BILL ANALYSIS Ó AB 2516 Page 1 Date of Hearing: May 4, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2516 (Wood) - As Amended April 6, 2016 ----------------------------------------------------------------- |Policy |Agriculture |Vote:|7 - 2 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Business and Professions | |13 - 1 | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill creates a "specialty cottage" license for eligible medical cannabis cultivators. Specifically, this bill: 1)Creates a Type 1C, or "specialty cottage" license to be issued by the California Department of Food and Agriculture (CDFA), for cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be AB 2516 Page 2 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 for indoor cultivation, on one premises. 2)Clarifies the role of the of the CDFA is not to supersede or limit the authority of the State Water Resources Control Board (SWRCB), regional water quality control boards, or the Department of Fish and Wildlife (DFW) when implementing and enforcing their statutory obligations or to adopting regulations to protect water quality, water supply, and natural resources. FISCAL EFFECT: 1)Unknown costs to CDFA to develop regulations, review and issue licenses, and enforce regulations as a result of more cultivators participating in the regulated market. While this bill does not expand the universe of potential licensed cultivators, this new specialty cottage license is intended to attract an unknown number of small cultivators who otherwise may opt out of the regulated market altogether. 2)Existing law authorizes CDFA to establish a scale of license fees, based on the size of the business, that would cover the cost of licensing and enforcement activities. However, the potentially broad appeal of this new license category could result in the enforcement and licensing workload not scaling proportionally to license fees, resulting in costs that exceed fee revenue in the initial years of implementation. COMMENTS: 1)Purpose. This bill is intended to help cottage farmers comply with the provisions of the Medical Marijuana Regulation and Safety Act (Act) by establishing a license that is more AB 2516 Page 3 appropriate for their size and output. Supporters argue that this will help encourage these cultivators to participate in the regulatory structure put in place by the Act. 2)Background. The Act, which consisted of three separate bills (243 (Wood), Chapter 688, Statutes of 2015; AB 266 (Bonta), Chapter 689, Statutes of 2015; and, SB 643 (McGuire), Chapter 719, Statutes of 2015) was enacted to bring licensure and regulation to the medical marijuana industry. The Act 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 Board, are responsible for developing environmental standards. 3)Size of the cottage industry. The precise size of the number of cottage farmers is unknown, but is likely in the range of tens of thousands statewide. This bill does not expand the number of eligible cultivators who may participate in the regulatory structure established by the Act. However, by creating a license that is more in line with the size of cottage farmers, this bill is more likely to bring these small AB 2516 Page 4 cultivators into the regulatory framework established by the Act. As a result, an intended impact of this bill is to increase the number of cultivators covered by the Act. Analysis Prepared by:Luke Reidenbach / APPR. / (916) 319-2081