BILL ANALYSIS                                                                                                                                                                                                    Ó

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          Date of Hearing:  July 14, 2015

                            ASSEMBLY COMMITTEE ON HEALTH

                                  Rob Bonta, Chair

          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  

          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.


          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,  

             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  

          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  


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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  


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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  


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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  


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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  

          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  

             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  

             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  

          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  

          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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          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  

          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  

             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  

          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  

          88)Requires all edible MM products to comply with quality  
            assurance standards in existing law, in addition to the  

             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  

             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  

             e)   A requirement that products containing  
               tetrahydrocannabinol (THC) to be prepared in compliance  
               with maximum potency standards for THC and THC  

             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.


          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  
            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.


             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  

               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  

                 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  


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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;  

                 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  

               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  

             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  

             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  

             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  

             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.


             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  

             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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          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  
               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  

             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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                                                                    Page  51

               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  
             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.


          None on file.


          Fresno Cannabis Association

          Analysis Prepared by:An-Chi Tsou / HEALTH / (916)