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
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          |Author:   |Jones-Sawyer                                          |
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          |Version:  |May 12, 2016                                          |
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          |Urgency:  |No                     |Fiscal:    |Yes              |
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          |Consultant|Sarah Huchel                                          |
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            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.








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          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  








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            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."








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          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  








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                  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 --
          








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