BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  April 19, 2016


                   ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS


                                  Rudy Salas, Chair


          AB 2672  
          (Bonilla) - As Amended April 5, 2016


          SUBJECT:  Medical cannabis.


          SUMMARY:  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).


          EXISTING LAW:


          1)Requires specified entities under the jurisdiction of the  
            Department of Consumer Affairs (DCA) to provide on their  
            Internet web sites specified information pursuant to the  
            California Public Records Act and the Information Practices  
            Act, which must include information on suspensions,  
            revocations and other enforcement actions against licensees  
            pursuant to the Administrative Procedure Act; specifies that  








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            personal information about a licensee is not to be included on  
            the web site.  (BPC Section 27)
          2)Specifies the board and bureaus in this state that are under  
            the jurisdiction of the DCA, including the Bureau.  (BPC  
            Section 101)


          3)Specifies that an applicant to become licensed by a board or  
            bureau, as specified, including the Bureau, under the  
            jurisdiction of the DCA must submit a full set of fingerprints  
            for the purposes of conducting criminal history record checks.  
             (BPC Section 144)


          4)Establishes the Fund within the Professions and Vocations  
            Fund.  (BPC Sections 205.1 and 19351)


          5)Establishes the Act to provide for the 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; defines  
            several terms applicable to the Act;  establishes the Bureau  
            within the DCA to be supervised and controlled by the director  
            of the DCA; authorizes the Governor to appoint a chief of the  
            Bureau, to be confirmed by the Senate; specifies that the DCA,  
            Department of Food and Agriculture (CDFA), and the Department  
            of Public Health (CDPH) have the authority to issue, renew,  
            discipline, suspend, or revoke licenses, as specified;  
            authorizes the Bureau to convene an advisory committee to  
            advise the Bureau, the DCA, CDFA and CDFA on the development  
            of standards and regulations; requires the CDFA to make  
            available a certified organic designation and organic  
            certification program; requires the CDFA to establish a track  
            and trace program for reporting the movement of medical  
            marijuana items throughout the distribution chain, as  
            specified, requires each licensing authority to establish a  
            scale of application, licensing, and renewal fees, based on  








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            the cost of enforcing the Act; appropriates $10 million, as  
            specified, from the Fund to the DCA to implement the Bureau.   
            (BPC Section 19300, et seq.)


          6)Declares that the environmental impacts associated with  
            cultivation have increased, and unlawful water diversion for  
            irrigation have a detrimental effect on fish and wildlife and  
            their habitat; provides that cultivation sites may require  
            greater Department of Fish and Wildlife (CDFW) staff time and  
            personnel expenditures; requires the CDFW to establish the  
            watershed enforcement program; requires the CDFW to coordinate  
            with the State Water Resources Control Board (SWRCB) to  
            establish a permanent multiagency task force to address  
            environmental impacts, adopt regulations and a fee schedule.   
            (FGC Section 12029)


          7)Subjects any agency, authority, board, bureau, commission,  
            conservancy, council, department, division, or office of state  
            government, except as specified, to sunset review by the Joint  
            Sunset Review Committee, or relevant policy committees.  (GOV  
            Section 9147.7)


          8)Provides that indoor and outdoor cultivation activities must  
            adhere to state and local laws, as specified; provides that  
            state agencies, as specified, must address environmental  
            impacts and coordinate enforcement efforts.  (HSC Section  
            11362.769)


          9)Provides that qualified patients, as specified, who associate  
            within the state in order to collectively or cooperatively  
            cultivate are not solely based on that fact subject to  
            criminal sanctions; provides that this section is repealed  
            upon issuance of licenses under the Act one year after the  
            licensing authorities begin granting licenses.  (HSC Section  
            11362.775)








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          10)  Requires the CDFA to establish the Medical Cannabis  
            Cultivation Program (MCCP) to be administered by the secretary  
            of the CDFA, except as specified; specifies that a person or  
            entity who intends to cultivate must first obtain a license,  
            permit or other entitlement, as specified; specifies that a  
            person or entity must obtain a license, permit or other  
            entitlement pursuant to local provisions prior to applying for  
            state licensure; specifies that an application for a license  
            to cultivate cannot be submitted if it violates local  
            ordinances; authorizes local jurisdictions to issue or deny a  
            permit to cultivate; provides that a city, county to city and  
            count that issues or denies a conditional licensee to  
            cultivate must notify the CDFA; authorizes the secretary of  
            the CDFA to adopt and enforce regulations or emergency  
            regulations relating to implementing the MCCP; authorizes the  
            secretary of the CDFA to enter into a cooperative agreement  
            with a county agricultural commissioner to carry out  
            provisions; provides that the CDFA, in consultation with eh  
            Bureau, SWRCB, CDFW, and other state agencies as appropriate,  
            consider environmental impacts when developing the MCCP;  
            requires the CDFA to establish a program for the  
            identification of permitted plants at a cultivation site,  
            including identifiers and a fee structure; exempts a qualified  
            patient who cultivates for personal use, as specified.  (HSC  
            Section 11362.777)


          11)  Requires the State Board of Equalization (BOE), in  
            consultation with the CDFA, to adopt a system for reporting  
            the movement of commercial cannabis and cannabis products  
            throughout the distribution chain, employing secure packaging  
            and be capable of providing information to the BOE.  (RTC  
            Section 31020)


          12)  Expands the multiagency task force pilot project into a  
            permanent project the address the environmental impacts of  








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            cannabis cultivation on public and private lands in California  
            to ensure the reduction of adverse impacts throughout the  
            state.  (WAT Section 13726)


          THIS BILL:


          13)  Renames the act as the Medical Cannabis Regulation and  
            Safety Act and the bureau as the Bureau of Medical Cannabis  
            Regulation.


          14)  Renames the fund as the Medical Cannabis Regulation and  
            Safety Act Fund and the account as the Medical Cannabis Fines  
            and Penalties Account. 


          15)  Makes conforming changes to the act and would replace the  
            term "marijuana" with the term "cannabis."


          FISCAL EFFECT:  Unknown. This bill is keyed fiscal by the  
          Legislative Counsel. 


          COMMENTS:


          Purpose.  This bill is sponsored by the author.  According to  
          the author, "The term marijuana derives from a folk term for  
          cannabis brought over by Mexican immigrants who sought refuge  
          from the Mexican Revolution.  As the recreational use of smoking  
          cannabis and racial prejudice grew, propaganda against cannabis  
          featured false, lurid stories about African-American and Mexican  
          men committing outrageous acts of murder and mayhem.  Marijuana  
          effectively became more associated with these false stereotypes  
          and less with a form of medicine.  The term cannabis is a more  
          appropriate medical and botanical term as it does not carry the  








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          stigma that marijuana does."


          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  
          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.








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          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  
          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.










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          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."


          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  








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          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.    



          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.


          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  








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          delivery with a third party; would provide that a dispensary  
          that employs or uses the services of any person under 21 years  
          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.  NOTE: 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  








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          Professions during today's hearing.


          AB 2516 (Wood) of the current legislative session provides for  
          the issuance of a Type 1C, or "specialty cottage," state  
          cultivator license, as specified, by the CDFA. STATUS: This bill  
          will also be heard before the Assembly Committee on Business and  
          Professions during today's hearing.


          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  








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          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,  
            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  








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          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.


          REGISTERED SUPPORT:  


          None on file.


          REGISTERED OPPOSITION:  


          None on file.




          Analysis Prepared by:Gabby Nepomuceno / B. & P. / (916) 319-3301