BILL ANALYSIS Ó
AB 1575
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ASSEMBLY THIRD READING
AB
1575 (Bonta, et al.)
As Amended April 25, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Business & |14-0 |Salas, Baker, Bloom, | |
|Professions | |Campos, Chávez, | |
| | |Dahle, Dodd, Eggman, | |
| | |Gatto, Gomez, Holden, | |
| | |Mullin, Ting, Wood | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Banking |8-2 |Dababneh, Achadjian, |Travis Allen, Gatto |
| | |Bonilla, Brown, Chau, | |
| | |Low, | |
| | | | |
| | | | |
| | |Ridley-Thomas, Mark | |
| | |Stone | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |15-1 |Gonzalez, Bloom, |Bigelow |
| | |Bonilla, Bonta, | |
| | |Calderon, Chang, | |
| | |Daly, Eggman, Eduardo | |
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| | |Garcia, Roger | |
| | |Hernández, Holden, | |
| | |Quirk, Santiago, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: In 2015, California passed the Medical Marijuana
Regulation and Safety Act (Act), the first comprehensive
regulatory framework for medical cannabis in the state's
history. This bill is follow-up legislation in order to
strengthen its original intent and goals. This bill contains
numerous provisions related to medical cannabis (marijuana)
licensure and regulation. Specifically, this bill:
Makes a number of changes to the 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
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;
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provides that activities that are in full compliance with the
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 if
they possess a valid Board of Equalization (BOE) issued seller's
permit and a valid local license, permit, or other
authorization; requires the 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; 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; specify that the Bureau is subject to
review by the appropriate policy committees of the Legislature,
commencing January 1, 2023; and makes several non-substantive
changes.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, this bill will result in:
1) Minor staff costs to BOE and DBO to form an advisory
group and produce recommendations.
2) Initial costs to California Department of Public Health
(CDPH), CDFA, and the Bureau are funded through a
previously authorized General Fund (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
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type, once a licensing structure is established and fee
collection begins.
a) CDPH indicates additional requirements of this bill
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 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 above. Start-up costs would be in
the $160,000 and ongoing costs are $1.2 million.
Information technology (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: 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
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deemed appropriate and has been recommended by a physician who
has determined that the person's health would benefit from the
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
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1970, the Controlled Substances Act (CSA) established a federal
regulatory system designed to combat recreational drug abuse by
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
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and federal agencies to gain regulatory approvals, established
panels of nationally-recognized experts to rigorously review the
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
Department of Consumer Affairs (DCA), which is responsible for
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licensing and regulating dispensaries, transporters, and
distributors. In addition, 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.
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The bill requires nurseries to meet security standards for
transportation.
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, in conjunction with the DBO, 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.
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It also clarifies that delivery is allowed unless expressly
prohibited by local government, and clarifies that delivery
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.
Analysis Prepared by:
Le Ondra Clark Harvey, Ph.D. / B. & P. / (916)
319-3301 FN:
0003207
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