BILL ANALYSIS Ó SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT Senator Jerry Hill, Chair 2015 - 2016 Regular Bill No: AB 2385 Hearing Date: June 20, 2016 ----------------------------------------------------------------- |Author: |Jones-Sawyer | |----------+------------------------------------------------------| |Version: |May 12, 2016 | ----------------------------------------------------------------- ---------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Sarah Huchel | |: | | ----------------------------------------------------------------- Subject: Medical Marijuana Regulation and Safety Act: state licenses: Measure D SUMMARY: Exempts a commercial cannabis applicant from the local licensure requirement as a condition of state licensure if the applicant meets requirements specified by the City of Los Angeles' Measure D and the Medical Marijuana Regulation and Safety Act (Act). Existing law: 1) Establishes the Bureau of Medical Marijuana Regulation (Bureau) within the Department of Consumer Affairs (DCA) to oversee the licensing and regulation of medical marijuana pursuant to the Act. (Business and Professions Code (BPC) Section 19300, et seq.) 2)Defines a "licensing authority" as the state agency responsible for the issuance, renewal, or reinstatement of the license, or the state agency authorized to take disciplinary action against the license. (BPC § 19300.5 (w)) 3)Requires licensing authorities administering the Act to issue state licenses only to qualified applicants with a license or permit from the local jurisdiction in which he or she proposes to operate, following the requirements of the applicable local ordinance. AB 2385 (Jones-Sawyer) Page 2 of ? This bill: 1)Exempts qualified applicants to engage in commercial cannabis activity from the local licensing requirement for state licensure if the licensing authority determines that the applicant satisfies requirements of the Act and Measure D. 2)Establishes the following requirements pursuant to Measure D: 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 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 (class L050). 3)States that a state license issued pursuant to this bill 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 Angeles that obtain a license, permit, or other authorization from the local jurisdiction. 4)States that the determination of the licensing authority that an applicant for a state license meets Measure D criteria shall be based on a written or electronic notification provided to the licensing authority by the City of Los Angeles that the applicant has met the criteria. If the City of Los Angeles does not provide written or electronic notification to the licensing authority confirming an applicant has met the criteria, the licensing authority shall not issue a state license. 5)States that if the voters of Los Angeles approve an initiative after January 1, 2016, but prior to the time that the State of California begins issuing state licenses, the City of Los Angeles may issue local licenses to medical marijuana AB 2385 (Jones-Sawyer) Page 3 of ? businesses in the City of Los Angeles, and the exemption for local licensing in Los Angeles shall be superseded by the local licensing requirements as enacted by that initiative. FISCAL EFFECT: This bill is keyed "fiscal" by the Legislative Counsel. According to the Assembly Committee on Appropriations analysis dated May 11, 2016, the fiscal impact of this bill to state licensing authorities is expected to be minor and absorbable. COMMENTS: 1. Purpose. This bill is sponsored by the United Food and Commercial Workers (UFCW) Western States Council and the United Cannabis Business Alliance Trade Association (UCBA). According to the Author, "The City of Los Angeles failed multiple times to regulate medical marijuana, but finally in 2013 it passed (Proposition D) Measure D. That ballot measure 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 - which legal experts said, at the time, the city could not do because marijuana remains illegal under federal law. Measure D merely said the city would not prosecute those 135 dispensaries. "Under the recently enacted Medical Marijuana Regulation and Safety Act (MMRSA), California will start issuing licenses to medical cannabis businesses after January 1, 2018. MMRSA requires a license, permit or other authorization from a local jurisdiction in order to apply and receive a state license. "However, the state will only grant them to businesses with permits from their local jurisdictions. Because Los Angeles doesn't issue permits, growers, testing labs and dispensaries in L.A. are not currently eligible for state licenses. "AB 2385 seeks to protect these 135 dispensaries from future prosecution by allowing them to obtain a state issued medical cannabis license, provided that they can demonstrate that they have complied with specified Measure D requirements." AB 2385 (Jones-Sawyer) Page 4 of ? 2. California's Medical Marijuana Regulatory Background. California began regulating medical marijuana with the passage of the Compassionate Use Act in 1996, which exempted patients and their primary caregivers from criminal liability under state law for the possession and cultivation of marijuana. In 2003, the Legislature authorized the formation of medical marijuana cooperatives-nonprofit organizations that cultivate and distribute marijuana for medical uses to their members through dispensaries. Most recently, the Medical Marijuana Regulation and Safety Act (Act) passed in 2015, which consisted of three separate bills enacted together to license and regulate medical marijuana AB 243 (Wood, Chapter 688, Statues of 2015); AB 266 (Bonta, Chapter 689, Statutes of 2015); and SB 643 (McGuire, Chapter 719, Statutes of 2015). These bills created a comprehensive state licensing system for the commercial cultivation, manufacture, retail sale, transport, distribution, delivery, and testing of medical cannabis. Medical marijuana cooperatives will be phased out under the Act and replaced by state licensed businesses. The Act went into effect on January 1, 2016, and licensure requirements will follow when the regulatory entities responsible for implementation pass necessary regulations. The Act distributes state responsibilities among six agencies: The Bureau: responsible for licensing and regulating dispensaries, transporters, and distributors. Department of Fish and Wildlife (DFW): monitor and reduce environmental impacts of marijuana cultivation. State Water Resources Control Board (SWRCB): regulate the environmental impacts of marijuana cultivation on water quality and instream flows. California Department of Food and Agriculture (CDFA): regulate medical marijuana cultivation and issue AB 2385 (Jones-Sawyer) Page 5 of ? licenses to growers. Department of Public Health (DPH): develop and enforce regulations and standards for medical marijuana product manufacturers and testing laboratories. Department of Pesticide Regulation (DPR): develop pesticide use guidelines for the cultivation of medical marijuana. 1. Arguments in Support. UFCW writes, "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 access to qualified patients who will continue to be able to obtain medical marijuana. 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." 2. Recommended Technical Amendment. Due to a chaptering error, there are two identical sections of BPC § 19320. The following amendment will delete the redundant section. On page 4, delete lines 11-39, and delete pages 5 -6. SUPPORT AND OPPOSITION: Support: United Food and Commercial Workers (UFCW) Western States Council United Cannabis Business Alliance (UCBA) Trade Association Opposition: None on file as of June 14, 2016. -- END -- AB 2385 (Jones-Sawyer) Page 6 of ?