BILL ANALYSIS Ó AB 266 Page 1 (Without Reference to File) CONCURRENCE IN SENATE AMENDMENTS AB 266 (Bonta, et al.) As Amended September 11, 2015 Majority vote -------------------------------------------------------------------- |ASSEMBLY: |62-8 |(June 4, 2015) |SENATE: | |(September 11, | | | | | | |2015) | | | | | | | | | | | | | | | -------------------------------------------------------------------- (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: AB 266 Page 2 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. AB 266 Page 3 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 AB 266 Page 4 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; AB 266 Page 5 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 AB 266 Page 6 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. AB 266 Page 7 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 AB 266 Page 8 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 AB 266 Page 9 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 AB 266 Page 10 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 AB 266 Page 11 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