Butte County Board of Supervisors Agenda Transmittal Clerk of the Board Use Only Agenda Item: 5.02 Subject: Presentation on Proposed Statewide Regulatory Framework for Medical Marijuana Department: County Administration Meeting Date Requested: 11/10/2015 Contact: Paul Hahn Phone: 530-538-7631 Regular Agenda Consent Agenda Department Summary: (Information provided in this section will be included on the agenda. Attach explanatory memorandum and other background information as necessary). Paul A. Smith, Senior Legislative Advocate with Rural County Representatives of California (RCRC) and Karen Keene, Senior Legislative Representative from California State Association of Counties (CSAC) will provide a presentation on proposed statewide regulatory framework for medical marijuana. Fiscal Impact: N/A Personnel Impact: N/A Action Requested: ACCEPT FOR INFORMATION. Administrative Office Review:
Paul A. Smith Karen Keene 2015 MEDICAL MARIJUANA UPDATE BUTTE COUNTY
RCRC s Adopted Policy Principles for Medical Marijuana 2
CSAC s Medical Marijuana Policy 3
Common Principles for Licensing/Regulatory Structure Preserving local control Explicit county taxing authority Ending the collective model Addressing environmental impacts 4
2015 Medical Marijuana Legislative Package 5
Key Aspects of Package Local Control Key Clauses Business & Professions Code 19315 (a) Business & Professions Code 19316 (a) Business & Professions Code 19316 (c) Health & Safety Code 11362.777 (b) (3) 6
Key Aspects of Package Local Control Provisions: Nothing in this chapter 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. Business & Professions Code 19315 (a) 7 AB 266
Key Aspects of Package Local Control Provisions: Pursuant to Section 7 of Article XI of the California Constitution, a city, county, or city and county may adopt ordinances that establish additional standards, requirements, and regulations for local licenses and permits for commercial cannabis activity. Any standards, requirements, and regulations regarding health and safety, testing, security, and worker protections established by the state shall be the minimum standards for all licensees statewide. Business & Professions Code 19316 (a) 8 AB 266
Key Aspects of Package Local Control Provisions: Nothing in this chapter, or any regulations promulgated thereunder, shall be deemed to limit the authority or remedies of a city, county, or city and county under any provision of law, including, but not limited to, Section 7 of Article XI of the California Constitution. Business & Professions Code 19316 (c) 9 AB 266
Key Aspects of Package Local Control Provisions: A person or entity shall not submit an application for a state license issued by the department pursuant to this section if the proposed cultivation of marijuana will violate the provisions of any local ordinance or regulation, or if medical marijuana is prohibited by the city, county, or city and county in which the cultivation is proposed to occur, either expressly or otherwise under principles of permissive zoning. Health & Safety Code 11362.777 (b) (3) 10 AB 243
Key Aspects of Package Explicit and broad county taxing authority Referenced in Business & Professions Code 19348 County authority to tax deliveries Referenced in Business & Professions Code 19340 (c) Local fee and tax authority Referenced in Business & Professions Code 19320 (d) & 19350 11 SB 643
Key Aspects of Package Ending the Collective Model Strict Licensing Scheme Licensing authorities administering this chapter may issue state licenses only to qualified applicants engaging in commercial cannabis activity pursuant to this chapter. Upon the date of implementation of regulations by the licensing authority, no person shall engage in commercial cannabis activity without possessing both a state license and a local permit, license, or other authorization. A licensee shall not commence activity under the authority of a state license until the applicant has obtained, in addition to the state license, a license or permit from the local jurisdiction in which he or she proposes to operate, following the requirements of the applicable local ordinance. Business & Professions Code 19320 (a) 12 AB 266
Key Aspects of Package Environmental Enforcement Establishment of the Medical Cannabis Fines & Penalties Account Fine & penalty monies dedicated to state and local environmental enforcement efforts Bureau of Marijuana Regulation shall establish a grant program to locals for regulation/enforcement assistance Water diversion protections Cultivation standards 13 SB 643 & AB 243
Key Aspects of Package Licensure Exemptions Personal Grows Exemption Patient Caregivers Exemption 14
Local Control Applies To Those Exempt Exemption from the requirements of this section does not limit or prevent a city, county, or city and county from regulating or banning the cultivation, storage, manufacture, transport, provision, or other activity by the exempt person, or impair the enforcement of that regulation or ban. Health & Safety Code 11362.777 (g) 15 AB 243
Key Must-Knows 16
Dual Licensing Must have both a state license & local approval to operate STATE Business & Professions Code 19320 (a) 17 AB 243, AB 266, SB 643
Locals Go First for Cultivation Cultivation applicants must first obtain local license/permit before commencing an application for a state cultivation license Health & Safety Code 11362.777 (b) (1) 18 AB 243
Mobile Deliveries The default is that mobile deliveries are allowed Can only be prohibited by enactment of local ordinance Mobile delivery must originate from a licensed dispensary WE DELIVER! PAUL S HIGH TIMES WE DELIVER! Business & Professions Code 19340 19 AB 266
Cities Have the Option to Enforce State Standards For facilities issued a state license that are located within the incorporated area of a city, the city shall have full power and authority to enforce this chapter and the regulations promulgated by the bureau or any licensing authority, if delegated by the state. Counties do not have explicit authority Business & Professions Code 19316 (b) AB 266 20
Local Role in Enforcement Examine books $541,634 $411,738 $987,475 $654,542 Coordinated enforcement 21
Background Checks/License Restrictions (Criminal Record) Prospective licensees must submit to State Department of Justice background checks WHO ARE YOU? Business & Professions Code 19323 22 SB 643
Continued Background Checks/License Restrictions (Criminal Record) Previous criminal violation that could trigger failure to obtain state license: Felony illegal involvement in controlled substance offenses Fraud, deceit & embezzlement Illegal patient recommendations Illegal cultivation activities Record of violations in last 3 years Specified serious felonies Specified violent felonies Failure to have tax registration Business & Professions Code 19323 (b) (5) 23 SB 643
Other Relevant Aspects of the Legislative Package Employer Restrictions Transportation Standards Pesticide Standards Cross-Ownership Restrictions Mandatory Distribution Removal of (c) (4) in AB 243 24
Regulatory Efforts NCRWQCB CVRWQCB 25
Regional Regulatory Orders Central Valley Waiver of Waste Discharge Requirement Proposed August, 2015 Heard on October 2, 2015 North Coast Waiver of Waste Discharge Requirement Adopted August, 2015 26
Key Elements Defer to county ordinances Impose monitoring & reporting requirements Establish regulatory fee schedules Fine & penalty scheme for non-compliance No county obligations Effective immediately upon adoption by each Board 27
The Saga Continues 28 AB 1548 & AB 1549
Assembly Bill 1548 Cultivation Tax $9.25 per ounce on marijuana flowers $2.75 per ounce on marijuana leaves $1.25 per ounce on immature marijuana plants Tax collected at distributor level Board of Equalization administers and collects tax quarterly 29
Continued Assembly Bill 1548 Cultivation Tax Creation of Marijuana Production & Environmental Mitigation Fund All tax proceeds deposited into this Fund Distributed as follows: 35% California Department of Food & Agriculture Local law enforcement for illegal cultivation 35% Nature Resources Agency Competitive grant program for environmental clean-up 30% Department of Fish & Wildlife & State Water Resources Control Board to address environmental impacts 30
Assembly Bill 1549 State Banking Currently a spot bill -- language will be added at a later date Goal is to create a state financial institution for the medical marijuana industry so basic banking services can be available Try to work through federal banking laws 31
Ballot Measures 32
Paul A. Smith Karen Keene Questions? 33
MEDICAL MARIJUANA REGULATORY STRUCTURE LEGISLATION Key County Issue Local control clauses Referenced in Business & Professions Codes 19315 (a), 19316 (a) & (c) AB 266 Local Control Locals are responsible for awarding local licenses to operate Referenced in Business & Professions Code 19320 (a) AB 266 & SB 643 Cultivation must comply with local rules Referenced in Health & Safety Code 11362.777 (b) (3) - AB 243 Local fee and tax power Referenced in Business & Professions Code 19320 (d) AB 266 & SB 643 Broad and explicit county taxing authority Referenced in Business & Professions Code 19348 - SB 643 County Taxing Authority County authority to tax deliveries Referenced in Business & Professions Code 19340 (c) - AB 266 Local fee and tax authority Referenced in Business & Professions Code 19320 (d) AB 266 & SB 643 Referenced in Business & Professions Code 19350 AB 243
Local license issuance Referenced in Business & Professions Code 19320 (a) AB 266 & SB 643 Bureau of Medical Marijuana Regulation in Department of Consumer Affairs - Primary state licensing entity Referenced in Business & Professions Codes 19302, 19303, 19304 AB 266 Licensing Entity California Department of Food & Agriculture has role in cultivation licensing Referenced in Business & Profession Code 19302.1 (e) - SB 643 Referenced in Health & Safety Code 11362.777 (b) (1) (B) - AB 243 Cultivation licenses must first commence locally Referenced in Health & Safety Code 11362.777 (b) (2) - AB 243 Department of Consumer Affairs issues licenses for dispensary, distributor, transporter, special dispensary Referenced in Business & Profession Code 19334 (a) - AB 266 Department of Public Health issues licenses for manufacturers/testing laboratories Referenced in Business & Profession Code 19341 - AB 266
Establishment of the Medical Cannabis Fines & Penalties Account Referenced in Business & Professions Code 19360 - AB 243 Fine & penalty monies dedicated to state and local environmental enforcement efforts Referenced in Business & Professions Code 19351 (c) - AB 243 Environmental Enforcement Bureau of Marijuana Regulation shall establish a grant program to locals for regulation/enforcement assistance Referenced in Business & Professions Code 19351 (d) - AB 243 Water diversion protections Referenced in Business & Professions Code 19332 (d) AB 243 & SB 643 Cultivation standards Referenced in Business & Professions Code 19332 (e) (2) AB 243 & SB 643 Abolishes collective model Collective Model/Personal Grows Licensing requirements for all commercial cannabis activities Referenced in Business & Professions Code 19320 (a) - AB 266 & SB 643 Referenced in Health & Safety Code 11362.775 (b) - AB 266 Personal grow exemption/primary caregiver exemption for 5 patients Referenced in Business & Professions Code 19319 (a) & (b) - SB 643 Those exempt must still comply with local restrictions Referenced in Health & Safety Code 11362.777 (g) - AB 243
Date of Licensure After January 1, 2018 Referenced in Business & Professions Code 19321 (c) - AB 266 Department of Consumer Affairs, California Department of Food & Agriculture & Department of Public Health have broad regulatory authority Referenced in Business & Professions Codes 19321 - AB 266 California Department of Food & Agriculture responsible for cultivation regulations including weight and measures Referenced in Business & Professions Codes 19332 (a), 19332 (e) (1) AB 243 & SB 643 Detailed Regulatory Standards Department of Pesticide Regulation & Department of Public Health develop pesticide standards Referenced in Business & Professions Code 19332 (b) - AB 243 Annual license Referenced in Business & Professions Code 19321 (b) - AB 266 Dispensary security standards Referenced in Business & Professions Code 19334 (c) & (d) - AB 266 Testing laboratories Referenced in Business & Professions Codes 19343, 19344, 19345 AB 266
Transportation operators must be licensed Referenced in Business & Professions Code 19337 (a) - SB 643 Transportation Standards Detailed manifest/accessible records required Referenced in Business & Professions Codes 19337 (b), (c), (d) and (e) SB 643 Bureau to develop minimum security requirement for transportation Referenced in Business & Professions Code 19334 (b) - AB 266 General Enforcement Cities can request to be primary enforcement entity Referenced in Business & Professions Code 19316 (b) - AB 266 State not required to enforce local standards Referenced in Business & Professions Code 19315 (b) - AB 266 Mobile Retail Deliveries Permitted, unless prohibited by local ordinance Referenced in Business & Professions Code 19340 - AB 266
License Prohibitions (Criminal Record) Previous criminal violations that could trigger failure to obtain state license: Felony illegal involvement in controlled substances Fraud, deceit & embezzlement Illegal patient recommendations Illegal cultivation activities Record of violations in last 3 years Specified serious felonies Specified violent felonies Failure to have tax registration Referenced in Business & Professions Code 19323 (b) (5) - SB 643 Local Involvement in License Revocation Yes. Referenced in Business & Professions Code 19323 (b) (3) - SB 643 Advertising Restriction & Edibles Labeling No advertising restrictions Edibles labeling requirements Referenced in Business & Professions Code 19347 - AB 266 Cross Ownership of Licensing Extensive restrictions Referenced in Business & Professions Code 19328 - AB 266 No alcoholic beverage retailers can hold a medical marijuana license Referenced in Business & Professions Code 19329 - AB 266
Local Examination of Licensee's Records Yes. Referenced in Business & Professions Codes 19327 (c) & (d) - AB 266 Employer Restrictions/Drug Free Workplace Employers can adopt policies regarding employee use Referenced in Business & Professions Code 19330 - AB 266 Background Checks Prospective licensees must submit to State Department of Justice background checks Referenced in Business & Professions Code 19322 - SB 643 Facility/restrictions on financial interest Referenced in Business & Professions Code 2525(a) - SB 643 Addresses Doctor/Patient Relationship Physician recommendation requirements Referenced in Business & Professions Code 2241.5 & 2525.3 - SB 643 Physician advocating Referenced in Business & Professions Codes 2525.5 (a) & (b) - SB 643
California Department of Food & Agriculture shall establish organic program by 2020 Referenced in Business & Professions Code 19332.5 (a) - SB 643 Appellation/Organic Standards/Agricultural Product Bureau of Marijuana Regulation may establish appellations Referenced in Business & Professions Code 19332.5 (b) - SB 643 County of origin labeling standards Referenced in Business & Professions Code 19332.5 (c) - SB 643 Agricultural Product Referenced in Health & Safety Code 11362.777 (a) AB 243 Criminal Penalties Statues No criminal penalties if licensed Referenced in Business & Professions Code 19317 (a) & (b) - AB 266 No license, then one is eligible to face criminal penalties Referenced in Business & Professions Code 19318 (a) & (c) - AB 266 California Department of Food & Agriculture shall establish a unique identifier program Referenced in Business & Professions Codes 19335 (a), 19332 (e) (3) & (e) (4) AB 243 & SB 643 Track & Trace/Unique Identification System Locals can administrate their own unique identifier program Referenced in Health and Safety Codes 11362.777 (e) (1), (e) (2), (e) (3), (e) (2) AB 243 & SB 643 Board of Equalization for tax compliance associated with unique identifier program Referenced in Revenue & Tax Code 31020 - AB 266
State & Local Regulatory Fee Authority Yes, explicit fee authority Referenced in Business & Professions Code 19350 - AB 243
ADDENDUM MEDICAL MARIJUANA LICENSE CATEGORIES TYPE Type 1 Type 1A Type 1B Type 2 Type 2A Type 2B Type 3 Type 3A Type 3B Type 4 Type 6 Type 7 Type 8 Type 10 Type 10A Type 11 Type 12 CLASSIFICATION Cultivation; Specialty outdoor; Max 5,000 sq ft per premise/ 50 mature plants Cultivation; Specialty indoor; Max 5,000 sq ft per premise Cultivation; Specialty mixed-light; Max 5,000 sq ft per premise Cultivation; Outdoor; 5,001 10,000 sq ft per premise Cultivation; Indoor; 5,001 10,000 sq ft per premise Cultivation; Mixed-light; 5,001 10,000 sq ft per premise Cultivation; Outdoor; 10,001 1 acre sq ft per premise* Cultivation; Indoor; 10,001 1 acre sq ft per premise* Cultivation; Mixed-light; 10,001 1 acre sq ft per premise* Nursery; Can transport live plants Manufacturer 1; Products using nonvolatile solvents Manufacturer 2; Products using volatile solvents Testing Dispensary; General Dispensary; No more than three retail sites Distribution Transporter *CDFA shall have a limit on the number of licenses in this type.