BILL ANALYSIS Ó AB 2679 Page 1 Date of Hearing: April 12, 2016 ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS Rudy Salas, Chair AB 2679 (Cooley) - As Amended March 18, 2016 SUBJECT: Medical marijuana: regulation: research. SUMMARY: This bill increases the reporting requirements of the Bureau of Medical Marijuana Regulation (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 the California Marijuana Research Program within the University of California to include in its studies the effect of marijuana on a person's motor skills. EXISTING LAW: 1)Establishes the Bureau of Medical Marijuana to oversee the licensing and regulation of medical marijuana. (Business and Professions Code (BPC) Section 19300, et seq.) 2)Defines "cannabis" to be all parts of the Cannabis plant for specified species, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. (BPC Section 19300.5(f)) AB 2679 Page 2 3)Defines "commercial cannabis activity" as the cultivation, possession, manufacture, processing, storing, laboratory testing, labeling, transporting, distribution, or sale of medical cannabis or a medical cannabis product, except as specified. (BPC Section 19300.5(k)) 4)Defines a "licensing authority" to be the state agency responsible for the issuance, renewal, or reinstatement of the license, or the state agency authorized to take disciplinary action against the license. (BPC Section 19300.5 (w)) 5)Defines "medical cannabis," "medical cannabis product," or "cannabis product" as a product containing cannabis, including, but not limited to, concentrates and extractions, intended to be sold for use by medical cannabis patients in California pursuant to the Compassionate Use Act of 1996, also known as Proposition 215. (BPC Section 19300.5(ag)) 6)Defines sub-classifications within the categories of cultivation, manufacturer, testing, dispensary, distribution and transporter, as specified. (BPC Section 19300.7) 7)Provides that grounds for disciplinary action include failure to comply with the any rule or regulation set by the Bureau; any other grounds contained in regulations adopted by a licensing authority pursuant to the regulation of medical marijuana; failure to comply with any state law, except as specified. (BPC Section 19311) 8)Provides that each licensing authority may suspend or revoke licenses, after proper notice and hearing to the licensee, if the licensee is found to have committed any action that is grounds for disciplinary action; may take disciplinary action AB 2679 Page 3 against a licensee for any violation when the violation was committed by the licensee's agent or employee while acting on behalf of the licensee or engaged in commercial cannabis activity; and must inform the Bureau, which will in turn inform all other licensing authorities and the Department of Food and Agriculture. (BPC Sections 19312 - 19313.5) 9)Requires a licensing authority to deny an application if either the applicant or the premises for which a state license is applied does not qualify, as specified. (BPC Section 19323) 10)Requires a licensing authority to notify the applicant, in writing, upon the denial of any application for a license; within 30 days of service of the notice, the applicant may file a written petition for a license with the licensing authority; and, upon receipt of a petition, the licensing authority is required to set the petition for hearing. (BPC Section 19324) 11)Requires each licensing authority to submit, beginning on March 1, 2023, and on or before March 1 of each following year, to the Legislature an annual report on the authority's activities and post the report on the authority's Internet Web site; the report must include, but not be limited to, the following information for the previous fiscal year: a) The amount of funds allocated and spent by the licensing authority for medical cannabis licensing, enforcement, and administration; b) The number of state licenses issued, renewed, denied, suspended, and revoked, by state license category; c) The average time for processing state license AB 2679 Page 4 applications, by state license category; d) The number and type of enforcement activities conducted by the licensing authorities and by local law enforcement agencies in conjunction with the licensing authorities or the bureau; and, e) The number, type, and amount of penalties, fines, and other disciplinary actions taken by the licensing authorities. (BPC Section 19353) 12)Requires the Bureau to contract with the California Marijuana Research Program (CMRP), known as the Center for Medicinal Cannabis Research (CMCR), authorized pursuant to Section 11362.9 of the Health and Safety Code (HSC), to develop a study that identifies the impact of cannabis on motor skills. 13)Establishes the CMRP within the University of California (UC) to study the efficacy and safety of administering marijuana as part of medical treatment; specifies program parameters that the CMRP must develop in order to solicit proposals for research projects, including but not limited to: a) Demonstrating the use of key personnel; b) Procedures for patient outreach; c) Protocols for studying serious illnesses, as specified; d) Proper facilities, i.e. specimen laboratories and suitable equipment to analyze marijuana; e) Adequate information technology systems, i.e. patient registry and data collection; and AB 2679 Page 5 f) Maintaining objectivity and scientific merit. (HSC Section 11362.9) THIS BILL: 1)Requires the Bureau to comply with the reporting requirements pursuant to Government Code 9795. 2)Requires the licensing authorities to include in its annual report to the Bureau: a) The number of appeals of denial of state licenses or other disciplinary actions taken by the licensing authorities, and the amount of time spent on these appeals; and, b) The number of complaints submitted by citizens or representatives of cities or counties regarding licensees, provided as both by statewide and geographical region. 3)Expands the CMRP program parameters to include studies to ascertain the effect of marijuana on motor skills. FISCAL EFFECT: Unknown. This bill is keyed fiscal by the Legislative Counsel. COMMENTS: Purpose. This bill increases the reporting requirements of the Bureau of Medical Marijuana Regulation (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 the California Marijuana Research Program within AB 2679 Page 6 the University of California to include in its studies the effect of marijuana on a person's motor skills. This bill is sponsored by the author. According to the author, "The Medical Marijuana Regulation and Safety Act [(Act)] was a huge step forward in regulating the medical cannabis industry which has effectively operated in a legal gray area since the passage of [Proposition] 215. The [Act]'s passage last year created a robust administrative and regulatory structure at the state and local level over this industry. As California ramps up its licensing program, proper accountability and oversight are important to make certain state agencies are functioning efficiently and that community input is being effectively considered and tracked. [This bill] increases the reporting requirements regarding licensure denials, time of appeals, and citizen complaints to ensure the Bureau is operating in a timely manner and citizen complaints are being heard." 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. AB 2679 Page 7 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 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 AB 2679 Page 8 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." 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. AB 2679 Page 9 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 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 AB 2679 Page 10 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 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 AB 2679 Page 11 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 Business and Professions. 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 is pending in the Assembly Committee on Business and Professions. 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 is pending in the Assembly Committee on Agriculture. AB 2545 (Bonta) of the current legislative session authorizes the Governor to enter into agreements with federally recognized AB 2679 Page 12 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 is pending in the Assembly Committee on Business and Professions. 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 AB 2679 Page 13 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. REGISTERED SUPPORT: None on file. REGISTERED OPPOSITION: None on file. Analysis Prepared by:Gabby Nepomuceno / B. & P. / (916) 319-3301