BILL ANALYSIS Ó
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Date of Hearing: July 14, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
SB
643 (McGuire) - As Amended June 3, 2015
SENATE VOTE: 26-13
SUBJECT: Medical marijuana
SUMMARY: Establishes the Medical Marijuana Public Safety and
Environmental Protection Act (Act) for the regulation and
issuance of state licenses, termed conditional licenses in this
bill, for medical marijuana (MM) activity. Specifically, this
bill:
Medical Marijuana Recommendations
1)Requires the Medical Board of California (MBC) to prioritize,
investigate, and prosecute cases under which a physician
excessively recommends marijuana to patients for medical
purposes without a good faith prior examination of the patient
and medical reason.
2)Makes it a misdemeanor for a physician and surgeon who
recommends marijuana for a patient for a medical purpose to
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accept, solicit, or offer any form of payment from or to a
facility issued a conditional license pursuant to the Act, if
the physician and surgeon or his or her immediate family have
a financial interest in that facility.
3)Requires the MBC to consult with the California Marijuana
Research Program, under the direction of the University of
California, in the development and adoption of medical
guidelines for the appropriate administration and use of MM.
4)Prohibits a physician and surgeon from recommending MM to a
patient unless that person is a patient's attending physician,
as defined.
Definitions
5)Defines "dispensary" as a distribution operation that provides
MM or MM-derived products to patients and caregivers.
6)Defines a "licensed cultivation site" as a facility that
plants, grows, cultivates, harvests, dries, or processes MM
and that is issued a conditional license.
7)Defines "licensed dispensing facility" as a dispensary or
other facility that provides MM, MM products, or devices for
the use of MM products that is issued a conditional license.
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8)Defines "licensed manufacturer" as a person who extracts,
prepares, derives, produces, compounds, or repackages MM or MM
products into consumable and nonconsumable forms and that is
issued a conditional license.
9)Establishes the Office of Medical Marijuana Regulation
(Office) under the Business, Consumer Affairs, and Housing
Agency, and requires the protection of the public to be the
highest priority for the Office in exercising its licensing,
regulatory and disciplinary functions.
10)Defines "Chief" as the Chief of the Office of Medical
Marijuana Regulation.
11)Defines "licensed transporter" as an individual or entity
issued a conditional license by the Office to transport MM to
and from facilities that have been issued conditional licenses
in limited quantities.
12)Defines "edible MM product" as an MM or an MM-derived product
that is ingested or meant to be ingested through the mouth and
into the digestive system.
Administrative Provisions
13)Provides that the Office has the authority to issue, suspend,
or revoke conditional licenses for the cultivation,
manufacture, transportation, storage, distribution, and sale
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of MM within California and collect fees in association with
those activities.
14)Authorizes the Office to adopt and enforce rules and
regulations that he or she determines are reasonably necessary
to carry out the Act, and to appoint and compensate personnel
to assist in carrying out those rules and regulations.
15)Requires the funds for the establishment and support of the
Office to be advanced as a loan from the General Fund (GF), to
be repaid by the initial proceeds from fees collected as part
of any rule or regulation of the Act.
16)Provides the Office with the authority to implement the Act,
including:
a) Establishing rules or regulations necessary to carry out
the Act;
b) Issuing conditional licenses to individuals; setting
specified fees for conditional licenses;
c) Establishing standards for the cultivation,
manufacturing, transportation, storage, distribution,
provision, donation, and sale of MM and MM products;
d) Establishing procedures for the issuance, renewal,
suspension, and revocation of conditional licenses; and,
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e) Enforcing the licensing and regulatory requirements of
the Act, including the imposition of penalties.
17)On or before January 1, 2018, requires the Office to
promulgate regulations for implementation and enforcement of
the Act related to conditional licensure.
18)Requires the Chief to keep a complete record of all
facilities issued a conditional license to be made available
on the Office's Internet Website, and to provide information
upon request.
19)Requires the Office to establish procedures to provide state
and local law enforcement, upon request, with 24-hour access
to information regarding conditional licenses, transportation
manifests, and facility inventories for enforcement purposes.
20)Provides that the Act does 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, which grants MM
businesses and dispensaries qualified immunity consistent with
the terms of the measure and local ordinances, or any similar
measure in other jurisdictions.
Conditional Licensing Provisions
21)Exempts qualified patients and primary caregivers who care
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for no more than five specified patients, who engage in MM
activity, from the requirement for conditional licensure.
22)Except as allowed under the Compassionate Use Act (CUA),
prohibits the following:
a) An individual from selling or providing MM to a patient
or caregiver other than at a licensed dispensing facility
or through delivery from a licensed dispensing facility;
b) An individual from growing MM other than at a licensed
cultivation site;
c) An individual, other than a licensed manufacturer, from
manufacturing MM or MM products; and,
d) An individual, other than a licensed transporter, from
transporting MM from on facility issued a conditional
license to another.
23)Allows a licensed manufacturer to obtain MM from a licensed
cultivator and to furnish MM products to a licensed
dispensary.
24)Requires the Office to provide for and issue conditional
licenses, no later than July 1, 2018, for all activity
authorized under the Act, including, but not limited to,
cultivation, processing, storage, transport, and dispensing of
MM. Requires the conditional license to certify, at a
minimum, that the applicant has paid the state conditional
licensing fee, successfully passed a criminal background
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check, and met state residency requirements.
25)Clarifies that the issuance of a conditional license does
not, in and of itself, authorize a recipient to begin MM
business operations. Prohibits a conditionally licensed
facility from beginning activity under the conditional license
until the applicant has also obtained a license or permit from
the local jurisdiction in which he or she proposed to operate,
in accordance with the requirements of the local ordinance.
26)Requires applicants for conditional licenses to meet
specified conditions, and prohibits the Office from issuing a
conditional license to individuals, entities, or for premises
under specified circumstances. Requires each conditional
license to be valid for 12 months after the date of issuance,
and requires the Office to establish procedures for the
renewal of conditional licenses.
27)Authorizes a facility or entity that is operating in
accordance with local zoning ordinances and other state and
local requirements on January 1, 2016, to continue its
operations until its application for conditional licensure is
approved or denied.
28)Requires the Office, via regulation, to establish conditions
upon which a person whose conditional license has previously
been revoked, denied, or suspended to be issued a conditional
license.
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29)Requires an application for a conditional license to be
denied and a conditional license to be suspended or revoked
for past felony convictions for any of the following:
a) The possession for sale, sale, manufacture,
transportation, or cultivation of a controlled substance;
b) Drug trafficking;
c) Embezzlement;
d) Fraud or deceit; and,
e) Violent or serious felonies, as defined.
30)Prohibits a conditional license from being denied solely on
the basis of a prior conviction for a felony committed after
the enactment of the CUA, but which would not be a felony
after the enactment of the Act. Authorizes the Office, at its
discretion, to issue a conditional license to an applicant
that has obtained a certificate of rehabilitation, as defined.
31)Authorizes the Office to deny, suspend, or revoke a
conditional license under specified conditions, and requires
the Office to notify the applicant or licensee, in writing of
the denial, suspension or revocation of the conditional
license.
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32)Requires an application for or renewal of a conditional
license to be denied under any of the following conditions:
a) The applicant fails to meet the requirements of the Act
or has had an applicable permit or license revoked or
denied by an applicable local agency;
b) The applicant, or any of its officers, directors,
owners, members, or shareholders, is a minor, has been
sanctioned by the Office, a city, county, or city and
county, for MM activities conducted in violation of the Act
or any applicable local ordinance, or has had a license
revoked in the previous five years;
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 proposed cultivation, processing, possession,
storage, manufacturing, testing, transporting,
distribution, provision, or sale of MM will violate any
applicable law or ordinance; or,
e) The applicant or owner is unable to establish that he or
she has been a resident of California for not less than 12
months.
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33)Requires a conditional license to be subject to the
restrictions of the local jurisdiction in which the facility
operates or proposes to operate. Prohibits a facility from
operating in a local jurisdiction that prohibits the
establishment of that type of business, and provides that
local jurisdictions retain the power to assess fees and taxes,
as applicable, on facilities that are conditionally licensed.
34)Authorizes the Office to adopt regulations to limit the
number of conditional license issued after finding that the
otherwise unrestricted issuance of conditional licenses is
dangerous to the health and safety of the public.
Fee Provisions
35)Requires the Office to establish conditional licensing fees
at a level sufficient enough to fund the reasonable
administrative and enforcement costs of the Act.
36)Requires a cultivation facility, in addition to the
conditional licensing fee, to be assessed a fee sufficient to
cover the reasonable regulatory costs of enforcing the
environmental impact provisions relating to cultivation
facilities, and to be distributed to state and local agencies
and law enforcement.
37)Establishes the Medical Marijuana Regulation Fund (Fund), and
the Special Account for Environment Enforcement within the
Fund, under the direction of the Office. Provides that the
Special Account for Environment Enforcement is established to
enforce the environmental regulation of licensed cultivation
sites.
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38)Requires all fees collected in accordance to the Act to be
deposited into the Fund, and for all moneys within the Fund to
be made available for the sole purposes of fully funding and
administering the Act, subject to an appropriation by the
Legislature.
39)Requires all moneys collected as a result of penalties in the
Act to be deposited directly into the GF.
40)Authorizes the Office to establish and administer a grant
program to state and local entities for the purpose of
assisting with MM regulation and enforcement, subject to
appropriation by the Legislature.
41)Prohibits a facility with a conditional license from
acquiring, cultivating, processing, possessing, storing,
manufacturing, distributing, selling, delivering,
transferring, transporting, or dispensing MM for any other
purpose other than those authorized under the Act.
42)Prohibits a licensed dispensing facility from acquiring,
cultivating, processing, possessing, storing, manufacturing,
distributing, selling, delivering, transferring, transporting,
or dispensing MM plants or MM products except through a
licensed cultivation site or a licensed manufacturer.
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Transportation Provisions
43)Requires a licensed transporter to ship only to facilities
issued a conditional license, and in response to a request for
a specific quantity and variety from those facilities.
44)Requires a licensed transporter, prior to transporting MM
products, to complete a shipping manifest, using a form
prescribed by the Office, and securely transmit a copy of the
manifest to the licensee that will receive the MM product, and
the Office upon request.
45)Requires both the licensed transporter making the shipment
and the licensee receiving the shipment to maintain each
shipping manifest and make it available to local code
enforcement officers, the Office, and any other locally
designated enforcement entity, upon request.
46)Applies the following requirements to only licensed
transporters:
a) Transported MM products is required to be transported
only in a locked, safe, and secure storage compartment that
is securely affixed to the interior of the transporting
vehicle, and not be visible from the outside of the
vehicle;
b) Vehicles transporting MM are prohibited from having
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external markings or other indications that it is
transporting MM;
c) All transport vehicles carrying MM with a retail value
greater than $10,000 are required be staffed with a minimum
of two employees, and requires at least one transport team
member to remain with the vehicle at all times when the
vehicle contains MM;
d) Each transport team member is required to have access to
a secure form of communication by which each member can
communicate with personnel at the licensed facility at all
times when the vehicle contains MM; and,
e) Each transport team member is required to possess
documentation of licensing and a government-issued
identification card at all times when transporting or
delivering MM and to produce it upon request by any
representative of the Office or law enforcement.
47)Provides that specified transport provisions cannot be
construed to authorize or permit a licensee to transport, or
cause to be transported, MM or MM products outside California.
48)Prohibits a local jurisdiction from preventing transportation
through or to a facility issued a conditional license, by a
conditionally licensed transporter who acts in compliance with
the Act.
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Enforcement Provisions
49)Provides that a state agency is not required to enforce a
city, county, city and county, or local law, ordinance, rule,
or regulation regarding the site or operation of a facility
issued a conditional license.
50)Authorizes the Office to assist state taxation authorities in
the development of uniform policies for the state taxation of
licensees.
51)Authorizes the Office to enforce all of the requirements of
the Act, including any regulations adopted.
52)Requires the Office to delegate the authority to enforce the
requirements of the Act, including any regulations, to a city,
county, or city and county, upon request of that entity.
53)Provides that nothing in this bill's provisions shall be
interpreted to supersede or limit existing local authority for
law enforcement activity, enforcement of local zoning
requirements, or enforcement of local licensing requirements,
or to require the Office to undertake responsibilities for
those activities.
54)Requires that a willful violation of the requirements for a
conditional license, including an attempt to falsify
information on an application or to otherwise defraud or
mislead a state or local agency in the course of the
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application process, shall be punishable by a civil fine of up
to $35,000 for each individual violation.
55)Requires, at the Office's discretion, a technical violation
of the requirements for a conditional license to be punishable
by a civil fine of up to $10,000 for each individual
violation.
56)Authorizes a district attorney, county counsel, city
attorney, or city prosecutor, to bring an action to enjoin a
violation or the threatened violation of any provision of the
Act. Requires the action to be brought in the county in which
the violation occurred or is threatened to occur. Requires a
proceeding brought forward to conform to requirements of
existing law. Provides that the authority of a local
government to take required enforcement actions pertaining to
its own ordinances or regulations is not to be diminished.
57)Prohibits anything within the Act to prevent a city or other
local from taking action in the Medical Marijuana Program
(MMP), in accordance with existing law.
58)Provides that nothing within the Act is to be construed to
limit a law enforcement agency's ability to investigate
unlawful activity in relation to a facility issued a
conditional license.
59)Requires the Office to notify local law enforcement of all
conditional licenses issued for cultivation sites in that
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jurisdiction.
60)Requires a licensed cultivation site to display the state
license in a manner so as to be available and easily read at
the location.
61)No later than January 1, 2022, requires all MM grown,
produced, distributed, and sold in the state to meet certified
organic standards.
62)Requires the Office to establish appellations of origin for
marijuana grown in California.
63)Requires the Office to work with specified entities to
provide all the information and forms required for conditional
licensure as a cultivation site in a single location,
including state licensure, local requirements in that
jurisdiction, and environmental requirements.
Advertising, Security, and Recordkeeping Provisions
64)Prohibits a person from distributing any form of advertising
for physician recommendations for MM in California unless the
advertisement bears a notice to consumers, that reads:
NOTICE TO CONSUMERS: The Compassionate Use Act of 1996
ensures that seriously ill Californians have the right
to obtain and use marijuana for medical purposes where
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medical use is deemed appropriate and has been
recommended by a physician who has determined that the
person's health would benefit from the use of medical
marijuana. Physicians are licensed and regulated by
the Medical Board of California and arrive at the
decision to make this recommendation in accordance
with accepted standards of medical responsibility.
65)Requires advertisements for physician recommendations for MM
to meet advertising requirements in existing law.
66)Requires a facility issued a conditional license to implement
sufficient security measures to both deter and prevent
unauthorized entrance into areas containing marijuana and
theft of marijuana at those facilities.
67)Requires a facility issued a conditional license to notify
appropriate law enforcement authorities within 24 hours after
discovery of inventory discrepancies, diversion, theft, loss,
criminal activity, the loss of records, or any other security
breach.
68)Requires a licensed cultivation site to weigh, inventory, and
account for on video, all MM to be transported prior to its
leaving its origination location. Requires the licensed
dispensing facility, within eight hours upon arrival at the
destination, to reweigh, reinventory, and account for on
video, all transported marijuana.
69)Requires information identifying the names of patients, their
medical conditions, or the names of their primary caregivers
received and contained in the records kept by the Office for
administration purposes to be kept confidential and exempt
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from the California Public Records Act.
70)Provides that nothing shall prevent any of the following:
a) Office employees from notifying state or local agencies
about information submitted to the Office that the employee
suspects is falsified or fraudulent;
b) Notification from the Office to state or local agencies
of apparent violations of the Act or an applicable local
ordinance;
c) Verification of requests by state or local agencies to
confirm licenses and certificates issued by the office or
other state agency; or,
d) Providing information requests in accordance with a
court order or subpoena issued by a court, an
administrative agency, or local governing body authorized
by law to issue subpoenas.
71)Prohibits information from being disclosed by the Office
beyond what is necessary to achieve the goals of a specific
investigation or notification or the parameters of a specific
court order or subpoena.
72)Proclaims 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, and adopted regulations from, the Act are not
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unlawful under state law and are not an offense subject to
arrest or prosecution.
73)Proclaims 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 permits pursuant
to a conditional license, are not unlawful under state law and
are not an offense subject to arrest or prosecution.
74)Prohibits a licensee from cultivating, processing, storing,
manufacturing, transporting, or selling MM in California
unless accurate records are kept at the licensed premises of
those activities by the licensee. Allows a licensee who has a
conditional license for more than one premises to keep all
records at one of the conditionally licensed premises.
Requires records to be kept for seven years from the date of
the transaction.
75)Authorizes the Office or a local agency delegated the
authority to enforce the licensing requirements of the Act to
examine the books and records of a conditional licensee and to
visit and inspect the premises of a conditional licensee, as
deemed necessary by that entity to perform its duties.
Requires books or records requested by the enforcement entity
to be provided by the conditional licensee no later than five
business days after the request is made. Provides that a
licensee shall be subject to a civil fine of $15,000 for each
individual violation of failure to maintain or provide books
and records.
76)Authorizes the Office or a local agency to enter and inspect
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the premises of a facility issued a conditional license
between the hours of 8 a.m. and 8 p.m. on any day the facility
is open, or any reasonable time, to ensure compliance and
enforcement of the Act.
77)Authorizes the office to suspend a conditional license and
commence proceedings for the revocation of a conditional
license, if a licensee or an employee of a licensee refuses,
impedes, obstructs, or interferes with an inspection of the
licensed facility.
Tax Provisions
78)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, 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.
79)Requires the board of supervisors or city council to specify
in the ordinance proposing the tax, the activities subject to
the tax, the applicable rate or rates, the method of
apportionment, if necessary, and the manner of collection of
the tax. Authorizes the tax to be imposed for general
governmental purposes or for purposes specified in the local
ordinance.
80)Requires the tax imposed by local ordinances to be subject to
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applicable approval requirements imposed by existing law.
81)Provides that the imposition of a tax does not limit or
prohibit the levy or collection of any other fee, charge, or
tax, or a license or service fee or charge upon, or related
to, activities related to the activities of a conditional
license, as otherwise provided by law.
82)On or before July 1, 2016, requires the State Board of
Equalization to compile a report on the estimated tax
collected of the sale of MM, using the most current data
available. Requires the report to include the expected tax
revenues, under the existing tax structure, for the years 2016
to 2010, inclusive, and for the report to be submitted to the
Legislature and the Governor's office.
Collective Model Provisions
83)Eliminates protections from prosecution for qualified
patients, persons with valid identification cards, and
designated primary caregivers who specifically cultivate
marijuana for medical purposes through a collective or
cooperative model.
84)Provides an individual employee, officer, or board member of
a facility issued a conditional license pursuant to the Act
will not be subject to state criminal sanctions in existing
law, based solely on holding a conditional license for the
possession, cultivation, processing, packaging, storage,
transportation, sale, or distribution of MM to a facility also
holding a conditional license, or directly to a qualified
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patient, a person with a valid identification card, or a
designated primary caregiver, unless the license and related
paperwork is falsified.
Labeling, Testing and Edible MM Provisions
85)On or before July 1, 2017, requires the Office to report to
the Legislature on the feasibility of developing a program to
certify laboratories for the testing of MM and related
products, and the feasibility of developing a labeling
requirement for edible marijuana products that incorporates
information on the cannabinoid content.
86)Requires a facility issued a conditional license to maintain
supplier information in the event of recall procedures, and
for labeling of all MM and MM products.
87)Declares edible MM products to be unadulterated food
products.
88)Requires all edible MM products to comply with quality
assurance standards in existing law, in addition to the
following:
a) Allowance for baked edible MM products, that do not
require refrigeration or hot holding, to be manufactured,
sold, or otherwise distributed at facilities issued a
conditional license;
b) A requirement that a facility issued a conditional
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license has an owner or employee who has successfully
passed an approved and accredited food safety certification
examination, as specified in existing law, prior to
selling, manufacturing, or distributing edible MM products
requiring refrigeration or hot holding;
c) A requirement that individuals manufacturing or selling
edible MM products to thoroughly wash their hands before
commencing production and handling finished edible MM
products;
d) A requirement that all edible MM products sold for
direct consumption and infused with marijuana concentrate
to be individually wrapped at the original point of
preparation;
e) A requirement that products containing
tetrahydrocannabinol (THC) to be prepared in compliance
with maximum potency standards for THC and THC
concentrates;
f) A requirement that, prior to sale or distribution at a
licensed dispensing facility, edible MM products are
labeled and in an opaque and tamper evident package.
Requires labels and packages of edible MM products to meet
specified requirements;
g) A prohibition of photos or images of food on the
packages or labels of edible MM products; and,
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h) A requirement that only generic food names may be used
to describe edible MM products.
EXISTING LAW:
1)Authorizes a county or city, with its jurisdiction, to make
and enforce all local, policy, sanitary, and other ordinances
and regulations not in conflict with general laws.
2)Licenses and regulates physicians and surgeons, including
osteopathic physicians, under the Medical Practice Act by the
MBC within the Department of Consumer Affairs.
3)Establishes the Sherman Food, Drug, and Cosmetic Law to
regulate the packaging, labeling, and advertising of drugs and
devices, under the direction of the Department of Public
Health (DPH).
4)Prohibits the sale, possession, possession for sale,
cultivation, transport, import, furnishing, donation,
processing, administering, dispensing, and distribution of
marijuana, punishable by imprisonment and/or fines, unless
otherwise allowed by existing law.
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5)Establishes the CUA of 1996 under Proposition 215 in law,
which does the following:
a) Protects physicians from punishment, or denial of any
right or privilege, for the recommending marijuana to a
patient for medical purposes; and,
b) Provides that a qualified patient or primary caregiver,
as defined, who possesses or cultivates marijuana for his
or her own personal medical purpose with the written or
oral recommendation or approval of a physician, shall not
be punished.
6)Encourages the University of California to create the
California Marijuana Research Program to commission objective
scientific research concerning the efficacy and safety of
administering marijuana as part of medical treatment.
7)Establishes the MMP under the direction of the DPH.
8)Defines an "attending physician" as an individual who
possesses a license in good standing to practice medicine or
osteopathy issued by the MBC or the Osteopathic Medical Board
of California and who has taken the responsibility for an
aspect of the medical care, treatment, diagnosis, counseling,
or referral of patient and who has conducted a medical
examination of that patient prior to recording in the
patient's medical card the physician's assessment of whether
the patient has a serious medical condition and whether the
medical use of marijuana is appropriate.
9)Defines "primary caregiver" as an individual, designated by a
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qualified patient or by a person with an identification card,
who has consistently assumed responsibility for the housing,
health, or safety of that patient or person.
10)Defines a "qualified patient" as an individual who is
entitled to the protections of the CUA, but who does not have
an identification card pursuant to the MMP established in
existing law.
11) Requires DPH to establish and maintain a voluntary program
to issue identification cards to qualified patients of MM and
voluntarily apply to the identification card program, and
requires county health departments to issue identification
cards to qualified patients and their caregivers.
12)Provides that qualified patients, persons with valid
identification cards, and primary caregivers, who associate in
order to collectively or cooperatively cultivate marijuana,
are not subject to criminal liability solely on that basis.
13)Provides that individuals shall not be accommodated for the
use of MM on the property or premises of any place of
employment or during the hours of employment, or on the
property or premises of any jail, correctional facility, or
other type of penal institution in which prisoners reside or
persons under arrest are detained.
14)Prohibits anything within the MMP from preventing a city or
local governing body from adopting a local ordinance that
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regulates the location, operation, or establishment of a
medical marijuana cooperative or collective, enforcing local
ordinances for civil or criminal purposes, or enacting other
laws consistent with the MMP.
FISCAL EFFECT: According to the Senate Appropriations
Committee, ongoing costs, likely over $20 million per year to
license MM 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.
This bill would create a new Bureau dedicated to licensing and
enforcing licensing requirements on the MM industry. The annual
costs to operate the new Bureau are highly uncertain. For
example, the number of MM cultivators, transporters, and
dispensaries that would apply for licensure under this bill is
not known, in part because it is difficult to know how the
licensing and regulatory requirements in this bill will change
current practices in the MM industry.
Unknown costs for enforcement of this bill's requirements by
local governments (local funds and special funds). This 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 this
bill to prohibit the operation of MM facilities in their
jurisdictions, local governments can essentially opt out of the
enforcement responsibilities required under this bill. Thus the
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state is not likely to be required to reimburse local
governments for enforcement costs.
Unknown costs for the Department of Justice (DOJ) 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 this bill
(special fund). This 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 DOJ to enforce this bill, costs incurred by local law
enforcement agencies to enforce this bill, and costs incurred by
state and local environmental agencies for enforcement costs
relating to cultivation facilities. The fee revenues generated
under this 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 MM industry. This bill
would continuously appropriate the fee revenues deposited in a
new special fund to implement this bill.
COMMENTS:
1)PURPOSE OF THIS BILL. According to the author, this bill
seeks to resolve many of the issues created by the enactment
of Proposition 215, or the Compassionate Use Act, and
subsequent legislation. The author states California voters
clarified their desire to legalize MM; however, there are
growing issues and concerns for all MM stakeholders. The
author explains how he represents the remote areas of
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Mendocino, Humboldt, and Trinity Counties, which are a primary
growing region for MM in the country, responsible for up to
70% of the marijuana grown in the western United States. The
author contends much of these local areas have become
dependent on the economic benefits of marijuana cultivation,
but also suffer from the negative environmental, public
safety, and public health effects that arise from rogue
cultivators and the lack of regulation of MM. The author
maintains that trespass grows have become an environmental
disaster, illegally diverting millions of gallons of water
from rivers and streams, creating a clearance ground for
pesticides, insecticides, rodenticides, and fertilizers, and
depositing large amounts of sediment into waterways from crop
runoff.
The author contends that since the passage of Proposition 215
in 1996, it has become clear that the state is in need of
comprehensive regulation under the direction of the
Legislature for the oversight of the cultivating, processing,
manufacturing, transportation, prescribing, and safe of MM.
The author maintains that existing law virtually contains no
rules and regulations on the cultivation of MM and that it is
important to bring this legal crop into the regulatory
framework expected of other commodities. The author states
the severe drought California is now experience has only made
the need for this bill more urgent. The author concludes this
bill contains provisions necessary to recognize the voters'
mandate of Proposition 215 and streamlines the ability of the
MM industry to grow and sell a legal product.
2)BACKGROUND.
a) Medical use and research of marijuana. The marijuana,
or cannabis, plant produces a resin containing compounds
called cannabinoids, which are the active ingredients
within the plant. Cannabinoids directly affect the central
nervous system and immune system within the human body.
Some cannabinoids are psychoactive, or act on the brain and
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have the potential to alter mood or consciousness. Two of
the primary active cannabinoids within the marijuana plant
are THC and cannabidiol (CBD).
Clinical trials on the medical effectiveness of marijuana are
extremely limited due to the fact the federal government
considers the marijuana plant to be dangerous and to have
no medical benefits. As such, researchers must meet a
myriad of requirements prior to gaining approval to conduct
clinical research. Federal regulations currently require
investigators seeking to conduct clinical trials with
marijuana to gain approval from the U.S. Food and Drug
Administration, the U.S. Drug Enforcement Administration,
and the U.S. National Institute on Drug Abuse. In
addition, approved protocols may only utilize marijuana
supplied by the University of Mississippi, the sole
provider of cannabis for federally approved research. An
additional regulatory requirement mandating that the U.S.
Public Health Service review all clinical protocols was
eliminated in June 2015.
Results from the limited research on the medicinal
properties and adverse effects of marijuana suggests that
cannabinoids, the active ingredient in the marijuana plant,
are associated with improved symptoms of patients with a
variety of clinical indications, though not all
associations have yielded statistically significant
results. For example, some studies provide limited
evidence that cannabinoids may be beneficial for conditions
such as spasticity due to multiple sclerosis, and chronic
neuropathic and cancer pain.
b) CUA and MMP. On November 5, 1996, the voters of
California approved Proposition 215, a landmark initiative
that allowed for the statewide medical use of marijuana for
the first time in the history of the nation. Proposition
215, also referred to as the CUA, protects California
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physicians from prosecution for recommending marijuana to a
patient for medical purposes, and protects qualified
patients and primary caregivers from prosecution related to
the possession or cultivation of marijuana. The CUA also
makes findings and declarations on: the right of seriously
ill Californians to obtain and use marijuana for medical
purposes when appropriate and recommended by a physician;
ensuring that qualified patients and primary caregivers are
not subject to criminal prosecution or sanction; and,
encouraging the federal and state government to implement a
plan to provide for the safe and affordable distribution of
marijuana to all in-need patients. Although allowed by
law, the CUA does not explicitly grant the California State
Legislature the authority to amend or repeal any provisions
within the CUA without submitting the change to voters;
thus any amendments to the CUA by the Legislature without
approval of the voters would be deemed unconstitutional.
In an effort to increase access to MM by qualified patients
and primary caregivers, and to provide protections to
qualified patients and primary caregivers from prosecution
for the possession and cultivation of MM, California
enacted SB 420 (Vasconcellos), Chapter 85, Statutes of
2003, which established the MMP. The MMP, among other
things, provides for the creation of a voluntary program
for the issuance of MM identification cards to qualified
patients. The MM identification cards are intended to help
law enforcement officers identify and verify that
cardholders are able to cultivate, possess, and transport
certain amounts of marijuana without being subject to
arrest. The MMP also creates protections for qualified
patients and primary caregivers from prosecution for the
formation of collectives and cooperatives for MM
cultivation. The MMP sets a cap on the maximum amount of
MM a qualified patient or primary caregiver can possess and
the maximum number of plants each can grow; and, authorized
the California Attorney General to adopt guidelines to
ensure the security and non-diversion of MM. In 2008,
Attorney General Brown released guidelines that affirm the
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legality of MM collectives and cooperatives, but make clear
that such entities cannot be operated for profit, may not
purchase marijuana from unlawful sources, and must have a
defined organizational structure that includes detailed
records proving that users are legitimate patients.
Although the MMP expanded upon the CUA and provided
California with some of its first guidelines regarding MM
activity, it did not explicitly provide for robust state
regulations or sanctions related to MM activity. As a
result, MM activity through collectives and cooperatives
has expanded nearly uncontrollably throughout California,
regulated only by local agencies and governments, and
leaving the state with a plethora of patchwork standards
for MM activity.
c) Federal Controlled Substances Act (CSA). At the federal
level, marijuana remains classified as a Schedule I
substance under the CSA, making distribution of marijuana a
federal offense. Adopted in 1970, the CSA established a
federal regulatory system designed to combat recreational
drug abuse by making it unlawful to manufacture,
distribute, dispense, or possess any controlled substance.
Federal law defines a Schedule I substance as any drug or
substance having a high potential for abuse, no accepted
medical use in treatment in the United States, and a lack
of accepted safety for use under medical supervision.
Other Schedule I substances include specific types of
opiates, opium derivatives (e.g. heroin), and
hallucinogenic substances (e.g. lysergic acid diethylamide,
commonly referred to as LSD).
The guidelines published by the California Attorney
General, as a result of compliance with the MMP, state the
incongruity between federal and state law has given rise to
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confusion, but no legal conflict exists merely because
state law and federal law treat marijuana differently.
Although California's MM laws have been challenged in court
on the basis that they are preempted by the CSA, these
cases have been unsuccessful. The California Attorney
General's guidelines clarify that neither Proposition 215,
nor the MMP, conflict with the CSA because, in adopting
these laws, California did not legalize MM, but instead
exercised the state's reserved powers to not punish certain
marijuana offenses under state law when a physician has
recommended its use to treat a serious medical condition.
In light of the fact that the state has decided to remove
the use and cultivation of physician-recommended marijuana
from the scope of the state's drug laws, the California
Attorney General's guidelines recommend that state and
local law enforcement officers not arrest individuals or
seize marijuana under federal law when the officer
determines from the facts available that the cultivation,
possession, or transportation is permitted under
California's MM laws.
d) Case law surrounding California's marijuana laws. The
Legislature enacted SB 420 in part to clarify the CUA. As
part of its provisions, SB 420 limited the amounts of MM
that were allowed to be possessed and cultivated legally to
eight ounces of dried marijuana and either six mature or 12
immature marijuana plants, respectively. However in People
v. Kelly (2010) 47 Cal.4th 1008, the California Supreme
Court ruled that the state government is no longer allowed
to impose any legal limits on the amount of marijuana that
MM users can grow or possess, on the grounds that SB 420
amended Proposition 215, and the California Constitution
prohibits legislative tampering with ballot initiatives
approved by voters, unless explicitly allowed by the
initiative.
The California Supreme Court also granted review in several
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cases related to the rights of qualified patients and
dispensaries, specifically on the legality of local rules
regarding the operation and location of dispensaries and
cultivation sites. In 2013, in City of Riverside v. Inland
Empire Patients Health and Wellness Center, Inc. (2013)
Ct.App. 4/2 E052400, the Supreme Court of California ruled
that the state's MM statutes do not preempt a local ban on
facilities that distribute MM. Later that year, in Maral
v. Live Oak (2013) Ct.App. 3 C071822, an appellate court
decision ruled that cities and counties are permitted to
prevent patients from growing their own medicine, despite
the fact that it is allowed under state law. The results
of these cases inevitably have a significant impact on the
degree of local control that would be granted by the state
in any statewide regulatory framework for MM activity.
e) MBC guidelines. In its most recent guidelines, updated
in October 2014, the MBC clarifies that physicians who
recommend MM to their patients will not be subject to
investigation or disciplinary action by the MBC, as long as
they arrive to the recommendation in accordance with
accepted standards of medical responsibility. The accepted
standards include having a history and performing an
appropriate prior examination of the patient; developing a
treatment plan with objectives; providing appropriate
consent to the patient; providing periodic review of the
treatment's efficacy; providing consultation, as necessary;
and, maintaining proper medical records. The guidelines
further clarify that although making a recommendation to a
patient in writing may trigger federal action against a
physician, it does not instigate any action by the MBC.
f) Guidance from the United States Department of Justice
(USDOJ). Federal guidance on the issue of enforcement of
the marijuana industry has vacillated to a certain extent
in recent history. In October of 2009, the USDOJ sent a
memo, known as the Ogden Memo, to federal prosecutors
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encouraging them to make efficient and rational use of its
limited investigative and prosecutorial resources when
pursuing prosecution of individuals who engage in MM
activity. The 2009 memo stated that although prosecution
of significant traffickers of illegal drugs, including
marijuana, remains a core priority for the USDOJ, it
encouraged them to not focus federal resources on
individuals whose actions are in clear and unambiguous
compliance with existing state laws providing for the
medical use of marijuana, such as those individuals with
cancer or other serious illnesses who use marijuana as part
of a recommended treatment regimen consistent with
applicable state law.
Two years following the Ogden Memo, the USDOJ published the
2011 Cole Memo to provide clarification to the previous
memo. This second memo reasserted the federal government's
authority and intent to prosecute marijuana-related
activity. The 2011 Cole Memo acknowledged the increase in
scope of commercial cultivation, sale, distribution, and
use of marijuana for purported medical purposes, stating
the Ogden Memo was never intended to shield such activities
from federal enforcement action and prosecution, even where
those activities assert to comply with state law. It
further clarified that any persons who are in the business
of cultivating, selling, or distributing marijuana are in
violation of the CSA, regardless of state law, clearing
stating federal officials' position that MM dispensaries
should not be given legal shelter.
In August of 2013, the USDOJ announced its most recent
update to their marijuana enforcement policy, the 2013 Cole
Memo, with a much more progressive shift in attitude
towards marijuana-related activity. The 2013 Cole Memo
asserts that while marijuana remains illegal federally, the
federal government is less likely to enforce
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marijuana-related activity in states that have enacted laws
legalizing marijuana in some form, and have also
implemented strong and effective regulatory and enforcement
systems to control the cultivation, distribution, sale, and
possession of marijuana. However the USDOJ still reserves
the right to challenge state policies at any time it feels
it is appropriate and necessary.
In an effort to provide guidance to states in their
creation of robust systems that affirmatively address the
federal government's primary concerns related to MM, the
2013 USDOJ memo outlined the following eight priorities for
enforcement related to marijuana:
i) Preventing the distribution of marijuana to
minors;
ii) Preventing revenue from the sale of marijuana
from going to criminal enterprises, gangs, and cartels;
iii) Preventing the diversion of marijuana from
states where it is legal under state law in some form
to other states;
iv) Preventing state-authorized marijuana activity
from being used as a cover or pretext for the
trafficking of other illegal drugs or other illegal
activity;
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v) Preventing violence and the use of firearms in
the cultivation and distribution of marijuana;
vi) Preventing drugged driving and the exacerbation
of other adverse public health consequences associated
with marijuana use;
vii) Preventing the growing of marijuana on public
lands and the attendant public safety and environmental
dangers posed by marijuana production on public lands;
and,
viii) Preventing marijuana possession or use on
federal property.
The 2013 Cole memo further suggested that the existence of
a strong and effective state regulatory system and a
marijuana operation's compliance with such a system may
allay the threat that an operation's size poses to federal
enforcement interests, and encouraged federal prosecutors
to review marijuana cases on a case-by-case basis, and
consider whether or not the operation is in compliance with
a strong and effective state regulatory system prior to
prosecution.
To date, existing law in California does not provide for a
robust and effective state regulatory system for MM; it
merely provides limited protections to qualified patients
and primary caregivers from prosecution. Because existing
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state law does not prohibit local jurisdictions from
enacting ordinances related to MM activity, several local
jurisdictions have established their own policies regarding
MM activity, which are not all fully consistent or
compliant with the priorities outlined in the 2013 Cole
Memo.
g) Marijuana policies in other states. As of 2015, 23
states, the District of Columbia, and Guam allow for MM
programs. Although California was the first to allow for
the medical use of marijuana, it remains the only state
that allows its use without a robust state regulatory
framework. States with MM laws generally have some form of
patient registry, which may provide some protection against
arrest for possession up to a certain amount of marijuana
for personal medicinal use. A limited number of states
restrict MM usage to products with low to zero THC and high
CBD concentrations, in an effort to more strictly limit the
use of THC, known for its psychoactive effects.
h) Medical vs. recreational use. To date, only 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. Since 2010, support for marijuana
legalization has risen by 11 percentage points. A March
2013 survey conducted by the Pew Research Center found that
the majority of Americans support legalization by a seven
point margin - 52% to 45%.
The national trend to support marijuana legalization is
consistent with recent polls in California, which also
demonstrate a majority of residents support the concept.
As of the date of publishing of this analysis, there are
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five recreational marijuana initiatives cleared for
circulation by the Secretary of State; one measure relating
to marijuana is pending title and summary with the
California Attorney General. It is unclear whether or not
the initiatives will be combined or will qualify for the
ballot, however there is clearly an interest by
Californians to submit a framework for recreational
marijuana use for the approval of voters in 2016.
In order for any marijuana scheme - whether for
recreational or medical purposes - 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 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.
3)OPPOSITION. The Fresno Cannabis Association has an oppose
unless amended position on this bill, stating this bill would
institutionalize and potentially expand the existing patchwork
of local jurisdictions that allow and prohibit medical
cannabis cultivation and dispensing. The opposition states
this bill, as currently written, will leave patients in Fresno
County and the Central Valley, who are currently covered by
the CUA, with no safe access to cannabis gardens, collectives,
or dispensaries. The opposition further asserts that allowing
cities and counties to opt out of any and all state
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regulations that are developed would be bad public policy from
a health perspective. The Fresno Cannabis Association states
it will oppose this bill unless it is amended to prohibit
local bans on medical cannabis dispensaries and/or
cultivation.
4)RELATED LEGISLATION.
a) AB 26 (Jones-Sawyer) establishes the Medical Cannabis
Regulation and Control Act to regulate the cultivation,
testing, transportation, distribution, and sale of medical
cannabis. AB 26 is currently pending in the Assembly
Business and Professions Committee.
b) AB 34 (Cooley) would have created a comprehensive state
licensing and regulatory framework for the cultivation,
processing, distribution, testing, and sale of medical
cannabis. AB 34 was held in the Assembly Appropriations
Committee.
c) AB 243 (Wood) establishes a new regulatory framework for
MM cultivation, authorizing cities and counties to issue or
deny a conditional permit for the cultivation of MM.
Requires the State Water Resources Control Board to
implement an identification program for the monitoring,
tracking, and inspection of each MM plant. Imposes a tax
on each MM plant to be deposited in the Marijuana
Production and Environment Mitigation Fund to be allocated
as specified. AB 243 is currently pending in the Senate
Committee on Environmental Quality.
d) AB 258 (Levine), Chapter 51, Statutes of 2015, prohibits
the eligibility determination of a patient on the organ
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transplant waiting list from being based solely on his or
her status as a qualified patient for MM, or based solely
on a positive test for the use of MM by a qualified
patient.
e) AB 266 (Bonta) establishes a licensing and regulatory
framework for medical cannabis under the Medical Cannabis
Regulation and Control Act, and establishes the Office of
Medical Cannabis Regulation within the Office of the
Governor, the Division of Medical Cannabis Regulation
within the BOE, the Division of Medical Cannabis
Manufacturing and Testing within the DPH, and the Division
of Medical Cannabis Cultivation within the CDFA, and would
set forth the duties of the respective regulatory
authorities. AB 266 is currently pending in the Senate
Governance and Finance Committee.
f) AB 730 (Quirk) provides that a conviction for
transportation of marijuana, psilocybin mushrooms or
phencyclidine requires proof of intent to sell, as is
currently the case for cocaine, heroin and numerous other
drugs. AB 730 is currently enrolled and pending review by
the Governor.
g) AB 821 (Gipson) exempts from sales and use taxes the
gross receipts from the sale, storage, use, or other
consumption of MM for consumption by a terminally ill
patient, and requires the purchaser to provide an exemption
certificate as provided. AB 821 is currently pending in
the Assembly Revenue and Taxation Committee.
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h) AB 849 (Bonilla) makes it a felony for any person to
extract THC or any other cannabinoids, by means of solvent
extraction, from marijuana and cause an explosion resulting
in great bodily injury, or damage to structures, property,
or forest land. AB 849 is currently pending in the Senate
Public Safety Committee.
i) AJR 25 (Lackey) memorializes the President and Congress
of the United States to support legislation that will
provide a comprehensive solution to allow banks and credit
unions to perform financial services for marijuana
businesses. AJR 25 is currently pending in the Assembly
Banking and Finance Committee.
j) SB 165 (Monning) adds additional crimes or violations to
an existing Fish and Game Code statute which authorizes
civil fines for certain natural resource-related violations
in connection with the production or cultivation of a
controlled substance. SB 165 is currently pending in the
Assembly Appropriations Committee.
aa) SB 303 (Hueso) permits the destruction of excess seized
marijuana by law enforcement agencies, subject to specified
evidentiary and preservation requirements. SB 303 is
currently pending in the Assembly Public Safety Committee.
5)PREVIOUS LEGISLATION.
a) AB 1894 (Ammiano) of 2014 would have established the
Medical Cannabis Regulation and Control Act to regulate the
cultivation, testing, transportation, distribution, and
sale of medical cannabis. AB 1894 would have created the
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Division of Medical Cannabis Regulation in the Department
of Alcoholic Beverage Control (ABC) and would have given
ABC authority to register persons for specified activities
relating to medical cannabis and to collect registration
fees. AB 1894 was held on the Assembly Floor.
b) SB 1262 (Correa) of 2014 would have created a licensing
and regulatory framework for the cultivation,
transportation, testing, and sale of MM, administered by
the Bureau of Medical Marijuana Regulation in the
Department of Consumer Affairs. SB 1262 was held in the
Assembly Appropriations Committee.
c) AB 473 (Ammiano) of 2013 would have created the Division
of Medical Marijuana Regulation and Enforcement in order to
regulate the cultivation, manufacture, testing,
transportation, distribution, and sale of MM. AB 473 was
held on the Assembly Floor.
d) AB 604 (Ammiano) of 2013 was gutted and amended from a
different subject matter and would have enacted the Medical
Cannabis Regulation and Control Act. AB 604 was never
heard by the Senate Public Safety Committee.
e) 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. AB 2312 was never
heard by the Senate Committee on Business, Professions and
Economic Development.
f) AB 1300 (Blumenfield), Chapter 196, Statutes of 2011,
provides that a local government entity may enact an
ordinance regulating the location, operation or
establishment of a MM cooperative or collective; authorizes
local government entity to enforce such ordinances through
civil or criminal remedies and actions; and authorizes a
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local government entity to enact any ordinance that is
consistent with the MMP. AB 1300 did not directly regulate
MM facilities.
g) 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. SB 626 was held in the Senate Appropriations
Committee.
h) AB 390 (Ammiano) of 2009 would have legalized the
possession, sale, cultivation, and other conduct relating
to marijuana and required ABC and enforce the terms of
legalized marijuana. AB 390 was never heard by the
Assembly Health Committee.
i) SB 1098 (Migden) of 2007 would have required the BOE to
administer a tax amnesty program, for MM dispensaries, as
defined. SB 1098 was never voted on by the Senate Revenue
and Taxation Committee.
j) SB 420 (Vasconcellos) Chapter 875, Statutes of 2003,
establishes 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 CUA.
aa) 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.
6)CHAPTERING OUT. As currently written, this bill and AB 266,
currently pending in the Senate Governance and Finance
Committee, amend the same code sections. Amendments should be
taken to avoid chaptering out conflicts, should both bills be
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enacted.
7)AUTHOR'S AMENDMENTS. The author is proposing a number of
amendments to this bill. A portion of the amendments are
technical cleanup language. Another part of the author's
proposed amendments are in an effort to address some of the
concerns brought up by the Assembly Business and Professions
Committee, including clarifications to labeling and packaging
requirements, an extension to the immunity provided to
collectives and cooperatives prior to the issuance of
conditional licenses, and the establishment of testing
standards by the Office. The author's remaining proposed
amendments eliminate references to city taxing authority,
limit the length of time for which a conditional license may
be renewed, and specify in the definitions that a licensed
entity is one that is both conditionally licensed by the state
and maintains a local license or permit. These changes are
reflected in the mock-up associated with this analysis.
8)TECHNICAL AMENDMENTS. This bill establishes a statewide
framework for the MM industry. However there are a number of
instances in which this bill's provisions refer to marijuana
rather than MM. The Committee may suggest amending this bill
to ensure consistency throughout the language and uphold the
intent of the author to address the MM industry, rather than
influence recreational activity. This bill also regulates
both MM and MM products, however the language does not
consistently regulate both types of commodities. The
Committee may suggest amending this bill to regulate MM and
MMP, as relevant, consistently throughout the language. In
addition, this bill's provisions contain references to
definitions, such as "labor peace agreement," which are not
used at all in the rest of the language. The Committee may
suggest amending this bill to delete unnecessary definitions
and clauses.
9)RECOMMENDED AMENDMENTS. This bill establishes a statewide
regulatory structure for the MM industry from the ground up.
In order to ensure this bill meets the original intent of the
author, the Committee may suggest a number of amendments the
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author may want to consider to strengthen current provisions
within the language.
a) Appointments by the Governor vs. civil service
employees. This bill requires the Governor to appoint the
Chief, subject to confirmation by the Senate Committee on
Rules. The Chief is then required to serve in accordance
with State Civil Service Act. Under existing law, civil
service employees cannot be subject to confirmation by the
Legislature. This bill grants the Chief with the great
authority to enforce and administer the Act, and adopt and
enforce all rules and regulations necessary to implement
the Act. As such, the Committee may suggest amending this
bill to strike provisions requiring the Chief to be a civil
service employee and maintain provisions requiring the
Governor to appoint the position, subject to confirmation
by the Senate, as is customary with similar positions
appointed by the Governor.
b) Availability of records. This bill requires records of
all facilities issued conditional licenses and authorizes
access to those records by state and local law enforcement.
However, state and local agencies, other than law
enforcement, may need to access these records in order to
properly perform their duties to enforce the chapter. The
Committee may suggest amending this bill to allow state and
local agencies equal access to the records of all
facilities issued conditional licenses.
c) Organic marijuana. This bill requires, no later than
January 1, 2022, for all MM grown, produced, distributed,
and sold in the state to meet certified organic standards.
Organic is a labeling term that indicates that the food or
other agricultural product has been produced through
approved methods. In order to sell, label, or represent
their products as organic, operations must follow all of
the specifications set out by the USDA organic regulations.
As marijuana is currently listed as a Schedule I drug
under federal law, the USDA does not recognize marijuana
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has a legal crop, and therefore cannot certify marijuana as
organic. The Committee may suggest amending this bill to
require all MM under this Act to meet standards equivalent
to those for certified organic products, as certified by
the Office or an independent third party.
d) Exemption for the City of Los Angeles. The author
indicates the intent of this bill is to provide
comprehensive regulations for the MM industry throughout
the state, yet this bill currently leaves a large loophole
within the framework of the regulatory structure. This
bill exempts all marijuana businesses and dispensaries
subject to Measure D, approved by the voters of the City of
Los Angeles on the May 21, 2013 ballot for the city, from
the regulations and provisions of this bill. Measure D
grandfathered existing medical marijuana businesses and
dispensaries but does not allow the City to license the
businesses or allow new businesses.
In addition, as currently written, this bill does not
provide any means for the state to track MM and MM products
to ensure that they are not being illegally diverted into
or out of the City of Los Angeles. This bill also limits
entities holding a license from the state to engaging in MM
activity only with entities that also hold a license from
the state. Accordingly, any entity that holds a license
from the state that engages in MM activity with an entity
within the City limits is thereby participating in illegal
activity.
Measure D prevents the City of Los Angeles from issuing
licenses to MM businesses; however nothing prohibits the
state from issuing its own licenses to qualifying
applicants from the City. The Committee may suggest
amending this bill to allow the Office to issue licenses to
those MM businesses that are legally allowed to operate
within the City of Los Angeles, and make appropriate
changes to ensure these businesses are required to follow
all requirements of the Act, in order to close gaps in
protections currently created by the language.
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e) Suitability for licensure. This bill provides for a
conditional license to be denied, suspended, or revoked for
a past felony conviction for the possession for sale,
manufacture, transportation, or cultivation of a controlled
substance, or a felony criminal conviction for drug
trafficking, among others. However, this bill exempts, as
a reason for denial of licensure, a prior conviction for a
felony that was committed after the enactment of the CUA,
but which would not be a felony after the enactment of this
bill. This bill does not change any existing felonies or
constitute resentencing, but instead provides that the
actions of a licensee, in compliance with the law and its
regulations, are not in and of themselves unlawful. The
Committee may wish to consider that it would not be
possible for the actions committed by individuals prior to
the existence of a licensing scheme to be in full
compliance with the Act, as full compliance requires
licensure, and suggests amending this bill to clarify the
intent.
f) Talking straight with consumers. This bill requires
advertisements for physician recommendations to bear a
notice to consumers that educate consumers on the intent of
the CUA and physician credentials. The requirement of a
consumer notice implies there is a need to warn them about
issues related to MM recommendations. Yet the notice is
silent on the fact that marijuana is currently listed as a
Schedule I drug in the CSA, and federal officials still
have the authority to prosecute against individuals, with
the authority to charge felonies, for engaging in
marijuana-related activities. The Committee may suggest
amending this bill to clarify to consumers that they are
still subject to prosecution by the federal government for
marijuana-related activities, even if recommended marijuana
by a physician.
g) Tax provisions. This bill authorizes counties to impose
specified taxes on MM licensees within their jurisdictions.
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As currently written, the language does not specify the
types of taxes that may or may not be imposed, and provides
limited flexibility in methods for the collection of taxes.
Additional clarity is also needed as to the location of
which the tax applies. The Committee may suggest amending
this bill to appropriately clarify these provisions.
h) Enforcement by the Office. The bill authorizes civil
penalties but does not allow them to be levied
administratively. Allowing the office to levy penalties
after an administrative proceeding should make carrying out
enforcement actions considerably easier. The Committee may
suggest amending this bill to explicitly allow the office
to conduct administrative enforcement actions.
i) Medical records. This bill requires the Office to
ensure the confidentiality of patient information that it
keeps for administrative purposes. Existing law provides
extensive protections to patient medical records. In order
to ensure full safeguards are guaranteed to MM patients,
the Committee may suggest amending this bill to require all
patient records to be held and protected by the Office in
accordance with existing state and federal law.
j) Equal mandates for licensees. This bill requires a
licensed cultivation site to display the state license in a
manner so as to be available and easily read at the
location; this signage requirement is not mandatory for
other licensees. The Committee may suggest amending this
bill to have signage, and all other relevant, mandates
applied consistently to all licensees.
aa) Edible MM facilities. This bill provides some
requirements for licensed facilities that manufacture
edible MM products, yet does not require these facilities
to follow any statutory requirements of other food
facilities. Existing law requires food facilities to abide
by laws within the California Retail Food Code, which was
established to safeguard public health and provide to
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consumers food that is safe, unadulterated, and honestly
presented through adoption of science-based standards.
Licensure as a MM facility that conducts business with food
should not exempt these facilities from standards required
for non-MM food facilities. The Committee may suggest
amending this bill to clarify MM facilities are not exempt
from relevant health and safety standards, and require all
licensed food-related MM facilities to abide by standards
and regulations equivalent to those in the California
Retail Food Code.
10)POLICY COMMENTS. This bill establishes a licensing and
regulatory scheme for MM, from cultivation to retail. This
bill creates a new state agency, directing it to promulgate,
implement, and enforce all necessary rules, regulations, and
standards for the Act. As this bill creates a structure for
an entirely new industry, there are a number of outstanding
issues that the Committee should consider addressing in order
to ensure the success of the regulatory scheme, should this
bill be enacted into law.
a) Hazy definitions. This bill requires individuals who
intend to engage in MM activity within the state to apply
to the Office for a license from the state. This bill's
provisions refer to the license acquired from the state as
a conditional license. However, the term "conditional" is
a misnomer. All licenses issued by the state are
conditional by nature; the privilege of holding any license
from the state is conditioned upon following the laws
relevant to that license. For example, individuals who
hold a driver's license only maintain their license if they
follow the state's rules of the road. Thus the Committee
may wish to consider if the language should be amended to
clarify references to licenses.
This bill also establishes requirements for all applicants
for licensure by the state. However it is unclear whether
a licensee can be either a person or a facility; the
requirements for an applicant appear to refer to a person,
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yet other bill provisions refer to both licensed
individuals and licensed facilities. The Committee may
wish to consider clarifying this bill's provisions to
explicitly define what entities or persons can qualify for
licensure under the Act.
b) One agency vs. multiple agencies. This bill builds a
new state office from the ground up, and tasks it with
establishing, implementing, and enforcing standards and
regulations for an entirely new industry within the state;
thus this bill creates a regulatory structure unlike any
other for a single agricultural product. The establishment
of a brand new state office is highly resource-intensive in
terms of time, labor, and cost. The state currently
regulates and enforces non-MM industries using multiple
agencies that specialize in specific parts of each
industry. The Committee may wish to consider whether it is
appropriate to task one office with all of the
responsibilities set forth in this bill or if it would be
more appropriate to spread out the responsibilities among
existing agencies that already have expertise in
promulgating, implementing, and enforcing similar
regulations as those required by this bill.
c) Getting advice from experts. This bill requires the
Office to promulgate a myriad of regulations and standards
to implement this Act. Given the breadth of experience and
the significant resources that will inevitably be necessary
to promulgate and enforce the rules, standards, and
regulations required by this bill - from standards for
health and safety to best practices for
environmentally-friendly cultivation - the Committee may
suggest amending this bill to require the Office to convene
an advisory committee to provide the Office with necessary
expertise from stakeholders in the MM industry, assist with
the promulgation of regulations, and provide technical
assistance regarding implementation and enforcement of the
Act. The Committee may suggest the advisory committee be
comprised of gubernatorial and Legislative appointments
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including, but not limited to, representatives from local
and state agencies, public health and environmental
experts, patient advocates, physicians, MM industry
experts, and law enforcement.
d) The Office: Good cop and bad cop. This bill requires
the Office to promote the MM industry by upholding the CUA
and recognizing marijuana as a medicine to patients.
Simultaneously, the Office is charged with establishing
protections, collecting fees, and otherwise enforcing the
provisions of the Act. The responsibilities of both
promoting and enforcing the MM industry are inherently
contradictory; it is unlikely that any single entity would
be able to meet the obligations of both at equal standards
or with equal efficiency. The Committee may wish to
consider the ability of the Office to perform both sets of
responsibilities equally as well, and the potential
consequences of it meeting the duties of one more than the
other.
e) Implementation challenges. This bill leaves nearly all
of the administration of the Act to the rulemaking process
by requiring the Office to promulgate a multitude of
regulations rather than providing a clear, statutory
framework. In general, the role of state agencies is to
implement policies that are enacted by the Legislature,
rather than determine what those policies should be. The
process of promulgating regulations by a state agency can
be time-consuming depending on the complexity of the issue,
and given requirements for notification, public comment,
and additional delays that arise when amendments to
proposed regulations are made. Furthermore, the regulatory
process has been criticized heavily for lacking the
transparency and robust stakeholder input that the
legislature process allows for. As such, the Committee may
wish to consider whether or not it is in the best interest
of the state to delegate all rulemaking to the Office, or
to instead provide basic fundamental standards and
guidelines, which the Legislature can have a voice in
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crafting, within this bill's provisions.
f) Protections against poorly-performing locals. As
currently written, this bill does not provide protections
against local jurisdictions that do not have proper
standards within their local ordinances or fail to
adequately enforce local and state standards. For example,
if locally licensed cultivation site is polluting the
areas, should not the Office be able to act? The Committee
may wish to consider if the provisions of this bill provide
adequate protections against local ordinances or
enforcement actions that do not meet the principles
intended by the Office or this bill.
g) Protections for existing MM businesses. This bill does
not provide any protections for existing MM businesses from
January 1, 2016, the date this bill would become enacted,
through June 30, 2018, the date before the Office is
required to begin issuing licenses. As such, state and
local agencies could potentially take civil and criminal
actions against MM businesses during this timeframe. It is
an unusual circumstance to subject an entity to civil and
criminal penalties for an activity that will be legal in
three years. The Committee may wish to consider amending
this bill to address this concern.
h) Sufficient environmental protection? This bill
establishes the Medical Marijuana Public Safety and
Environmental Protection Act, and declares that all efforts
must be made to prevent and mitigate the harmful
environmental impacts that can be associated with some
marijuana cultivation. Furthermore, the author points to
the negative effects that the lack of regulations on the MM
industry has had on the environment, particularly in
California's northern counties. Yet this bill is silent on
specific standards that conditional licensees must meet and
abide by to ensure environmental protections with regard to
MM cultivation. The Committee may wish to consider whether
or not this bill provides sufficient guidelines and
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standards to ensure adequate environmental protections
regarding MM activity to meet the bill's original intent.
i) Adequate consumer protection? This bill currently lacks
guidelines on consumer protections. Of particular concern
is the absence of guidelines for strict testing standards
and regulations, which could potentially threaten the
health of patients if not thoroughly articulated by the
Office. This bill also does not expressly prohibit an
individual from obtaining a license for both testing and
any other license type. Without an explicit prohibition on
the ability for an individual to hold a testing license in
conjunction with any other license type, the language
provides a loophole to the regulatory structure which could
negatively impact health and safety protections for
patients. The Committee may wish to consider, given the
severity of the negative impacts the lack of regulation has
had on the state, whether it is appropriate to provide no
guidance to the Office and other responsible entities in
this bill on the standards required by this bill.
The one notable exception to the lack of guidance by this
bill's provisions is in the area of edible MM products;
this raises the question of why minimum standards have been
provided in the language for these commodities, but have
not been established for other commodities, such as those
developed by extraction methods, which contribute to one of
the fastest growing sectors within the MM market.
j) Whistle blowing or just indiscrete? This bill declares
that nothing prevents an Office employee from disclosing
information, including that related to fraud or violations
of the Act, to state or local agencies. Oftentimes
investigations of illicit activity require certain
confidentiality so as to not compromise the entire
operation. The Committee may wish to consider the
appropriateness of granting Office employees the right to
release information that could be confidential and relevant
to an investigation, particularly to other state and local
agencies that are not related to law enforcement.
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Furthermore, although this bill allows for Office employees
to act as whistle blowers, it currently offers no
protections to those who do. If this ability to disclose
is important, the Committee may wish to consider amending
the bill to provide sufficient protections to individuals
who provide more transparency or information to authorities
in specified circumstances.
aa) Limited state revenues. This bill currently only
provides revenue to the state by depositing penalties
imposed upon non-compliant individuals into the GF.
Although the language allows the Office to assist state
taxation authorities to develop policies for state
taxation, it does not explicitly provide for a state tax.
The MM industry currently generates millions of dollars,
with some industry supporters estimating it has the
potential to produce billions of dollars in the future.
The Legislature is granting local governments the first
crack at taxing this revenue base. The Committee may wish
to consider amending this bill to impose a state tax in the
regulatory structure to provide the state with much needed
monies to the GF.
bb) Geographic branding for marijuana. This bill requires
the Office to establish appellations of origin for
marijuana grown in California. An appellation of origin is
a geographic indication, generally consisting of a
geographical name or a traditional designation, used on
products which have a specific quality or characteristics
that are from the geographic environment in which they are
produced. Consumers are familiar with these products and
often request them using their geographical name. Common
examples include food and beverages such as Gruyère cheese,
Champagne, and Tequila, all of which are products named for
their origin, and they enjoy legal protection for their
names and reputations. Geographic branding is rarely used
for medical products, if at all. In addition, appellation
systems are used throughout the world and require laborious
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standards and enforcement. The Committee may wish to
consider the feasibility and need for the Office to create
and enforce a system to brand a medical product based on
its geographic origin.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file.
Opposition
Fresno Cannabis Association
Analysis Prepared by:An-Chi Tsou / HEALTH / (916)
319-2097