BILL ANALYSIS Ó
AB 1575
Page 1
Date of Hearing: May 11, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1575 (Bonta) - As Amended April 25, 2016
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|Policy |Business and Professions |Vote:|14 - 0 |
|Committee: | | | |
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| |Banking and Finance | |8 - 2 |
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill contains numerous provisions related to medical
cannabis (marijuana) licensure and regulation. Specifically,
this bill:
1)Replaces the word "marijuana" with "cannabis" in numerous code
sections.
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2)Modifies, adds, and reorders definitions of terms.
3)Clarifies California Department of Public Health (CDPH)
authority to regulate manufacturing and testing laboratories.
4)Exempts persons and entities complying with state law and
local ordinances from specified fines, penalties, and criminal
sanctions for cannabis-related activities.
5)Specifies the Bureau of Medical Marijuana Regulation (Bureau,
renamed "Bureau of Medical Cannabis Regulation") is subject to
review by appropriate policy committees of the Legislature.
6)Requires the Board of Equalization (BOE), in conjunction with
the Department of Business Oversight (DBO), to form an
advisory committee to examine strategies that will improve
financial monitoring of medical cannabis businesses, and
report to the Legislature by July 1, 2017.
7)Specifies 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).
8)Specifies that a collective or cooperative may operate on a
for-profit basis or not-for-profit basis.
9)Clarifies the allowable use of cannabis for research purposes.
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10)Authorizes the Bureau to promulgate regulations to establish
minimum qualifications for state authorization to conduct
research, regulations relating to the amount of product a
cultivator or manufacturer is required to send to a
distributor for inspection and a testing laboratory for
testing, and regulations related to delivery of medical
cannabis.
11)Specifies the fees established by state licensing authorities
are in addition to, and shall not limit, any fees or taxes
imposed local jurisdictions.
12)Contains a number of other technical, clarifying, or narrow
substantive changes.
FISCAL EFFECT:
1)Minor staff costs to BOE and DBO to form an advisory group and
produce recommendations.
2)Initial costs to CDPH, CDFA, and the Bureau are funded through
a previously authorized GF loan to the Medical Marijuana
Regulation and Safety Act Fund, to be repaid through licensure
fee revenue. Ongoing costs will be funded through license fee
revenue specific to the license type, once a licensing
structure is established and fee collection begins.
a) CDPH indicates additional requirements of this bill,
including provisions related to laboratory testing
standards, edible cannabis, and scientific input to the
regulatory process will be absorbed within existing planned
workload. A Budget Change Proposal (BCP) in the 2016-17
Governor's Budget requests $12 million for CDPH and 37
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positions to be phased in over three fiscal years, starting
with the current year.
b) CDFA indicates exempting local ordinances from
secretarial approval will be fiscally beneficial to the
Department by reducing workload. Other provisions will be
absorbed within existing planned workload. A BCP in the
2016-17 Governor's Budget requests $3.5 million for CDFA
and 18 positions to begin in the current year.
c) The Bureau may incur significant new staff costs related
to promulgation, implementation, and enforcement of
regulations noted in (10), above. Start-up costs would be
in the $160,000 and ongoing costs are $1.2 million. IT
costs may also be significant but cannot be estimated at
this time. A BCP in the 2016-17 Governor's Budget requests
$1.6 million for the Bureau and 9.0 positions to begin in
the current year, and $3.8 million and 25 positions in
2016-17, and $4 million in 2017-18.
COMMENTS:
1)Purpose. This bill is essentially an omnibus cleanup bill to
the regulatory structure created last year for medical
cannabis. According to the author, last year's bills
established a licensing structure that prioritizes the
protections of patient, the public, and the environment, as
well as local control. Based on conversations with
stakeholders, patients, and members of the public, AB 1575
makes key changes to improve implementation of the regulatory
framework and ease the transition for existing operators,
local governments, and the general public.
2)Background. Medical cannabis (or marijuana), though illegal
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under federal law, has been legal under state law since the
passage of Proposition 215 in 1996. The Medical Marijuana
Regulation and Safety Act (MMRSA) was a package of three bills
enacted together in 2015 to regulate the medical marijuana
industry and license its participants. The bills created a
comprehensive state regulatory system for the commercial
cultivation, manufacture, retail sale, transport,
distribution, delivery, and testing of medical cannabis.
Among other things, the MMRSA establishes the new Bureau under
the Department of Consumer Affairs, which is responsible for
licensing and regulating dispensaries, transporters, and
distributors. The MMRSA charges CDPH with regulating
manufacturers, testing laboratories, and the production and
labeling of edible medical marijuana products, and CDFA with
regulating cultivation. Other state agencies, such as the
Department of Pesticide Regulation and the State Water
Resources Control Board, are responsible for developing
environmental standards. The MMRSA went into effect on
January 1, 2016, though licensure will not be required until
the responsible licensing authorities pass regulations.
3)Marijuana Regulation Startup Costs and Fees. Among other
provisions, AB 243 (Wood), Chapter 688, Statutes of 2015, one
of the bills establishing MMRSA, appropriated $10 million to
the Medical Marijuana Regulation and Safety Act Fund for
start-up activities. MMRSA requires each licensing authority
for medical marijuana, including the Bureau, CDPH, and CDFA,
to charge fees commensurate with regulatory costs. Further,
each licensing authority is required to generate sufficient
fee revenue to cover the specific licensure program
administered by that authority.
4)Staff Comments. BOE notes it appears questionable whether an
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advisory group can be formed to identify proposed changes to
state law or regulations that would improve banking access,
and submit a report by July 1, 2017, and that the author may
wish to consider delaying the report date to provide
sufficient time for the advisory group to solve such a
complicated issue.
5)Prior Legislation. AB 266 (Bonta, Cooley, Jones-Sawyer,
Lackey, and Wood), Chapter 689, Statutes of 2015; SB 643
(McGuire), Chapter 719, Statutes of 2015; and AB 243,
described above, were companion bills that formed the MMRSA.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081