BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2679


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          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))









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          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  








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            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  








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               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








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             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  








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          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.   








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          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  








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          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.   








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          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  








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          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  








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          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  








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          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  








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          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