19342 of the Business and Professions Code
35 is amended to read:

36

19342.  

(a) For the purposes of testing medical cannabis or
37medical cannabis products, licensees shall use a licensed testing
38laboratory that has adopted a standard operating procedure using
39methods consistent with general requirements for the competence
40of testing and calibration activities, including sampling, using
P39   1standard methods established by the International Organization
2for Standardization, specifically ISO/IEC 17020 and ISO/IEC
317025 to test medical cannabis and medical cannabis products that
4are approved by an accrediting body that is a signatory to the
5International Laboratory Accreditation Cooperation Mutual
6Recognition Arrangement.

7(b) An agent of a testing laboratory shall obtain samples
8according to a statistically valid sampling method for each lot.

9(c) A testing laboratory shall analyze samples according to the
10following:

11(1) In the final form which the patient will consume the medical
12cannabis or medical cannabis product, including moisture content
13and other attributes.

14(2) A scientifically valid methodology approved by the
15accrediting body.

16(d) If a test result falls outside the specifications authorized by
17law or regulation, the testing laboratory shall follow a standard
18operating procedure to confirm or refute the original result.

19(e) A testing laboratory shall destroy the remains of the sample
20of medical cannabis or medical cannabis product upon completion
21of the analysis.

22

SEC. 28.  

Section 19344 of the Business and Professions Code
23 is amended to read:

24

19344.  

(a) A testing laboratory shall issue a certificate of
25analysis for each lot, with supporting data, to report both of the
26following:

27(1) Whether the chemical profile of the lot conforms to the
28specifications of the lot for compounds, including, but not limited
29to, all of the following:

30(A) Tetrahydrocannabinol (THC).

31(B) Tetrahydrocannabinolic Acid (THCA).

32(C) Cannabidiol (CBD).

33(D) Cannabidiolic Acid (CBDA).

34(E) The terpenes described in the most current version of the
35cannabis inflorescence monograph published by the American
36Herbal Pharmacopoeia.

37(F) Cannabigerol (CBG).

38(G) Cannabinol (CBN).

39(H) Any other compounds required by the State Department of
40Public Health.

P40   1(2) That the presence of contaminants does not exceed the levels
2that are the lesser of either the most current version of the American
3 Herbal Pharmacopoeia monograph or the State Department of
4Public Health. For purposes of this paragraph, contaminants
5include, but are not limited to, all of the following:

6(A) Residual solvent or processing chemicals.

7(B) Foreign material, including, but not limited to, hair, insects,
8or similar or related adulterant.

9(C) Microbiological impurity, including total aerobic microbial
10count, total yeast mold count, P. aeruginosa, aspergillus spp., s.
11aureus, aflatoxin B1, B2, G1, or G2, or ochratoxin A.

12(D) Whether the batch is within specification for odor and
13appearance.

14(b) Residual levels of volatile organic compounds shall be below
15those set by the State Department of Public Health. The State
16Department of Public Health shall conduct periodic audits of the
17results of testing laboratories to verify their accuracy.

18

SEC. 29.  

Section 19347 of the Business and Professions Code
19 is amended to read:

20

19347.  

(a) Prior to delivery or sale at a dispensary, medical
21cannabis products shall be labeled and in a tamper-evident package.
22Labels and packages of medical cannabis products shall meet the
23following requirements:

24(1) Medical cannabis packages and labels shall not be made to
25be attractive to children.

26(2) All medical cannabis product labels shall include the
27following information, prominently displayed and in a clear and
28legible font:

29(A) Manufacture date and source.

30(B) The statement “SCHEDULE I CONTROLLED
31SUBSTANCE.”

32(C) The statement “KEEP OUT OF REACH OF CHILDREN
33AND ANIMALS” in bold print.

34(D) The statement “FOR MEDICAL USE ONLY.”

35(E) The statement “THE INTOXICATING EFFECTS OF THIS
36PRODUCT MAY BE DELAYED BY UP TO TWO HOURS.”

37(F) The statement “THIS PRODUCT MAY IMPAIR THE
38ABILITY TO DRIVE OR OPERATE MACHINERY. PLEASE
39USE EXTREME CAUTION.”

P41   1(G) For packages containing only dried flower, the net weight
2of medical cannabis in the package.

3(H) A warning if nuts or other known allergens are used.

4(I) List of pharmacologically active ingredients, including, but
5not limited to, tetrahydrocannabinol (THC), cannabidiol (CBD),
6and other cannabinoid content, the THC and other cannabinoid
7amount in milligrams per serving, servings per package, and the
8THC and other cannabinoid amount in milligrams for the package
9total.

10(J) Clear indication, in bold type, that the product contains
11medical cannabis.

12(K) Identification of the source and date of cultivation and
13manufacture.

14(L) Any other requirement set by the State Department of Public
15Health.

16(M) Information associated with the unique identifier issued by
17the Department of Food and Agriculture pursuant to Section
1811362.777 of the Health and Safety Code.

19(b) Only generic food names may be used to describe edible
20medical cannabis products, pursuant to regulations promulgated
21by the State Department of Public Health.

22

SEC. 30.  

Section 19350 of the Business and Professions Code
23 is amended to read:

24

19350.  

Each licensing authority shall establish a scale of
25application, licensing, and renewal fees, based upon the cost of
26enforcing this chapter, as follows:

27(a) Each licensing authority shall charge each licensee a
28licensure and renewal fee, as applicable. The licensure and renewal
29fee shall be calculated to cover the costs of administering this
30chapter. The licensure fee may vary depending upon the varying
31costs associated with administering the various regulatory
32requirements of this chapter as they relate to the nature and scope
33of the different licensure activities, including, but not limited to,
34the track and trace program required pursuant to Section 19335,
35but shall not exceed the reasonable regulatory costs to the licensing
36authority.

37(b) The total fees assessed pursuant to this chapter shall be set
38at an amount that will fairly and proportionately generate sufficient
39total revenue to fully cover the total costs of administering this
40chapter.

P42   1(c) All state license fees shall be set on a scaled basis by the
2licensing authority, dependent on the size of the business.

3(d) The licensing authority shall deposit all fees collected
4pursuant to this chapter in a fee account specific to that licensing
5authority, to be established in the Medical Cannabis Regulation
6and Safety Act Fund. Moneys in the licensing authority fee
7 accounts shall be used, upon appropriation of the Legislature, by
8the designated licensing authority for the administration of this
9chapter.

10(e) The fees established by licensing authorities pursuant to this
11chapter shall be in addition to, and shall not limit, any fees or taxes
12imposed by a city, county, or city and county in which the licensee
13operates.

14

SEC. 31.  

Section 19351 of the Business and Professions Code
15 is amended to read:

16

19351.  

(a) The Medical Cannabis Regulation and Safety Act
17Fund is hereby established within the State Treasury. Moneys in
18the fund shall be available upon appropriation by the Legislature.
19Notwithstanding Section 16305.7 of the Government Code, the
20fund shall include any interest and dividends earned on the moneys
21in the fund.

22(b) (1) Funds for the establishment and support of the regulatory
23activities pursuant to this chapter shall be advanced as a General
24Fund or special fund loan, and shall be repaid by the initial
25proceeds from fees collected pursuant to this chapter or any rule
26or regulation adopted pursuant to this chapter, by January 1, 2022.
27Should the initial proceeds from fees not be sufficient to repay the
28loan, moneys from the Medical Cannabis Fines and Penalties
29Account shall be made available to the bureau, by appropriation
30of the Legislature, to repay the loan.

31(2) Funds advanced pursuant to this subdivision shall be
32appropriated to the bureau, which shall distribute the moneys to
33the appropriate licensing authorities, as necessary to implement
34the provisions of this chapter.

35(3) The Director of Finance may provide an initial operating
36loan from the General Fund to the Medical Cannabis Regulation
37and Safety Act Fund that does not exceed ten million dollars
38($10,000,000).

39(c) Except as otherwise provided, all moneys collected pursuant
40to this chapter as a result of fines or penalties imposed under this
P43   1chapter shall be deposited directly into the Medical Cannabis Fines
2and Penalties Account, which is hereby established within the
3fund, and shall be available, upon appropriation by the Legislature
4to the bureau, for the purposes of funding the enforcement grant
5program pursuant to subdivision (d).

6(d) (1) The bureau shall establish a grant program to allocate
7moneys from the Medical Cannabis Fines and Penalties Account
8to state and local entities for the following purposes:

9(A) To assist with medical cannabis regulation and the
10enforcement of this chapter and other state and local laws
11applicable to cannabis activities.

12(B) For allocation to state and local agencies and law
13enforcement to remedy the environmental impacts of cannabis
14cultivation.

15(2) The costs of the grant program under this subdivision shall,
16upon appropriation by the Legislature, be paid for with moneys in
17the Medical Cannabis Fines and Penalties Account.

18(3) The grant program established by this subdivision shall only
19be implemented after the loan specified in subdivision (b) is repaid.

20

SEC. 32.  

Section 19360 of the Business and Professions Code
21 is amended to read:

22

19360.  

(a) A person engaging in commercial cannabis activity
23without a license and associated unique identifiers required by this
24chapter shall be subject to civil penalties of up to twice the amount
25of the license fee for each violation, and the licensing authority,
26state or local authority, or court may order the destruction of
27medical cannabis associated with that violation. Each day of
28operation shall constitute a separate violation of this section. All
29civil penalties imposed and collected pursuant to this section shall
30 be deposited into the Medical Cannabis Fines and Penalties
31Account, established pursuant to Section 19351.

32(b) If an action for civil penalties is brought against a licensee
33pursuant to this chapter by the Attorney General, the penalty
34collected shall be deposited into the Medical Cannabis Fines and
35Penalties Account. If the action is brought by a district attorney
36or county counsel, the penalty collected shall be paid to the
37treasurer of the county in which the judgment was entered. If the
38action is brought by a city attorney or city prosecutor, the penalty
39collected shall be paid to the treasurer of the city or city and county
40in which the judgment was entered. If the action is brought by a
P44   1city attorney and is adjudicated in a superior court located in the
2unincorporated area or another city in the same county, the penalty
3shall be paid one-half to the treasurer of the city in which the
4complaining attorney has jurisdiction and one-half to the treasurer
5of the county in which the judgment is entered.

6(c) Notwithstanding subdivision (a), criminal penalties shall
7continue to apply to an unlicensed person or entity engaging in
8commercial cannabis activity in violation of this chapter, including,
9but not limited to, those individuals covered under Section 11362.7
10of the Health and Safety Code.

11

SEC. 33.  

Section 12025 of the Fish and Game Code is amended
12to read:

13

12025.  

(a) In addition to any penalties imposed by any other
14law, a person found to have violated the code sections described
15in paragraphs (1) to (11), inclusive, in connection with the
16production or cultivation of a controlled substance on land under
17the management of the Department of Parks and Recreation, the
18Department of Fish and Wildlife, the Department of Forestry and
19Fire Protection, the State Lands Commission, a regional park
20district, the United States Forest Service, or the United States
21Bureau of Land Management, or within the respective ownership
22of a timberland production zone, as defined in Chapter 6.7
23(commencing with Section 51100) of Part 1 of Division 1 of Title
245 of the Government Code, of more than 50,000 acres, or while
25trespassing on other public or private land in connection with the
26production or cultivation of a controlled substance, shall be liable
27for a civil penalty as follows:

28(1) A person who violates Section 1602 in connection with the
29production or cultivation of a controlled substance is subject to a
30civil penalty of not more than ten thousand dollars ($10,000) for
31each violation.

32(2) A person who violates Section 5650 in connection with the
33production or cultivation of a controlled substance is subject to a
34civil penalty of not more than forty thousand dollars ($40,000) for
35each violation.

36(3) A person who violates Section 5652 in connection with the
37production or cultivation of a controlled substance is subject to a
38civil penalty of not more than forty thousand dollars ($40,000) for
39each violation.

P45   1(4) A person who violates subdivision (a) of Section 374.3 of
2the Penal Code in connection with the production or cultivation
3of a controlled substance is subject to a civil penalty of not more
4than forty thousand dollars ($40,000) for each violation.

5(5) A person who violates paragraph (1) of subdivision (h) of
6Section 374.3 of the Penal Code in connection with the production
7or cultivation of a controlled substance is subject to a civil penalty
8of not more than forty thousand dollars ($40,000) for each
9violation.

10(6) A person who violates subdivision (b) of Section 374.8 of
11the Penal Code in connection with the production or cultivation
12of a controlled substance is subject to a civil penalty of not more
13than forty thousand dollars ($40,000) for each violation.

14(7) A person who violates Section 384a of the Penal Code in
15connection with the production or cultivation of a controlled
16substance is subject to a civil penalty of not more than ten thousand
17dollars ($10,000) for each violation.

18(8) A person who violates subdivision (a) of Section 4571 of
19the Public Resources Code in connection with the production or
20cultivation of a controlled substance is subject to a civil penalty
21of not more than ten thousand dollars ($10,000) for each violation.

22(9) A person who violates Section 4581 of the Public Resources
23Code in connection with the production or cultivation of a
24controlled substance is subject to a civil penalty of not more than
25ten thousand dollars ($10,000) for each violation.

26(10) A person who violates Section 2000 in connection with
27the production or cultivation of a controlled substance is subject
28to a civil penalty of not more than ten thousand dollars ($10,000)
29for each violation.

30(11) A person who violates Section 2002 in connection with
31the production or cultivation of a controlled substance is subject
32to a civil penalty of not more than ten thousand dollars ($10,000)
33for each violation.

34(b) (1) In addition to any penalties imposed by any other law,
35a person found to have violated the code sections described in this
36subdivision in connection with the production or cultivation of a
37controlled substance on land that the person owns, leases, or
38otherwise uses or occupies with the consent of the landowner shall
39be liable for a civil penalty as follows:

P46   1(A) A person who violates Section 1602 in connection with the
2production or cultivation of a controlled substance is subject to a
3civil penalty of not more than eight thousand dollars ($8,000) for
4each violation.

5(B) A person who violates Section 5650 in connection with the
6production or cultivation of a controlled substance is subject to a
7civil penalty of not more than twenty thousand dollars ($20,000)
8for each violation.

9(C) A person who violates Section 5652 in connection with the
10production or cultivation of a controlled substance is subject to a
11civil penalty of not more than twenty thousand dollars ($20,000)
12for each violation.

13(D) A person who violates subdivision (a) of Section 374.3 of
14the Penal Code in connection with the production or cultivation
15of a controlled substance is subject to a civil penalty of not more
16than twenty thousand dollars ($20,000) for each violation.

17(E) A person who violates paragraph (1) of subdivision (h) of
18Section 374.3 of the Penal Code in connection with the production
19or cultivation of a controlled substance is subject to a civil penalty
20of not more than twenty thousand dollars ($20,000) for each
21violation.

22(F) A person who violates subdivision (b) of Section 374.8 of
23the Penal Code in connection with the production or cultivation
24of a controlled substance is subject to a civil penalty of not more
25than twenty thousand dollars ($20,000) for each violation.

26(G) A person who violates Section 384a of the Penal Code in
27connection with the production or cultivation of a controlled
28substance is subject to a civil penalty of not more than ten thousand
29dollars ($10,000) for each violation.

30(H) A person who violates subdivision (a) of Section 4571 of
31the Public Resources Code in connection with the production or
32cultivation of a controlled substance is subject to a civil penalty
33of not more than eight thousand dollars ($8,000) for each violation.

34(I) A person who violates Section 4581 of the Public Resources
35Code in connection with the production or cultivation of a
36controlled substance is subject to a civil penalty of not more than
37eight thousand dollars ($8,000) for each violation.

38(J) A person who violates Section 2000 in connection with the
39production or cultivation of a controlled substance is subject to a
P47   1civil penalty of not more than eight thousand dollars ($8,000) for
2each violation.

3(K) A person who violates Section 2002 in connection with the
4production or cultivation of a controlled substance is subject to a
5civil penalty of not more than eight thousand dollars ($8,000) for
6each violation.

7(2) Each day that a violation of a code section described in this
8subdivision occurs or continues to occur shall constitute a separate
9violation.

10(c) The civil penalty imposed for each separate violation
11pursuant to this section is in addition to any other civil penalty
12imposed for another violation of this section, or any violation of
13any other law.

14(d) All civil penalties imposed or collected by a court for a
15separate violation pursuant to this section shall not be considered
16to be fines or forfeitures, as described in Section 13003, and shall
17be apportioned in the following manner:

18(1) Thirty percent shall be distributed to the county in which
19the violation was committed pursuant to Section 13003. The county
20board of supervisors shall first use any revenues from those
21penalties to reimburse the costs incurred by the district attorney
22or city attorney in investigating and prosecuting the violation.

23(2) (A) Thirty percent shall be distributed to the investigating
24agency to be used to reimburse the cost of any investigation directly
25related to the violations described in this section.

26(B) If the department receives reimbursement pursuant to this
27paragraph for activities funded pursuant to subdivision (f) of
28Section 4629.6 of the Public Resources Code, the reimbursement
29funds shall be deposited into the Timber Regulation and Forest
30Restoration Fund, created by Section 4629.3 of the Public
31Resources Code, if there is an unpaid balance for a loan authorized
32by subdivision (f) of Section 4629.6 of the Public Resources Code.

33(3) Forty percent shall be deposited into the Timber Regulation
34and Forest Restoration Fund, created by Section 4629.3 of the
35Public Resources Code, and used for grants authorized pursuant
36to Section 4629.6 of the Public Resources Code that improve forest
37health by remediating former cannabis growing operations.

38(e) Civil penalties authorized pursuant to this section may be
39imposed administratively by the department if all of the following
40occur:

P48   1(1) The chief deputy director or law enforcement division
2assistant chief in charge of cannabis-related enforcement issues a
3complaint to any person or entity on which an administrative civil
4penalty may be imposed pursuant to this section. The complaint
5shall allege the act or failure to act that constitutes a violation, any
6facts related to natural resources impacts, the provision of law
7authorizing the civil penalty to be imposed, and the proposed
8penalty amount.

9(2) The complaint and order is served by personal notice or
10certified mail and informs the party served that the party may
11request a hearing not later than 20 days from the date of service.
12If a hearing is requested, it shall be scheduled before the director
13or his or her designee, which designee shall not be the chief deputy
14or assistant chief issuing the complaint and order. A request for a
15hearing shall contain a brief statement of the material facts the
16party claims support his or her contention that no administrative
17penalty should be imposed or that an administrative penalty of a
18lesser amount is warranted. A party served with a complaint
19pursuant to this subdivision waives his or her right to a hearing if
20a hearing is not requested within 20 days of service of the
21complaint, in which case the order imposing the administrative
22penalty shall become final.

23(3) The director, or his or her designee, shall control the nature
24and order of hearing proceedings. Hearings shall be informal in
25nature, and need not be conducted according to the technical rules
26relating to evidence. The director or his or her designee shall issue
27a final order within 45 days of the close of the hearing. A copy of
28the final order shall be served by certified mail upon the party
29served with the complaint.

30(4) A party may obtain review of the final order by filing a
31petition for a writ of mandate with the superior court within 30
32days of the date of service of the final order. The administrative
33penalty shall be due and payable to the department within 60 days
34after the time to seek judicial review has expired, or, where the
35party did not request a hearing of the order, within 20 days after
36the order imposing an administrative penalty becomes final.

37(5) The department may adopt regulations to implement this
38subdivision.

39(f) All administrative penalties imposed or collected by the
40department for a separate violation pursuant to this section shall
P49   1not be considered to be fines or forfeitures, as described in Section
213003, and shall be deposited into the Timber Regulation and
3Forest Restoration Fund, created by Section 4629.3 of the Public
4Resources Code, to repay any unpaid balance of a loan authorized
5by subdivision (f) of Section 4629.6 of the Public Resources Code.
6Any remaining funds from administrative penalties collected
7pursuant to this section shall be apportioned in the following
8manner:

9(1) Fifty percent shall be deposited into the Timber Regulation
10and Forest Restoration Fund for grants authorized pursuant to
11subdivision (h) of Section 4629.6 of the Public Resources Code,
12with priority given to grants that improve forest health by
13remediating former cannabis growing operations.

14(2) Fifty percent shall be deposited into the Fish and Game
15Preservation Fund.

16(g) Any civil penalty imposed pursuant to this section for the
17violation of an offense described in paragraph (4), (5), or (6) of
18subdivision (a) or subparagraph (D), (E), or (F) of paragraph (1)
19of subdivision (b) for which the person was convicted shall be
20offset by the amount of any restitution ordered by a criminal court.

21(h) For purposes of this section, “controlled substance” has the
22same meaning as defined in Section 11007 of the Health and Safety
23Code.

24(i) This section does not apply to any activity in full compliance
25with the Medical Cannabis Regulation and Safety Act (Chapter
263.5 (commencing with Section 19300) of Division 8 of the Business
27and Professions Code).

28

SEC. 34.  

Section 12029 of the Fish and Game Code is amended
29to read:

30

12029.  

(a) The Legislature finds and declares all of the
31following:

32(1) The environmental impacts associated with cannabis
33cultivation have increased, and unlawful water diversions for
34cannabis irrigation have a detrimental effect on fish and wildlife
35and their habitat, which are held in trust by the state for the benefit
36of the people of the state.

37(2) The remediation of existing cannabis cultivation sites is
38often complex and the permitting of these sites requires greater
39department staff time and personnel expenditures. The potential
40for cannabis cultivation sites to significantly impact the state’s fish
P50   1and wildlife resources requires immediate action on the part of the
2department’s lake and streambed alteration permitting staff.

3(b) In order to address unlawful water diversions and other
4violations of the Fish and Game Code associated with cannabis
5cultivation, the department shall establish the watershed
6enforcement program to facilitate the investigation, enforcement,
7and prosecution of these offenses.

8(c) The department, in coordination with the State Water
9Resources Control Board, shall establish a permanent multiagency
10task force to address the environmental impacts of cannabis
11cultivation. The multiagency task force, to the extent feasible and
12subject to available resources, shall expand its enforcement efforts
13on a statewide level to ensure the reduction of adverse impacts of
14cannabis cultivation on fish and wildlife and their habitats
15throughout the state.

16(d) In order to facilitate the remediation and permitting of
17 cannabis cultivation sites, the department shall adopt regulations
18to enhance the fees on medical-cannabis-cultivation-related
19activities subject to Section 1602 for cannabis cultivation sites that
20require remediation. The fee schedule established pursuant to this
21subdivision shall not exceed the fee limits in Section 1609.

22

SEC. 35.  

Section 52334 of the Food and Agricultural Code is
23amended to read:

24

52334.  

(a) Notwithstanding any other law, on and after January
251, 2015, a city, county, or district, including a charter city or
26county, shall not adopt or enforce an ordinance that regulates
27plants, crops, or seeds without the consent of the secretary. An
28ordinance enacted before January 1, 2015, shall be considered part
29of the comprehensive program of the department and shall be
30enforceable.

31(b) An ordinance that regulates cannabis or marijuana as defined
32in subdivision (f) of Section 19300.5 of the Business and
33Professions Code, or medical cannabis or medical marijuana, as
34 defined in subdivision (ag) of Section 19300.5 of the Business and
35Professions Code, shall not require the consent of the secretary.

36

SEC. 36.  

Section 11352 of the Health and Safety Code is
37amended to read:

38

11352.  

(a) Except as otherwise provided in this division, every
39person who transports, imports into this state, sells, furnishes,
40administers, or gives away, or offers to transport, import into this
P51   1state, sell, furnish, administer, or give away, or attempts to import
2into this state or transport (1) any controlled substance specified
3in subdivision (b), (c), or (e), or paragraph (1) of subdivision (f)
4of Section 11054, specified in paragraph (14), (15), or (20) of
5subdivision (d) of Section 11054, or specified in subdivision (b)
6or (c) of Section 11055, or specified in subdivision (h) of Section
711056, or (2) any controlled substance classified in Schedule III,
8IV, or V which is a narcotic drug, unless upon the written
9prescription of a physician, dentist, podiatrist, or veterinarian
10licensed to practice in this state, shall be punished by imprisonment
11pursuant to subdivision (h) of Section 1170 of the Penal Code for
12three, four, or five years.

13(b) Notwithstanding the penalty provisions of subdivision (a),
14any person who transports a controlled substances specified in
15subdivision (a) within this state from one county to another
16noncontiguous county shall be punished by imprisonment pursuant
17to subdivision (h) of Section 1170 of the Penal Code for three, six,
18or nine years.

19(c) For purposes of this section, “transports” means to transport
20for sale.

21(d) This section does not preclude or limit the prosecution of
22an individual for aiding and abetting the commission of, or
23conspiring to commit, or acting as an accessory to, any act
24prohibited by this section.

25(e) This section does not apply to commercial cannabis activity
26engaged in by a person or entity licensed pursuant to the Medical
27Cannabis Regulation and Safety Act (Chapter 3.5 (commencing
28with Section 19300) of Division 8 of the Business and Professions
29Code) and who is in full compliance with that act and all applicable
30local ordinances.

31

SEC. 37.  

Section 11362.765 of the Health and Safety Code is
32amended to read:

33

11362.765.  

(a) Subject to the requirements of this article, the
34individuals specified in subdivision (b) shall not be subject, on
35that sole basis, to criminal liability under Section 11357, 11358,
3611359, 11360, 11366, 11366.5, or 11570. However, nothing in
37this section shall authorize the individual to smoke or otherwise
38consume cannabis unless otherwise authorized by this article, nor
39shall anything in this section authorize any individual or group to
40cultivate or distribute cannabis in any manner other than as set
P52   1forth in this article, the Medical Cannabis Regulation and Safety
2Act (Chapter 3.5 (commencing with Section 19300) of Division
38 of the Business and Professions Code), or as described in the
4 Compassionate Use Act of 1996.

5(b) Subdivision (a) shall apply to all of the following:

6(1) A qualified patient or a person with an identification card
7who transports or processes cannabis for his or her own personal
8medical use.

9(2) A designated primary caregiver who transports, processes,
10administers, delivers, or gives away cannabis for medical purposes,
11in amounts not exceeding those established in subdivision (a) of
12Section 11362.77, only to the qualified patient of the primary
13caregiver, or to the person with an identification card who has
14designated the individual as a primary caregiver.

15(3) An individual who provides assistance to a qualified patient
16 or a person with an identification card, or his or her designated
17primary caregiver, in administering medical cannabis to the
18qualified patient or person or acquiring the skills necessary to
19cultivate or administer cannabis for medical purposes to the
20qualified patient or person.

21(c) A primary caregiver who receives compensation for actual
22expenses, including reasonable compensation incurred for services
23provided to an eligible qualified patient or person with an
24identification card to enable that person to use cannabis under this
25article, or for payment for out-of-pocket expenses incurred in
26providing those services, or both, shall not, on the sole basis of
27that fact, be subject to prosecution or punishment under Section
2811359 or 11360.

29

SEC. 38.  

Section 11362.775 of the Health and Safety Code is
30amended to read:

31

11362.775.  

(a) Subject to subdivision (b), qualified patients,
32persons with valid identification cards, and the designated primary
33caregivers of qualified patients and persons with identification
34cards, who associate within the State of California in order
35collectively or cooperatively to cultivate cannabis for medical
36purposes, shall not solely on the basis of that fact be subject to
37state criminal sanctions under Section 11357, 11358, 11359, 11360,
3811366, 11366.5, or 11570. A collective or cooperative that operates
39pursuant to this section may operate for profit, not for profit, or
40any combination thereof.begin insert A collective or cooperative that operates
P53   1for profit shall only retain the protections of this section if it
2possesses a valid, Board of Equalization-issued sellers permit and
3a valid local license, permit, or other authorization.end insert

4(b) (1) It is unlawful to display an advertisement for qualified
5patients, persons with valid identification cards, and the designated
6primary caregivers of qualified patients and persons with
7identification cards, who associate within the state in order
8collectively or cooperatively to cultivate cannabis for medical
9purposes, without first verifying a valid Board of Equalization
10issued seller’s permit.

11(2) A violation of this subdivision is an infraction, punishable
12by a fine of five hundred dollars ($500).

13(3) For purposes of this section, “advertisement” means a notice,
14begin delete announcementend deletebegin insert announcement,end insert or information in a public medium,
15including but not limited to, television, Internet Web site,begin delete billboardend delete
16begin insert billboard,end insert or printed publication,begin delete whichend deletebegin insert thatend insert promotes a location
17where medical cannabis is sold or dispensed orbegin insert aend insert service that is
18 involved in the delivery of medical cannabis.

19(c) This section shall remain in effect only until one year after
20the Bureau of Medical Cannabis Regulation posts a notice on its
21Internet Web site that the licensing authorities have commenced
22issuing licenses pursuant to the Medical Cannabis Regulation and
23Safety Act (Chapter 3.5 (commencing with Section 19300) of
24Division 8 of the Business and Professions Code), and is repealed
25upon that date.

26

SEC. 39.  

Section 11362.777 of the Health and Safety Code is
27amended to read:

28

11362.777.  

(a) The Department of Food and Agriculture shall
29establish a Medical Cannabis Cultivation Program to be
30administered by the secretary and, except as specified in
31subdivision (c), shall administer this section as it pertains to the
32cultivation of medical cannabis. For purposes of this section and
33Chapter 3.5 (commencing with Section 19300) of Division 8 of
34the Business and Professions Code, medical cannabis is an
35agricultural product.

36(b) (1) A person or entity shall not cultivate medical cannabis
37without first obtaining both of the following:

38(A) A license, permit, or other entitlement, specifically
39permitting cultivation pursuant to these provisions, from the city,
40county, or city and county in which the cultivation will occur.

P54   1(B) A state license issued by the department pursuant to this
2section.

3(2) A person or entity shall not submit an application for a state
4license pursuant to this section unless that person or entity has
5received a license, permit, or other entitlement, specifically
6permitting cultivation pursuant to these provisions, from the city,
7county, or city and county in which the cultivation will occur.

8(3) A person or entity shall not submit an application for a state
9license pursuant to this section if the proposed cultivation of
10cannabis will violate the provisions of a local ordinance or
11regulation, or if medical cannabis is prohibited by the city, county,
12or city and county in which the cultivation is proposed to occur,
13either expressly or otherwise under principles of permissive zoning.

14(c) (1) Except as otherwise specified in this subdivision, and
15without limiting any other local regulation, a city, county, or city
16and county, through its current or future land use regulations or
17ordinance, may issue or deny a permit to cultivate medical cannabis
18pursuant to this section. A city, county, or city and county may
19inspect the intended cultivation site for suitability before issuing
20a permit. After the city, county, or city and county has approved
21a permit, the applicant shall apply for a state medical cannabis
22cultivation license from the department. A locally issued cultivation
23permit shall only become active upon licensing by the department
24and receiving final local approval. A person shall not cultivate
25medical cannabis before obtaining both a license or permit from
26the city, county, or city and county and a state medical cannabis
27cultivation license from the department.

28(2) A city, county, or city and county that issues or denies
29conditional licenses to cultivate medical cannabis pursuant to this
30section shall notify the department in a manner prescribed by the
31secretary.

32(3) A city, county, or city and county’s locally issued conditional
33permit requirements must be at least as stringent as the
34department’s state licensing requirements.

35(d) (1) The secretary may prescribe, adopt, and enforce
36regulations relating to the implementation, administration, and
37enforcement of this section, including, but not limited to, applicant
38requirements, collections, reporting, refunds, and appeals.

39(2) The secretary may prescribe, adopt, and enforce any
40emergency regulations as necessary to implement this section. An
P55   1emergency regulation prescribed, adopted, or enforced pursuant
2to this section shall be adopted in accordance with Chapter 3.5
3(commencing with Section 11340) of Part 1 of Division 3 of Title
42 of the Government Code, and, for purposes of that chapter,
5including Section 11349.6 of the Government Code, the adoption
6of the regulation is an emergency and shall be considered by the
7Office of Administrative Law as necessary for the immediate
8preservation of the public peace, health and safety, and general
9welfare.

10(3) The secretary may enter into a cooperative agreement with
11a county agricultural commissioner to carry out the provisions of
12this section, including, but not limited to, administration,
13investigations, inspections, licensing and assistance pertaining to
14the cultivation of medical cannabis. Compensation under the
15cooperative agreement shall be paid from assessments and fees
16collected and deposited pursuant to this section and shall provide
17reimbursement to the county agricultural commissioner for
18associated costs.

19(e) (1) The department, in consultation with, but not limited
20to, the Bureau of Medical Cannabis Regulation, the State Water
21Resources Control Board, and the Department of Fish and Wildlife,
22shall implement a unique identification program for medical
23cannabis. In implementing the program, the department shall
24consider issues, including, but not limited to, water use and
25environmental impacts. In implementing the program, the
26department shall ensure that:

27(A) Individual and cumulative effects of water diversion and
28discharge associated with cultivation do not affect the instream
29flows needed for fish spawning, migration, and rearing, and the
30flows needed to maintain natural flow variability.

31(B) Cultivation will not negatively impact springs, riparian
32wetlands, and aquatic habitats.

33(2) The department shall establish a program for the
34identification of permitted medical cannabis plants at a cultivation
35site during the cultivation period. The unique identifier shall be
36attached at the base of each plant. A unique identifier, such as, but
37not limited to, a zip tie, shall be issued for each medical cannabis
38plant.

39(A) Unique identifiers shall only be issued to those persons
40appropriately licensed by this section.

P56   1(B) Information associated with the assigned unique identifier
2and licensee shall be included in the trace and track program
3specified in Section 19335 of the Business and Professions Code.

4(C) The department may charge a fee to cover the reasonable
5costs of issuing the unique identifier and monitoring, tracking, and
6inspecting each medical cannabis plant.

7(3) The department shall take adequate steps to establish
8protections against fraudulent unique identifiers and limit illegal
9diversion of unique identifiers to unlicensed persons.

10(f) (1) A city, county, or city and county that issues or denies
11licenses, permits, or other entitlements to cultivate medical
12 cannabis pursuant to this section shall notify the department in a
13manner prescribed by the secretary.

14(2) Unique identifiers and associated identifying information
15administered by a city, county, or city and county shall adhere to
16the requirements set by the department and be the equivalent to
17those administered by the department.

18(g) This section does not apply to a qualified patient cultivating
19cannabis pursuant to Section 11362.5 if the area he or she uses to
20cultivate cannabis does not exceed 100 square feet and he or she
21cultivates cannabis for his or her personal medical use and does
22not sell, distribute, donate, or provide cannabis to any other person
23or entity. This section does not apply to a primary caregiver
24cultivating cannabis pursuant to Section 11362.5 if the area he or
25she uses to cultivate cannabis does not exceed 500 square feet and
26he or she cultivates cannabis exclusively for the personal medical
27use of no more than five specified qualified patients for whom he
28or she is the primary caregiver within the meaning of Section
2911362.7 and does not receive remuneration for these activities,
30except for compensation provided in full compliance with
31subdivision (c) of Section 11362.765. For purposes of this section,
32the area used to cultivate cannabis shall be measured by the
33aggregate area of vegetative growth of live cannabis plants on the
34premises. Exemption from the requirements of this section does
35not limit or prevent a city, county, or city and county from
36exercising its police authority under Section 7 of Article XI of the
37California Constitution.

38

SEC. 40.  

Section 11379 of the Health and Safety Code is
39amended to read:

P57   1

11379.  

(a) Except as otherwise provided in subdivision (b)
2and in Article 7 (commencing with Section 4110) of Chapter 9 of
3Division 2 of the Business and Professions Code, every person
4who transports, imports into this state, sells, furnishes, administers,
5or gives away, or offers to transport, import into this state, sell,
6furnish, administer, or give away, or attempts to import into this
7state or transport any controlled substance which is (1) classified
8in Schedule III, IV, or V and which is not a narcotic drug, except
9subdivision (g) of Section 11056, (2) specified in subdivision (d)
10of Section 11054, except paragraphs (13), (14), (15), (20), (21),
11(22), and (23) of subdivision (d), (3) specified in paragraph (11)
12of subdivision (c) of Section 11056, (4) specified in paragraph (2)
13or (3) of subdivision (f) of Section 11054, or (5) specified in
14subdivision (d) or (e), except paragraph (3) of subdivision (e), or
15specified in subparagraph (A) of paragraph (1) of subdivision (f),
16of Section 11055, unless upon the prescription of a physician,
17dentist, podiatrist, or veterinarian, licensed to practice in this state,
18shall be punished by imprisonment pursuant to subdivision (h) of
19Section 1170 of the Penal Code for a period of two, three, or four
20years.

21(b) Notwithstanding the penalty provisions of subdivision (a),
22any person who transports any controlled substances specified in
23subdivision (a) within this state from one county to another
24noncontiguous county shall be punished by imprisonment pursuant
25to subdivision (h) of Section 1170 of the Penal Code for three, six,
26or nine years.

27(c) For purposes of this section, “transports” means to transport
28for sale.

29(d) Nothing in this section is intended to preclude or limit
30prosecution under an aiding and abetting theory, accessory theory,
31or a conspiracy theory.

32(e) This section does not apply to commercial cannabis activity
33engaged in by a person or entity licensed pursuant to the Medical
34Cannabis Regulation and Safety Act (Chapter 3.5 (commencing
35with Section 19300) of Division 8 of the Business and Professions
36Code) and who is in full compliance with that act and all applicable
37local ordinances.

38

SEC. 41.  

No reimbursement is required by this act pursuant to
39Section 6 of Article XIII B of the California Constitution because
40the only costs that may be incurred by a local agency or school
P58   1district will be incurred because this act creates a new crime or
2infraction, eliminates a crime or infraction, or changes the penalty
3for a crime or infraction, within the meaning of Section 17556 of
4the Government Code, or changes the definition of a crime within
5the meaning of Section 6 of Article XIII B of the California
6Constitution.



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