BILL ANALYSIS Ó
AB 2516
Page 1
Date of Hearing: April 19, 2016
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Rudy Salas, Chair
AB 2516
(Wood) - As Amended April 6, 2016
NOTE: This bill is double referred, having been previously
heard by the Committee on Agriculture, and passed on a 7-2 vote.
SUBJECT: Medical marijuana: state cultivator license types:
specialty cottage type.
SUMMARY: Clarifies the role of the of the California Department
of Food and Agriculture (CDFA) is not to supersede or limit the
authority of specified state agencies when implementing and
enforcing their statutory obligations, or adopting regulations
to protect water quality, water supply, and natural resources;
creates a Type 1C, or "specialty cottage" license, to be issued
by the CDFA, for cultivation using a combination of natural and
supplemental artificial lighting at a maximum threshold to be
determined by the licensing authority; and, authorizes the CDFA
to promulgate regulations to govern the new license type.
EXISTING LAW:
1) Prohibits the possession, possession with intent to sell,
cultivation, sale, transportation, importation, or furnishing
of marijuana, except as otherwise provided by law. (Health
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and Safety Code (HSC) §§ 11357, 11358, 11359, and 11360)
2) Prohibits prosecution of a patient or a patient's primary
caregiver, under the Compassionate Use Act (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) Establishes the Bureau of Medical Marijuana Regulation
(Bureau) within the Department of Consumer Affairs (DCA) to
oversee 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; requires the Bureau, the
California Department of Public Health (CDPH), and the CDFA
to administer the Medical Marijuana Regulation and Safety Act
(Act) and promulgate regulations for implementation of the
Act. (Business and Professions Code (BPC) § 19300 et seq.)
4) 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)
5) Specifies license classifications as follows: (BPC Section
19328)
a) Type 1 = Cultivation; Specialty outdoor; Small.
b) Type 1A = Cultivation; Specialty indoor; Small.
c) Type 1B = Cultivation; Specialty mixed-light; Small.
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d) Type 2 = Cultivation; Outdoor; Small.
e) Type 2A = Cultivation; Indoor; Small.
f) Type 2B = Cultivation; Mixed-light; Small.
g) Type 3 = Cultivation; Outdoor; Medium.
h) Type 3A = Cultivation; Indoor; Medium.
i) Type 3B = Cultivation; Mixed-light; Medium.
j) Type 4 = Cultivation; Nursery.
aa) Type 6 = Manufacturer 1.
bb) Type 7 = Manufacturer 2.
cc) Type 8 = Testing.
dd) Type 10 = Dispensary; General.
ee) Type 10A = Dispensary; No more than three retail sites.
ff) Type 11 = Distribution.
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gg) Type 12 = Transporter.
6) 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 begins
issuing licenses under the Act. (HSC § 11362.775)
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 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)
9) Provides that the permitted actions of a licensee 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)
10)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)
11)Requires an applicant for a state license to, among other
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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)
12)Requires applicants seeking licensure to cultivate,
distribute, or manufacture medical cannabis, to include a
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)
13)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)
14)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)
15)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)
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16)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)
17)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)
18)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)
THIS BILL:
1)Clarifies the role of the of the CDFA is not to supersede or
limit the authority of the State Water Resources Control
Board, regional water quality control boards, or the
Department of Fish and Wildlife when implementing and
enforcing their statutory obligations or to adopting
regulations to protect water quality, water supply, and
natural resources.
2)Creates a Type 1C, or "specialty cottage" license, to be
issued by the CDFA, for cultivation using a combination of
natural and supplemental artificial lighting at a maximum
threshold to be determined by the licensing authority, of
2,500 square feet or less of total canopy size for outdoor
cultivation, or 500 square feet or less of total canopy size
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for indoor cultivation, on one premises.
3)Authorizes the CDFA to promulgate regulations to govern the
new license type.
FISCAL EFFECT: Unknown. This bill is keyed fiscal by the
Legislative Counsel.
COMMENTS:
Purpose. This bill is sponsored by the California Growers
Association . According to the author, "Last year the
[L]egislature passed the [Act] in order to address the
environmental, public health, and public safety concerns that
surfaced in the industry. In order for these new regulations to
be successful we need to ensure businesses have pathways to
compliance. Currently in California there are thousands of
small growers that operate on much less than 5,000 [square
feet]. [This bill] will round out the licensing structure that
was put in place last year so that it will accurately reflect
the business activities currently taking place across the
state."
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
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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
California Department of Public Health (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
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
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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.) 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. According to 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."
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The CMCR continues, "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, which legalized the use of medical
marijuana. 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 and the State Water Resources Control
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Board, 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.
Commercial and Personal Use Cultivation. According to the
author, "Many medical cannabis farmers across California grow
only a handful of plants on relatively small plots of land.
These cottage farmers often rely on medical cannabis cultivation
to supplement their income, or simply as one product in a larger
agricultural portfolio." The author goes on to say, "The
creation of a cottage license that provides a viable pathway to
compliance for the small farmers that operate throughout the
state will maximize the number of businesses that come into
compliance."
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.
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
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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. 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 2385 (Jones-Sawyer) of the current legislative session
prohibits licensing authorities from requiring a local license,
permit, or other authorization, and would require the issuance
of a state license, if the authorities determine that the
applicant meets all of the requirements of the act, as
specified, in the City of Los Angeles. STATUS: This bill will
also be heard before the Assembly Committee on Business and
Professions during today's hearing.
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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.
Prior Related Legislation. AB 266 (Bonta, Cooley, Jones-Sawyer,
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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:
The California Growers Association (CGA) writes in support, "CGA
has conducted numerous community workshops throughout the state
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and found that the smallest growers didn't fit into the [Act]'s
license framework due to the simple fact they grew significantly
less product than the smallest license category "type 1" at
5,000 square feet. By creating a smaller license type that
accurately reflects the smallest cultivation operation the state
will realize greater regulatory compliance because cottage
growers will identify with a license category that accurately
fits the scope of their regulated business."
The Consortium Manage Group writes in support, "Creating a new
license for small cultivators, with a maximum of 2500 square
feet for outdoor cultivation and 500 square feet for indoor
cultivation, ensures that small business have a licensing
category and a regulatory structure that is consistent with the
size of the cultivation."
Safe Access for Americans (ASA) writes in strong support for
"licensing and sensible regulations for commercial medical
cannabis cultivation and other activity." ASA goes onto say,
"The addition of a license for smaller-scale cultivators is an
important improvement to the [Act]. The "cottage" cultivators
anticipated by [this bill] will play an important role in
increasing the quantity and variety of medical cannabis that an
estimated 1.4 million legal patients need to treat the symptoms
of chronic pain, cancer, arthritis, migraines, and other serious
conditions."
ARGUMENTS IN OPPOSITION:
None on file.
POLICY ISSUES FOR CONSIDERATION:
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This bill may be premature given that the Act and Bureau are
relatively new and the structure of each is still being
developed. It is unclear if this additional license type is
necessary, although the license type will allow small
cultivation to comply more easily with the provisions of the Act
and may encourage hesitant cities and counties to allow
cultivation if in smaller quantities.
REGISTERED SUPPORT:
California Growers Association (sponsor)
Consortium Manage Group
Safe Access for Americans
REGISTERED OPPOSITION:
None on file.
Analysis Prepared by:Gabby Nepomuceno / B. & P. / (916) 319-3301