BILL ANALYSIS Ó AB 2545 Page 1 Date of Hearing: May 18, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2545 (Bonta) - As Amended April 26, 2016 ----------------------------------------------------------------- |Policy |Business and Professions |Vote:|10 - 1 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- 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 AB 2545 Page 2 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: AB 2545 Page 3 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 AB 2545 Page 4 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. AB 2545 Page 5 Analysis Prepared by:Lisa Murawski / APPR. / (916) 319-2081