BILL ANALYSIS Ó AB 1575 Page 1 Date of Hearing: April 12, 2016 ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS Rudy Salas, Chair AB 1575 (Bonta) - As Amended April 4, 2016 NOTE: This bill is doubled-referred, and if passed by this Committee, it will be referred to the Banking and Finance Committee. SUBJECT: Medical cannabis. SUMMARY: Makes a number of changes to the Medical Marijuana Regulation and Safety Act (Act) including: exempting a cultivator from sending medical cannabis to a distributor for inspection if it is to be used, sold or provided to another manufacture for further manufacturing; requires the Bureau of Medical Cannabis Regulation (Bureau) to specify the manner in which medical cannabis meant for wholesale purposes is required to be packaged and sealed prior to transport, testing, quality assurance, quality control testing, or distribution; specifies that licensees with a nursery license may transport live immature plants; requires dispensaries to require all medical cannabis used for specified purposes to be stored out of reach of any individual who is not employed by the dispensary; requires the Bureau to establish regulations regarding delivery of medical cannabis by a dispensary; specifies that fees established by a licensing entity shall not limit any fees of taxes imposed by a local municipality; requires a licensed testing laboratory to analyze samples in the final form of AB 1575 Page 2 consumption using a valid methodology; specifies that it is not a violation of state law or local ordinance or regulation for a business or research institution with state authorization to engage in the research of medical cannabis used for the medical purposes; specifies that it is not a violation of state law for certain licensees to sell medical cannabis under eight ounces; provides that activities that are in full compliance with the Medical Cannabis Regulation and Safety Act (Act) are not subject to civil penalties as specified; provides that an ordinance that regulates cannabis or medical cannabis shall not require the consent of the Secretary of the California Department of Food and Agriculture (CDFA); specifies that a collective or cooperative may operate on a for-profit basis or not-for-profit basis; declares that it is unlawful to display an advertisement for qualified patients or caregivers without first verifying a valid Board of Equalization (BOE) seller's permit; specifies that no individual or group may cultivate or distribute cannabis other than what is specified in the Act or the Compassionate Use Act (CUA); exempts any commercial cannabis activity by a holder of a state license who complies with the Act; and makes several non-substantive changes. EXISTING LAW: 1)Prohibits the possession, possession with intent to sell, cultivation, sale, transportation, importation, or furnishing of marijuana, except as otherwise provided by law. (Health and Safety Code (HSC) §§ 11357, 11358, 11359, and 11360) 2)Prohibits prosecution of a patient or a patient's primary caregiver, under the CUA, an initiative measure, for possessing or cultivating marijuana for personal medical purposes of the patient upon the written or oral recommendation or approval of a physician. (HSC § 11362.5) 3)Provides that qualified patients, persons with valid identification cards, and their designated primary caregivers AB 1575 Page 3 who associate in order to collectively or cooperatively cultivate marijuana, are not subject to criminal liability solely on that basis, until one year after the Bureau begins issuing licenses under the ACT. (HSC § 11362.775) 4)Enacts the Act, which provides for the state licensure and regulation of commercial cannabis activities, including cultivation, possession, manufacture, processing, storing, laboratory testing, labeling, transporting, distribution, and sale of medical cannabis or medical cannabis products. (Business and Professions Code (BPC) § 19300 et seq.) 5)Establishes the Bureau within the Department of Consumer Affairs (DCA), and requires the Bureau, the California Department of Public Health (CDPH), and the CDFA to administer the Act and promulgate regulations for implementation of the act. (BPC § 19300 et seq.) 6)Vests in the DCA the sole authority to create, issue, renew, discipline, suspend, or revoke licenses for medical marijuana activities, including licenses for dispensaries, distributors, and transporters. Prohibits a licensee from holding more than one license except as specified. (BPC §§ 19302.1, 19328) 7)Allows the Bureau to convene an advisory committee to advise the Bureau and licensing authorities on the development of standards and regulations, including best practices and guidelines to ensure qualified patients have adequate access to medical marijuana and medical marijuana products. (BPC § 19306) 8)Provides that the actions of a licensee permitted pursuant to AB 1575 Page 4 both a state license and a license or permit issued by the local jurisdiction following the requirements of the applicable local ordinances, and conducted in accordance with the Act are not unlawful under state law. (BPC § 19317) 9)Prohibits a person from engaging in commercial cannabis activity without possessing both a state license and a local permit or other authorization upon the date of implementation of regulations by the licensing authority. (BPC § 19320) 10)Requires an applicant for a state license to, among other things, submit fingerprints to the Department of Justice, and provide documentation, issued by the local jurisdiction, certifying that the applicant is in compliance with all local ordinances and regulations; evidence of the legal right to occupy the proposed location; for applicants with 20 or more employees, provide a statement that the applicant will enter into, or already has entered into, a labor peace agreement; a seller's permit number; and other specified information. (BPC § 19322) 11)Requires applicants seeking licensure to cultivate, distribute, or manufacture medical cannabis, to 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) transportation procedures; 4) inventory procedures; and 5) quality control procedures. (BPC § 19322) 12)Requires the Bureau to deny an application if the applicant or the premises do not qualify for licensure or fail to comply with the Act. (BPC § 19323) AB 1575 Page 5 13)Allows licensing authorities to take disciplinary action against a licensee for any violation of any provision in this bill, and requires a licensing authority to inform the Bureau upon suspension or revocation of a license. (BPC §§ 19313, 19313.5) 14)Provides that nothing shall be interpreted to supersede or limit existing local authority for law enforcement activity, enforcement of local zoning requirements or local ordinances, or enforcement of local permit or licensing requirements. (BPC § 19315) 15)Requires the CDPH to administer the provisions of the Act related to the manufacturing and testing of medical cannabis and to promulgate regulations governing the licensing of manufacturers and testing laboratories. Requires the CDPH to develop standards for the production and labeling of all edible medical cannabis products. (BPC §§ 19332, 19341) 16)Requires all licensed cultivators and manufacturers to package all medical cannabis and medical cannabis products in tamper-evident packaging and to use a unique identifier to identify and track the product, and requires the product to be labeled as specified. (BPC § 19326) 17)Requires all licensees holding cultivation or manufacturing licensees to send all medical cannabis and medical cannabis products to a distributor for quality assurance and inspection by the distribution licensee and for batch testing by a AB 1575 Page 6 testing licensee prior to distribution to a dispensary. (BPC § 19326) 18)Requires the CDFA to administer the provisions of the Act related to the cultivation of medical cannabis; to create, issue, and suspend or revoke cultivation licenses for violations of the Act; and to promulgate regulations governing the licensing of indoor and outdoor cultivation sites. (BPC § 19302.1, 19332) 19)Requires the CDFA, in consultation with the Bureau, to establish a track and trace program for reporting the movement of medical marijuana items throughout the distribution chain that use a unique identifier and secure packaging, and is capable of providing specified information, including the licensee receiving the product, the transaction date, and the cultivator from which the product originates. (BPC § 19335) 20)Requires the CDFA to create an electronic database containing the electronic shipping manifests which shall include the quantity, or weight, and variety of products shipped and received; estimated and actual times of departure and arrival; and license number and unique identifiers issued by the licensing authority for all licensees involved in the shipping process. (BPC § 19335) 21)Requires the Bureau to establish minimum security requirements for the commercial transportation and delivery of medical cannabis and products. (BPC § 19334) AB 1575 Page 7 22)Authorizes a county to impose a tax on the privilege of cultivating, dispensing, producing, processing, preparing, storing, providing, donating, selling, or distributing medical cannabis or medical cannabis products by a licensee operating pursuant to the Act, as specified. (BPC § 19348) 23)Provides for a General Fund or special fund loan, including up to $10 million from the General Fund, to the Bureau to support the initial regulatory activities authorized by Act. (BPC § 19351) 24)Requires the Bureau to establish a grant program to fund activities by state and local law enforcement to remedy the environmental effects of cannabis cultivation, payable from fines and penalties charged pursuant to the Act after all outstanding loans for the program are repaid. (BPC § 19351) 25)Directs the BOE to adopt a system, in consultation with the CDFA, to report the movement of commercial cannabis and cannabis products throughout the distribution chain, which must not duplicate CDFA's track and trace program. (Revenue and Taxation Code § 31020) 26)Requires, beginning March 1, 2023, and on or before March 1 of each following year, each licensing authority to prepare and submit to the Legislature an annual report on the authority's activities and post it on its Internet Web site, as specified. (BPC § 19353) AB 1575 Page 8 27)By January 1, 2017, requires the Division of Occupational Safety and Health to convene an advisory committee to evaluate whether there is a need to develop industry-specific regulations related to the activities of licensed facilities. (Labor Code § 147.5) THIS BILL: 1)Renames the "Medical Marijuana Cannabis Regulation and Safety Act" as the "Medical Cannabis Regulation and Safety Act." 2)Defines "cultivation site" as 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. 3)Defines "cultivator" as 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. 4)Amends the definition of "dispensary" to include a commercial facility with a fixed location, whether or not there is direct access by customers, where cannabis or medical cannabis products are offered, either individually or in any combination, for retail sale, including an establishment that AB 1575 Page 9 delivers, unless expressly prohibited by local ordinance, medical cannabis and medical cannabis products as part of a retail sale. 5)Amends the definition of "distributor" as a person engaged in the business of purchasing medical cannabis from a licensed cultivator, or medical cannabis products from a licensed manufacturer, for sale to a licensed dispensary and who holds a valid state license pursuant to this chapter and a valid local license, permit, or other authorization. 6)Defines "licensee" as a person issued a state license under this chapter to engage in commercial cannabis activity. 7)Defines "live plants" means living medical cannabis flowers and plants, including seeds, immature plants, and vegetative stage plants. 8)Defines "lot" as 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 uniform character and quality within specified limits. 9)Defines "manufactured cannabis" or "manufactured marijuana" means raw cannabis that has undergone a process whereby the raw agricultural product has been transformed into a AB 1575 Page 10 concentrate, an edible cannabis product, or a topical product. 10)Defines "topical product" as 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, and specifies that a topical product is not considered a drug. 11)Defines "testing laboratory" as 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: a) Accredited by an accrediting body that is independent from all other persons involved in the medical cannabis industry in the state. b) Registered with the CDPH. 12)Defines "transporter" as 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. AB 1575 Page 11 13)Specifies that the State Department of Public Health may create, issue, and suspend or revoke manufacturing and testing licenses for a violation of this chapter. 14)Authorizes the advisory group to examine strategies, such as the use of integrated point-of-sale systems with state track and tracesystems and other measures that will improve financial monitoring of medical cannabis businesses. 15)Indicates that the Department of Business Oversight (DBO) shall create an enhanced financial monitoring certification for entities licensed pursuant to this chapter that further enables those entities to comply with the federal banking regulations under the federal Bank Secrecy Act. The DBO shall consider including requirements to use electronic financial monitoring that enables real-time sales inventory tracking and other tools that allow a bank or credit union to readily access information they are required to monitor under the federal Bank Secrecy Act. 16)Authorizes the DBO may collect fees from applicants requesting the enhanced financial monitoring certification in an amount sufficient to fund the actual reasonable costs of implementation, as specified. 17)Declares that 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, pursuant to this chapter, small amounts of medical cannabis or medical cannabis products, as AB 1575 Page 12 determined by the Bureau but 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. 18)Authorizes the bureau to promulgate regulations to establish minimum qualifications for state authorization to conduct research on medical cannabis or medical cannabis products and all related protocols. The regulations shall include, but not be limited to, the following: a) The requirement for all medical cannabis and medical cannabis products used for research purposes to be subject to all requirements of the state's track and trace program established pursuant to this chapter. b) The requirement that all applicants pursuing state authorization for research on medical cannabis or medical cannabis products obtain permission to operate from the local jurisdiction in which the applicant intends to conduct the research. A person shall not conduct research on medical cannabis or medical cannabis products without approval from both the state and the local jurisdiction in which the research is being conducted. AB 1575 Page 13 c) The maximum amount of medical cannabis and medicalcannabis products that may be obtained per month for research purposes. In no case shall aperson approved to conduct research on medical cannabis and medical cannabis products obtain more than eight ounces per month for research purposes. 19)Specifies that 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. 20)Requires that upon receipt of medical cannabis or medicalcannabis product 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. 21)Authorizes the Bureau to 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. AB 1575 Page 14 22)Specifies that a business be registered with the BOE for tax purposes. 23)Specifies that a Type 4 licensee may transport live immature plants, subject to the tracking, security, and related requirements, as specified. 24)Specifies that a dispensary may be one of the following: a) "Storefront dispensary" for licensees who have a dispensary with direct physical access for the public. b) "Nonstorefront dispensary" for licensees who have a dispensary that does not have a storefront with direct physical access for the public. c) "Special dispensary" for licensees who have no more than three dispensary facilities. 25)Further specifies that any of the dispensaries listed above may deliver in a city, county, or city and county that does not expressly prohibit delivery by local ordinance. 26)Specifies that a "distributor," or "type 11 licensee," for the distribution of medicalcannabis and medical cannabis AB 1575 Page 15 products from manufacturer to dispensary 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. 27)Specifies that a "transporter" or "type 12 licensee" for transporters of medicalcannabis or medical cannabis products between licensees shall be bonded and insured at a minimum level established by the licensing authority. 28)Authorizes the Bureau to establish both of the following: a) Minimum security requirements for the commercial transportation and delivery of medical cannabis and medical cannabis products. b) Advertising, marketing, signage, and other labeling AB 1575 Page 16 requirements and restrictions, including a prohibition on advertising, marketing, and other promotion of the medical cannabis or medical cannabis products provided by a person not in full compliance with this chapter. 29)Specifies that only generic food names may be used to describe edible medical cannabisproducts, pursuant to regulations promulgated by the CDPH. 30)Indicates that 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. 31)Specifies if an action for civil penalties is brought against a licensee by the Attorney General, the penalty collected shall be deposited into the Medical Cannabis Fines and Penalties Account. 32)Specifies that this section does not apply to commercial cannabis activity engaged in by a person or entity licensed pursuant to the Act and any person who is in full compliance AB 1575 Page 17 with that act and all applicable local ordinances. FISCAL EFFECT: Unknown. This bill has been keyed fiscal by the Legislative Counsel. COMMENTS: Purpose. This bill is sponsored by the author. According to the author, "In 1996, California was the first state in the nation to allow the use of medical cannabis after voters approved Proposition 215, the [CUA]. Since then, 22 other states and the District of Columbia have passed laws allowing for the medical or adult use of cannabis. In 2015, California passed the [Act], the first comprehensive regulatory framework for medical cannabis in the state's history. AB 1575 is follow-up legislation to the [Act] in order to strengthen its original intent and goals. The regulatory framework balances local control with many of the needs of existing medical cannabis businesses. The bill established a licensing structure that prioritizes the protections of patient, the public, and the environment, and local control. Based on conversations with stakeholders, patients, and members of the public, AB 1575 revises the [Act] to improve implementation of the regulatory framework, and ease the transition for existing operators, local governments, and the general public." Background. The Compassionate Use Act of 1996 (CUA). Proposition 215 was approved by California voters to exempt certain patients and their primary caregivers from criminal liability under state law for the possession and cultivation of marijuana. Proposition 215 was enacted to "ensure that seriously ill Californians have the right to obtain and use marijuana for medical purposes where that medical use is deemed appropriate and has been recommended by a physician who has determined that the person's health would benefit from the AB 1575 Page 18 use of marijuana," and to "ensure that patients and their primary caregivers who obtain and use marijuana for medical purposes upon the recommendation of a physician are not subject to criminal prosecution or sanction." The Medical Marijuana Program Act. SB 420 (Vasconcellos), Chapter 875, Statutes of 2003, established the Medical Marijuana Program Act (MMP). The MMP, among other things, required the CDPH to establish and maintain a program for a statewide identification card system. Medical marijuana identification cards are intended to help law enforcement officers identify and verify that cardholders are able to cultivate, possess, and transport certain amounts of marijuana without being subject to arrest under specific conditions. All counties participate in the identification card program; however, participation by patients and primary caregivers in the identification card program is voluntary. In 2008, the Attorney General issued guidelines to: 1) ensure that marijuana grown for medical purposes remains secure and does not find its way to non-patients or illicit markets, 2) help law enforcement agencies perform their duties effectively and in accordance with California law, and 3) help patients and primary caregivers understand how they may cultivate, transport, possess, and use medical marijuana under California law. Since the passage of Proposition 215, a flood of medical marijuana collectives and cooperatives have created a patchwork of local regulations for these industries and with little statewide involvement. The Federal Controlled Substances Act. Despite the CUA and SB 420, marijuana is still illegal under federal law. Adopted in 1970, the Controlled Substances Act (CSA) established a federal regulatory system designed to combat recreational drug abuse by AB 1575 Page 19 making it unlawful to manufacture, distribute, dispense, or possess any controlled substance. (Title 21 United States Code Section (USC) 801, et seq.) Under California law, marijuana is listed as a hallucinogenic substance in Schedule I of the California Uniform Controlled Substances Act. Yet, the CUA prohibits prosecution for obtaining, distributing, or using marijuana for medical purposes. However, under the federal CSA, it is unlawful for any person to manufacture, distribute, dispense or possess a controlled substance, including marijuana, whether or not it is for a medical purpose. As a result, patients, caregivers, and dispensary operators, who engage in activities relating to medical marijuana, may still vulnerable to federal arrest and prosecution. Congress has provided that states are free to regulate in the area of controlled substances, including marijuana, provided that state law does not positively conflict with the CSA. (Title 21 USC Section 903.) Neither Proposition 215, nor the MMP, conflicts with the CSA because medical marijuana use has not been "legalized" medical marijuana in the state; instead, California has tried to avoid this conflict by not pursuing the state's powers to punish certain offenses when a physician has recommended marijuana as a treatment for a serious medical condition. Center for Medicinal Cannabis Research. Health and Safety Code section 11362.9 authorizes the creation of the Center for Medical Cannabis Research (CMCR). According to information obtained from the CMCR, "The [CMCR] was created in 2000 to conduct clinical and pre-clinical studies of cannabinoids, including smoked marijuana, to provide evidence one way or the other to answer the question "Does marijuana have therapeutic value?" To accomplish this objective, the CMCR issued calls for applications from researchers at leading California institutions, developed a close working relationship with state and federal agencies to gain regulatory approvals, established panels of nationally-recognized experts to rigorously review the AB 1575 Page 20 merit of applications, and funded carefully designed studies that have now been published in high impact scientific journals, making significant contributions to the available literature on cannabis and the cannabinoids." The CMCR further states, "As a result of this program of systematic research, we now have reasonable evidence that cannabis is a promising treatment in selected pain syndromes caused by injury or diseases of the nervous system, and possibly for painful muscle spasticity due to multiple sclerosis. Obviously more research will be necessary to elucidate the mechanisms of action and the full therapeutic potential of cannabinoid compounds. Meanwhile, the knowledge and new findings from the CMCR provide a strong science-based context in which policy makers and the public can discuss the place of these compounds in medical care." The Medical Marijuana Regulation and Safety Act. The Act consisted of three separate bills which were enacted together on Sept 11, 2015, to bring licensure and regulation to the medical marijuana industry nearly 20 years after the passage of Proposition 215 in 1996. The bills created a comprehensive state licensing system for the commercial cultivation, manufacture, retail sale, transport, distribution, delivery, and testing of medical cannabis. In addition, the bills affirm local control and require licensure by both a local government and the state in order for a licensee to operate. The Act went into effect on January 1, 2016, although licensure requirements will not go into effect until the regulatory entities responsible for implementing the act pass necessary regulations. Among other things, the Act establishes the new Bureau under the DCA, which is responsible for licensing and regulating dispensaries, transporters, and distributors. In addition, AB 1575 Page 21 the CDPH is responsible for regulating manufacturers, testing laboratories, and the production and labeling of edible medical marijuana products. The CDFA is responsible for regulating cultivation, and other state agencies, such as the Department of Pesticide Regulation (DPR) and the State Water Resources Control Board (SWRCB), are responsible for developing environmental standards. Under the Act, applicants seeking licensure to cultivate, distribute, or manufacture medical cannabis are required to include a detailed description of the applicant's operating procedures for cultivation, extraction and infusion methods, transportation process, inventory procedures, and quality control procedures. According to the author, this bill would make a number of changes to the Act including: 1)Allowance of For-Profit Model- The bill permits medical cannabis businesses to operate for-profit, not-for-profit, or under any combination thereof. It also clarifies that existing collectives may operate for profit. 2)Refinements to Licenses- The bill requires all testing to be done on medicine in the form in which the patient will be consuming it. The bill also revises the dispensary license by allowing both storefront and non-storefront (e.g. not open to the public) dispensaries to operate. The bill allows direct transfer from cultivators to dispensaries, and clarifies that a distributor can either purchase or take custody of the medical cannabis. The bill also requires that distributors would only have to obtain local licenses for their facilities. The bill requires nurseries to meet security standards for transportation. AB 1575 Page 22 3)Access to Banking- The bill requires the BOE to form an advisory group of stakeholders to address access of medical cannabis businesses to banking. Requires the BOE to submit a report to the Legislature with its findings. Requires the DBO to create financial monitoring certification for licensees under the Act that further compliance with federal banking laws and regulations. Declares that it is not unlawful under state law for financial institutions to offer banking services to licensed medical cannabis businesses. 4)Research and Development- The bill allows for research institutions and businesses to access limited amounts of medical cannabis for research purposes. Businesses interested in research and development (R&D) will have to be located in jurisdictions with permissive local ordinances and receive separate local authorization to conduct such R&D. 5)Patient Protection- The bill requires uniform packaging safety standards to be developed by the CDPH, minimizing inconsistencies across jurisdictions, while retaining local control over advertising and appellations. 6)Advertising- The bill would require all licensees to submit their license number when seeking advertising. Additionally, the bill would declare it unlawful for existing collectives and cooperatives to advertise should they not possess a valid BOE Seller's Permit, and make the violation of that provision an infraction punishable by a $500 fine. 7)Delivery- The bill requires standards be set for delivery drivers, including registering information with the bureau. It also clarifies that delivery is allowed unless expressly prohibited by local government, and clarifies that delivery AB 1575 Page 23 drivers do not need to know the patient's condition, and that a card issued pursuant to SB 420 is valid in lieu of a doctor's recommendation. 8)CDPH- The bill requires the DPH to include scientists from the industry and testing labs in developing regulations. It also requires the DPH to annually review and update their testing standards based on the latest technology, including DNA testing for contaminants. It requires the DPH to conduct periodic audits of testing labs to verify their results. 9)Dual Licensure- The bill indicates that the local license must be received prior to issuance of the state license. The bill also notes that dual licensure is required one year following the beginning of issuance of licenses, at the same time SB 420 sunsets, instead of upon issuance of regulations, which is prior to issuance of licenses. 10)California Seed Law- The bill clarifies that local regulation of medical cannabis under the Act is not pre-empted by California's seed law, which requires the Secretary of CDFA approval of all local ordinances that regulated seeds prior to them becoming operative. Current Related Legislation. AB 26 (Jones-Sawyer) of the current legislative session requires a licensee under the Act to institute and maintain a training program to educate, inform, and train the licensee's agents and employees regarding compliance with the Act, and requires the Bureau to approve and regulate the training programs. STATUS: This bill is pending in the Senate Committee on Business, Professions and Economic Development. AB 567 (Gipson) of the current legislative session, would AB 1575 Page 24 prohibit mobile, vehicular, or technology platforms that enable qualified patients or primary caregivers to arrange for any delivery with a third party; would provide that a dispensary that employs or uses the services of any person under 21 years of age for the sale or delivery of medical cannabis or medical cannabis products is subject to suspension or revocation of certain state or local licenses; and would require tax penalty amnesty programs, for medical cannabis-related businesses, as provided. STATUS: This bill is pending in the Senate Committee on Health. AB 1548 (Wood) of the current legislative session, would impose a tax in specified amounts on the distribution in this state by a cultivator of marijuana to a licensed distributor, as specified; require the licensed distributor to collect the tax from the cultivator and remit it to the BOE; and require all moneys, less refunds and costs of administration, to be deposited into the Marijuana Production and Environment Mitigation Fund, as specified. NOTE: This measure died in the Assembly Committee on Revenue and Taxation. AB 2385 (Jones-Sawyer) of the current legislative session prohibits licensing authorities from requiring a local license, permit, or other authorization, and would require the issuance of a state license, if the authorities determine that the applicant meets all of the requirements of the act, as specified, in the City of Los Angeles. STATUS: This bill is pending in the Assembly Committee on Business and Professions. AB 2516 (Wood) of the current legislative session provides for the issuance of a Type 1C, or "specialty cottage," state cultivator license, as specified, by the CDFA. STATUS: This bill is pending in the Assembly Committee on Agriculture. AB 2545 (Bonta) of the current legislative session authorizes the Governor to enter into agreements with federally recognized AB 1575 Page 25 sovereign Indian tribes, as defined; authorizes these agreements to include provisions regulating activities between licensees operating on and off the land of federally recognized sovereign Indian tribes; authorizes the Governor to delegate to the chief of the Bureau authority to negotiate these agreements. STATUS: This bill is pending in the Assembly Committee on Business and Professions. AB 2679 (Cooley) of the current legislative session increases the reporting requirements of the Bureau to include the number of appeals of denial of state licenses or other disciplinary actions taken by the licensing authorities, the number of complaints submitted to the Bureau regarding licenses; and, expands scope of the CMCS to include in its studies the effect of marijuana on a person's motor skills. STATUS: This bill is pending in the Assembly Committee on Business and Professions. Prior Related Legislation. AB 266 (Bonta, Cooley, Jones-Sawyer, Lackey, and Wood), Chapter 689, Statutes of 2015, enacted the Act for the licensure and regulation of medical marijuana and established the Bureau within the DCA, under the supervision and control of the Director of the DCA, and required the Director to administer and enforce the provisions of the Act. AB 266 also required the CDFA to administer the provisions of the act related to cultivation, and required the CDPH to administer the provisions of the Act related to manufacturing and testing of medical cannabis. The bill also required the BOE, in consultation with the CDFA, to adopt a system for reporting the movement of commercial cannabis and cannabis products. AB 243 (Wood), Chapter 688, Statutes of 2015, required the CDFA, the DPR, the CDPH, the DFW, and the SWRCB to promulgate regulations or standards relating to medical marijuana and its cultivation, as specified, required various state agencies to AB 1575 Page 26 take specified actions to mitigate the impact that marijuana cultivation has on the environment, and established the Act Fund. SB 643 (McGuire), Chapter 719, Statutes of 2015, set forth standards for a physician and surgeon prescribing medical cannabis, required the Medical Board of California to prioritize its investigative and prosecutorial resources to identify and discipline physicians and surgeons that have repeatedly recommended excessive cannabis to patients for medical purposes or repeatedly recommended cannabis to patients for medical purposes without a good faith examination, as specified, authorized counties to impose a tax upon specified cannabis-related activity, and set forth standards for the licensed cultivation of medical cannabis. ARGUMENTS IN SUPPORT: The California Cannabis Delivery Alliance writes in support, "We have reached a workable compromise that will ensure our businesses have an opportunity to be licensed. Our support is limited to and based on proposed language that would amend BPC § 19334 to include "nonstorefront dispensary" for licensees who have a dispensary that does not have a storefront with direct physical access for the public." AMENDMENTS: 1)In order to specify the business arrangements that are permissible, the author should amend the bill as follows: 11362.775. (a) Subject to subdivision (b), 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 AB 1575 Page 27 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. However, a collective or cooperative that operates for profit only retains the protections pursuant to this section if they possess a valid Board of Equalization issued seller's permit and a valid local license, permit, or other authorization. 2)As with other boards and bureaus under the DCA, the Bureau does not have a sunset date nor is it subject to review by the appropriate policy committees of the Legislature. Therefore, the bill should be amended to specify that the Bureau is subject to review by the appropriate policy committees of the Legislature, commencing January 1, 2023, in order to allow the Bureau time to establish its operations, and for the Legislature to enact scheduled oversight of the Bureau. REGISTERED SUPPORT: California Cannabis Delivery Alliance REGISTERED OPPOSITION: 1 individual Analysis Prepared by:Le Ondra Clark Harvey Ph.D. / B. & P. / (916) 319-3301 AB 1575 Page 28