BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 643 (McGuire) - Medical marijuana
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|Version: May 6, 2015 |Policy Vote: B., P. & E.D. 7 - |
| | 0, GOV. & F. 5 - 1 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: May 18, 2015 |Consultant: Brendan McCarthy |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 643 would establish a licensing and regulatory
framework for medical marijuana, to be administered by a new
bureau within the Department of Consumer Affairs and enforced
primarily by local governments.
Fiscal
Impact:
Ongoing costs, likely over $20 million per year to license
medical marijuana cultivators, transporters, and dispensaries
by the new Bureau of Medical Marijuana Regulation (special
fund). For comparison, the California State Board of Pharmacy,
which licenses and regulates pharmacists and pharmacies in the
state has an annual budget of about $20 million per year.
SB 643 (McGuire) Page 1 of
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The bill would create a new Bureau dedicated to licensing and
enforcing licensing requirements on the medical marijuana
industry. The annual costs to operate the new Bureau are
highly uncertain. For example, the number of medical marijuana
cultivators, transporters, and dispensaries that would apply
for licensure under the bill is not known, in part because it
is difficult to know how the licensing and regulatory
requirements in the bill will change current practices in the
medical marijuana industry.
Unknown costs for enforcement of the bill's requirements by
local governments (local funds and special funds). The bill
requires both the new Bureau and local governments to take
responsibility for enforcement activity. How those
responsibilities will be divided between levels of government
and how much funding the state will make available to local
governments for enforcement activity is unknown at this time.
Because local governments have the legal authority under the
bill to prohibit the operation of medical marijuana facilities
in their jurisdictions, local governments can essentially opt
out of the enforcement responsibilities required under the
bill. Thus the state is not likely to be required to reimburse
local governments for enforcement costs.
Unknown costs for the Department of Justice to conduct
criminal background checks of licensees (special fund). Under
current practice, applicants for a criminal background check
are required to pay the $65 cost to conduct a criminal
background check using fingerprint databases.
Unknown fee revenues to offset the costs to implement the bill
(special fund). The bill gives the new Bureau broad authority
to set licensing fees sufficient to pay for the Bureau's costs
to operate the licensing program, costs incurred by the Bureau
or the Department of Justice to enforce the bill, costs
incurred by local law enforcement agencies to enforce the
bill, and costs incurred by state and local environmental
agencies for enforcement costs relating to cultivation
facilities. The fee revenues generated under the bill would
depend both on the allowed costs that are incurred at the
state and local level as well as the feasibility of collecting
sufficient fees from the medical marijuana industry. The bill
would continuously appropriate the fee revenues deposited in a
new special fund to implement the bill.
SB 643 (McGuire) Page 2 of
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Background: Under the Compassionate Use Act of 1996 (a voter approved
initiative measure), state law prohibits the criminal
prosecution of a patient with specified illnesses or a caregiver
for possession or cultivation of marijuana upon the
recommendation of a physician.
Under current law, the Department of Public Health operates a
program under which individuals can apply for an identification
card for the use of medical marijuana.
Proposed Law:
SB 643 would establish a licensing and regulatory framework
for medical marijuana, to be administered by a new bureau within
the Department of Consumer Affairs and enforced primarily by
local governments.
Specific provisions of the bill would:
Prohibit physicians who prescribe medical marijuana from
receiving compensation from licensed medical marijuana
facilities;
Prohibit a physician from prescribing medical marijuana,
unless the physician is the patient's attending physician;
Create a new Bureau of Medical Marijuana Regulation within the
Department of Consumer Affairs;
Authorize the new Bureau to issue and revoke licenses for
marijuana cultivation, manufacture, transportation, storage,
distribution and sale;
Require the Department of Consumer Affairs to provide an
initial loan to cover startup costs of the new Bureau, to be
paid back with subsequent fee revenues;
Authorize the new Bureau to adopt regulations, issue licenses,
set fees for application, licensing and renewal, and certify
laboratories for testing marijuana;
Require the new Bureau to develop standards for licensing,
protection of environmental, agricultural, consumer
protection, and food and safety requirements;
Provide that the bill does not supersede local ordinances or
regulations;
Require medical marijuana to be grown, transported, and sold
only under license;
Specify the requirements for licensure;
Require a criminal background check of an applicant as part of
SB 643 (McGuire) Page 3 of
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the licensure process;
Prohibit the issuance of a license if the applicant has one of
a specified list of convictions;
Prohibit a licensed facility from operating in a jurisdiction
that prohibits the establishment of that type of business;
Require the new Bureau to establish licensing fees sufficient
to pay for the costs of the licensing program, costs incurred
by the state for enforcement, costs incurred by local law
enforcement for enforcement, and costs for several state
agencies and local agencies to enforce regulations relating to
the environmental impact of licensed cultivation sites;
Create a new special fund for deposit of licensing fee
revenues and continuously appropriate those funds;
Require deposit of penalty revenues in the General Fund;
Specify the standards for transportation of medical marijuana;
Require local governments to enforce the statutory and
regulatory requirements of the bill;
Specify the standards for cultivation of medical marijuana;
Specify the licensing requirements for licensed facilities;
Require annual audits of all licensed facilities;
Specifically authorize a local government to impose a tax
measure relating to medical marijuana (local governments would
still need to receive voter approval for such tax measures);
Specify regulatory requirements for edible marijuana products;
Require the Board of Equalization to report on tax revenues
relating to medical marijuana.
Related
Legislation:
SB 1262 (Correa, 2014) was similar to this bill. That bill was
held in the Assembly Appropriations Committee.
AB 604 (Ammiano) would have required the Department of Alcohol
Beverage Control to regulate the cultivation and sale of
medical marijuana. That bill was held in the Senate Public
Safety Committee.
AB 1894 (Ammiano) is substantially similar to AB 604. Failed
passage on the Assembly Floor.
Staff
Comments: Prop 26 limits the imposition of fees by legislative action.
Under Proposition 26, state agencies may impose fees on
regulated entities to perform licensing activities and enforce
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licensing requirements.
As noted above, the bill requires that the duty of enforcing and
administering the bill be vested in the chief of the new Bureau
of Medical Marijuana Regulation. However, the bill also requires
that cities and counties shall have the full power and authority
to enforce the provisions of the bill. How the new Bureau and
local governments share responsibility for enforcement
activities and the level of grant funding that the Bureau makes
available to local governments for enforcement activity will
have a significant impact on how the bill's provisions will be
enforced.
The bill mandates that local governments enforce the
requirements of the bill (both explicit statutory requirements
and requirements in regulations adopted by the new Bureau of
Medical Marijuana Regulation). The bill also explicitly allows
local governments to prohibit medical marijuana establishments
in their jurisdiction. Because local governments can opt out of
the enforcement requirements of the bill by prohibiting medical
marijuana facilities in their jurisdiction, the bill does not
impose a reimbursable mandate on the state. (Note, however, that
the bill does authorize the new Bureau to establish licensing
fees sufficient to cover both the Bureau's licensing and
enforcement costs and local enforcement costs.) The only other
costs that may be incurred by a local agency relate to crimes
and infractions. Such costs are not reimbursable by the state
under the California Constitution.
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