BILL ANALYSIS �
AB 1894
Page 1
ASSEMBLY THIRD READING
AB 1894 (Ammiano)
As Amended May 23, 2014
Majority vote
PUBLIC SAFETY 5-2 APPROPRIATIONS 9-5
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|Ayes:|Ammiano, Jones-Sawyer, |Ayes:|Bocanegra, Bradford, |
| |Quirk, Skinner, Stone, | |Eggman, Gomez, Holden, |
| | | |Pan, Quirk, |
| | | |Ridley-Thomas, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Hagman, Waldron |Nays:|Gatto, Bigelow, Jones, |
| | | |Linder, Wagner |
| | | | |
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SUMMARY : Enacts the Medical Cannabis Regulation and Control
Act. Specifically, this bill :
1)Makes legislative findings and declarations regarding medical
cannabis.
2)States legislative intent to establish a statewide system for
regulating and controlling medical cannabis activities by
creating a state entity to enact and enforce regulations
governing the cultivation, manufacturing, testing,
transportation, distribution, provision, donation, and sale of
medical cannabis.
3)States legislative intent to allow cities and counties to
enact zoning regulations or other restrictions, including
bans, applicable to the cultivation, processing, manufacturing
testing, and distribution of commercial medical cannabis based
on a local governing body's determination of local needs.
4)Requires the Medical Board of California to include in the
cases it prioritizes for investigation and prosecution those
involving repeated acts of excessively recommending marijuana
to a patient for medical purposes.
5)States that recommending marijuana to a patient for a medical
purpose without having conducted an appropriate prior
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examination, including an in-person examination, or
recommending marijuana for a non-medical purpose, constitutes
unprofessional conduct.
6)States that employing or aiding and abetting an unlicensed
person to engage in the practice of medicine with a marijuana
clinic or dispensary to provide recommendations for medical
marijuana constitutes unprofessional conduct.
7)States legislative intent to provide for the comprehensive
regulation of the cultivation, manufacturing, testing,
transportation, distribution, provision, donation, and sale of
medical cannabis and the enforcement of laws relating to these
activities without preempting city or county ordinances
regulating or banning these activities.
8)States that, without limiting the authority of a city or
county under section 7 of article XI of the California
Constitution or any other provision of law, and subject to
that authority, the state shall have the power to regulate
medical cannabis and register persons for commercial
cannabis-related activities.
9)Defines the following terms:
a) "Cannabis" means "all parts of the plant cannabis
sativa, cannabis indica, or cannabis ruderalis whether
growing or not, the seeds thereof, the resin extracted from
any part of the plant; and every compound, manufacture,
salt, derivative, mixture, or preparation of the plant, it
seeds or resin." It also means marijuana as defined by
Health and Safety Code Section 11018.
b) "Commercial" means any cultivation, processing,
possession, storage, manufacturing, testing,
transportation, distribution, provision, donation, or sale
of cannabis or cannabis product, except as specified.
c) "Department" is the Department of Alcoholic Beverage
Control (ABC).
d) "Dispensary" means "a mandatory commercial registrant
that dispenses cannabis or medical cannabis products
through a retail storefront."
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e) "Division" is the Division of Medical Cannabis
Regulation and Enforcement.
f) "Edible cannabis product" means "a cannabis product that
is used or intended for use in whole or in part for human
consumption, including chewing gum.
g) "Fund" is the Medical Marijuana Fund established under
Business and Professions Code Section 26028.
h) "Identification program" is "the universal
identification card program for mandatory commercial
registrants."
i) "Mandatory commercial registrant" is "any individual,
partnership, joint venture, association, limited liability
company, corporation, estate, trust, receiver, syndicate,
or any other group or combination thereof acting as a unit
to cultivate, process, possess, store, manufacture, test,
transport, distribute, provide, donate, or sell medical
cannabis in compliance with this chapter, other than a
patient or a patient's primary caregiver, as defined by the
Compassionate Use Act of 1996, growing, possessing,
storing, manufacturing, transporting, or providing medical
cannabis exclusively for the personal medical purposes of
individual patients."
j) "Medical cannabis product" means "any product containing
cannabis, including concentrates and extractions, that is
cultivated, manufactured, processed, packaged, and
distributed in full compliance with the requirements of
this chapter and with any regulations adopted by the
department pursuant to its rulemaking authority" and
includes "products that contain medical cannabis and are
intended for oral or topical consumption by a qualified
patient."
aa) "Person" includes "any individual, firm, copartnership,
joint venture, association, corporation, estate, trust,
business trust, receiver, syndicate, or any other group or
combination acting as a unit and includes the plural as
well as the singular number."
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bb) "Testing and labeling" means mandatory labeling and a
quality assurance plan in place that addresses: potency,
chemical residue, microbiological contaminants, random
sample testing, handling, care, and storage.
10)Specifies that this chapter and Articles 2 and 2.5 of the
Health and Safety Code do not prevent a city or county from
doing any of the following:
a) Adopting local ordinances inconsistent with this chapter
that ban or regulate the location, operation, or
establishment of a mandatory commercial registrant, or
other specified groups that are involved with commercial
medical cannabis activities;
b) Enforcing those ordinances civilly or criminally;
c) Establishing a fee or tax for the operation of a
mandatory commercial registrant; and
d) Enacting and enforcing other laws or ordinances under
the authority granted by section 7 of article XI of the
California Constitution.
11)Creates the Division of Medical Cannabis Regulation
(division) in the Department of Alcoholic Beverage Control
(ABC).
12)Gives the department the power to register persons for
specified activities relating to medical cannabis and to
collect registration fees.
13)Confers on the division all power necessary for the
administration of this chapter, including, but not limited to:
a) Establishing statewide minimum standards for the
cultivation, manufacturing, testing, transportation,
distribution, and sales of medical cannabis and medical
cannabis products;
b) Establishing a scale of state-imposed fees for the
cultivation, manufacture, testing, transportation,
distribution, provision, donation, and sale of medical
cannabis and medical cannabis products;
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c) Making and prescribing rules that are necessary and
proper to exercise the powers and perform the duties
conferred upon it;
d) Approving or denying mandatory registration application
for cultivation, manufacturing, testing, labeling,
transportation, distribution, provision, donation, and sale
of medical cannabis;
e) Suspending, fining, restricting, or revoking mandatory
commercial registration upon a violation of a rule or
regulation adopted by the division;
f) Imposing penalties;
g) Taking any action with respect to a mandatory commercial
registration application;
h) Delegating to an administrative law judge the power to
hear and decide appeals of applications for registration;
i) Developing any necessary forms, identification cards,
and applications;
j) Overseeing the operation of the Medical Cannabis
Regulation Fund;
aa) Establishing fees; and
bb) Consulting with other agencies, departments, and
entities for establishing statewide standards and
regulations.
14)Requires the department to provide written notice of a denial
for registration to an applicant, and allows a denied
applicant to petition for a hearing.
15)Requires the department to file an accusation prior to
suspending, revoking, or fining and registrant, and allows the
registrant to request a hearing.
16)Allows the department to temporarily summarily suspend a
registration for up to 60 days pending a hearing for specified
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reasons.
17)Establishes the Medical Cannabis Regulation Fund within the
State Treasury.
18)Specifies that all fees collected pursuant to this regulatory
scheme shall be deposited into the fund, and that all monies
in the fund are to be continuously appropriated without regard
to fiscal year to the department for the purpose of
administering this chapter. However, all monies collected as
a result of penalties are deposited in the General Fund.
19)Authorizes the department to establish and administer a grant
program to allocate monies from the fund to state and local
entities for purposes of enforcing medical cannabis
registration laws.
20)Confers peace officer status on the director and persons
employed by the ABC for administration and enforcement of this
chapter, and authorize those persons to enforce any penal
provisions of law while in the course of their employment.
21)Allows other specified peace officers to visit and to inspect
the premises of any mandatory commercial registrant at any
time while enforcing this chapter.
22)Makes information contained in department records regarding
the names of patients, their medical conditions, and their
primary caregivers confidential and exempt from the Public
Records Act, except as specified.
23)Requires, by January 1, 2016, the department to establish
procedures for the issuance, renewal, suspension, and
revocation of mandatory commercial registration; application,
registration, and renewal forms and fees; qualifications for
registrants; security requirements; testing and labeling
requirements; health and safety requirements; inspection and
other tracking requirements, storage, packing, and
transportation procedures and protocols; advertising
restrictions and requirements; consumer protection; food and
product safety requirements; requirements to prevent diversion
of cannabis for nonmedical use, and civil penalties for the
failure to comply with regulations.
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24)States that at a minimum these standards shall:
a) Prescribe sanitation standards, as specified;
b) Require that edible cannabis products be limited to
nonpotentially hazardous food, as specified;
c) Have standards for labeling edible cannabis products so
that they cannot be mistaken for food not containing
cannabis;
d) Require facilities which prepare these edible products
be construed with applicable building standards, health and
safety standards, and other state laws;
e) Ensure edible products distributed or sold by
dispensaries are not produced or stored in private homes;
f) Provide that weight and measurement devices meet
specified standards;
g) Require that any pesticide application meet specified
Food and Agricultural Code standards; and
h) Protect the state's clean water and environment.
25)Prohibits approval of a mandatory commercial registration
application or renewal if the department determines any of the
following:
a) The applicant fails to meet the established requirements
or any adopted regulations;
b) The applicant, or any of its officers, directors,
owners, members, or shareholders is under 21 years of age;
c) The applicant has knowingly answered a question or
request for information falsely on the form;
d) The applicant, or any of its officers, directors,
owners, members, or shareholders, has been convicted in the
past five years of a serious or violent felony, as
specified, a felony involving fraud or deceit, or any other
felony that, in the division's estimation, would impair the
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applicant's ability to appropriately operate medical
cannabis cultivation, manufacturing, testing, distribution
or sales;
e) The applicant, or any of its officers, directors,
owners, members, or shareholders, is a licensed physician
making medical cannabis recommendations for patients;
f) The applicant, or any of its officers, directors,
owners, members, or shareholders, had been sanctioned by
the division for operating cannabis activities in violation
of this chapter or a local ordinance, or has had a
registration revoked in the previous three years;
g) A sufficient number of mandatory commercial registrants
already exist in the state, city, or county to satisfy
patients' medical use in that jurisdiction; or,
h) The proposed commercial medical cannabis activity will
violate any applicable local law or ordinance.
26)Requires the department to issue emergency regulations within
180 days of January 1, 2015, including establishing
appropriate fees.
27)Mandates the department to establish various classes or types
of registration for specific medical cannabis-related
activities, and requires that cultivation and processing of
marijuana are in a separate class from the operation of a
dispensary.
28)States that each mandatory commercial registration
application approved by the department is separate and
distinct.
29)Prohibits an applicant from applying for registration in
multiple classes of specified medical cannabis activities.
30)Prohibits a registrant from being an officer, director,
member, owner, or shareholder registrant in another class.
31)States that an approved application is valid for a period not
to exceed one year from the date of approval, unless revoked
or suspended earlier than that date.
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32)Requires the department to limit the number of registrations
statewide to a number no greater than what is necessary to
meet statewide need, and require the department to ensure that
the number of approved registration do not exceed the
department's ability to enforce the provisions of this
chapter.
33)Requires the department to consider specified factors in
establishing limits.
34)Specifies requirements and procedures for registration
renewals.
35)Requires an application for mandatory commercial registration
to include, but not be limited to, specified information.
36)Requires the department to make a thorough investigation to
determine qualifications upon receipt of an application, and
requires denial of the application for specified reasons.
37)Prohibits a physician from recommending medical marijuana to
a patient while that physician is a mandatory commercial
registrant, or an officer, director, owner, member,
shareholder, employee, or financial beneficiary of a
registrant.
38)Exempts all mandatory commercial registrants from arrest,
prosecution, forfeiture, or other sanctions, as specified.
39)Exempts a property owner, who in good faith and upon
investigation, allows his or her property to be used by a
mandatory commercial registrant from arrest, prosecution,
forfeiture, or other sanctions, as specified.
40)States that these exemptions do not limit the authority or
remedies of a city or county under any provision of law.
41)Requires a registrant to keep accurate records, as specified,
at the registered premises.
42)Allows the department and any state or local agency to
examine the books and records of registrants and inspect the
premises of registrants as necessary.
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43)Permits the summary suspension of a registration if the
registrant refuses or interferes with an inspection.
44)States that this chapter does not apply to and has no
diminishing effect on the rights and protections granted to
individual patients and primary caregivers under the
Compassionate Use Act of 1996 (CUA).
45)Exempts individual patients who do not sell, distribute,
donate, or provide cannabis, and caregivers who do not sell or
charge for marijuana-related activities from mandatory
commercial registration.
46)Requires the department to provide for provisional
registration, as specified, beginning on January 1, 2015.
47)Requires the department to charge a $5,000 application fee
for each provisional registration.
48)Prohibits the department from issuing a provisional
registration to an individual or entity against whom pending
proceedings have been initiated by a city or county under any
applicable local ordinance, or who has already been determined
to have violated such an ordinance.
49)States that entities provided immunity under Los Angeles
Measure D of 2013 are to be considered the equivalent of
registered entities and in compliance for purposes of this
Act.
50)Requires the department to establish regulations regarding
the minimum standards for the operation of dispensaries,
including standards for labeling products, requirements for
inventory control, the maximum number of dispensaries
permitted in a jurisdiction (which may not exceed the number
allowed by any applicable local ordinance), minimal
educational and testing requirements, maximum hours of
operation for dispensaries, and standards governing signage
and advertising.
51)Requires the department to make recommendations to the
Legislature about establishing an appeals and judicial review
process.
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52)Requires the department to work with law enforcement entities
throughout California in order to implement and to enforce the
rules and regulations regarding medical marijuana, and to take
appropriate action against businesses and individuals who do
not comply.
53)States that nothing in this chapter or in Articles 2 and 2.5
of the Health and Safety Code prevents a city, county, or city
and county from adopting or enforcing a local zoning ordinance
or law of general application that bans or regulates mandatory
commercial registrants.
54)Requires, commencing on January 1, 2016, that any product
containing cannabis offered for sale be subject to testing,
labeling and food safety requirements, except in the case of a
primary caregiver distributing to a qualified patient.
55)Makes it a misdemeanor for a person to steal or fraudulently
use a registrant's identification card or status to acquire,
possess, cultivate, transport, use, produce, possess for sale,
sell, distribute, provide, or donate cannabis, or to tamper
with or fraudulently produce an identification card or
registration status.
56)Establishes the following penalties for the misdemeanor
crimes:
a) For the first offense, imprisonment in the county jail
for no more than six months, or a fine up to $5,000, or
both.
b) For a second or subsequent offense, imprisonment in the
county jail for no more than one year, or a fine up to
$8,000, or both.
57)Subjects a person operating an unregistered medical cannabis
facility to civil penalties of up to $25,000 and authorize the
destruction of marijuana associated with violations.
58)Specifies that each day of unregistered operation constitutes
a separate violation.
59)Allows not only the department, but also any district
attorney, county counsel, city attorney, or city prosecutor to
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bring an action to enjoin a violation or threatened violation
of this chapter.
60)Requires law enforcement to notify the department of any
arrests made for violations over which the department has
jurisdiction which involve a registrant or registered
premises.
61)Specifies that this chapter does not limit a law enforcement
agency's ability to investigate unlawful activity in relation
to a registrant.
62)Requires the department to create and maintain a searchable
database that will allow state and local law enforcement to
verify a mandatory commercial registration.
63)Permits a registrant to transport medical marijuana products
only to the registered facilities of a mandatory commercial
registrant and only in response to a request for a specific
quantity and variety from the registered facility.
64)Requires a mandatory commercial registrant, prior to
transporting any medical cannabis product, to complete a
shipping manifest using a form prescribed by the department,
and to securely transmit that manifest to the department and
to the mandatory commercial registrant that will receive the
product.
65)Requires that medical cannabis products be transported in a
secured manner, as specified.
66)Sets forth requirements for medical cannabis delivery teams
including: that transport vehicles have a minimum of two
employees, one of which shall remain on the vehicles at all
times cannabis is present; that each team member have access
to a secure form of communication with personnel and the
mandatory commercial registrant; and that each team member
possess a government-issued identification card and
documentation of registration when transporting cannabis.
67)Prohibits a registrant from transporting cannabis or cannabis
products outside the state.
68)Permits the board of supervisors of any county to impose a
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tax on a mandatory commercial registrant for the privilege of
conducting commercial medical-cannabis-related activities, as
specified.
69)Requires the board of supervisors to specify the activities
subject to tax, the applicable rates, the method of
apportionment, and the manner of collection.
70)Requires voter approval for the tax.
71)Specifies that this taxing authority does not limit or
prohibit the levy or collection of any other fee, charge, or
tax authorized by law, nor is it a limitation upon the taxing
authority of any county.
72)Amends the definition of "attending physician" for purposes
of the Medical Marijuana Program Act.
73)States that the provisions of this Act are severable, and
that if one is held invalid, the invalidity will not affect
other provision which can still be given effect.
74)States that the provisions of this Act which impose a
limitation on the public's right of access to documents in the
possession of a public agency is necessary to maintain to
maintain the confidentiality of patient and physician
information provided to the division in order to protect the
private medical information of patients who use medical
cannabis and to preserve physician-patient confidentiality.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Significant annual costs, potentially in the range of $30
million, to create the Division of Medical Marijuana
Regulation and Enforcement within the ABC to regulate the
medical marijuana industry. It is not clear these costs would
be fully covered by the unspecified registration fees
authorized by this bill, as the division will be created
regardless of the number of applications. (The bill is silent
regarding ongoing mandatory registration.) It is also not
clear what source would fund the significant - in the millions
of dollars - start-up costs for the division.
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The entire budget of the ABC is $58 million, with 430 positions.
The ABC is charged with licensing and regulating persons and
businesses engaged in the manufacture, importation and
distribution of alcoholic beverages, and with administering
the provisions of the ABC Act to protect the health, safety,
welfare and economic well-being of the state. In addition to
the ABC, there is the ABC Appeals Board, with a $1 million
budget.
Based on funding and staffing levels of the ABC and the Appeals
Board, and considering the complexities of the undertaking and
the significant start-up costs of any new entity (adoption of
regulations and fee schedules, office equipment and expenses,
etc), it seems reasonable to assume the costs of providing
statewide regulation of the cultivation, manufacture, testing,
transportation, distribution, and sale of medical marijuana,
along with associated hearings, appeal, litigation and
enforcement, would be at least in the range of 50% of the ABC
budget.
2)This bill establishes unspecified registration fees. The
costs of creating and maintaining the division, as specified,
within the ABC would require significant application fees and
fines. For purpose of illustration, the average fee to cover
the cost of a $30 million entity, if there were 1,500 annual
applications, would be about $20,000 per application.
Given the current legal environment surrounding medical
marijuana, with the California Supreme Court ruling last year
that local governments can ban medical marijuana production
and distribution, and given the federal government's interest
in shutting down dispensaries, will there be a sufficient
number of applications and penalties to fully fund the
division?
Tax revenue:
1)Unknown moderate local revenue increase, potentially in the
millions of dollars, to the extent local governments opt to
levy a transaction and use tax (TUT) or other tax on the
cultivation, dispensing, production, selling or distributing
medical cannabis. For order of magnitude purposes, based on a
2009 Board of Equalization estimate that the potential sales
and use tax revenue on marijuana would be about $400 million,
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based on a 9% combined rate, if 20% of the taxable sales
amount was medicinal marijuana, and if half of the state's
cities and/or counties, representing 50% of the state's
population, levied an average 3% TUT, the annual local revenue
increase would be about $13 million.
2)Unknown, nonreimbursable local election costs to the extent
cities and counties opt to hold elections on proposed tax
increases. Unconsolidated elections generally cost in the
hundreds of thousands of dollars, depending on the
jurisdiction.
COMMENTS : According to the author, "The Compassionate Use Act
of 1996 called on state government to implement a plan for the
safe and affordable distribution of marijuana to all patients in
medical need of marijuana.
"In 2003, the Legislature enacted the Medical Marijuana Program
Act (MMPA). Under the guidance of the MMPA, approximately 60
California cities and counties have created medical marijuana
access ordinances that can act as a guide for the state.
However, many other cities and counties are calling for more
guidance and regulation from the state and have passed bans or
moratoria on medical marijuana cultivation and distribution
while awaiting such guidance. This patchwork of laws cannot
continue, and the state needs to responds to calls from local
governments and the federal government to institute a
comprehensive set of statewide regulations.
"Greater certainty and uniformity are urgently needed regarding
the rights and obligations of medical marijuana facilities, and
for the imposition and enforcement of regulations to prevent
unlawful cultivation and the diversion of marijuana to
nonmedical use. This bill utilizes an existing state regulatory
agency with law enforcement functions to oversee a regulated
chain of commerce, similar to what ABC does with alcohol. It
provides for locals to have the ultimate say in what types of
medical cannabis activities can happen in that local
jurisdiction. This locals-first approach requires that growers,
processers, manufacturers, testing and labeling, transporters,
and retailers will all be required to have local zoning approval
and a local business permit in order to even apply for state
registration.
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"Local control and a state regulatory structure will ensure that
every aspect of this commercial chain of commerce will be
tracked - from growers all the way to storefront dispensaries,
creating a network of accountability and transparency that does
not exist today. Providers who are engaged in transparent
activities with local approval will have nothing to fear as it
will allow law enforcement to effectively utilize their limited
resources to go after bad actors, those who are not registered,
or those who are not following local and state law.
"The worst public policy is for California to sit idly by and
again do nothing, to let the status quo remain unchecked. There
is no doubt that the medical marijuana industry exists, and the
point of regulation is to bring these activities out of the
shadows to ensure safe and effective access with clear rules,
and for local and state government regulators to know what
activities are happening, and who is engaging in them. We need
to clean up bad actions and bad actors, and AB 1894 will enable
local and state regulators to do so.".
Please see the policy committee analysis for a full discussion
of this bill.
Analysis Prepared by : Sandy Uribe / PUB. S. / (916) 319-3744
FN: 0003697