BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  May 18, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2545 (Bonta) - As Amended April 26, 2016


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill authorizes the Governor to enter into agreements  
          concerning medical cannabis with federally recognized sovereign  
          Indian tribes, as specified, and authorizes the Governor to  
          delegate to the chief of the Bureau of Medical Marijuana  
          Regulation (Bureau) within the Department of Consumer Affairs  
          authority to negotiate the agreements.


          In addition, it requires any such agreement to require  
          individuals conducting medical cannabis business activity on  
          tribal land to meet the state and local licensure requirements  
          applicable in the jurisdiction of the local government in which  








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          the tribal land is located.


          FISCAL EFFECT:


          1)Assuming the Governor delegated authority to the Bureau to  
            negotiate agreements with federally recognized sovereign  
            Indian tribes, the Bureau would need $150,000 in fiscal year  
            2016-17, and $270,000 every year thereafter (Medical Marijuana  
            Regulation and Safety Act Fund). 



            Implementation would require an attorney to meet with all  
            Indian tribes in California that choose to enter into  
            agreements and negotiate the terms of the agreements, and  
            additional staff to assist with the development of regulations  
            and monitoring of agreements. 





          2)With approximately 110 federally recognized sovereign Indian  
            tribes and assuming all tribes would pursue an agreement with  
            the state, the Bureau would also incur about $115,000 in  
            travel expenses in the first year of implementation (Medical  
            Marijuana Regulation and Safety Act Fund).


          3)State licensure and enforcement costs could also potentially  
            be large if a large number of entities on tribal lands seek  
            state licensure (Medical Marijuana Regulation and Safety Act  
            Fund, reimbursed by licensure fees).  


          COMMENTS:









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          1)Purpose.    This bill is sponsored by the author.  According  
            to the author, this bill will guide California on a pathway to  
            integrating tribal governments and businesses on sovereign  
            land into the the regulated market for medical cannabis (or  
            marijuana).  



          2)Background. Medical cannabis, though illegal under federal  
            law, has been legal under state law since the passage of  
            Proposition 215 in 1996.  The Medical Marijuana Regulation and  
            Safety Act (MMRSA) was a package of three bills enacted  
            together in 2015 to regulate the medical marijuana industry  
            and license its participants. The bills created a  
            comprehensive state regulatory system for the commercial  
            cultivation, manufacture, retail sale, transport,  
            distribution, delivery, and testing of medical cannabis.   
            Various state agencies are tasked with implementation, and  
            implementation-related Budget Change Proposals proposed in the  
            2016-17 Governor's Budget being considered through the budget  
            process.



            MMRSA is based on a system of dual licensure-all businesses  
            must have both a state and a local license. However, under  
            current law, tribal governments are sovereign entities, not  
            subject to the new regulatory scheme. Under MMRSA, licensed  
            businesses can only conduct business with other licensees. If  
            businesses on sovereign land are unable to obtain a state  
            license, they would be excluded from the state system and  
            unable to legally interact with the rest of the industry.  


          
          3)Related federal memoranda.  The August 29, 2013 Memorandum  
            issued by the U.S. Department of Justice (DOJ) indicates that  
            while cannabis remains a Schedule 1 drug, the federal  








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            government is less inclined to intervene in states that have  
            authorized medical cannabis use if the states have strong and  
            effective regulatory and enforcement systems.  It also listed  
            federal enforcement priorities, including preventing diversion  
            to minors or to states where marijuana is illegal, preventing  
            violence and the use of firearms in trafficking, and  
            preventing drugged driving and adverse public health  
            consequences, among other priorities. 
            


            On October 28, 2014, U.S. DOJ published a memorandum regarding  
            cannabis issues on tribal lands.  The statement reaffirmed  
            that the Cole Memorandum does not alter the authority or  
            jurisdiction of the U.S. to enforce federal law on sovereign  
            lands; however, it stated the priorities listed in the 2013  
            Cole Memorandum will guide the U.S. Attorneys' cannabis  
            enforcement efforts on sovereign lands.  As such, in order for  
            a state to have a complete and robust regulatory system for  
            medical cannabis operations, the author of this bill believes  
            it is important to include businesses on sovereign lands.  





          4)Related legislation. Eight other bills active in this session  
            address various issues of cannabis regulation, taxation,  
            reporting, and other issues, including AB 1575 (Bonta), which  
            is pending on the Suspense File of this committee



          5)Prior Legislation.  AB 266 (Bonta, Cooley, Jones-Sawyer,  
            Lackey, and Wood), Chapter 689, Statutes of 2015; SB 643  
            (McGuire), Chapter 719, Statutes of 2015; and AB 243,  
            described above, were companion bills that formed the MMRSA.    










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           Analysis Prepared by:Lisa Murawski / APPR. / (916)  
          319-2081