Amended in Senate June 13, 2016

Amended in Assembly April 25, 2016

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 Bill No. 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, begin insert 19345, end insert 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 begin delete 11352, end delete 11362.765, 11362.775, begin delete 11362.777, and 11379 end delete begin insert and 11362.777, end insert 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 medical marijuana by the Bureau of Medical Marijuana Regulation. 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 Safety 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. The bill would also require the Board of Equalization, in conjunction with the Department of Business Oversight, to form an advisory group made up of representatives from financial institutions, nonbank financial service providers, 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, in conjunction with the department, by July 1, 2017, to submit a report to the Legislature with recommendations that will improve financial monitoring of medical cannabis businesses. 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. begin insert The act, with certain exceptions, provides a city full power and authority to enforce the provisions of the act end insert begin insert for facilities issued a state license that are located within the incorporated area of a city, if delegated by the state. end insert

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. begin insert The bill would authorize a city to contract in writing with the county in which it is located to arrange for the county to fulfill any regulatory functions relating to licensees within the city limits if the county agrees to assume such responsibility end insert begin insert . end insert

(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 begin delete plants, end delete begin insert plants to a licensed facility, end insert 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.

begin insert

(7) The act prohibits a licensed testing laboratory from acquiring or receiving medical cannabis products except from a licensed facility and prohibits a licensed testing laboratory from distributing, delivering, transferring, transporting, or dispensing medical cannabis or medical cannabis products, as specified.

end insert begin insert

This bill would instead prohibit a licensed testing laboratory from transferring or transporting medical cannabis or medical cannabis products except to the licensed facility from which the medical cannabis or medical cannabis products were acquired or received.

end insert begin delete

(7)

end delete

begin insert (8) end insert  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.

begin delete

(8)

end delete

begin insert (9) end insert  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.

begin delete

(9)

end delete

begin insert (10) end insert  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.

begin delete

(10)

end delete

begin insert (11) end insert  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.

begin delete

(11)

end delete

begin insert (1 end insert begin insert 2) end insert  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.

begin delete

(12)

end delete

begin insert (13) end insert  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 combination thereof, but would provide the protections of the exception to for-profit collectives and cooperatives only if they have a valid Board of Equalization seller’s permit and a valid local license, permit, or other authorization. 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. begin insert The bill would additionally provide that a collective or cooperative that cultivates cannabis and manufactures medical cannabis products is not, solely on that basis, subject to certain criminal penalties if specified requirements are met, including that the collective or cooperative is in possession of a valid sellers permit issued by the State Board of Equalization. end insert

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.

begin delete

(13)

end delete

begin insert (14) end insert  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.

begin delete

(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.

end delete begin delete

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.

end delete

(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:

SECTION 1.  

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

 

Chapter  3.5. Medical Cannabis Regulation and Safety
Act

 

SEC. 2.  

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

19300.  

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

SEC. 3.  

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

19300.5.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(k) “Commercial cannabis activity” or “commercial marijuana
activity” includes cultivation, possession, manufacture, processing,
storing, laboratory testing, labeling, transporting, distribution,
begin insert provision, donation, end insert or sale of medical cannabis or a medical
cannabis product, begin insert regardless of whether the activity is undertaken
on a for- end insert begin insert profit or nonprofit basis, or any combination thereof, and
regardless of whether the activity is for compensation or is
gratuitous, end insert except as set forth in Section 19319, related to
qualifying patients and primary caregivers.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(af) “Medical cannabis,” “medical cannabis product,” “cannabis
product,” “medical marijuana,” “medical marijuana product,” or
“marijuana product” means a product containing cannabis,
including, but not limited to, concentrates and extractions, intended
to be sold for use by medical cannabis patients in California
pursuant to the Compassionate Use Act of 1996 (Proposition 215),
found at Section 11362.5 of the Health and Safety Code. For the
purposes of this chapter, “medical cannabis” or “medical
marijuana” does not include “industrial hemp” as defined by
Section 81000 of the Food and Agricultural Code or Section
11018.5 of the Health and Safety Code.

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

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

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

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

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

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

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

(2)  begin delete Registered with the State Department of Public Health. end delete

begin insert Licensed pursuant to this chapter. end insert

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

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

SEC. 4.  

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

19302.  

(a) There is in the Department of Consumer Affairs
the Bureau of Medical Cannabis Regulation, under the supervision
and control of the director. The director shall administer and
enforce the provisions of this chapter.

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

SEC. 5.  

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

19302.1.  

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

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

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

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

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

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

SEC. 6.  

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

19306.  

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

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

SEC. 7.  

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

19310.  

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

SEC. 8.  

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

19310.5.  

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

(b) (1) The State Board of Equalization, in conjunction with
the Department of Business Oversight, shall form an advisory
group made up of representatives from financial institutions,
nonbank financial service providers, the medical cannabis industry,
law enforcement, and federal banking regulators. By July 1, 2017,
the board, in conjunction with the department, shall submit a report
to the Legislature with recommendations from the advisory group
that will improve financial monitoring of medical cannabis
businesses.

(2) A report submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government
Code. The requirement for submitting a report imposed in
paragraph (1) is inoperative on July 1, 2021, pursuant to Section
10231.5 of the Government Code.

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

SEC. 9.  

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

19316.  

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

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

begin insert Health, in accordance with Section 19347. end insert

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

(b) For facilities issued a state license that are located within
the incorporated area of a city, the city shall have full power and
authority to enforce this chapter and the regulations promulgated
by the bureau or any licensing authority, if delegated by the state.
Notwithstanding Sections 101375, 101400, and 101405 of the
Health and Safety Code or any contract entered into pursuant
thereto, or any other law, the city shall further assume complete
responsibility for any regulatory function relating to those licensees
within the city limits that would otherwise be performed by the
county or any county officer or employee, including a county
health officer, without liability, cost, or expense to the county. begin insert end insert begin insert A
city may contract in writing with the county in which it is located
to arrange for the county to fulfill any regulatory functions relating
to those licensees within the city limits end insert begin insert if the county has agreed to
assume such responsibility. end insert

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

SEC. 10.  

Section 19318 of the Business and Professions Code
is repealed.

SEC. 11.  

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

19319.5.  

(a) It is not a violation of this chapter or any other
state law, for a business or research institution engaged 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 legally obtain from a
licensee who is permitted to provide or deliver medical cannabis
pursuant to subdivisions (n) and (o) of Section 19300.7, small
amounts of medical cannabis or medical cannabis products, not to
exceed eight ounces per month, as necessary to conduct research
and development related to medical cannabis or medical cannabis
products in a city, county, or city and county that expressly
authorizes that activity by local ordinance. A business or research
institution engaged in the research of medical cannabis shall obtain
written authorization from its local jurisdiction that the business
or institution 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.

(b) It is not a violation of this chapter or any other state law for
a licensee, pursuant to subdivisions (n) and (o) of Section 19300.7,
to sell medical cannabis or medical cannabis products in an amount
not to exceed eight 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 the business’s
or institution’s jurisdiction and a copy of the local ordinance. The
licensee shall keep on file that written authorization for at least
three years and make it available upon request to local authorities
for auditing purposes.

SEC. 12.  

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

19320.  

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

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

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

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

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

SEC. 13.  

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

19320.  

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

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

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

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

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

SEC. 14.  

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

19321.  

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

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

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

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

SEC. 15.  

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

19322.  

(a) A person or entity shall not submit an application
for a state license pursuant to this chapter unless that person or
entity first receives a license, permit, or authorization begin insert specific to
commercial cannabis activity end insert from a local jurisdiction. An
applicant for any type of state license issued pursuant to this
chapter shall do all of the following:

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

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

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

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

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

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

(4) If the application is for a cultivator or dispensary license,
provide evidence that the proposed location is located beyond at
least a 600-foot radius from a school, as required by Section
11362.768 of the Health and Safety Code.

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

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

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

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

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

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

(9) For an applicant seeking a cultivation license, provide a
statement declaring the applicant is an “agricultural employer,” as
defined in the Alatorre-Zenovich-Dunlap-Berman Agricultural
Labor Relations Act of 1975 (Part 3.5 (commencing with Section
1140) of Division 2 of the Labor Code), to the extent not prohibited
by law.

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

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

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

(1) Cultivation.

(2) Extraction and infusion methods.

(3) The transportation process.

(4) Inventory procedures.

(5) Quality control procedures.

SEC. 16.  

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

19322.5.  

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

SEC. 17.  

The heading of Article 5 (commencing with Section
19326) of Chapter 3.5 of Division 8 of the Business and Professions
Code is amended to read:

 

Article 5.  Medical Cannabis Regulation

 

SEC. 18.  

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

19326.  

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 19.  

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

19328.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 20.  

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

19328.  

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 21.  

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

19332.  

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

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

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

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

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

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

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

(3) Establish procedures for the issuance and revocation of
unique identifiers for activities associated with a medical cannabis
cultivation license, pursuant to Article 8 (commencing with Section
19337). All medical cannabis shall be labeled with the unique
identifier issued by the Department of Food and Agriculture.

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

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 22.  

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

19332.  

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

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

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

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

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

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

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

(3) Establish procedures for the issuance and revocation of
unique identifiers for activities associated with a medical cannabis
cultivation license, pursuant to Article 8 (commencing with Section
19337). All medical cannabis shall be labeled with the unique
identifier issued by the Department of Food and Agriculture.

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

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 23.  

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

19332.5.  

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

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

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

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

SEC. 24.  

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

19334.  

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

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

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

(i) “Storefront dispensary” for licensees who have a begin insert brick and
mortar end insert dispensary with direct physical access for the public.

(ii) “Nonstorefront dispensary” for licensees who have a begin insert brick
and mortar end insert dispensary that does not have a storefront with direct
physical access for the public.

begin delete

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

end delete

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

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

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

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

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

(2) Advertising, marketing, signage, and other labeling
requirements and restrictions, including a prohibition on
advertising, marketing, and other promotion of the medical
cannabis or medical cannabis products provided by a person
begin insert engaging in commercial cannabis activity but end insert not in full
compliance with this chapter.

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

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

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

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

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

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

(4) 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.

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

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

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

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

(4) Any other breach of security.

SEC. 25.  

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

19335.  

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

(1) The licensee receiving the product.

(2) The transaction date.

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

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

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

(B) The estimated times of departure and arrival.

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

(D) The actual time of departure and arrival.

(E) A categorization of the product.

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

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

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

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

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

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

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

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

SEC. 26.  

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

19340.  

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

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

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

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

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

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

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

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

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

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

(2) Protocols to provide qualified patients and primary caregivers
with information regarding laws, regulations, and begin delete policies end delete begin insert local
ordinances end insert relevant to providing medical cannabis or medical
cannabis products to qualified patients and primary caregivers in
the local jurisdiction in which the dispensary is located and the

begin delete area in which the medical cannabis or medical cannabis products
are being delivered. end delete begin insert local jurisdiction in which the qualified
patients and primary caregivers are located. end insert

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

(4) The operating hours for delivery.

(5) A requirement that begin delete each dispensary employee end delete begin insert any person end insert
who delivers medical cannabis or medical cannabis products begin insert be
employed by or end insert contract with only one dispensary at begin insert a end insert time.

(6) Minimum requirements for patient information that is stored
by each delivery operation, including, but not limited to, the contact
information for the patient and, if applicable, his or her primary
caregiver, the physician’s recommendation, and the identification
card issued pursuant to Article 2.5 (commencing with Section
11362.7) of Chapter 6 of Division 10 of the Health and Safety
Code. All identifying information obtained about a qualified patient
or primary caregiver shall be obtained and stored in compliance
with the Confidentiality of Medical Information Act (Part 2.6
(commencing with Section 56) of Division 1 of the Civil Code)
and all other privacy laws and regulations.

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

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

(2) Provide the bureau with a current address.

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

(4) Registration with the bureau.

SEC. 27.  

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

19342.  

(a) For the purposes of testing medical cannabis or
medical cannabis products, licensees shall use a licensed testing
laboratory that has adopted a standard operating procedure using
methods consistent with general requirements for the competence
of testing and calibration activities, including sampling, using
standard methods established by the International Organization
for Standardization, specifically ISO/IEC 17020 and ISO/IEC
17025 to test medical cannabis and medical cannabis products that
are approved by an accrediting body that is a signatory to the
International Laboratory Accreditation Cooperation Mutual
Recognition Arrangement.

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

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

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

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

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

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

SEC. 28.  

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

19344.  

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

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

(A) Tetrahydrocannabinol (THC).

(B) Tetrahydrocannabinolic Acid (THCA).

(C) Cannabidiol (CBD).

(D) Cannabidiolic Acid (CBDA).

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

(F) Cannabigerol (CBG).

(G) Cannabinol (CBN).

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

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

(A) Residual solvent or processing chemicals.

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

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

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

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

begin insert

begin insert SEC. 29. end insert   

end insert

begin insert Section 19345 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19345.  

(a) Except as provided in this chapter, a licensed testing
laboratory shall not acquire or receive medical cannabis or medical
cannabis products except from a licensed facility in accordance
with this chapter, and shall not begin delete distribute, sell, deliver, transfer,
transport, or dispense end delete begin insert transfer or transport end insert medical cannabis or
medical cannabis products, begin insert except to the licensed facility end insert from
which the medical cannabis or medical cannabis products were
acquired or received. All transfer or transportation shall be
performed pursuant to a specified chain of custody protocol.

(b) A licensed testing laboratory may receive and test samples
of medical cannabis or medical cannabis products from a qualified
patient or primary caregiver only if he or she presents his or her
valid recommendation for cannabis for medical purposes from a
physician. A licensed testing laboratory shall not certify samples
from a qualified patient or caregiver for resale or transfer to another
party or licensee. All tests performed by a licensed testing
laboratory for a qualified patient or caregiver shall be recorded
with the name of the qualified patient or caregiver and the amount
of medical cannabis or medical cannabis product received.

(c) The State Department of Public Health shall develop
procedures to ensure that testing of cannabis occurs prior to
begin delete delivery end delete begin insert transport end insert to dispensaries or any other business, specify
how often licensees shall test cannabis and that the cost of testing
shall be borne by the licensed cultivators, and require destruction
of harvested batches whose testing samples indicate noncompliance
with health and safety standards promulgated by the State
Department of Public Health, unless remedial measures can bring
the cannabis into compliance with quality assurance standards as
promulgated by the State Department of Public Health.

(d) The State Department of Public Health shall establish a
licensing fee, and laboratories shall pay a fee to be licensed.
Licensing fees shall not exceed the reasonable regulatory cost of
the licensing activities.

begin delete SEC. 29. end delete

begin insert SEC. 30. end insert   

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

19347.  

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

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

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

(A) Manufacture date and source.

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

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

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

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

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

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

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

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

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

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

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

(M) Information associated with the unique identifier issued by
the Department of Food and Agriculture pursuant to Section
11362.777 of the Health and Safety Code.

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

begin delete SEC. 30. end delete

begin insert SEC. 31. end insert   

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

19350.  

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

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

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

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

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

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

begin delete SEC. 31. end delete

begin insert SEC. 32. end insert   

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

19351.  

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

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

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

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

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

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

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

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

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

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

begin delete SEC. 32. end delete

begin insert SEC. 33. end insert   

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

19360.  

(a) A person engaging in commercial cannabis activity
without a license and associated unique identifiers required by this
chapter shall be subject to civil penalties of up to twice the amount
of the license fee for each violation, and the licensing authority,
state or local authority, or court may order the destruction of
medical cannabis associated with that violation. Each day of
operation shall constitute a separate violation of this section. All
civil penalties imposed and collected pursuant to this section shall
be deposited into the Medical Cannabis Fines and Penalties
Account, established pursuant to Section begin delete 19351. end delete begin insert 19351, except as
provided in subdivision (b). end insert

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

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

begin delete SEC. 33. end delete

begin insert SEC. 34. end insert   

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

12025.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(f) All administrative penalties imposed or collected by the
department for a separate violation pursuant to this section shall
not be considered to be fines or forfeitures, as described in Section
13003, and shall be deposited into the Timber Regulation and
Forest Restoration Fund, created by Section 4629.3 of the Public
Resources Code, to repay any unpaid balance of a loan authorized
by subdivision (f) of Section 4629.6 of the Public Resources Code.
Any remaining funds from administrative penalties collected
pursuant to this section shall be apportioned in the following
manner:

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

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

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

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

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

begin delete SEC. 34. end delete

begin insert SEC. 35. end insert   

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

12029.  

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

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

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

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

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

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

begin delete SEC. 35. end delete

begin insert SEC. 36. end insert   

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

52334.  

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

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

begin delete

SEC. 36.  

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

11352.  

(a) Except as otherwise provided in this division, every
person who transports, imports into this state, sells, furnishes,
administers, or gives away, or offers to transport, import into this
state, sell, furnish, administer, or give away, or attempts to import
into this state or transport (1) any controlled substance specified
in subdivision (b), (c), or (e), or paragraph (1) of subdivision (f)
of Section 11054, specified in paragraph (14), (15), or (20) of
subdivision (d) of Section 11054, or specified in subdivision (b)
or (c) of Section 11055, or specified in subdivision (h) of Section
11056, or (2) any controlled substance classified in Schedule III,
IV, or V which is a narcotic drug, unless upon the written
prescription of a physician, dentist, podiatrist, or veterinarian
licensed to practice in this state, shall be punished by imprisonment
pursuant to subdivision (h) of Section 1170 of the Penal Code for
three, four, or five years.

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

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

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

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

end delete

SEC. 37.  

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

11362.765.  

(a) Subject to the requirements of this article, the
individuals specified in subdivision (b) shall not be subject, on
that sole basis, to criminal liability under Section 11357, 11358,
11359, 11360, 11366, 11366.5, or 11570. However, nothing in
this section shall authorize the individual to smoke or otherwise
consume cannabis unless otherwise authorized by this article, nor
shall anything in this section authorize any individual or group to
cultivate or distribute cannabis in any manner other than as set
forth in this article, the Medical Cannabis Regulation and Safety
Act (Chapter 3.5 (commencing with Section 19300) of Division
8 of the Business and Professions Code), or as described in the
Compassionate Use Act of 1996.

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

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

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

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

(c) A primary caregiver who receives compensation for actual
expenses, including reasonable compensation incurred for services
provided to an eligible qualified patient or person with an
identification card to enable that person to use cannabis under this
article, or for payment for out-of-pocket expenses incurred in
providing those services, or both, shall not, on the sole basis of
that fact, be subject to prosecution or punishment under Section
11359 or 11360.

SEC. 38.  

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

11362.775.  

(a) Subject to subdivision begin delete (b), end delete begin insert (d), end insert 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 of California
in order collectively or cooperatively to cultivate cannabis for
medical purposes, shall not solely on the basis of that fact be
subject to state criminal sanctions under Section 11357, 11358,
11359, 11360, 11366, 11366.5, or 11570. A collective or
cooperative that operates pursuant to this section may operate for
profit, not for profit, or any combination thereof. A collective or
cooperative that operates for profit shall only retain the protections
of this section if it possesses a valid, Board of Equalization-issued
sellers permit and a valid local license, permit, or other
authorization.

(b) (1) It is unlawful begin delete to display an advertisement end delete 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, begin delete without first verifying a end delete begin insert to submit for placement an
advertisement that end insert begin insert fails to include in the text of the advertisement
the collective or cooperative’s end insert valid begin insert State end insert Board of Equalization
issued seller’s begin delete permit. end delete begin insert permit number. end insert

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

(3) For purposes of this section, “advertisement” means a notice,
announcement, or information in a public medium, including but
not limited to, television, Internet Web site, billboard, or printed
publication, that promotes a location where medical cannabis is
sold or dispensed or a service that is involved in the delivery of
medical cannabis.

begin insert

(c) A collective or cooperative that operates pursuant to this
section and manufactures medical cannabis products shall not,
solely on the basis of that fact, be subject to state criminal
sanctions under Section 11379.6 if the collective or cooperative
abides by all of the following requirements:

end insert begin insert

(1) Utilizes only nonvolatile solvents, as provided in the Medical
Cannabis Regulation and Safety Act (Chapter 3.5 (commencing
with Section 19300) of Division 8 of the Business and Professions
Code) or any regulations adopted pursuant to that act.

end insert begin insert

(2) Is in possession of a valid sellers permit issued by the State
Board of Equalization.

end insert begin insert

(3) Is in possession of a valid local license, permit, or other
authorization specific to the manufacturing of medical cannabis
products.

end insert begin insert

(4) For purposes of this subdivision, “manufacturing” includes
compounding, converting, producing, deriving, processing, or
preparing, either directly or indirectly by chemical extraction or
independently by means of chemical synthesis, medical cannabis
products.

end insert begin delete

(c)

end delete

begin insert ( end insert begin insert d) end insert  This section shall remain in effect only until one year 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 Medical Cannabis Regulation and
Safety Act (Chapter 3.5 (commencing with Section 19300) of
Division 8 of the Business and Professions Code), and is repealed
upon that date.

SEC. 39.  

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

11362.777.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(g) This section does not apply to a qualified patient cultivating
cannabis pursuant to Section 11362.5 if the area he or she uses to
cultivate cannabis does not exceed 100 square feet and he or she
cultivates cannabis for his or her personal medical use and does
not sell, distribute, donate, or provide cannabis to any other person
or entity. This section does not apply to a primary caregiver
cultivating cannabis pursuant to Section 11362.5 if the area he or
she uses to cultivate cannabis does not exceed 500 square feet and
he or she cultivates cannabis exclusively for the personal medical
use of no more than five specified qualified patients for whom he
or she is the primary caregiver within the meaning of Section
11362.7 and does not receive remuneration for these activities,
except for compensation provided in full compliance with
subdivision (c) of Section 11362.765. For purposes of this section,
the area used to cultivate cannabis shall be measured by the
aggregate area of vegetative growth of live cannabis plants on the
premises. Exemption from the requirements of this section does
not limit or prevent a city, county, or city and county from
exercising its police authority under Section 7 of Article XI of the
California Constitution.

begin delete

SEC. 40.  

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

11379.  

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

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

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

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

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

end delete

begin delete SEC. 41. end delete

begin insert SEC. 40. end insert   

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