BILL ANALYSIS Ó
SB 643
Page 1
Date of Hearing: July 7, 2015
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Susan Bonilla, Chair
SB 643(McGuire) - As Amended June 3, 2015
SENATE VOTE: 26-13
SUBJECT: Medical marijuana
SUMMARY: Establishes a comprehensive licensing and regulatory
framework for the cultivation, manufacture, transportation,
storage, distribution, and sale of medical marijuana to be
administered by the Office of Medical Marijuana Regulation
within the Business, Consumer Services, and Housing Agency.
EXISTING LAW:
1)Recognizes the authority of cities and counties to make and
enforce, within their borders, all local, police, sanitary,
and other ordinances and regulations not in conflict with
general interest laws. (Cal. Const. Article XI sec. 7)
2)Prohibits the possession, possession with intent to sell,
cultivation, sale, transportation, importation, or furnishing
of marijuana, except as otherwise provided by law. (Health
and Safety Code (HSC) Sections 11357, 11358, 11359, and 11360)
3)Prohibits prosecution of a patient or a patient's primary
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caregiver, under the Compassionate Use Act of 1996 (CUA), an
initiative measure, for possessing or cultivating marijuana
for personal medical purposes of the patient upon the written
or oral recommendation or approval of a physician. (HSC
Section 11362.5)
4)Licenses and regulates physicians and surgeons, including
osteopathic physicians, under the Medical Practice Act (Act)
by the Medical Board of California (MBC) within the DCA.
(Business and Professions Code (BPC) Section 2000 et seq.)
5)Defines "attending physician" as an individual who possesses a
license in good standing to practice medicine or osteopathy
issued by the Medical Board of California (MBC) or the
Osteopathic Medical Board of California (OMB) and who has
taken responsibility for an aspect of the medical care,
treatment, diagnosis, counseling, or referral of a patient and
who has conducted a medical examination of that patient before
recording in the patient's medical record the physician's
assessment of whether the patient has a serious medical
condition and whether the medical use of marijuana is
appropriate. (HSC Section 11362.7(a))
6)Defines "primary caregiver," for purposes of the CUA, as the
individual designated by a patient who has consistently
assumed responsibility for the housing, health, or safety of
that person. (HSC Section 11362.7(d))
7)Requires the California Department of Public Health to
establish and maintain a voluntary Medical Marijuana Program
for qualified patients to apply for identification cards, and
county health departments to issue identification cards to
qualified patients and their caregivers. (HSC Section 11362.7
et seq.)
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8)Provides that qualified patients, persons with valid
identification cards, and their designated primary caregivers
who associate in order to collectively or cooperatively to
cultivate marijuana, are not subject to criminal liability
solely on that basis. (HSC Section 11362.775)
THIS BILL:
Administrative Provisions
1)Defines the following terms:
a) "Licensed cultivation site" as a facility that plants,
grows, cultivates, harvests, dries, or processes medical
marijuana and that is issued a conditional license.
b) "Licensed dispensing facility" as a dispensary or other
facility that provides MM, MM products, or devices for the
use of medical marijuana or medical marijuana products that
is issued a conditional license.
c) "Licensed manufacturer" as a person who extracts,
prepares, derives, products, compounds, or repackages
medical marijuana or medical marijuana products into
consumable and nonconsumable forms and that is issued a
conditional license.
d) "Licensed transporter" as an individual or entity issued
a conditional license to transport medical marijuana to and
from facilities that have been issued conditional licenses
or medical marijuana products above a quantity limit, as
specified.
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2)Establishes the Office of Medical Marijuana Regulation
(Office) in the Business, Consumer Affairs, and Housing
Agency, under the supervision and control of the Chief of the
Office.
a) Provides the Office with the authority to issue,
suspend, or revoke conditional licenses for the
cultivation, manufacture, transportation, storage,
distribution, and sale of medical marijuana in the state
and to collect fees in connection with these actions, and
to create, issue, suspend, or revoke other licenses in
order to protect patient health and the public and to
facilitate the regulation of medical marijuana.
b) Requires the Chief to be appointed by the Governor,
subject to Senate confirmation.
c) Requires funds for the establishment and support of the
Office to be advanced as a loan from the General Fund, to
be repaid by the initial proceeds from fees collected
pursuant to this bill or any regulations adopted by this
bill.
3)Provides the Office with the authority to implement this bill,
including the authority to:
a) Establish necessary rules and regulations, in accordance
with the Administrative Procedure Act, and subject to local
control, as specified.
b) Set application, licensing, and renewal fees for
conditional license.
c) Establish standards for the cultivation, manufacturing,
transportation, storage, distribution, provision, donation,
and sale of medical marijuana and medical marijuana
products.
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d) Establish procedures for the issuance, renewal,
suspension, denial, and revocation of conditional licenses.
e) Enforcing the licensing and regulatory requirements of
this bill, subject to provisions of the bill specifying
enforcement.
f) Imposing a penalty authorized by these provisions or any
regulations adopted pursuant to these provisions.
g) Taking action with respect to an application for a
commercial license, as specified.
h) Overseeing the operation of the Medical Marijuana
Regulation Fund and the Special Account for Environmental
Enforcement, as specified.
i) Consulting with other state or local agencies,
departments, representatives of the medical marijuana
community, or public or private entities for the purposes
of establishing statewide standards and regulations.
4)Requires the Office, on or before January 1, 2018, to
promulgate regulations for implementation and enforcement,
including:
a) Procedures for the issuance, renewal, suspension,
denial, and revocation of conditional licenses.
b) Procedures for the appeal of fines and the appeal of
denial, suspension, or revocation of conditional licenses.
c) Application, licensing, and renewal forms and fees.
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d) A time period in which the Office shall approve or deny
an application for a conditional license.
e) Qualifications for licensees.
5)Requires the Office, in consultation with the Division of
Labor Standards Enforcement, to adopt regulations establishing
worker safety standards for licensed entities.
6)Prohibits the Office from issuing a conditional license unless
the applicant meets all application requirements, as
specified, and has demonstrated compliance with all applicable
agricultural, consumer protection, food and product safety,
and environmental requirements, including applicable water
quality standards.
7)Requires the Chief to keep a complete record of all facilities
issued a conditional license, which shall be made available on
the Office's website.
a) Prohibits the Office from disclosing sensitive
information, including the address or location of
cultivation sites.
b) Requires the Office to provide summary information on
all licensees including the name, the date the license was
issued, the status of the license, and the licensee's
mailing address.
c) Requires the Office to establish procedures to provide
state and local law enforcement, upon their request, with
24-hour access to information to verify a conditional
license, track transportation manifests, and track the
inventories of facilities issued a conditional license.
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Immunity and Exemptions
8)Provides that these provisions do not supersede the provisions
of Measure D, approved by the voters of the City of Los
Angeles on the May, 21, 2013, ballot for the city, or any
similar measure in other jurisdictions, which grants medical
marijuana businesses and dispensaries qualified immunity
consistent with the terms of the measure and local ordinances,
as specified.
9)Exempts from these provisions:
a) Patients who cultivate, possess, store, manufacture, or
transport marijuana exclusively for his or her personal
medical use and who do not sell, distribute, donate, or
provide marijuana to another person or entity.
b) Primary caregivers who cultivate, possess, store,
manufacture, or transport marijuana exclusively for the
personal medical use of no more than five qualified
patients and who do not receive renumeration for these
activities, except as specified.
10)After July 1, 2017, no longer exempts patients and primary
caregivers who engage in medical marijuana activities
collectively or cooperatively from criminal prosecution, and
instead extends that criminal immunity to an individual
employee, officer, or board member of a facility issued a
conditional license, as specified.
Conditional Licensing Provisions
11)Prohibits the sale or provision of medical marijuana to a
patient or caregiver other than through a licensed dispensing
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facility or delivery from a licensed dispensing facility; the
growth of medical marijuana other than at a licensed
cultivation site; the manufacturing of medical marijuana or
medical marijuana products other than by a licensed
manufacturer; and the transportation of medical marijuana
other than from one licensed facility to another. Authorizes
a licensed manufacturer to obtain medical marijuana from a
licensed cultivator, and to furnish medical marijuana to a
licensed dispensary.
12)Requires the Office, no later than July 1, 2018, to provide
for and issue conditional licenses, which are required for all
activities, including cultivation, processing, storage,
transport, and dispensing of medical marijuana.
13)Provides that the issuance of a conditional license does not
authorize a recipient to begin business operations, and
instead only certifies that the applicant has paid the state
license fee, successfully passed a criminal background check,
and met the state residency requirements.
14)Prohibits a conditionally licensed facility from commencing
activities until the applicant also obtained a license or
permit from a local jurisdiction in which he or she proposed
to operate, following the requirements of local ordinances.
15)Requires an applicant to do the following:
a) Pay the fee and register on forms prescribed by the
Chief, and provide the following information:
i) Name of all persons or entities having an ownership
interest, as specified, and the name, address, and date
of birth of each principal officer and board member.
ii)Address and telephone number of the facility, and for
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cultivation sites, the GPS coordinates.
b) Describe the scope of business.
c) Provide evidence that the applicant and the owner have
been legal full-time residents of the state for not less
than 12 months.
d) Provide detailed operating procedures, including
procedures for facility and operational security;
prevention of diversion; employee screening; storage of MM;
personnel policies; and recordkeeping procedures.
e) Provide evidence that the applicant has received all
required environmental permits, including compliance with
the California Environmental Quality Act and wastewater
discharge permits.
f) Provide the applicant's fingerprint images, as
specified.
g) Provide a statement signed under penalty of perjury that
the information provided is true.
16)Requires each location and discrete use of a single location
to obtain a conditional license, and provides that each
application for a conditional license is separate and
distinct.
17)Provides that a conditional license is valid for 12 months,
and after the initial 12-month period, may be renewed for a
period of 36 months.
18)Prohibits the Office from issuing a conditional license to a
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person or entity against whom there is a pending enforcement
case under a local ordinance, or who has been determined to
have violated an applicable local ordinance, as specified.
19)Authorizes a facility or entity that is operating in
conformance with local zoning ordinances and other
requirements on the effective date of this bill to continue
its operations until its application for conditional licensure
is approved or denied.
20)Authorizes the Office to issue a conditional license and send
proof of issuance to an applicant, provided the applicant has
not committed an act or crime constituting grounds for the
denial of licensure. Requires the Chief, by regulation, to
prescribe conditions upon which a person, whose conditional
license has previously been denied, suspended, or revoked, may
be issued a conditional license.
21)Requires an application for a conditional license to be
denied, and a conditional license suspended or revoked, for a
past felony conviction for the possession for sale, sale,
manufacture, transportation, or cultivation of a controlled
substance, a felony criminal conviction for drug trafficking,
a felony conviction for embezzlement, a felony conviction
involving fraud or deceit, or any violent or serious felony
conviction, as specified.
22)Provides that a conditional license shall not be denied
solely on the basis of a prior conviction for a felony that
was committed after the CUA, but which would not be a felony
after the enactment of this bill.
23)Authorizes the Chief to deny, suspend, or revoke a
conditional license when a conditional licensee, applicant, or
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employee, partner, officer, or member of an entity
conditionally licensed for specified reasons such as: making
untrue or misleading statements; engaging in conduct that
constitutes fraud or gross negligence; failing to comply with
these provisions or any rule or regulations adopted pursuant
to these provisions; or conduct that constitutes grounds for
denial of a license pursuant to the Business and Professions
Code, as specified.
24)Sets the following as reasons a conditional license shall not
be approved:
a) The applicant fails to meet requirements of this bill or
has had an applicable permit or license revoked or denied
by an applicable city, county, or city and county agency.
States that if a local government adopts an ordinance or
resolution authorizing MM to be cultivated, manufactured,
stored, distributed, or sold within its jurisdiction, it
shall submit to the Office documentation detailing their
renewal requirements.
b) The applicant, or any of its officers, directors,
owners, members, or shareholders, is a minor.
c) The applicant has knowingly answered a question or
request for information falsely on the application form or
failed to provide information requested.
d) The applicant, or any of its officers, directors,
owners, members, or shareholders has been sanctioned by the
Office, a city, county, or city and county, for MM
activities conducted in violation of this part or any
applicable local ordinance or has had a license revoked in
the previous five years.
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e) The proposed cultivation, processing, possession,
storage, manufacturing, testing, transporting,
distribution, provision, or sale of medical marijuana will
violate any applicable local law or ordinance.
f) The applicant or the owner is unable to establish that
he or she has been a resident of the state for at least 12
months.
25)Specifies that a conditional license is subject to the
restrictions of the local jurisdiction in which the facility
operates or proposes to operate. Clarifies that even if a
conditional license has been granted pursuant to this part, a
facility shall not operate in a local jurisdiction that
prohibits the establishment of that type of business.
Specifies that local jurisdictions retain the power to assess
fees and taxes, as applicable, on facilities that are
conditionally licensed and the business activities of those
licensees.
26)Authorizes the Office to adopt regulations to limit the
number of conditional licenses issued upon a finding that the
otherwise unrestricted issuance of conditional licenses is
dangerous to the public health and safety.
Fee Provisions
27)Sets the conditional licensing fee at a level sufficient to
fund the Office's administrative costs (in overseeing the
licensing program, in establishing health and safety standards
and in certifying testing laboratories), costs incurred by the
Office, the Department of Justice, law enforcement, and other
public safety entities for enforcing these provisions.
28)Requires a cultivation facility fee to be assessed, in
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addition to a conditional licensing fee, set at an amount
sufficient to cover the reasonable regulatory costs of
enforcing environmental impact provisions of cultivation
facilities. Requires this fee to be distributed between the
State Water Resources Control Board, Department of Fish and
Wildlife, Department of Forestry and Fire Protection,
Department of Pesticide Regulation, Department of Food and
Agriculture, and local law enforcement, as specified.
29)Establishes the Medical Marijuana Regulation Fund (Fund) in
the State Treasury and states that all fees collected pursuant
to the Act shall be deposited into the Fund. Provides that
all moneys in the fund are available, upon appropriation, to
the Office solely for the purposes of fully funding and
administering the Act.
30)Creates the Special Account for Environmental Enforcement as
an account within the Fund and provides that the moneys in the
account are available, upon appropriation, to the Office to
distribute monies to the entities listed above to be used to
enforce the environmental regulation of licensed cultivation
sites.
31)Requires all penalties collected to be deposited directly
into the General Fund, to be available upon appropriation.
32)Authorizes the Office to establish and administer a grant
program to allocate monies from the Fund to state and local
entities for the purpose of assisting with medical marijuana
regulation and enforcement of this part.
Transportation Provisions
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33)Specifies requirements for a licensed transporter to include
requirements that it: ship only to facilities issued a
conditional license and only in response to a request for a
specific quantity and variety; complete a shipping manifest
form prescribed by the Office prior to transporting medical
marijuana products; securely transmit a copy of the manifest
to the licensee that will receive the medical marijuana
product as well as to the Office prior to transport; and that
both transporters and licensed facilities maintain each
shipping manifest and make it available to local code
enforcement officers, any other locally designated enforcement
entity as well as the Office upon request.
34)Specifies transported medical marijuana products be
transported only in a locked, safe and secure storage
compartment that is securely affixed to the interior of the
transporting vehicle and not visible from outside the vehicle.
Prohibits the vehicle from having external markings that it
is transporting medical marijuana. Requires the vehicle
travel directly from one licensed facility to another licensed
facility authorized to receive the shipment.
35)Requires transport vehicles carrying more than $10,000 retail
value of medical marijuana to be staffed with a minimum of two
employees, one of whom must remain with the vehicle at all
times when the vehicle contains medical marijuana. Requires
each transport team member to have access to a secure form of
communication by which to communicate with personnel at the
licensed facility at all times when the vehicle contains
medical marijuana. Requires each transport team member to
possess documentation of licensing and a government-issued
identification card at all times when transporting or
delivering medical marijuana, and to produce it to the Office
or law enforcement upon request. Clarifies that these
provisions do not authorize or permit a licensee to transport
medical marijuana or medical marijuana products outside the
state.
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36)Provides that these transportation provisions only apply to
licensed transporters.
37)Prohibits a local jurisdiction from preventing transportation
through or to a facility issued a conditional license by a
conditionally licensed transporter acting in compliance with
the Act.
Enforcement Provisions
38)Clarifies that a state agency is not required to enforce
local laws regarding the site or operation of a facility
issued a conditional license.
39)Authorizes the Office to assist state taxation authorities in
the development of uniform policies for the state taxation of
licensees.
40)Authorizes the Office to enforce all of the requirements of
this part, including any regulations adopted pursuant to this
part.
41)Requires the Office to delegate the authority to enforce the
requirements of this part, including any regulations, to a
local government upon request of that entity.
42)Provides that nothing in this part shall be interpreted to
supersede or limit local authority, or interpreted to require
the Office to undertake local enforcement.
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43)Establishes a fine of up to $35,000 for each willful
violation of conditional license application provisions of the
Act, and a fine of up to $10,000 for each technical violation,
as specified.
44)Authorizes a District Attorney, County Counsel, City Attorney
or City Prosecutor to bring an action to enjoin a violation or
the threatened violation of the Act. Provides that the action
be brought in the county in which the violation occurred or is
threatened to occur and that a local government's authority to
take requisite enforcement actions pertaining to its own
ordinances or regulations is not diminished. Clarifies that
an action under the MMPA may still be taken. Clarifies that
the Act shall not be construed to limit a law enforcement
agency's ability to investigate unlawful activity in relation
to a facility issued a conditional license.
Cultivation Provisions
45)Requires the Office to notify local law enforcement of all
conditional licenses issued for cultivation sites in that
jurisdiction.
46)Requires a licensed cultivation site to display the state
license in an available and easy to read manner at the
location.
47)Requires that no later than January 1, 2022, all medical
marijuana grown, produced, distributed and sold in the state
meet the certified organic standards. Requires the Office to
establish appellations of origin for marijuana grown in
California and work with county agricultural commissioners to
provide all the information and forms required for conditional
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licensure as a cultivation site in a single location,
including state licensure, local requirements in that
jurisdiction, and environmental requirements.
Security, Recordkeeping, and Other Regulatory Provisions
48)Requires conditionally licensed facilities to implement
safety security measures to both deter and prevent
unauthorized entrance into areas containing marijuana and
theft of marijuana at those facilities to be implemented by a
facility issued a conditional license. Requires security
measures to include: preventing individuals from remaining on
the premises of the facility if they are not engaging in
activity expressly related to the operations of the facility;
establishing limited access areas accessible only to
authorized facility personnel: and storing all finished
marijuana in a secured and locked room, safe, or vault, and in
a manner as to prevent diversion, theft, and loss, except
small amounts used for display, samples, or immediate sale.
49)Requires a facility issued a conditional license to notify
appropriate law enforcement authorities within 24 hours after
discovering significant discrepancies identified during
inventory, as determined by the Office; diversion, theft,
loss, or any criminal activity involving the facility or a
facility agent; the loss or unauthorized alteration of records
related to marijuana, registered qualifying patients, personal
caregivers, or facility agents; and any other breach of
security.
50)Requires a licensed cultivation site to weigh, inventory, and
account for on video, all medical marijuana to be transported
prior to its leaving its origination location. Requires that,
within eight hours after arrival at the destination, the
licensed dispensing facility shall reweigh, reinventory, and
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account for on video, all transported marijuana.
51)Requires the Office to maintain confidentiality for
information identifying the names of patients, their medical
conditions, or the names of their primary caregivers received
and contained in records kept by the Office for the purposes
of administering the Act and exempts this information from the
California Public Records Act. States that this information
is not subject to disclosure to an individual or private
entity, except as necessary for authorized employees of the
state to perform official duties pursuant to the Act.
52)Specifies that these provisions do not preclude the Office
from notifying state or local agencies about information
submitted to the Office that the employee suspects is
falsified or fraudulent; notifications from the Office to
state or local agencies of apparent violations of this Act or
an applicable local ordinance; verification of requests by
state or local agencies to confirm licenses and certificates
issued by the Office or another state agency; or providing
information requested pursuant to a court order or subpoena
issued by a court, an administrative agency, or local
governing body authorized by law to issue subpoenas.
53)Specifies that information shall not be disclosed beyond what
is necessary to achieve the goals of a specific investigation
or notification or the parameters of a specific court order or
subpoena.
54)Provides that the actions of a licensee, its employees, and
its agents, that are permitted pursuant to a conditional
license and that are conducted in accordance with the
requirements of the Act and regulations adopted pursuant to
the Act, are not unlawful under state law and shall not be an
offense subject to arrest or prosecution.
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55)Provides that the actions of a person who, in good faith and
upon investigation, allows his or her property to be used by a
licensee, its employees, and its agents, as permitted pursuant
to a conditional license, are not unlawful under state law and
shall not be an offense subject to arrest or prosecution.
56)Sets forth requirements for record keeping by a licensee,
specifically that a licensee shall not cultivate, process,
store, manufacture, transport, or sell medical marijuana in
the state unless accurate records are kept at the licensed
premises of the growing, processing, storing, manufacturing,
transporting, or selling by the licensee in the state.
a) States that the records shall include the name and
address of the supplier of marijuana received or possessed
by the licensee, the location at which the marijuana was
cultivated, the amount of marijuana received, the form in
which it is received, the name of the employee receiving
it, and the date of receipt. States that these records
shall also include receipts for all expenditures incurred
by the licensee and banking records, if any, for all funds
obtained or expended in the performance of any activity
under the authority of the conditional license.
b) Authorizes a licensee who has a conditional license for
more than one premises to keep all records at one of the
conditionally licensed premises, and requires records to be
kept for a period of seven years from the date of the
transaction.
57)Authorizes the Office or a local agency delegated the
authority to enforce the licensing requirements of this Act to
examine the books and records of a conditional licensee and
visit and inspect the premises. Requires books or records
requested by the Office or that local agency to be provided by
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the conditional licensee no later than five business days
after the request is made.
58)Authorizes the Office or a local agency delegated the
authority to enforce the licensing requirements of this Act to
enter and inspect the premises of a facility issued a
conditional license between the hours of 8 a.m. and 8 p.m. on
any day that the facility is open, or at any reasonable time,
to ensure compliance and enforcement of the provisions of the
Act or a local ordinance. Provides that if a licensee or an
employee of a licensee refuses, impedes, obstructs, or
interferes with an inspection, the conditional license may be
summarily suspended and the Office shall directly commence
proceedings for the revocation of the conditional license.
59)Provides that if a licensee fails to maintain or provide the
books and records required, the licensee shall be subject to a
civil fine of $15,000 per individual violation.
60)Authorizes the Office or a local agency delegated the
authority to enforce the licensing requirements of this Act to
require a licensee to contract for an independent audit of the
records required under these provisions, and that the licensee
shall be liable for all costs associated with the audit.
Taxation Provisions
61)Authorizes a city, county, or city and county to impose a tax
on the privilege of cultivating, dispensing, producing,
processing, preparing, storing, providing, donating, selling,
or distributing marijuana by a licensee operating under the
Act.
62)Requires the Board of Supervisors or City Council to specify
in the ordinance the activities subject to the tax, the
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applicable rate or rates, the method of apportionment, and the
manner of collection of the tax. Provides that the tax may be
imposed for general governmental purposes or for purposes
specified in the ordinance.
63)Specifies that the tax authorized may be imposed upon any or
all of the activities outlined above, regardless of whether
the activity is undertaken individually, collectively, or
cooperatively, and regardless of whether the activity is for
compensation or gratuitously, as determined by the Board of
Supervisors or City Council. Specifies that a tax for these
purposes is applicable voter approval requirements imposed by
law.
64)Specifies that these provisions do not limit or prohibit the
levy or collection or any other fee, charge, or tax, or a
license or service fee or charge upon, or related to, the
activities outlined above, and shall not be construed as
limiting the tax authority of a city, county, or city and
county as provided by law.
65)Requires, on or before July 1, 2016, the State Board of
Equalization (BOE) to complete a report and submit it to the
Legislature and Governor's Office on the estimated tax
collected on the sale of medical marijuana, using the most
current data available. States that the report should also
include expected tax revenues, under the existing tax
structure, for the years 2016 to 2021, inclusive.
Health, Safety, and Labeling Provisions
66)Defines the following terms in the Sherman Food, Drug and
Cosmetics Law:\
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a) "Edible medical marijuana product" as medical marijuana
or a medical marijuana-derived product that is ingested or
meant to be ingested through the mouth and into the
digestive system.
b) "Labor peace agreement" means an agreement between an
entity and a bona fide labor organization that, at a
minimum, protects the state's proprietary interests by
prohibiting labor organizations and members from engaging
in picketing, work stoppages, boycotts, and any other
economic interference with the applicant's business. This
agreement means that the applicant has agreed not to
disrupt efforts by the bona fide labor organization to
communicate with, and attempt to organize and represent,
the applicant's employees.
c) "Representative samples" as samples taken from each
batch or shipment of medical marijuana received from a
licensed cultivation site or any other source if intended
for sale.
67)Requires the Office, by July 1, 2017, to report to the
Legislature on the feasibility of developing a program to
certify laboratories for the testing of medical marijuana and
related products and the feasibility of a labeling requirement
for edible marijuana products that incorporates information on
the cannabinoid content.
68)Requires a facility issued a conditional license to bear the
responsibility for:
a) Maintaining supplier information in order for recall
procedures to be implemented, if and when necessary; and
b) Labeling of all medical marijuana and medical marijuana
products that shall, at a minimum, include the following:
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i) A list of pharmacologically active ingredients,
including, but not limited to, tetrahydrocannabinol (THC)
and cannabidiol (CBD) content, clear recommended dosage,
and the size or volume of the recommended dose.
ii)Clear indication, in bold font, that the product
contains medical marijuana.
iii)The statement "FOR MEDICAL USE ONLY. KEEP OUT OF REACH
OF CHILDREN AND ANIMALS" in bold print.
iv)Identification of the source and date of cultivation and
manufacture.
v) The name and location of the dispensary providing
the product, and the date of sale.
vi)Any other requirements set by the Office.
69)Provides that for purposes of these provisions, edible
medical marijuana products are deemed to be unadulterated food
products. Authorizes baked edible medical marijuana products,
including but not limited to, brownies, bars, cookies and
cakes, tinctures and other edible medical marijuana products
that do not require refrigeration or hot holding to be
manufactured, sold or otherwise distributed at facilities
issued a conditional license under the Act.
70)Requires a facility issued a conditional license to have an
owner or employee who has successfully passed an approved and
accredited food safety certification examination prior to
selling, manufacturing or distributing edible medical
marijuana products requiring refrigeration or hot holding.
Requires individuals manufacturing or selling edible medical
marijuana products to thoroughly wash their hands before
commencing production and before handling finished edible
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medical marijuana products.
71)States that all edible medical marijuana products sold for
direct consumption and infused with marijuana concentrate
shall be individual wrapped at the original point of
preparation.
72)Requires products containing THC to be prepared in compliance
with maximum potency standards for THC and THC concentrates
set forth in the Office's regulations.
73)Sets forth requirements for labeling of edible medical
marijuana products. Requires, prior to sale or distribution
at a licensed dispensing facility, edible medical marijuana
products shall be labeled and in an opaque and tamper evident
package. Labels and packages of edible medical marijuana
products shall not be made to be attractive to children.
Prohibits the use of photos or images of food on products or
labels, and only authorizes the use of generic food names to
describe the products.
74)All edible medical marijuana product labels shall include the
information listed above, prominently displayed and in a clear
and legible font, and also the net weight of medical marijuana
in package and a warning if nuts or other known allergens are
used and shall include the total weight, in ounces or grams,
of medical marijuana in the package.
Physician Provisions
75)Requires the MBC to prioritize cases involving physicians who
recommend marijuana to patients for medical purposes without a
good faith prior examination of the patient and medical reason
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therefor.
76)Makes it a misdemeanor for a physician and surgeon who
recommends medical marijuana to a patient to accept, solicit,
or offer any form of remuneration from or to a facility issued
a conditional license to engage in medical marijuana
activities if the physician and surgeon or his or her
immediately family have a financial interest in that facility.
77)Requires the MBC to consult with the California Marijuana
Research Program, known as the Center for Medicinal Cannabis
Research, on developing and adopting medical guidelines for
the appropriate administration and use of medical marijuana.
78)Prohibits a physician and surgeon from recommending medical
marijuana to a patient unless that person is the patient's
attending physician, as defined under existing law.
79)Requires advertising for physician recommendations for
medical marijuana to meet all requirements to bear a
prescribed notice for consumers and comply with false
advertising prohibitions for healing arts practitioners, as
specified, and prohibits price advertising that is fraudulent,
deceitful, or misleading.
FISCAL EFFECT: According to the Senate Appropriations Committee
analysis dated May 28, 2015:
Ongoing costs, likely over $20 million per year to license
medical marijuana cultivators, transporters, and dispensaries
by the new Office of Medical Marijuana Regulation (special
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fund). For comparison, the California State Board of Pharmacy,
which licenses and regulates pharmacists and pharmacies, has
an annual budget of about $20 million per year.
The bill would create a new Office dedicated to licensing and
enforcing licensing requirements on the medical marijuana
industry. The annual costs to operate the new Office 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 the Office to enforce its provisions, but requires
the Office to delegate enforcement authority to requesting
local agencies. 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.
Unknown fee revenues to offset the costs to implement the bill
(special fund). The bill gives the new Office broad authority
to set licensing fees sufficient to pay for the Office's costs
to operate the licensing program, costs incurred by the Office
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.
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
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are required to pay the $65 cost to conduct a criminal
background check using fingerprint databases.
Ongoing costs of about $1 million per year for enforcement of
food and drug safety requirements on medical marijuana
products by the Department of Public Health (General Fund or
fee revenues from licensees).
COMMENTS:
Purpose. This bill is author sponsored. According to the
author, "SB 643 seeks to resolve many of the issues created by
the enactment of the Compassionate Use Act and subsequent
legislation. Our bill creates a statewide comprehensive program
overseeing the medical marijuana industry, from planting to
consumption, and all the steps in between. California voters
made it clear that they wanted medical marijuana to be
legalized, but issues and concerns for growers, doctors,
dispensaries, law enforcement, district attorneys, cities,
counties and others have only become more complicated.
I represent the primary growing region for medical marijuana in
the western United States, specifically remote expanses of
Mendocino, Humboldt and Trinity counties, which are responsible
for up to 70% of the marijuana grown in the west. Much of this
area of the state has come to rely on the economic benefits of
marijuana cultivation, but also suffers from the negative
environmental, public safety and public health effects that can
arise from rogue cultivators and lack of regulation. Trespass
grows have become an environmental disaster in this region,
illegally diverting millions of gallons of water from rivers and
streams, creating a dumping ground for pesticides, insecticides,
rodenticides and fertilizers, and depositing huge amounts of
sediment into our waterways from crop runoff.
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Since the voters of California passed Proposition 215 in 1996,
it has become clear that there needs to be a comprehensive
regulation bill from the Legislature that oversees the
cultivating, processing, manufacturing, transportation,
prescribing and sale of medical marijuana. The Legislature has
worked hard over the last couple of years to enact a regulatory
program that will recognize the voter's mandate, streamline the
ability of the industry to grow and sell a legal product and
that this bill contains much of that hard work as well as
reflects the efforts of many groups, individuals who have spent
years working in this industry.
Currently, there are virtually no rules and regulations on the
cultivation side of the medical marijuana industry, and it is
important that we bring this legal crop into the regulatory
framework expected for other commodities. The severe drought
California is now experiencing has only made the need for this
legislation all the more urgent."
The Compassionate Use Act (CUA) and SB 420. In 1996, voters
approved the CUA, which allowed patients and primary caregivers
to obtain and use medical marijuana, as recommended by a
physician, and prohibited physicians from being punished or
denied any right or privilege for making a medical marijuana
recommendation to a patient. In 2003, SB 420 (Vasconcellos),
Chapter 875, Statutes of 2003, established the Medical Marijuana
Program (MMP), which allowed patients and primary caregivers to
collectively and cooperatively cultivate medical marijuana, and
established a medical marijuana card program for patients to use
on a voluntary basis. The card can be used to verify that a
patient has authorization to possess, grow, transport, or use
medical marijuana in California, and that a caregiver has
authorization to possess, grow, and transport medical marijuana
in California. The MMP facilitates the registration of
qualified patients and their caregivers through a statewide
identification system, and qualified patients and their
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caregivers may apply for and be issued an identification card
through their county of residence. Upon issuance of the card,
it is registered with an online database which law enforcement
can use to verify whether a card is valid.
Under the MPP, a person is required to get a recommendation for
medical marijuana from an attending physician, which is defined
to mean someone who, " ?has taken responsibility for an aspect
of the medical care, treatment, diagnosis, counseling, or
referral of a patient and who has conducted a medical
examination of that patient before recording in the patient's
medical record the physician's assessment of whether the patient
has a serious medical condition and whether the medical use of
marijuana is appropriate." Written documentation of this
recommendation is required to be submitted to the county in
order to receive a medical marijuana card. However, since the
passage of Proposition 215 and SB 420, the state has not adopted
a framework to provide for appropriate licensure and regulation
of medical marijuana. As a result, in the nearly 20 years since
the passage of Proposition 215, there has been an explosion of
medical marijuana collectives and cooperatives that are largely
left to the enforcement of local governments, resulting in the
creation of a patchwork of local regulations for these
industries and with little statewide involvement.
The California Attorney General's Compassionate Use Guidelines.
SB 420 required the California Attorney General to "?develop and
adopt appropriate guidelines to ensure the security and
non-diversion of marijuana grown for medical use by patients
qualified under the Compassionate Use Act of 1996." 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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According to a 2011 letter, after a series of meeting with
stakeholders to assess whether to clarify the 2008 guidelines to
stop the exploitation of California's medical marijuana laws by
gangs, criminal enterprises, and others, the Attorney General
decided to postpone the issuance of new guidelines because of
pending litigation and to urge the Legislature to amend the law
to establish clear rules governing access to medical marijuana.
California Supreme Court Affirms Local Control Over Medical
Marijuana. By exempting qualified patients and caregivers from
prosecution for using or from collectively or cooperatively
cultivating medical marijuana, the CUA and the MPP essentially
authorized the cultivation and use of medical marijuana. These
laws have triggered the growth of medical marijuana dispensaries
in many localities, and in response, local governments have
sought to exercise their police powers to regulate or ban
activities relating to medical marijuana. After numerous court
cases and years of uncertainty relating to the ability of local
governments to control medical marijuana activities,
particularly relating to the ability to control the zoning,
operation, and existence of medical marijuana dispensaries, the
California Supreme Court, in City of Riverside v. Inland Empire
Patients (2013) 56 Cal. 4th 729, held that California's medical
marijuana statutes do not preempt a local ban on facilities that
distribute medical marijuana. The court held that nothing in
the CUA or the MMP expressly or impliedly limited the inherent
authority of a local jurisdiction, by its own ordinances, to
regulate the use of its land, including the authority to provide
that facilities for the distribution of medical marijuana will
not be permitted to operate within its borders.
Federal Controlled Substances Act. Despite the CUA and SB 420,
marijuana is still illegal under state and federal law. 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 Controlled Substances Act,
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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. According to the California
Attorney General's guidelines, the difference between state and
federal law gives rise to confusion. However, California has
tried to avoid this conflict by deciding not to use the state's
powers to punish certain marijuana offenses under state law when
a physician has recommended its use to treat a serious medical
condition.
U.S. Department of Justice (USDOJ) Guidance Regarding Marijuana
Enforcement. On August 29, 2013, the USDOJ issued a memorandum
that updated its guidance to all U.S. Attorneys in light of
state ballot initiatives to legalize under state law the
possession of small amounts of marijuana and provide for the
regulation of marijuana production, processing, and sale. While
the memorandum noted that illegal distribution and sale of
marijuana is a serious crime that provides a significant source
of revenue to large-scale criminal enterprises, gangs, and
cartels, it also noted that USDOJ is committed to using its
limited investigative and prosecutorial resources to address the
most significant threats, which include: preventing distribution
to minors; preventing revenue from marijuana from going to
criminal enterprises; preventing diversion to other states where
marijuana is not legal under state law; preventing
state-authorized marijuana from being a cover for trafficking in
other illegal drugs or illegal activity; preventing violence in
cultivating and distributing marijuana; preventing drugged
driving and other public health problems from marijuana use; and
preventing growing, possessing or using marijuana on public
lands or on federal property.
According to the USDOJ, "In jurisdictions that have enacted laws
legalizing marijuana in some form and that have also implemented
strong and effective regulatory and enforcement systems to
control the cultivation, distribution, sale, and possession of
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marijuana, conduct in compliance with those laws and regulations
is less likely to threaten the federal priorities set forth
above?In those circumstances, consistent with the traditional
allocation of federal-state efforts in this area, enforcement of
state law by state and local law enforcement and regulatory
bodies should remain the primary means of addressing
marijuana-related activity."
Marijuana Frameworks Established in Other States. There are
currently 23 states, plus the District of Columbia, that allow
for medical marijuana and have some level of regulation.
California is the only state that permits medical marijuana in
the absence of a robust state-wide regulatory system. The
following states have statewide medical marijuana regulatory
systems: Alaska, Arizona, Colorado, Connecticut, Washington DC,
Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts,
Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey,
New Mexico, New York, Oregon, Rhode Island, Vermont and
Washington. In addition, Alaska, Colorado, Oregon, Washington,
and the District of Columbia have legalized the use of
recreational marijuana.
According to the Brookings Institute, since the early 1990s,
U.S. public opinion has trended in favor of marijuana
legalization. Currently, a majority of Americans support
legalization by a margin of seven points-52 percent to 45
percent, according to findings from a Pew Research Center survey
in March 2013. Support for marijuana legalization has risen
sharply since 2010, by 11 percentage points.
This increasing support for marijuana legalization is present in
California as well, with recent polls showing that a majority of
Californians support marijuana legalization. Currently, there
are an estimated four different marijuana initiatives attempting
to qualify for the 2016 ballot. In order for any marijuana
scheme to be effective, it should address all parts of the
industry, including establishing a robust licensing and
regulatory scheme, a taxation scheme, and incorporate health and
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safety standards, in addition to ensuring that the public is
protected; however, if the measure is too prescriptive, it may
hamper the ability to address any unintended consequences or
fill in any policy gaps without having to go back to the ballot.
As a result, if the State is able to create a comprehensive
framework for medical marijuana, it may also serve a dual role
by serving as a basis for a recreational marijuana scheme.
Medical Marijuana Industry in California. According to the
author's Sunrise Questionnaire, submitted to the Committee
pursuant to Government Code Section 9148 et seq., by law
enforcement estimates, over 60% of all marijuana in the country
is grown in the Emerald Triangle counties of Humboldt, Mendocino
and Trinity, all of which are in the author's district, and once
the industry is regulated, and the medical marijuana products
are certified as safe, the market is expected to open up
substantially. In addition, once the industry is regulated, the
author believes that physicians who do not recommend or even
discuss medical marijuana due to its quasi-legal nature and
outright ban from the federal government may be more willing to
discuss and recommend medical marijuana to their patients.
Since 1996 when the Compassionate Use Act (CUA) was passed,
individuals, patients and organizations from all sides have been
asking the Legislature to enact a regulatory framework that will
settle many of the open ended questions and legal status of the
medical marijuana. According to the author, the Legislature has
enacted several bills over the years clarifying CUA, but nearly
everyone agrees that a complete regulatory framework needs to be
enacted as soon as possible. The author asserts that the harm
starts at the environmental side of things, and simply expands
from there. Right now, with virtually no standards for
cultivation, the state is seeing the worst damage to watersheds,
forests and rivers than ever before on the North Coast. The
regional and State Water Boards, along with California
Department of Fish and Wildlife, are doing what they can, but
without legislation, their hands are largely tied. This leads
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to streams and rivers literally running dry (even before the
current drought) and to huge loads of sediments and toxic wastes
being dumped into the watersheds. The lack of regulation
complicates water supply for millions of legal residential and
commercial water users throughout the state-- entire tracts of
forests are being mowed down by rogue growers and planted with
marijuana with no permits, oversight, or regard for the
environment.
The author believes that the lack of regulation on the
processing, manufacturing, testing, transportation and resale
needs to be fixed as well. Without statewide standards produced
by specific health and safety testing, ingredient lists, and
dosage listings on all marijuana products, people are put at
risk. Of significant concern is the "edibles" and "oils" market,
which are relatively new to consumers and have the potential to
expand beyond the typical cigarette style that most people are
used to. And with no standards for dosages or active ingredient
lists, for example, the danger is very real. According to the
author, it is well past time we treat this product like a real
medication and give it the same scrutiny and oversight that all
other legal drugs have.
Cities and counties that have medical marijuana ordinances take
the first step in protecting consumers and the public, but
without a strong state-wide regulatory body overseeing all
aspects of the product chain, consumers have very little control
over the risk unless they have personal knowledge of the
product. There simply is no cohesive strategy for protecting
consumers in the industry, and as a very loose and only
quasi-legal, it is very difficult for the industry to
self-police. Clear guidelines from the state and or the local
jurisdiction, backed up by the state, is the only way to ensure
protection of consumers and the public.
According to the author, nearly every provision of the SB 643 is
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designed to preclude consumer injury, from the cultivation
standards all the way to the resale of the final product, and by
taking a multi-billion dollar industry with virtually no
regulations and placing the entire product chain into a
regulated environment. All aspects of the product chain need to
be regulated, from "Seed to Sale". This would include creating
licensures and regulatory framework for all aspects of the
industry, including cultivation, processing, manufacturing,
prescribing, testing, transporting, and selling. The health and
safety of the product must be of top concern for the state and
other jurisdictions, and making sure no diversions occur for
non-medical marijuana purposes.
Every aspect of this current quasi-legal product includes
dangers at this time, from law enforcement to cultivator
neighbors, to transportation, manufacturing and beyond. Creating
a uniform policy toward all aspects of medical marijuana will be
a giant step in protecting consumers, but the public at large,
as well as our water and environment. However, according to the
author, the one danger in this process is making it so onerous
and laborious to become legitimate that people simply refuse to
participate and stay in the black/grey market. The author
asserts this bill is designed to limit that as much as possible,
while accepting that some in the industry simply will not be
able to participate.
SB 643 Licensing and Regulatory Framework. According to the
author, this bill will address many of these concerns by doing
all of the following:
Creates the Office of Medical Marijuana Regulation, under the
Secretary of Business, Consumer Services and Housing .
According to the author, the Secretary oversees the ABC and
the Dept. of Consumer Services and can draw on the expertise
of both agencies to help the Office get set up and running.
Requires that all medical marijuana grown, produced,
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distributed, prescribed, and sold in the state meet the
California certified organic standards by January 1, 2022.
According to the author, this is in effort to guard against
consumption of harmful and damaging products, and to help
protect the cultivating watersheds and environment from
toxics.
Creates "Appellations of Origin" for medical marijuana .
According to the author, similar to the wine grapes grown in
the southern part of his district, this will help establish
and perpetuate authenticity in the industry.
Allows local governments to impose a tax or fee on
cultivation, above the ultimate sales tax, to help defray the
expense of regulating the cultivation and processing of the
commodity in their jurisdiction. This is designed to make sure
local authorities can afford to pay for the implementation of
the regulations allowed under this legislation or any other.
Local authorities would have to abide by Prop. 218
regulations.
Licenses would only be valid if both the state and the local
jurisdiction approved the applications . The author's goal is
to allow as much local control as possible.
All licensed location and license information would be given
to local law enforcement . In an effort to prevent wasted
resources and limit dangerous circumstances, the author
believes that local law enforcement should know when and where
all licensees are operating.
A conditional license issued pursuant to this section shall be
valid for 12 months after the date of issuance, after which it
may be renewed for a period of 36 months . This is a departure
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from previous bills that only give 12-month renewals. Once
licensees have established themselves, the author does not
believe they should have to go through the process of renewal
every year.
Current Related Legislation. AB 26 (Jones-Sawyer) of the
current legislative session, would enact the Medical Cannabis
Regulation and Control Act to license and regulate medical
cannabis, and would create the Division of Medical Cannabis
Regulation and Enforcement within the Department of Alcoholic
Beverage Control to administer the act. STATUS: This bill is in
the Assembly Business and Professions Committee.
AB 34 (Bonta) of the current legislation, session would enact
the Medical Cannabis Regulation and Control Act to license and
regulate medical cannabis, and would establish the Division of
Medical Cannabis Regulation and Enforcement within the
Department of Alcoholic Beverage Control to administer the act.
STATUS: This bill was held in the Assembly Appropriations
Committee.
AB 243 (Wood) of the current legislation session, would require
all medical marijuana cultivation (MMC) to be conducted in
accordance with state and local laws and best practices, as
specified, and would require state agencies to address
environmental impacts of MMC and coordinate with local
governments in enforcement efforts, and establishes a MMC
permitting system. STATUS: This bill is scheduled to be heard
in the Senate Governance and Finance Committee.
AB 266 (Bonta, Cooley, Jones-Sawyer, and Lackey), establishes a
licensing and regulatory framework for medical cannabis under
the Medical Cannabis Regulation and Control Act (Act), and would
establish the Office of Medical Cannabis Regulation within the
Office of the Governor, the Division of Medical Cannabis
Regulation within the State Board of Equalization, the Division
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of Medical Cannabis Manufacturing and Testing within the
California Department of Public Health, and the Division of
Medical Cannabis Cultivation within the California Department of
Food and Agriculture, and would set forth the duties of the
respective regulatory authorities. STATUS: This bill is
scheduled to be heard in the Senate Health Committee.
Prior Related Legislation. AB 1262 (Correa) of 2014, would have
established a licensing and regulatory framework for the
cultivation, processing, transportation, testing, recommendation
and sale of medical marijuana to be administered by the
Department of Consumer Affairs (DCA) and enforced primarily at
the local level. NOTE: This bill was held in the Assembly
Appropriations Committee.
AB 1894 (Ammiano) of 2014, would have enacted the Medical
Cannabis Regulation and Control Act to license and regulate the
cultivation, manufacture, testing, transportation, storage,
distribution, and sale of medical cannabis, and would create the
Division of Medical Cannabis Regulation and Enforcement within
the Department of Alcoholic Beverage Control. NOTE: This bill
was held on the Assembly Floor.
AB 473 (Ammiano) of 2013, would have enacted the Medical
Marijuana Regulation and Control Act to license and regulate the
cultivation, manufacturing, testing, transportation,
distribution, and sales of medical marijuana and medical
marijuana products, and would create the Division of Medical
Marijuana Regulation and Enforcement within the Department of
Alcoholic Beverage Control. NOTE: This bill was held on the
Assembly Floor.
AB 604 (Ammiano) of 2013, would have enacted the Medical
Cannabis Regulation and Control Act to license and regulate the
cultivation, manufacture, testing, transportation, storage,
distribution, and sale of medical cannabis, and would create the
Division of Medical Cannabis Regulation and Enforcement within
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ABC. NOTE: This bill was held in the Senate Public Safety
Committee.
AB 2312 (Ammiano) of 2012, would have established the Medical
Marijuana Regulation and Control Act, authorizing local taxes on
medical cannabis and creating a board to regulate the medical
cannabis industry. NOTE: This bill was held in the Senate
Committee on Business, Professions and Economic Development.
SB 1182 (Leno) of 2012, would have provided that a cooperative
or collective that operates within the Attorney General's (AG)
guidelines shall not be subject to prosecution for marijuana
possession or commerce, as specified. NOTE: This bill was held
on the Senate Floor.
AB 1300 (Blumenfield), Chapter 196, Statutes of 2011, provided
that a local government entity may enact an ordinance regulating
the location, operation or establishment of a medical marijuana
cooperative or collective; authorizes local government entities
to enforce such ordinances through civil or criminal remedies
and actions; and authorizes a local government entity to enact
any ordinance that is consistent with the Medical Marijuana
Program.
SB 626 (Calderon) of 2011, would have required the Board of
Equalization (BOE) to establish a nine-member task force to
conduct a study to determine ways to enhance collections of
sales and use taxes on retail sales of marijuana and ensure
proper regulation of the cultivation, transportation, and
distribution of marijuana and marijuana products. NOTE: This
bill was held in the Senate Appropriations Committee.
AB 390 (Ammiano) of 2009, would have legalized the possession,
sale, cultivation and other conduct relating to marijuana and
required the Department of Alcoholic Beverage Control to
administer and enforce the terms of legalized marijuana. NOTE:
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This bill was held in the Assembly Health Committee.
SB 420 (Vasconcellos), Chapter 875, Statutes of 2003,
established the Medical Marijuana Program Act, a statewide,
voluntary program for the issuance of identification cards to
identify persons authorized to engage in the medical use of
marijuana under the Compassionate Use Act.
Proposition 215, of the November 1996 General Election,
prohibits prosecution for the possession and cultivation of
cannabis by a patient or a patient's primary caregiver with a
physician's written or oral recommendation.
POLICY ISSUE(S):
This bill would establish a novel licensing and regulatory
scheme for medical marijuana, which covers every aspect of the
medical marijuana industry, from seed to sale. In addition to
tasking the newly-created Office with myriad duties involved in
this new scheme, the bill also places enforcement
responsibilities primarily on the State, as well as establish a
dual licensure scheme, which would require a close partnership
between the Office and local governments. In addition, the bill
seeks to establish a comprehensive regulatory scheme for medical
marijuana, and would require the establishment of a
comprehensive set of health and safety standards for medical
marijuana and medical marijuana products. As would be expected
for any new regulatory program of this scale and scope, a number
of outstanding issues and questions will need to be addressed in
order to ensure that the program has the greatest chance of
success.
Establishing a new Office within the Business, Consumer
Services, Housing Agency (BCSH). The BSCH oversees various
departments, boards and commissions, including: 1) California
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Housing Finance Agency, 2) Department of Alcoholic Beverage
Control; 3) Department of Business Oversight; 4) Department of
Consumer Affairs; 5) Department of Fair Employment and Housing;
6) Department of Housing and Community Development; 7) Seismic
Safety Commission; 8) Alcoholic Beverage Control Appeals Board;
and 9) Horse Racing Board. As a result of its varied
jursidiction, the BCSH's mission is to: license and regulate
professionals and businesses in California, so as to protect
consumers; to preserve, expand and fund safe and affordable
housing opportunities; to investigate and research earthquake
related issues to advise on ways to reduce earthquake risk; and
to protect the civil rights of all Californians from acts of
hate violence and unlawful discrimination in employment, housing
and public accommodations.
While many of the entities within BCSH may adopt complex
regulations relating to their specified areas, the type of
expertise required to establish and implement, at wholesale,
such a comprehensive program that covers all aspects of medical
marijuana activities, will pose great challenge to any state
entity, especially one that is completely new. Not only will a
newly-established Office of Medical Marijuana Regulation have to
deal with overcoming all of the administrative obstacles that
exist to establishing a brand new government entity, such as
establishing a budget, hiring new staff, developing business
practices, and establishing an information technology system
that will meet all of these needs under the bill, it will also
have to take on an issue that is novel, complex, and requires
much expertise. Successful implementation of any medical
marijuana program will require strong leadership and involvement
from the Administration to prioritize implementation so that it
meets federal guidance and prevents the potential for
illegitimate activities, to determine whether it is appropriate
to coordinate efforts among all affected entities that will play
a role in establishing a robust and effective licensing and
regulatory framework, all of which the Office's success will
rely heavily on, in addition to having sufficient resources to
ensure that all staffing and other needs will be met.
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Office's Ability to Absorb New Responsibilities. This bill
would require the Office to adopt regulations for implementation
and enforcement, including specific procedures for the issuance
and revocation of licenses, the application forms and fees, by
January 1, 2018. This bill also requires the Office to adopt
regulations that establish standards for cultivation,
manufacturing, transportation, storage, distribution, provision,
donation, and sale of medical marijuana and medical marijuana
products, as specified. These regulations are thereby required
to cover everything from licensure, to comprehensive health and
safety standards for medical marijuana, including establishing
the maximum potency standards for THC. This bill would delay
implementation, thereby giving the Office 24 months to adopt
regulations. In addition, the bill authorizes the Office to
consult with other state and local agencies, industry, and
public and private entities to establish these regulations.
Due to the extensive number and type of regulations required to
be adopted, in addition to the level of outside expertise the
Office will need to rely on, the author may wish to consider
whether 24 months will be enough time to establish all of these
standards, or if the Office should be given more time to adopt
these standards, or be authorized to adopt temporary emergency
regulations.
The author may also wish to consider the benefits of spreading
out duties among existing agencies that already have expertise
in issues like adopting, implementing, and enforcing cultivation
and health and safety standards, such as the Department of Food
and Agriculture and the Department of Public Health. At a
minimum, the author should strongly consider requiring the
Office to consult with other agencies, instead of merely
authorizing such consultation, and requiring the Office to
establish an advisory taskforce with the requisite expertise to
assist the newly-established Office during this rulemaking
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process and to clarify the appropriate roles of each state
entity that is, or would be, affected by medical marijuana
activities. Such an advisory taskforce should include
representatives from the Department of Public Health, California
Department of Food and Agriculture, State Water Resources
Control Board and other environmental departments, such as the
Department of Fish and Wildlife, the Attorney General's Office
(especially critical to help navigate the federal and changing
legal landscape), local governments, medical marijuana experts,
and industry representatives.
In addition, while the bill authorizes the Office to assist
state taxation authorities in the development of uniform
policies for the state taxation of licensees and requires the
State Board of Equalization (BOE) to complete a report on the
estimated tax collected on the sale of medical marijuana and
expected tax revenues, the author should consider requiring the
Offie to work with the BOE on establishing clear policies for
the state taxation of licensees, and include the BOE in any
taskforce activities.
The author should also consider working with the BSCH to
determine the feasibility, timeline, and cost to establish a
database system that would meet these new requirements to assist
in tracking licensees', shipments, and other information to help
and product, i.e."seed to sale" tracking, based on the State's
troubled history with implementing new information technology
projects.
Implementation of the Act through Rulemaking. The bill leaves
much of the administration of the Act to the rulemaking process
by requiring the Office to promulgate myriad regulations,
instead of providing a clear, statutory framework. This process
can take years, given requirements for notification, public
comment and additional delays that arise whenever amendments to
proposed regulations are made, and the regulatory process in
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general has been criticized for lacking transparency and robust
stakeholder input that the Legislative process allows for.
For example, this bill was recently amended to remove provisions
directing the Office to certify laboratories for the testing of
medical marijuana, and deleted language specifying health and
safety requirements for medical marijuana and medical marijuana
products. Now, the bill merely requires the Office to
"establish standards for the cultivation, manufacturing,
transportation, storage, distribution, provision, donation, and
sale" of medical marijuana," and requires applicants to
demonstrate compliance with "all applicable agricultural,
consumer protection, food product and safety, and environmental
requirements," with little other guidance. In addition, the
bill requires the Office to report to the Legislature on the
"feasibility" of developing a program to certify laboratories,
by July 1, 2017, and only specifies limited health and safety
standards.
While the author has indicated that the bill is designed to
limit a regulatory process that is not too onerous and laborious
for market participants, the author may wish to consider whether
it is appropriate to delegate too much discretion to the Office
and other regulatory agencies, which would leave policy
decisions to be made at the agency level, rather than through
the legislative process. In addition, the role for many
agencies is to implement policies, rather than determine what
those policies should be; as a result, it might be beneficial to
provide greater guidance to the Office to help the Office
understand the intent of the Legislature and narrow the scope of
the Office's rulemaking authority.
Clarifying Licensure Provisions. The bill requires a dual
licensure framework, thereby requiring both a conditional state
license and a local license or permit in order to operate. The
author may wish to clarify that such licensed facilities must be
dually licensed in order to conduct business with one another by
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amending the definitions for licensees to specify that licensees
must hold both a conditional license and a local license or
permit. In addition, the author may wish to specify that the
application process clearly require a licensee to verify that
they are not located near schools, which would be a violation of
existing law, in order to quickly weed out ineligible licensees.
Tiered Licensing Schemes. Washington and Colorado have both
created comprehensive systems of legal production and sale,
subject to licensing, regulation and taxation. However, the
laws require different industry structures and build on their
existing medical systems in different ways. Colorado allows
entrepreneurs to produce cannabis and sell it at retail, and
such businesses were, at least initially, required to produce
the majority of the marijuana they sell (vertical integration),
while Washington state maintains clear separation between
marijuana growers, processors and retailers (horizontal
integration or "tiered" licensing). Both models seek to,
however, reduce diversion and increase accountability. In
addition, the commercial market in Washington is supervised by
the Washington State Liquor Control Board, while Colorado's law
vests authority to regulate the commercial market in the newly
created Marijuana Enforcement Division of the Department of
Revenue. Colorado's medical marijuana program is also under
that Division - prior to the recreational initiative, the
Medical Marijuana Enforcement Division was regulating that part
of the market.
According to proponents of a tier licensing system, a horizontal
or tiered system of licensing (requiring separate licenses for
cultivators, manufacturers/wholesalers, and retailers, and
limiting a licensee from holding more than one license type) is
modeled after alcohol distribution, and acts to prevent the
ability for large firms to dominate local markets by keeping the
categories separate and distinct, which prevents one group from
controlling too much of the market. Proponents also believe
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that a tiered licensing system based on the alcohol distribution
system, which requires distributors to be responsible for
collecting and remitting taxes, would make it easier for the
state to keep track of industry transactions and to collect
taxes, and would provide checks and balances that would make it
harder to allow for diversion, contraband, or "cooking the
books."
However, some believe that requiring licensees to be involved in
all phases of medical marijuana activities would serve to keep
these licensees smaller, as it would take more capital to engage
in all parts of the industry. In addition, some believe that
larger businesses are not problematic because those larger
businesses may be better positioned to have the resources
available to ensure that they are following all regulatory
requirements, for example, by hiring compliance managers. In
addition, some believe that requiring a horizontal licensure
scheme would pose undue hardship on many existing businesses who
may engaged in multiple aspects of the industry, some at the
request of the localities in which they operate that require
vertical licensure.
This bill adopts an open approach by allow licensees to hold
more than one type of license type, but provides no additional
clarification. However, the author may wish to consider the
benefits of the different licensing schemes, including the
ability of each scheme to prevent diversion and prevent just a
few players from dominating the market. If multiple license
types are able to be held by a single licensee, the author may
also consider whether it may be appropriate to limit multiple
license types based on the size of the operation, for example,
by only allowing retailers to engage in cultivation if they are
cultivating a small amount. The author may also wish to
consider establishing different levels of license types to
accommodate businesses of various sizes, and to clearly
establish a sliding scale for fees to preserve the small
businesses that are currently engaged in medical marijuana
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activities, for example, small farmers.
Dual Licensure and Enforcement. The bill requires facilities,
manufacturers, cultivation sites, and transporters to be
licensed by the Office, and requires enforcement of these
provisions and health, safety, and other standards to be carried
out by the State, unless a local entity has requested the
authority to enforce these provisions at the local level. In
addition, this bill enacts a dual licensure scheme that requires
a licensee to obtain both a state conditional license and a
local license or permit prior to engaging in any medical
marijuana activities. As a result, there may be some inevitable
confusion between the Office and local governments in their
enforcement roles, which may be further complicated by the fact
that licensure depends on having both approvals, and that an
enforcement action taken by a state or local government will
inevitably affect their equivalent state or local license, and
trigger enforcement. The author may wish to require the Office
to consult with local governments and develop a framework that
clarifies enforcement roles, regardless of whether a local
entity specifically requests to be delegated enforcement
authority or not, and require the Office to ensure open
communication and collaboration with local governments.
Patient Access to Care. This bill delays implementation of many
of these provisions, including promulgating regulations for
licensing and enforcement until January 1, 2018, and for issuing
and requiring conditional licenses until July 1, 2018. However,
the bill would delete the provisions authorizing patients and
caregivers to be exempt from state criminal sanctions for
"collectively or cooperatively" cultivating medical marijuana on
July 1, 2017. As a result, the author may consider similarly
delaying the implementation of that provision until the Office
begins issuing conditional licenses, or until July 1, 2018, or
longer, in order to provide time for applicants to go through
the licensure process.
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The bill also limits exemptions for patients who do not sell,
distribute, donate, or provide marijuana to any other person or
entity, and limits the exemption for patient caregivers who
serve five or less qualified patients for whom he or she is a
caregiver. The author may wish to consider whether patients
should be exempt for distributing marijuana without
compensation, and whether limiting the number of patients a
primary caregiver may serve might limit access to care for
certain patients, for example, those in rural areas. The author
may wish to consider specifically authorizing a facility that is
operating in accordance with local regulations, and who submits
an application for state conditional licensure, to continue to
operate until its application is approved or denied by the
Office.
In addition, the bill currently authorizes the Office to adopt
regulations to limit the number of conditional licenses issued
upon a finding that the otherwise unrestricted issuance of
conditional licenses is dangerous to the public health and
safety. Because this licensure scheme relies upon dual license,
the author may wish to consider whether it is necessary to
empower the Office to restrict the number of licenses issued
when the local government would have the last say on whether a
business would receive necessary local approval to operate or
not.
Labeling of Edible Marijuana Products. The bill would require,
among other things, that medical marijuana products, including
edibles, be labeled and include specified information, such as a
list of THC and CBD content and clear recommended dosage.
Because medicinal marijuana varies in terms of the levels and
types of active ingredient, THC or CBD, for example, and what it
is used for varies among patients, it may be difficult to
develop a standard "dosage" for products. As a result, the
author may wish to consider clarifying labeling standards in
regards to medical marijuana products and requiring products to
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instead state the amount of THC per milligrams in each serving,
and the total amount of THC in a package. In addition, the
author should consider striking provisions that requires edible
products to be in opaque packaging and prohibit any packaging
from containing photos or images of food, which may cause
confusion for consumers and employees. The author should also
include a warning to let consumers know that the intoxicating
effects of edible medical marijuana products may be delayed to
prevent consumers from consuming more than is necessary to
alleviate symptoms.
REGISTERED SUPPORT:
None on file.
REGISTERED OPPOSITION:
None on file.
Analysis Prepared by:Eunie Linden / B. & P. / (916) 319-3301