BILL ANALYSIS �
SENATE COMMITTEE ON PUBLIC SAFETY
Senator Loni Hancock, Chair S
2011-2012 Regular Session B
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SB 1182 (Leno) 2
As Amended April 9, 2012
Hearing date: April 24, 2012
Health and Safety Code
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MEDICAL MARIJUANA ACCESS AND DISTRIBUTION
HISTORY
Source: Author
Prior Legislation: AB 1300 (Blumenfield) - Ch. 196, Stats. 2011
SB 847 (Correa) - Vetoed, 2011
AB 2650 (Buchanan) - Chapter 603, Stats. 2010
SB 420 (Vasconcellos) - Chapter 875, Stats. 2003
Proposition 215, November 1996 General Election
Support: California NORML; Americans for Safe Access; Marijuana
Project; County of Mendocino; Crusaders for Patients
Rights; The Greater Los Angeles Collective Alliance;
Lawmen Protecting Patients
Opposition:None known
KEY ISSUES
SHOULD A MEDICAL MARIJUANA COLLECTIVE OR COOPERATIVE OR OTHER
BUSINESS ENTITY, AND ITS EMPLOYEES, OFFICERS AND MEMBERS, THAT
IS ORGANIZED AND OPERATED WITHIN THE CALIFORNIA ATTORNEY
GENERAL'S GUIDELINES NOT BE SUBJECT TO PROSECUTION FOR SPECIFIED
MARIJUANA-RELATED CRIMES, INCLUDING POSSESSION, POSSESSION FOR
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SALE, SALE, MAINTAINING A PLACE FOR MARIJUANA SALES OR USE,
LEASING OR MAKING AVAILABLE A PLACE FOR MARIJUANA ACTIVITIES OR
MAINTAINING A NUISANCE?
(CONTINUED)
SHOULD COOPERATIVES, COLLECTIVES OR OTHER BUSINESS ENTITIES, AND
THEIR EMPLOYEES, OFFICERS, AND MEMBERS, NOT BE SUBJECT TO
PROSECUTION FOR POSSESSION FOR SALE, OR SALE OF MARIJUANA BECAUSE
THESE ENTITIES OR PERSONS RECEIVED COMPENSATION FOR ACTUAL EXPENSES
INCURRED IN CARRYING OUT ACTIVITIES WITHIN THE ATTORNEY GENERAL'S
GUIDELINES FOR SUCH ENTITIES?
PURPOSE
The purposes of this bill are to 1) provide that a cooperative,
collective or other business entity that operates within the
Attorney General's guidelines shall not be subject to
prosecution for marijuana possession or commerce, as specified;
and 2) provide that where such an entity operates within the
Attorney General's guidelines, the entity and its employees,
officers and members shall not be subject to prosecution for
marijuana commerce because the entity or its employees,
officers, or members received compensation for actual expenses
incurred in carrying out activities in compliance with the
guidelines.
Existing law - the Compassionate Use Act of 1996 (Health & Saf.
Code � 11362.5) - includes the following purposes:
To ensure that seriously ill Californians have the right to
obtain and use marijuana for medical purposes where such use
is deemed appropriate and has been recommended by a physician
for treatment of cancer, anorexia, AIDS, chronic pain,
spasticity, glaucoma, arthritis, migraine, or any other
illness for which marijuana provides relief.
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To ensure that patients and primary caregivers who obtain and
use marijuana for medical purposes upon the recommendation of
a physician are not subject to criminal prosecution.
To encourage the federal and state governments to implement a
plan to provide for the safe and affordable distribution of
marijuana to all patients in medical need of marijuana.
(Health and Saf. Code � 11362.5, subd. (b)(1)(A)-(C).)
Existing law - the Compassionate Use Act - also provides:
� The act shall not be construed to supersede legislation
prohibiting persons from engaging in conduct that endangers
others, or to condone the diversion of marijuana for
non-medical purposes. (Health & Saf. Code � 11362.5, subd.
(b)(2).)
� No physician in California shall be punished or denied any
right or privilege for recommending medical marijuana to a
patient. (Health & Saf. Code � 11362.5, subd. (c).)
� Penal laws relating to the possession of marijuana and the
cultivation of marijuana shall not apply to a patient, or to a
patient's primary caregiver, who possesses or cultivates
marijuana for the personal medical purposes of the patient
upon the written or oral recommendation or approval of a
physician. (Health & Saf. Code � 11362.5, subd. (d).)
Existing law provides that qualified patients, persons with
valid identification cards, and the designated primary
caregivers of qualified patients and persons with identification
cards, who associate within the State of California in order
collectively or cooperatively to cultivate marijuana for medical
purposes, shall not solely on the basis of that fact be subject
to state criminal sanctions under existing law. (Health & Saf.
Code � 11362.775.)
Existing law directs the Attorney General to develop and adopt
appropriate guidelines to ensure the security and nondiversion
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of medical marijuana. ( Health & Saf. Code � 11362.81, subd.
(d).) Section IV of the guidelines concern collectives and
cooperatives.
Existing law prohibits any medical marijuana cooperative,
collective, dispensary, operator, establishment, or provider who
possess, cultivates, or distributes medical marijuana, as
specified, from being located within 600 feet of a school.
There are specified exceptions for medical or elder care
facilities, local ordinances adopted prior to enactment of the
state standard and for later adopted ordinances that are more
restrictive than state law. (Health & Saf. Code � 11362.768.)
Existing law allows cities or other local governing bodies to
adopt and enforce local ordinances that regulate the location,
operation, or establishment of a medical marijuana cooperative
or collective, as follows:
A local government entity may enforce a medical
marijuana ordinance through civil or criminal remedies and
actions.
A local government entity may enact other laws
consistent with the Medical Marijuana Program (MMP), as
specified. (Health & Saf. Code � 11362.83.)
This bill provides that for any medical marijuana collective,
cooperative, or other business entities that comply with medical
marijuana guidelines published by the Attorney General, the
following shall apply:
The cooperative, collective or businesses entity, and
the employees, officers and members thereof shall be exempt
from criminal prosecution and nuisance abatement actions,
as specified.
The fact that a cooperative, collective or businesses
entity, including an employee, officer or member thereof,
receives compensation for actual expenses for activities
carried out within the guidelines published by the Attorney
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General shall not be subject to prosecution under Health
and Safety Code Sections 11359 and 11360.
RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION
("ROCA")
In response to the unresolved prison capacity crisis, since
early 2007 it has been the policy of the chair of the Senate
Committee on Public Safety and the Senate President pro Tem to
hold legislative proposals which could further aggravate prison
overcrowding through new or expanded felony prosecutions. Under
the resulting policy known as "ROCA" (which stands for
"Receivership/Overcrowding Crisis Aggravation"), the Committee
has held measures which create a new felony, expand the scope or
penalty of an existing felony, or otherwise increase the
application of a felony in a manner which could exacerbate the
prison overcrowding crisis by expanding the availability or
length of prison terms (such as extending the statute of
limitations for felonies or constricting statutory parole
standards). In addition, proposed expansions to the
classification of felonies enacted last year by AB 109 (the 2011
Public Safety Realignment) which may be punishable in jail and
not prison (Penal Code section 1170(h)) would be subject to ROCA
because an offender's criminal record could make the offender
ineligible for jail and therefore subject to state prison.
Under these principles, ROCA has been applied as a
content-neutral, provisional measure necessary to ensure that
the Legislature does not erode progress towards reducing prison
overcrowding by passing legislation which could increase the
prison population. ROCA will continue until prison overcrowding
is resolved.
For the last several years, severe overcrowding in California's
prisons has been the focus of evolving and expensive litigation.
On June 30, 2005, in a class action lawsuit filed four years
earlier, the United States District Court for the Northern
District of California established a Receivership to take
control of the delivery of medical services to all California
state prisoners confined by the California Department of
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Corrections and Rehabilitation ("CDCR"). In December of 2006,
plaintiffs in two federal lawsuits against CDCR sought a
court-ordered limit on the prison population pursuant to the
federal Prison Litigation Reform Act. On January 12, 2010, a
three-judge federal panel issued an order requiring California
to reduce its inmate population to 137.5 percent of design
capacity -- a reduction at that time of roughly 40,000 inmates
-- within two years. The court stayed implementation of its
ruling pending the state's appeal to the U.S. Supreme Court.
On May 23, 2011, the United States Supreme Court upheld the
decision of the three-judge panel in its entirety, giving
California two years from the date of its ruling to reduce its
prison population to 137.5 percent of design capacity, subject
to the right of the state to seek modifications in appropriate
circumstances. Design capacity is the number of inmates a
prison can house based on one inmate per cell, single-level
bunks in dormitories, and no beds in places not designed for
housing. Current design capacity in CDCR's 33 institutions is
79,650.
On January 6, 2012, CDCR announced that California had cut
prison overcrowding by more than 11,000 inmates over the last
six months, a reduction largely accomplished by the passage of
Assembly Bill 109. Under the prisoner-reduction order, the
inmate population in California's 33 prisons must be no more
than the following:
167 percent of design capacity by December 27, 2011
(133,016 inmates);
155 percent by June 27, 2012;
147 percent by December 27, 2012; and
137.5 percent by June 27, 2013.
The author has been informed that this bill does not aggravate
the prison overcrowding crisis described above under ROCA.
COMMENTS
1. Need for This Bill
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According to the author:
Senate Bill 1182 will clarify the legality of medical
cannabis collectives, cooperatives, and other business
entities that are organized and operated in compliance
with the Guidelines For The Security And Non-Diversion
of Marijuana Grown For Medical Use issued by the
Attorney General in 2008. The bill also clarifies the
rights of these entities and their officers, employees
and members to receive compensation pursuant to and
consistent with statute and the guidelines of the
Attorney General.
The legality of medical marijuana collectives,
cooperatives, and other business entities is ambiguous
under current state law resulting in needless arrests
and prosecutions. Lack of certainty in the law
creates confusion on the part of local elected
officials who increasingly choose to ban collectives
and cooperatives rather than adopt reasonable
regulations that protect public safety, prevent
neighborhood nuisances and provide for safe access for
qualified patients and their designated primary
caregivers.
SB 1182 provides a focused solution that clarifies
elements of state law. This simple fix is compatible
with, and may be enacted independently of, omnibus
legislation that may provide a more comprehensive
solution to state medical marijuana issues. While it
is beyond our reach to resolve the conflict in federal
and state law, there is no valid reason to further
delay resolving existing ambiguities in state law that
are within our power to fix.
2. Compassionate Use Act of 1996 (Proposition 215) - Medical
Marijuana
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The Compassionate Use Act (CUA) was enacted in 1996. (Health &
Saf. Code � 11362.5.) The CUA established the right of patients
to obtain and use marijuana to treat specified illnesses and any
other illness for which marijuana provides relief.
Additionally, the CUA specifically protects physicians who
recommend the use of marijuana to patients for medical purposes
and exempts qualified patients and their primary caregivers from
California drug laws prohibiting possession and cultivation of
marijuana.
The CUA is a very general law. It establishes the right of a
patient to obtain medical marijuana pursuant to a physician's
recommendation. The initiative then simply encourages the state
and federal governments to "implement a plan for safe and
affordable distribution or marijuana �to qualified patients]."
It has been argued that very little has been done to implement
the initiative. (McCabe, It's High Time: California Attempts to
Clear the Smoke Surrounding the Compassionate Use Act, (2004) 35
McGeorge L. Rev. 545, 546.) Instead of a comprehensive
implementation plan, numerous uncoordinated bills have been
introduced in the Legislature. Further, the courts have only
provided a small measure of clarity and certainty in this area.
3. California Constitutional Provisions Limit the Ability of the
Legislature to Amend the CUA
Legislation Affecting the Compassionate Use Act - Legislature
Cannot Limit the Amount of Medical Marijuana a Patient may
Possess
The California Supreme Court recently ruled on the power of the
Legislature to amend or affect the Compassionate Use Act (CUA).
(People v. Kelly (2010) 47 Cal.4th 1008.) In Kelly, the court
ruled that the legislative restriction on the number of plants a
qualified medical marijuana patient may possess was
unconstitutional as it interfered with the rights established by
the CUA initiative. Although the Legislature may clarify or
expand the rights established in the CUA, it may not enact
legislation that interferes with those.
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The Kelly Court stated:
Under the CUA �patients and primary caregivers] are
not subject to any specific limits and do not require
a physician's recommendation in order to exceed any
such limits; instead they may possess an amount of
medical marijuana reasonably necessary for their, or
their charges', personal medical needs. ? In this
sense, quantity limitations conflict with - and
thereby substantially restrict - the CUA's guarantee
that a qualified patient may possess and cultivate any
amount of marijuana reasonably necessary for his or
her current medical condition. In that respect,
Section 11362.77 improperly amends the CUA in
violation of the California Constitution. (People v.
Kelly, supra, 47 Cal.4th at p. 1044.)
4. Attorney General Compassionate Use Guidelines
Consideration of Cooperatives and Collectives in the Guidelines
In August 2008, the California Attorney General published
"Guidelines for the Security and Non-Diversion of Marijuana
Grown for Medical Use." (Guidelines for the Security and
Non-Diversion of Marijuana Grown for Medical Use, Cal. Attorney
General. Aug. 2008; hereinafter, Guidelines.) This bill
provides that any collective cooperative or other business
entity that operates in compliance with specified portions of
the guidelines published by the Attorney General would not be
subject to criminal prosecution. (Guidelines, � IV, A and
B.) Further, these entities would not be subject to prosecution
for transporting or furnishing marijuana (Health & Saf. Code
��1359-11360.) The portion of the guidelines referred to by
this bill concern collectives and cooperatives.
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A cooperative (coop) is a creature of state law<1> and subject
to detailed regulations. (Guidelines, p. 8.) The guidelines
note that cooperatives are not typical for-profit endeavors.
Coops are democratically controlled and exist mostly for the
benefit of members as patrons. "The earnings and savings of the
business must be used for the general welfare of its members or
equitably distributed to the members in the form of cash,
property, credits or services." (Ibid.) Thus, money earned by
the coop can be distributed among the members in proportions
that reflect their ownership shares or efforts. It appears that
coops could thus not distribute profits to a small group of
owners or pay dividends to shareholders who have little to do
with the operation of the enterprise.
As concerns medical marijuana coops specifically, the guidelines
state this cardinal rule: "Cooperatives should not purchase
marijuana from or sell to, non-members; instead they should only
provide a means for facilitating or coordinating transaction
�among] members." (Ibid.)
Unlike cooperatives, collectives are largely undefined. (Ibid.)
The guidelines rely on the dictionary definition of a
collective as a business, farm or other entity operated by
members of an organization of group. The guidelines then
conclude that "a collective should be an organization that
merely facilitates the collaborative efforts of patient and
caregiver members - including the allocation of costs and
revenue. ? �A] collective is not a statutory entity, but as a
practical matter it might have to organize as some form of
business ?" (Ibid.)
As to transactions involving marijuana specifically, the
guidelines state: "The collective should not purchase marijuana
from, or sell to, non-members, instead, it should only provide a
means for facilitating or coordinating transactions between �or
among] members." (Ibid.)
---------------------------
<1> Corp. Code �� 12201, 12300 and 12311; Food & Agric. Code �
54033.
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Guideline Recommendations for Cooperatives and Collectives
Operate as a non-profit. (Health & Saf. Code �
11362.765, subd. (a).) (It remains unclear, despite the
guidelines, whether a distribution of "earnings" of the
cooperative or collective to the members constitute
realization of a profit.) (Id, at p. 8.)
Business Licenses, Sales Tax and Sellers' Permits: The
Board of Equalization has held that medical marijuana
transactions are subject to sales tax, regardless of
whether or not a coop or collective generates profits.
Persons who engage in medical marijuana transactions must
obtain a Seller's Permit. Many cities and counties would
require collectives and coops to hold business licenses.
Membership - Guidelines recommend written applications,
as follows:
o The coop or collective should verify the
applicant's status as a patient or qualified
caregiver. Verification can be done through a valid
state medical marijuana card or the recommending
physician.
o Members should explicitly agree not to
distribute to non-members and to use marijuana only
for medical purposes.
o Membership records should be accessible.
o The entity should track the status and
expiration of recommendations and identification
cards.
o The entity should enforce conditions of
membership through excluding persons who violate the
conditions.
Coops and collectives should deal only in lawfully
cultivated marijuana. In particular, a coop or collective
should only acquire marijuana from constituent members.
Coop or collective marijuana should not be distributed
to non-members.
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Allocation of medical marijuana and reimbursement for
services.
o Medical marijuana can be distributed free to
member patients and caregivers.
o Medical marijuana can be provided in exchange
for services.
o Medical marijuana can be provided for a fee
that reflects costs and expenses.
o Any combination of these allocation processes
can be used.
The guidelines discuss possession limits in the Medical
Marijuana Program Act. (Health & Saf. Code � 11362.765.)
However, the California Supreme Court in People v. Kelly
(2010) 47 Cal.4th 1008, held that a legislatively enacted
limit on the amount of medical marijuana a patient or
caregiver may possess violates the Compassionate Use Act
initiative. The court in Kelly held that a patient or
caregiver may possess any amount reasonably necessary to
address the medical needs of the patient.
Security should be maintained to protect patients,
caregivers and the neighborhood in which the coop or
collective is located.
Enforcement Guidelines - Staying within the Law
Storefront Dispensaries: Dispensaries are not
recognized in the law. The operators of a dispensary that
is not organized as a coop or collective may be subject to
prosecution. A dispensary that describes itself as a
caregiver for patients, but only supplies marijuana to a
patient is not acting as a caregiver under the law. A
caregiver must consistently take responsibility for the
housing, health, or safety of patient. (People v. Mentch
(2008) 45 Cal.4th 274, 283-285; Health & Saf. Code �
1162.5.)<2>
Law enforcement will look for the following signs that a
coop or collective is violating the law:
o Excessive cash.
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<2> The guidelines were published about three months before
Mentch was published.
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o Excessive amounts of marijuana.
o Failure to follow local and state laws
applicable to similar businesses, such as failure to
pay sales tax or failure to obtain a business license.
o Transactions with non-members, especially out
of state buyers.
o Weapons or illicit drugs.
5. Difficult Times for Medical Marijuana Entities
Recently, medical marijuana entities - including coops,
collectives and dispensaries - have been under intense pressure
from new restrictions in state law concerning locations of these
entities near schools and myriad local ordinances authorized by
state law. The federal government has ordered the closure of
numerous medical marijuana facilities. It appears that the
basis for federal enforcement has not been consistent. Some
facilities have been closed because of proximity to schools.
(Pot Shop Crackdowns in San Francisco All About Location, Sac.
Bee, April 15, 2012.) Some facilities have been closed because
federal law does not recognize the use of marijuana for any
purpose, especially commerce. The United States Attorney in
Sacramento - Benjamin Wagner - has effectively stated that he
will close or prosecute the operators of medical marijuana
entities that run a business for profit. Wagner, in an address
to the Sacramento Press Club would not say how much of a profit
is enough to attract a federal prosecution. (Sacramento's U.S.
Prosecutor Defends Medical Marijuana Crackdown, Sac. Bee, Feb.
29, 2012.)
However, what is a commercial enterprise may be difficult to
distinguish from a coop or collective that reimburses members
for expenses incurred and activities done on behalf of the
entity and its members. This bill appears intended to provide
some certainty and clarity for operators of coops and
collectives, at least as concerns state law. The bill provides
objective standards for allowable or proper operation of a coop
or collective. That is, a coop or collective will not be
subject to prosecution under state marijuana laws if the entity
abides by the guidelines published by the California Attorney
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General. Perhaps a relatively consistent and clear set of state
rules will induce or persuade the federal government to respect
state law on medical marijuana.
6. Related, Assembly Bill - AB 2312 (Ammiano)
Assembly Member Ammiano, the Chair of the Assembly Public Safety
Committee, has introduced a comprehensive bill to regulate
medical marijuana in California. The bill was approved by the
Assembly Public Safety Committee on April 17, 2012, on a vote of
4-2. The Assembly Public Safety Committee analysis of the bill,
in summary provides:
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�AB 2312] Authorizes local taxes on medical cannabis
up to 2.5%. Creates a nine-member Board of Medical
Marijuana Enforcement (BMME) to regulate the medical
cannabis industry and collect fees from medical
cannabis businesses to be deposited in a new Medical
Marijuana Fund.
�AB 2312 also] establishes the Medical
Marijuana Regulation and Control Act �which shall
preempt all local ordinances on medical
marijuana].
Declares legislative intent to accomplish
all of the following:
o To establish a statewide system
for regulating and controlling medical
marijuana activities by creating a state
board to enact and enforce regulations
governing the cultivation, processing,
manufacturing, testing, transportation,
distribution, and sale of medical marijuana.
o To allow cities and counties to
enact reasonable zoning regulations or other
restrictions applicable to the cultivation,
processing, manufacturing, testing, and
distribution of medical marijuana based on
local needs.
o To prohibit the issuance and
use of fraudulent or forged physician's
recommendations for medical marijuana.
o To establish the BMME to be
located within the Department of Consumer
Affairs to provide a governmental agency
that will ensure the strict, honest,
impartial, and uniform administration and
enforcement of the medical marijuana laws
throughout California.
o To fulfill the promise of the
Compassionate Use Act of 1996 to "implement
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a plan for the safe and affordable
distribution of marijuana to all patients in
medical need of marijuana."
o To support the creation of a
more appropriate schedule for marijuana that
recognizes its medical use in the State of
California.
o To reduce the cost of medical
marijuana enforcement by providing law
enforcement guidelines to more easily
determine whether or not a person is acting
in conformance with the state's medical
marijuana laws and by providing courts and
prosecutors flexibility in the punishment of
minor marijuana offenses.
AB 2312 includes amendments to Health and Safety Code Section
11362.775 - specified immunity from prosecution for coops and
collectives - that are quite similar to the amendments in this
bill. What largely sets AB 2312 apart from this bill is the
extensive regulatory system that
would be implemented under AB 2312, including a requirement that
collectives, coops and other entities that dispense or
distribute medical marijuana must register their businesses with
the state. Registration would give these entities numerous
benefits, however, including clear rules for operation and
protection from local ordinances intended to close such
entities.
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