BILL ANALYSIS Ó
AB 2385
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Date of Hearing: April 19, 2016
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Rudy Salas, Chair
AB 2385
(Jones-Sawyer) - As Amended April 5, 2016
NOTE: This bill is double referred and should it pass this
committee, it will be referred to the Assembly Committee on
Local Government.
SUBJECT: Medical Marijuana Regulation and Safety Act: state
licenses: Measure D.
SUMMARY: Prohibits licensing authorities from requiring a local
license, permit, or other authorization, and would require the
issuance of state license, if the authorities determine that the
applicant meets all for the requirements of the Medical
Marijuana Regulation and Safety Act (Act) and specified criteria
relating to Measure D, which was approved by the voters of the
City of Los Angeles. Further provides that a license issued
pursuant to Measure D has the same effect, benefits, and
responsibilities as licenses that were not issues pursuant to
Measure D.
EXISTING LAW:
1)Prohibits the possession, possession with intent to sell,
cultivation, sale, transportation, importation, or furnishing
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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
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 of
Medical Marijuana Regulation (Bureau) begins issuing licenses
under the ACTAct. (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)
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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
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
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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)
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)
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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
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
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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)
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 State Board of Equalization (BOE) to adopt a
system, in consultation with the CDFA, to report the movement
of commercial cannabis and cannabis products throughout the
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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)
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)Indicates that the state licensing authorities shall not
require a local license, permit, or other authorization and
shall issue a state license to engage in commercial cannabis
activity only if the licensing authorities determine the
applicant satisfies all of the requirements of the Act and
demonstrates that it meets the following criteria established
by Measure D, approved by the voters of the city of Los
Angeles at the May 2, 2013 general election:
a) The applicant was operating in the City of Los Angeles
as a medical marijuana business by September 14, 2007, as
evidenced by a business tax registration certificate issued
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by the city of Los Angeles on or before November 13, 2007.
b) The applicant registered with the city of Los Angeles
city clerk by November 13, 2007, in accordance with all of
the requirements of the City of Los Angeles' Interim
Control Ordinance.
c) The applicant obtained a City of Los Angeles business
tax registration for taxation as a medical marijuana
collective.
2)A state license issued for commercial cannabis activity shall
have the same force and effect and shall confer the same
benefits and responsibilities as licenses issued to licensees
outside the City of Los Angles that obtain a license, permit,
or other authorization from the local jurisdiction.
FISCAL EFFECT: Unknown. This bill has been keyed fiscal by the
Legislative Counsel.
COMMENTS:
Purpose. This bill is sponsored by the United Food and
Commercial Workers. According to the author, "Under the [Act],
California will start issuing licenses to medical cannabis
businesses after January 1, 2018. [The Act] requires a license,
permit or other authorization from a local jurisdiction in order
to apply and receive a state license.
In 2013, the City of Los Angeles passed Measure D, allowing 135
dispensaries to remain open while banning others. Under Measure
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D, the City of Los Angeles does not actually issue permits or
licenses to those 135 dispensaries; instead, the city gave
immunity to these medical marijuana operators.
As medical marijuana business operators start to apply for state
licenses, after January 1, 2018, the DCA, the CDFA, and the CDPH
will need proof from operators in the city of Los Angeles that
they are Measure D compliant. This legislation will give state
agencies direction to issue state licenses to respect the will
of Los Angeles voters, which is to permit patients to be able to
obtain medical marijuana. This legislation will permit Measure D
compliant medical marijuana businesses to continue to operate as
they have been in compliance with local zoning, environmental,
and tax requirements."
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
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 sanctions."
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
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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
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.
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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" 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.
The 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
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
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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,
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.
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Measure D. The City of Los Angeles attempted multiple times to
regulate medical marijuana, and in 2013 it passed a ballot
measure, Measure D, which allowed 135 dispensaries, all of which
had been in business since 2007, to remain open, while banning
others. However, the measure did not actually permit those 135
dispensaries to operate because, according to federal law,
marijuana is an illegal substance. Rather, Measure D specified
the city would not prosecute those 135 dispensaries.
Enforcement Against Medical Cannabis Businesses in Los Angeles.
Many Los Angeles based medical cannabis entities have not paid
taxes and have opened and closed at different locations, on many
occasions, to avoid prosecution by law enforcement. According
to the author, since 2013, 716 medical marijuana businesses have
been closed across the City of Los Angeles. The City Attorney's
Office has also filed 365 criminal cases against 1,444
defendants.
Ineligibility for State Licensure. The recently enacted Act
requires a license, permit, or other authorization from a local
jurisdiction in order to apply and receive a state license. Los
Angeles does not issue permits, thus, growers, testing labs, and
dispensaries in Los Angles are not currently eligible for state
licenses. As such, the provisions of this bill specify only
those who have adhered to Measure D requirements will be
eligible to be issued a state medical cannabis license.
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.
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AB 567 (Gipson) of the current legislative session, would
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 1575 (Bonta) of the current legislative session makes a
number of changes to the Act including, among others: specifies
that it is not a violation of state law for certain licensees to
sell medical cannabis under 8 ounces; specifies that no
individual or group may cultivate or distribute cannabis other
than what is specified in the Act or the Compassionate Use Act;
and, exempts any commercial cannabis activity by a holder of a
state license who complies with the Act. STATUS: This bill is
pending in the Assembly Committee on Banking and Finance.
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
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will also be heard before the Assembly Committee on Business and
Professions during today's hearing.
AB 2545 (Bonta) of the current legislative session authorizes
the Governor to enter into agreements with federally recognized
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 will also be heard before the Assembly Committee on
Business and Professions during today's hearing.
AB 2672 (Bonilla) of the current legislative session renames the
Medical Marijuana Regulation and Safety Act (Act) to the Medical
Cannabis Regulation and Safety Act; renames the Bureau of
Medical Marijuana Regulation (Bureau) to the Bureau of Medical
Cannabis Regulation; renames the Medical Marijuana Regulation
and Safety Act Fund (Fund) to the Medical Cannabis Regulation
and Safety Act Fund; renames the Medical Marijuana Fines and
Penalties Account (Account) to the Medical Cannabis Fines and
Penalties Account; and, makes other conforming changes
throughout the Business and Professions (BPC), Fish and Game
(FGC), Government (GOV), Health and Safety (HSC), Revenue and
Taxation (RTC), and Water Codes (WAT). STATUS: This bill will
also be heard before the Assembly Committee on Business and
Professions during today's hearing.
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 Appropriations.
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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
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:
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The United Cannabis Business Alliance Trade Association writes
in support, "This legislation will give state agencies direction
to issue state licenses to those medical marijuana businesses
that are Measure D compliant and will respect the Los Angeles
voters' desire to provide medical marijuana access to qualified
patients. This legislation will permit Measure D compliant
medical marijuana businesses who have been afforded limited
immunity to continue to operate as they have been since
September 2007, and who have been continuously operating in
compliance with all local zoning, environmental, and tax
requirements as set forth in Measure D."
ARGUMENTS IN OPPOSITION:
None on file.
REGISTERED SUPPORT:
United Cannabis Business Alliance Trade Association
REGISTERED OPPOSITION:
None on file.
Analysis Prepared by:Le Ondra Clark Harvey, Ph.D. / B. & P. /
(916) 319-3301
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