BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 266


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          (Without Reference to File)





          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          266 (Bonta, et al.)


          As Amended  September 11, 2015


          Majority vote


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                                               (vote not available)




          Original Committee Reference:  B. & P.


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


          The Senate amendments:








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          Administration


          1)Enact the Medial Marijuana Regulation and Safety Act (Act),  
            and establishes the Bureau of Medical Marijuana Regulation  
            (Bureau) within the DCA and confers upon the department the  
            sole authority to create, issue, renew, discipline, suspend,  
            or revoke licenses for the transportation, storage unrelated  
            to manufacturing activities, distribution, and sale of MM  
            within the state and to collect fees in connection with  
            activities the Bureau regulates.
          2)Allows the Bureau to convene an advisory committee to advise  
            the Bureau and licensing authorities on the development of  
            standards and regulations, including best practices and  
            guidelines to ensure qualified patients have adequate access  
            to MM and MM products. 


          3)Requires DCA, CDPH, and the CDFA to promulgate regulations for  
            implementation of their respective responsibilities in the  
            administration of the Act.


          Enforcement 


          4)Specify that grounds for disciplinary action include: failure  
            to comply with provisions in this bill or any rule or  
            regulation adopted regarding MM, conduct that constitutes  
            grounds for denial of licensure, other grounds contained in  
            regulations adopted by licensing authorities, and failure to  
            comply with state law.


          5)Allow licensing authorities to take disciplinary action  
            against a licensee for any violation of any provision in this  
            bill.  Require a licensing authority to inform the Bureau upon  
            suspension or revocation of a license.










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          6)Provide that nothing shall be interpreted to supersede or  
            limit existing local authority for law enforcement activity,  
            enforcement of local zoning requirements or local ordinances,  
            or enforcement of local permit or licensing requirements, or  
            to require the DCA to undertake local law enforcement  
            responsibilities, local zoning requirements, or local  
            licensing requirements. 

          7)Authorize a city, county, or city and county to adopt  
            ordinances that establish additional standards for local  
            licenses and permits for commercial cannabis activity. 

          8)Provide that for facilities issued a state licensed located  
            within the incorporate area of a city, that the city shall  
            have full power and authority to enforce these provisions, if  
            so delegated by the State. 

          9)Provide that the city shall further assume responsibility for  
            any regulatory function relating to those licensees within the  
            city limits that would otherwise be performed by the county,  
            or any county officer or employee, including a county health  
            officer, without liability, cost, or expense to the county. 

          10)Provide that the actions of a licensee, that are permitted  
            pursuant to both a state license and a license or permit  
            issued by a local jurisdiction and conducted in accordance  
            with the requirements of the Act are not unlawful under state  
            law, as specified. 

          11)Require all persons engaging in commercial MM activity  
            without a license to be subject to civil penalties of up to  
            twice the amount of the license fee for each violation.


          Licensure


          12)Require the DCA to issue state licenses for dispensaries,  
            distributors, transporters, and special dispensary status, as  
            specified. 

          13)Prohibit a person from engaging in commercial cannabis  








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            activity without possessing both a state license and a local  
            permit or other authorization upon the date of implementation  
            of regulations by the licensing authority. 

          14)Specify that revocation of a local license, permit, or other  
            authorization and revocation of a state license shall  
            terminate a licensee's ability to operate within the state  
            until the local jurisdiction or licensing authority reinstates  
            or reissues the state or local license, permit, or other  
            authorization.


          15)Provide that a facility or entity that is operating in  
            compliance with local zoning ordinances and other state and  
            local requirements on or before January 1, 2018, may continue  
            its operations until its application for licensure is approved  
            or denied. 


          16)Provide that issuance of a state license or determination of  
            compliance with local law by a licensing authority shall in no  
            way limit the ability of the City of Los Angeles to prosecute  
            any person or entity for a violation of, or be deemed to  
            establish satisfying the immunity requirements of Proposition  
            D, approved by the voters of the City of Los Angeles on May  
            21, 2013, ballot for the city, or local zoning laws. 


          17)Until January 1, 2026, prohibits a licensee from holding more  
            than one license except as follows:  


             a)   A licensee may hold a small cultivation license and a  
               manufacturer license;


             b)   A licensee may hold a manufacturer license and a  
               dispensary license, limited to three retail sites;


             c)   A licensee may hold a small cultivation license and a  
               dispensary license, limited to three retail sites;  








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             d)   A licensee may hold a distribution license and a  
               transporter license, if so authorized. 


             e)   A dispensary licensee, limited to three retail sites,  
               may apply for a manufacturer license and hold a cultivation  
               license if it is not cultivating more than four acres. 


          18)    Until January 1, 2026, exempt from the above licensing  
            restrictions business that were authorized by a local  
            jurisdiction, prior to July 1, 2015, to engage in multiple  
            cannabis activities, as specified.  


          19)Repeal existing statute allowing qualified patients and  
            designated primary caregivers to collectively or cooperatively  
            cultivate MM for medical purposes one year after the Bureau  
            posts on its Internet Web site that licensing authorities have  
            commenced issuing licenses pursuant to the Act.


          Health and Safety Provisions


          20)Require all licensees holding cultivation or manufacturing  
            licensees to send all medical cannabis and medical cannabis  
            products to a distributor for quality assurance and inspection  
            by the distribution licensee and for batch testing by a  
            testing licensee prior to distribution to a dispensary. 

          21)Require a licensee holding a dispensary license, in addition  
            to a cultivation or manufacturing license, to send all medical  
            cannabis or medical cannabis products to a distribution  
            licensee for presale inspection and for a batch testing by a  
            testing licensee prior to dispensing any product. 

          22)Require all medical cannabis and medical cannabis products,  
            upon issuance of a certificate of analysis by a testing  
            licensee, to undergo a quality assurance review by a  








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            distribution licensee prior to distribution, to ensure the  
            quantity and content of the medical cannabis or medical  
            cannabis product, and for tracking and taxing purposes by the  
            state. 

          23) Require all licensed cultivators and manufacturers to  
            package all medical cannabis and medical cannabis products in  
            tamper-evident packaging and to use a unique identifier to  
            identify and track the product, and requires the product to be  
            labeled as specified. 

          24)Require the DPH to promulgate regulations governing the  
            licensing of MM manufacturers and testing laboratories. 


          25)Require medical cannabis products to be labeled and in  
            tamper-evident packages, and prohibits MM packages and labels  
            from being made to be attractive to children. Requires MM  
            product labels to include, but not be limited to, the  
            following statements:  "Keep out of reach of children and  
            animals"; "For medical use only"; "The intoxicating effects of  
            this product may be delayed by up to two hours"; and warnings  
            if nuts or other known allergens are used.


          26)Require the Bureau to establish minimum security requirements  
            for the commercial transportation and delivery of medical  
            cannabis and products, and require a licensed dispensary to  
            implement security measures to deter and prevent unauthorized  
            entrance into areas containing, or theft of, medical cannabis  
            or medical cannabis products.  Require a dispensary to notify  
            the licensing authority and appropriate law enforcement  
            authorities within 24 hours after discovering, among other  
            things, breaches of security.

          Other 

          27)Require, beginning March 1, 2023, and on or  before March 1  
            of each following year, each licensing authority to prepare  
            and submit to the Legislature an annual report on the  
            authority's activities and post it on its Internet Web site,  
            as specified.  








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          28)Require the Bureau to contract with the California Marijuana  
            Research Program, known as the Center for Medicinal Cannabis  
            Research, to develop a study that identifies the impact that  
            MM has on motor skills.  


           29)By January 1, 2017, require the Division of Occupational  
            Safety and Health to convene an advisory committee to evaluate  
            whether there is a need to develop industry-specific  
            regulations related to the activities of licensed facilities.  


           30) Require the State Board of Equalization, in consultation  
            with CDFA, to adopt a system for reporting the movement of  
            commercial cannabis and cannabis products through the  
            distribution chain, as specified.   


           31)Provide that the provisions of this bill are severable of any  
            provision or its application is held invalid. 


          32)Make the bill operative only if AB 243 (Wood) and SB 643  
            (McGuire) of the current legislative session is enacted and  
            takes effect on or before January 1, 2016. 


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


          COMMENTS:


          Purpose.  This bill is author sponsored.  According to the  
          author, "After nearly 20 years of access to medical marijuana  
          without a reasonable framework for distribution, it is time for  
          us to take a serious look at putting such a framework into  
          place, whether voters are called upon to decide on legislation  
          in 2016 or not.  Periodic litigation and the lack of uniform  








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          health and safety standards are just two examples of how the  
          status quo has not served the general public or patients with  
          bona fide medical needs well."    


          This bill is drafted to work in conjunction with AB 243 (Wood)  
          and SB 643 (McGuire) of the current legislative session, and is  
          contingent upon the enactment of both of those bills. 


          The Compassionate Use Act (CUA) and SB 420 (Vasconcellos),  
          Chapter 875, Statutes of 2003.  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, Statutes  
          of 2003, 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  
          (1996) 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  








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          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  
          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  
          Cannabis.  By exempting qualified patients and caregivers from  
          prosecution for using or from collectively or cooperatively  
          cultivating medical marijuana, the CUA and the MMP 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 (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  








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          obtaining, distributing, or using marijuana for medical  
          purposes.  However, under the federal Controlled Substances Act,  
          it is unlawful for any person to manufacture, distribute,  
          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.  


          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, 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 Cannabis Industry in California.  According to the  
          author's Sunrise Questionnaire, submitted to the Assembly  
          Business and Professions Committee pursuant to Government Code  
          Section 9148 et seq., there are multiple occupational groups  
          interested in state regulation, representing a growing marijuana  
          industry.  Because marijuana remains federally prohibited, it is  
          not recognized by the federal government as having any medicinal  
          value.  United States Attorneys with jurisdiction over  
          California and neighboring states remain capable of launching  








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          enforcement actions at any time.  In addition, many California  
          jurisdictions, roughly estimated by the League of California  
          Cities at 50% pending completion of a statewide survey, ban the  
          cultivation and sale of medical marijuana altogether.  As a  
          result, while some local governments have established  
          comprehensive licensing and regulatory schemes, many  
          practitioners in this industry are part of an underground  
          economy that is unregulated, unlicensed, and untaxed.  


          According to the author, there is significant public demand for  
          uniform standards in the field of health and safety, and many  
          local jurisdictions would like to see a uniform state regulatory  
          structure, and have refused to allow cultivation or sale of  
          marijuana within their boundaries in the absence of such a  
          structure.  There is also widespread public demand for marijuana  
          cultivation standards that mirror established agricultural  
          standards and that will alleviate environmental degradation.   
          According to the author, without regulation, harm to consumers  
          is very likely given that no health and safety standards exist  
          for marijuana, so there are none to be enforced.  


          Analysis Prepared by:                                             
                          Eunie Linden / B. & P. / (916) 319-3301  FN:  
          0002445