BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 643


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          (Without Reference to File)





          SENATE THIRD READING


          SB  
          643 (McGuire)


          As Amended  September 11, 2015


          Majority vote


          SENATE VOTE:  26-13


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Business &      |8-2  |Bonilla, Bloom, Dodd, |Jones, Gatto        |
          |Professions     |     |Eggman, Mullin, Ting, |                    |
          |                |     |Wilk, Wood            |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Health          |11-2 |Bonta, Maienschein,   |Chávez, Patterson   |
          |                |     |Bonilla, Burke, Chiu, |                    |
          |                |     |Gomez, Lackey,        |                    |
          |                |     |Santiago, Steinorth,  |                    |
          |                |     |Thurmond, Wood        |                    |
          |                |     |                      |                    |








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          |----------------+-----+----------------------+--------------------|
          |Appropriations  |11-0 |Gomez, Bloom, Bonta,  |                    |
          |                |     |Nazarian, Eggman,     |                    |
          |                |     |Eduardo Garcia,       |                    |
          |                |     |Holden, Quirk,        |                    |
          |                |     |Rendon, Weber, Wood   |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Business &      |8-1  |Bonilla, Baker, Dodd, |Gatto               |
          |Professions     |     |Eggman, Mullin, Ting, |                    |
          |                |     |Wilk, Wood            |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 


          SUMMARY:  Establishes a comprehensive licensing and regulatory  
          framework for the cultivation, manufacture, transportation,  
          storage, distribution, and sale of medical cannabis to be  
          administered by the Department of Consumer Affairs (DCA),  
          Department of Food and Agriculture (CDFA), and Department of  
          Public Health (CDPH), as specified.  Specifically, this bill:  


          1)Requires the Medical Board of California (MBC) to prioritize  
            cases for repeated acts of clearly excessive recommending of  
            cannabis to patients without a good faith prior examination of  
            the patient and medical reason therefor, and specifies that it  
            is unprofessional conduct to recommend medical cannabis to a  
            patient without an appropriate prior examination and medical  
            indication.  


          2)Makes it a misdemeanor for a physician and surgeon who  
            recommends cannabis to a patient for a medical purpose to  
            accept, solicit, or offer any form of remuneration from or to  
            a licensed facility if the physician and surgeon or his or her  
            immediate family has a financial stake in that facility. 










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          3)Requires the Governor to appoint a Chief of the Bureau of  
            Medical Marijuana Regulation (Bureau), within the DCA and  
            authorizes the Chief of the Bureau or a deputy to exercise  
            every power or duty given to the Director.


          4)Vests in the DCA the sole authority to create, issue, renew,  
            discipline, suspend, or revoke licenses for medical marijuana  
            activities within the state and to collect related fees, and  
            authorizes the DCA to create additional licenses.


          5)Requires the CDFA to administer the provisions of the Act  
            related to the cultivation of medical cannabis, and to create,  
            issue, and suspend or revoke cultivation licenses for  
            violations of the Act.


          6)Requires the CDPH to administer the provisions of the Act  
            related to the manufacturing and testing of medical cannabis.   



          7)Exempts from the licensure requirements of the Act qualified  
            patients who do not provide, donate, sell, or distribute  
            cannabis to any other person, and primary caregivers who  
            provide cannabis exclusively for medical purposes to no more  
            than five specified qualified patients, as specified. 


          8)Upon the date of implementation of regulations by the  
            licensing authority, prohibits any person from engaging in  
            commercial cannabis activity without possessing both a state  
            license and local authorization, and prohibits a licensee from  
            commencing activity under the authority of a state license  
            until the applicant has obtained a local license or permit, as  
            specified. 










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          9)Provides that revocation of a local license terminates the  
            ability of a medical cannabis business to operate within that  
            local jurisdiction, and that revocation of a state license  
            terminates the ability of a licensee to operate within the  
            state. 


          10)Requires an applicant for state license to, among other  
            things, submit fingerprints to the Department of Justice, and  
            provide documentation, issued by the local jurisdiction,  
            certifying that the applicant is in compliance with all local  
            ordinances and regulations; evidence of the legal right to  
            occupy the proposed location; for applicants with 20 or more  
            employees, provide a statement that the applicant will enter  
            into, or already has entered into, a labor peace agreement; a  
            seller's permit number; and other specified information. 


          11)Requires applicants seeking licensure as a testing laboratory  
            to register with the CDPH, and requires applicants seeking  
            licensure to cultivate, distribute, or manufacture medical  
            cannabis to include in their application a detailed  
            description of their operating procedures. 


          12)Requires a licensing authority to deny an application if the  
            applicant or the premises do not qualify for licensure under  
            the Act, and authorizes a licensing authority to deny a  
            license or license renewal for specified acts. 


          13)Requires the CDFA to promulgate regulations governing the  
            licensing of indoor and outdoor cultivation sites.  


          14)Requires the Department of Pesticide Regulation (DPR), in  
            consultation with the CDFA, to develop standards for the use  
            of pesticides in cultivation, and maximum tolerances for  
            pesticides and other foreign object residue in harvested  








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            cannabis. 


          15)Requires the CDPH to develop standards for the production and  
            labeling of all edible medical cannabis products. 


          16)Requires the CDFA, in consultation with the Department of  
            Fish and Wildlife and the State Water Resources Control Board,  
            to ensure that individual and cumulative effects of water  
            diversion and discharge associated with cultivation do not  
            affect the in stream flows needed for fish spawning,  
            migration, and rearing, and the flows needed to maintain  
            natural flow variability. 


          17)Provides the CDFA with the authority necessary for the  
            implementation of regulations it adopts pursuant to the Act,  
            and requires those regulations: to regulate weighing or  
            measuring devices; require that cannabis cultivation is  
            conducted in accordance with state and local laws; establish  
            procedures for the issuance and revocation of unique  
            identifiers for cannabis cultivation activities; and prescribe  
            standards, in consultation with the Bureau, for the reporting  
            of necessary information relating to unique identifiers.   


          18)Requires the DPR, in consultation with the State Water  
            Resources Control Board, to promulgate regulations that  
            require that the application of pesticides or other pest  
            control in connection with the cultivation of medical cannabis  
            to meet standards equivalent to existing law. 


          19)Specifies various license types for state cultivator licenses  
            issued by the CDFA, including licenses for special outdoor,  
            specialty indoor, specialty mixed-light, small outdoor, small  
            indoor, small mixed-light, outdoor, indoor, and mixed-light  
            cultivation, and nursery licenses, and requires the CDFA to  








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            limit the number of outdoor, indoor, and mixed-light licenses,  
            as specified. 


          20)By January 1, 2020, requires the CDFA, in conjunction with  
            the Bureau, to make available a certified organic designation  
            and organic certification program for medical marijuana, if  
            permitted under federal and state law, as specified, and  
            authorizes the Bureau to establish appellations of origin for  
            marijuana grown in California.


          21)Requires the CDFA, in consultation with the Bureau, to  
            establish a track and trace program for reporting the movement  
            of medical marijuana items throughout the distribution chain  
            that use a unique identifier and secure packaging, and is  
            capable of providing specified information, including the  
            licensee receiving the product, the transaction date, and the  
            cultivator from which the product originates. 


          22)Requires the CDFA to create an electronic database containing  
            the electronic shipping manifests which shall include the  
            quantity, or weight, and variety of products shipped and  
            received; estimated and actual times of departure and arrival;  
            and license number and unique identifiers issued by the  
            licensing authority for all licensees involved in the shipping  
            process. 


          23)Prior to transporting medical cannabis or medical cannabis  
            products, requires a licensed transporter to complete an  
            electronic shipping manifest and to transmit that manifest to  
            the Bureau and the licensee that will receive the medical  
            cannabis product, and requires licensees receiving the  
            shipment to submit to the licensing agency a record verifying  
            receipt of the shipment and details of the shipment. 










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          24)Authorizes a county to impose a tax on the privilege of  
            cultivating, dispensing, producing, processing, preparing,  
            storing, providing, donating, selling, or distributing medical  
            cannabis or medical cannabis products by a licensee operating  
            pursuant to the Act, as specified.


          25)Provides that the provisions of this Act are severable if any  
            provision or its application is invalid. 


          26)Makes this bill operative only if AB 266 (Bonta, et al.) and  
            AB 243 (Wood) of the current legislative session is enacted  
            and takes effect on or before January 1, 2016.


          27)Makes other technical and conforming changes. 


          FISCAL EFFECT:  Unknown.  This bill is keyed fiscal by the  
          Legislative Counsel.  


          COMMENTS: 




          Purpose.  This bill is author sponsored.  According to the  
          author, "SB 643 seeks to resolve many of the issues created by  
          the enactment of the Compassionate Use Act and subsequent  
          legislation?.California voters made it clear that they wanted  
          medical marijuana to be legalized, but issues and concerns for  
          growers, doctors, dispensaries, law enforcement, district  
          attorneys, cities, counties and others have only become more  
          complicated?Since the voters of California passed Proposition  
          215 in 1996, it has become clear that there needs to be a  
          comprehensive regulation bill from the Legislature that oversees  
          the cultivating, processing, manufacturing, transportation,  








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          prescribing and sale of medical marijuana?."  


          The Compassionate Use Act (CUA) and SB 420.  In 1996, voters  
          approved the CUA, which allowed patients and primary caregivers  
          to obtain and use medical marijuana, as recommended by a  
          physician, and prohibited physicians from being punished or  
          denied any right or privilege for making a medical marijuana  
          recommendation to a patient.  In 2003, SB 420 (Vasconcellos),  
          Chapter 875, established the Medical Marijuana Program (MMP),  
          which allowed patients and primary caregivers to collectively  
          and cooperatively cultivate medical marijuana, and established a  
          medical marijuana card program for patients to use on a  
          voluntary basis.  However, since the passage of Proposition 215  
          and SB 420, the state has not adopted a framework to provide for  
          appropriate licensure and regulation of medical marijuana.  As a  
          result, in the nearly 20 years since the passage of Proposition  
          215, there has been an explosion of medical marijuana  
          collectives and cooperatives that are largely left to the  
          enforcement of local governments, resulting in the creation of a  
          patchwork of local regulations for these industries and with  
          little statewide involvement.    


          The California Attorney General's Compassionate Use Guidelines.   
          SB 420 required the California Attorney General to "?develop and  
          adopt appropriate guidelines to ensure the security and  
          non-diversion of marijuana grown for medical use by patients  
          qualified under the Compassionate Use Act of 1996."  In 2008,  
          the Attorney General issued guidelines to:  1) ensure that  
          marijuana grown for medical purposes remains secure and does not  
          find its way to non-patients or illicit markets, 2) help law  
          enforcement agencies perform their duties effectively and in  
          accordance with California law, and 3) help patients and primary  
          caregivers understand how they may cultivate, transport,  
          possess, and use medical marijuana under California law.   
          According to a 2011 letter, after a series of meeting with  
          stakeholders to assess whether to clarify the 2008 guidelines to  
          stop the exploitation of California's medical marijuana laws by  








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          gangs, criminal enterprises, and others, the Attorney General  
          decided to postpone the issuance of new guidelines because of  
          pending litigation and to urge the Legislature to amend the law  
          to establish clear rules governing access to medical marijuana.   
          


          California Supreme Court Affirms Local Control Over Medical  
          Marijuana.  By exempting qualified patients and caregivers from  
          prosecution for using or from collectively or cooperatively  
          cultivating medical marijuana, the CUA and the MPP essentially  
          authorized the cultivation and use of medical marijuana.  These  
          laws have triggered the growth of medical marijuana dispensaries  
          in many localities, and in response, local governments have  
          sought to exercise their police powers to regulate or ban  
          activities relating to medical marijuana.  After numerous court  
          cases and years of uncertainty relating to the ability of local  
          governments to control medical marijuana activities,  
          particularly relating to the ability to control the zoning,  
          operation, and existence of medical marijuana dispensaries, the  
          California Supreme Court, in City of Riverside v. Inland Empire  
          Patients (2013) 56 Cal. 4th 729, held that California's medical  
          marijuana statutes do not preempt a local ban on facilities that  
          distribute medical marijuana.  The court held that nothing in  
          the CUA or the MMP expressly or impliedly limited the inherent  
          authority of a local jurisdiction, by its own ordinances, to  
          regulate the use of its land, including the authority to provide  
          that facilities for the distribution of medical marijuana will  
          not be permitted to operate within its borders.


          Federal Controlled Substances Act.  Despite the CUA and SB 420,  
          marijuana is still illegal under state and federal law.  Under  
          California law, marijuana is listed as a hallucinogenic  
          substance in Schedule I of the California Uniform Controlled  
          Substances Act.  Yet, the CUA prohibits prosecution for  
          obtaining, distributing, or using marijuana for medical  
          purposes.  However, under the federal Controlled Substances Act,  
          it is unlawful for any person to manufacture, distribute,  








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          dispense or possess a controlled substance, including marijuana,  
          whether or not it is for a medical purpose.  As a result,  
          patients, caregivers, and dispensary operators, who engage in  
          activities relating to medical marijuana, may still vulnerable  
          to federal arrest and prosecution.  According to the California  
          Attorney General's guidelines, the difference between state and  
          federal law gives rise to confusion.  However, California has  
          tried to avoid this conflict by deciding not to use the state's  
          powers to punish certain marijuana offenses under state law when  
          a physician has recommended its use to treat a serious medical  
          condition.  


          United States Department of Justice (USDOJ) Guidance Regarding  
          Marijuana Enforcement.  On August 29, 2013, the USDOJ issued a  
          memorandum that updated its guidance to all United States  
          Attorneys in light of state ballot initiatives to legalize under  
          state law the possession of small amounts of marijuana and  
          provide for the regulation of marijuana production, processing,  
          and sale.  While the memorandum noted that illegal distribution  
          and sale of marijuana is a serious crime that provides a  
          significant source of revenue to large-scale criminal  
          enterprises, gangs, and cartels, it also noted that USDOJ is  
          committed to using its limited investigative and prosecutorial  
          resources to address the most significant threats.  According to  
          the USDOJ, "In jurisdictions that have enacted laws legalizing  
          marijuana in some form and that have also implemented strong and  
          effective regulatory and enforcement systems to control the  
          cultivation, distribution, sale, and possession of marijuana,  
          conduct in compliance with those laws and regulations is less  
          likely to threaten the federal priorities set forth above?In  
          those circumstances, consistent with the traditional allocation  
          of federal-state efforts in this area, enforcement of state law  
          by state and local law enforcement and regulatory bodies should  
          remain the primary means of addressing marijuana-related  
          activity."  


          Medical Marijuana Industry in California.  According to the  








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          author's Sunrise Questionnaire, submitted to the Committee  
          pursuant to Government Code Section 9148 et seq., by law  
          enforcement estimates, over 60% of all marijuana in the country  
          is grown in the Emerald Triangle counties of Humboldt, Mendocino  
          and Trinity, all of which are in the author's district, and once  
          the industry is regulated, and the medical marijuana products  
          are certified as safe, the market is expected to open up  
          substantially.  In addition, once the industry is regulated, the  
          author believes that physicians who do not recommend or even  
          discuss medical marijuana due to its quasi-legal nature and  
          outright ban from the federal government may be more willing to  
          discuss and recommend medical marijuana to their patients.   


          The author asserts that the harm starts at the environmental  
          side of things, and simply expands from there.  The regional and  
          State Water Boards, along with California Department of Fish and  
          Wildlife, are doing what they can, but without legislation,  
          their hands are largely tied.  This leads to streams and rivers  
          literally running dry (even before the current drought) and to  
          huge loads of sediments and toxic wastes being dumped into the  
          watersheds.  According to the author, the lack of regulation  
          complicates water supply for millions of legal residential and  
          commercial water users throughout the state-- entire tracts of  
          forests are being mowed down by rogue growers and planted with  
          marijuana with no permits, oversight, or regard for the  
          environment. 


          The author also believes that the lack of regulation on the  
          processing, manufacturing, testing, transportation and resale  
          needs to be fixed as well, and that without statewide standards  
          produced by specific health and safety testing, ingredient  
          lists, and dosage listings on all marijuana products, people are  
          put at risk. 


          According to the author, cities and counties that have medical  
          marijuana ordinances take the first step in protecting consumers  








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          and the public, but without a strong state-wide regulatory body  
          overseeing all aspects of the product chain, consumers have very  
          little control over the risk unless they have personal knowledge  
          of the product.  The author believes that clear guidelines from  
          the state and or the local jurisdiction, backed up by the state,  
          is the only way to ensure protection of consumers and the  
          public.


          Analysis Prepared by:                                             
                          Eunie Linden / B. & P. / (916) 319-3301  FN:  
          0002442