Today's Law As Amended

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AB-1575 Medical cannabis.(2015-2016)



SECTION 1.

 Section 14235.5 is added to the Business and Professions Code, to read:

14235.5.
 Notwithstanding Section 14235, for purposes of those marks for which a certificate of registration is issued on or after January 1, 2017, the following classifications may be used for marks related to medical cannabis goods and services that are lawfully in commerce in the State of California:
(a) 500 for medical cannabis and medical cannabis products.
(b) 501 for services related to medical cannabis and medical cannabis products.

SEC. 2.

 Section 19300.5 of the Business and Professions Code is amended to read:

19300.5.
 For purposes of this chapter, the following definitions shall apply:
(a) “Accrediting body” means a nonprofit organization that requires conformance to ISO/IEC 17025 requirements and is a signatory to the International Laboratory Accreditation Cooperation Mutual Recognition Arrangement for Testing.
(b) “Applicant,” includes the following:
(1) Owner or owners of proposed premises.
(2) An “owner” means the chief executive officer, a member of the board of directors, a person having an aggregate ownership interest, other than a security interest, lien, or encumbrance, of 10 percent or more in the licensee, or a person who has the power to direct, or cause to be directed, the management or control of the licensee. The applicant shall disclose all persons having an aggregate ownership interest, other than a security interest, lien, or encumbrance, of 1 percent or more in the licensee, at the time of application.
(c) “Batch” means a specific quantity of homogeneous medical cannabis or medical cannabis product and is one of the following types:
(1) “Harvest batch” means a specifically identified quantity of dried flower or trim, leaves, and other cannabis plant matter that is uniform in strain, harvested at the same time, and, if applicable, cultivated using the same pesticides and other agricultural chemicals, and harvested at the same time.
(2) “Manufactured cannabis batch” means either:
(A) An amount of cannabis concentrate or extract produced in one production cycle using the same extraction methods and standard operating procedures, and is from the same harvest batch.
(B) An amount of a type of manufactured cannabis produced in one production cycle using the same formulation and standard operating procedures.
(d) “Bureau” means the Bureau of Medical Cannabis Regulation within the Department of Consumer Affairs.
(e) “Cannabinoid” or “phytocannabinoid” means a chemical compound that is unique to and derived from cannabis.
(f) “Cannabis” means all parts of the plant Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. “Cannabis” also means the separated resin, whether crude or purified, obtained from cannabis. “Cannabis” also means marijuana as defined by Section 11018 of the Health and Safety Code as enacted by Chapter 1407 of the Statutes of 1972. “Cannabis” does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. For the purpose of this chapter, “cannabis” does not mean “industrial hemp” as defined by Section 81000 of the Food and Agricultural Code or Section 11018.5 of the Health and Safety Code.
(g) “Cannabis concentrate” means manufactured cannabis that has undergone a process to concentrate one or more active cannabinoids, thereby increasing the product’s potency. Resin from granular trichomes from a cannabis plant is a concentrate for purposes of this chapter. A cannabis concentrate is not considered food, as defined by Section 109935 of the Health and Safety Code, or a drug, as defined by Section 109925 of the Health and Safety Code.
(h) “Certificate of accreditation” means a certificate issued by an accrediting body to a testing laboratory.
(i) “Chief” means Chief of the Bureau of Medical Cannabis Regulation within the Department of Consumer Affairs.
(j) “Commercial cannabis activity” includes cultivation, possession, manufacture, processing, storing, laboratory testing, labeling, transporting, distribution, donation, provision, delivery, or sale of medical cannabis or a medical cannabis product, regardless of whether the activity is undertaken on a for-profit or nonprofit basis, or any combination thereof, and regardless of whether the activity is for compensation or is gratuitous, except as set forth in Section 19319, related to qualifying patients and primary caregivers.
(k) “Cultivation” means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of medical cannabis.
(l) “Cultivation site” means a location where medical cannabis is planted, grown, harvested, dried, cured, graded, or trimmed, or that does all or any combination of those activities.
(m) “Cultivator” means a person that conducts the planting, growing, harvesting, drying, curing, grading, or trimming of medical cannabis.
(n) “Delivery” means the commercial transfer of medical cannabis or medical cannabis products from a dispensary, up to an amount determined by the bureau, to a primary caregiver or qualified patient as defined in Section 11362.7 of the Health and Safety Code, or a testing laboratory. “Delivery” also includes the use by a dispensary of any technology platform owned and controlled by the dispensary, or independently licensed under this chapter, that enables qualified patients or primary caregivers to arrange for or facilitate the commercial transfer by a licensed dispensary of medical cannabis or medical cannabis products.
(o) “Dispensary” means a premises with a fixed location, whether or not there is direct access by customers, where medical cannabis or medical cannabis products are offered, either individually or in any combination, for retail sale, including an establishment that delivers, pursuant to Section 19340, medical cannabis and medical cannabis products as part of a retail sale.
(p) “Dispensing” means any activity involving the retail sale of medical cannabis or medical cannabis products from a dispensary.
(q) “Distribution” means the procurement, sale, and transport of medical cannabis and medical cannabis products between entities licensed pursuant to this chapter.
(r) “Distributor” means a person licensed under this chapter to engage in the business of purchasing or taking custody of medical cannabis from a licensed cultivator, or medical cannabis products from a licensed manufacturer, for sale or transfer to a licensed dispensary.
(s) “Dried flower” means all dead medical cannabis that has been harvested, dried, cured, or otherwise processed, excluding leaves and stems.
(t) “Edible cannabis product” means manufactured cannabis that is intended to be used, in whole or in part, for human consumption, including, but not limited to, chewing gum, but excluding products set forth in Division 15 (commencing with Section 32501) of the Food and Agricultural Code. An edible medical cannabis product is not considered food as defined by Section 109935 of the Health and Safety Code or a drug as defined by Section 109925 of the Health and Safety Code.
(u) “Fund” means the Medical Cannabis Regulation and Safety Act Fund established pursuant to Section 19351.
(v) “Identification program” means the universal identification certificate program for commercial medical cannabis activity authorized by this chapter.
(w) “Labeling” means any label or other written, printed, or graphic matter upon a medical cannabis product, or upon its container or wrapper, or that accompanies any medical cannabis product.
(x) “Labor peace agreement” means an agreement between a licensee and a bona fide labor organization that, at a minimum, protects the state’s proprietary interests by prohibiting labor organizations and members from engaging in picketing, work stoppages, boycotts, and any other economic interference with the applicant’s business. This agreement means that the applicant has agreed not to disrupt efforts by the bona fide labor organization to communicate with, and attempt to organize and represent, the applicant’s employees. The agreement shall provide a bona fide labor organization access at reasonable times to areas in which the applicant’s employees work, for the purpose of meeting with employees to discuss their right to representation, employment rights under state law, and terms and conditions of employment. This type of agreement shall not mandate a particular method of election or certification of the bona fide labor organization.
(y) “Licensee” means a person issued a state license under this chapter to engage in commercial cannabis activity.
(z) “Licensing authority” means the state agency responsible for the issuance, renewal, or reinstatement of the license.
(aa) “Live plants” means living medical cannabis flowers and plants, including seeds, immature plants, and vegetative stage plants.
(ab) “Local license, permit, or other authorization” means an official document granted by a local jurisdiction that specifically authorizes a person to conduct commercial cannabis activity in the local jurisdiction.
(ac) “Lot” means a batch or a specifically identified portion of a batch.
(ad) “Manufactured cannabis” means raw cannabis that has undergone a process whereby the raw agricultural product has been transformed into a concentrate, an edible product, or a topical product.
(ae) “Manufacturer” means a person that conducts the production, preparation, propagation, or compounding of manufactured medical cannabis, as described in subdivision (ae), or medical cannabis products either directly or indirectly or by extraction methods, or independently by means of chemical synthesis or by a combination of extraction and chemical synthesis at a fixed location that packages or repackages medical cannabis or medical cannabis products or labels or relabels its container.
(af) “Manufacturing site” means the premises that produces, prepares, propagates, or compounds manufactured medical cannabis or medical cannabis products, directly or indirectly, by extraction methods, independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis, and is owned and operated by a licensee for these activities.
(ag) “Medical cannabis,” “medical cannabis product,” or “cannabis product” means a product containing cannabis, including, but not limited to, concentrates and extractions, intended to be sold for use by medical cannabis patients in California pursuant to the Compassionate Use Act of 1996 (Proposition 215), found at Section 11362.5 of the Health and Safety Code. For the purposes of this chapter, “medical cannabis” does not include “industrial hemp” as defined by Section 81000 of the Food and Agricultural Code or Section 11018.5 of the Health and Safety Code.
(ah) “Nursery” means a licensee that produces only clones, immature plants, seeds, and other agricultural products used specifically for the planting, propagation, and cultivation of medical cannabis.
(ai) “Person” means an individual, firm, partnership, joint venture, association, corporation, limited liability company, 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.
(aj) “Primary caregiver” has the same meaning as that term is defined in Section 11362.7 of the Health and Safety Code.
(ak) “State license” or “license” means a state license issued pursuant to this chapter.
(al) “Testing laboratory” means the premises where tests are performed on medical cannabis or medical cannabis products and that holds a valid certificate of accreditation.
(am) “Topical cannabis” means a product manufactured such that its final stage is in the form of a topical drug, as defined by the Center for Drug Evaluation and Research under the federal Food and Drug Administration, and intended for external use. A topical cannabis product is not considered a drug as defined by Section 109925 of the Health and Safety Code.
(an) “Transport” means the transfer of medical cannabis or medical cannabis products from the permitted business location of one licensee to the permitted business location of another licensee, for the purposes of conducting commercial cannabis activity authorized pursuant to this chapter.
(ao) “Transporter” means a person who holds a license by the bureau to transport medical cannabis or medical cannabis products in an amount above a threshold determined by the bureau between licensees.

SEC. 3.

 Section 19302 of the Business and Professions Code is amended to read:

19302.
 (a) There is in the Department of Consumer Affairs the Bureau of Medical Cannabis Regulation, under the supervision and control of the director. The director shall administer and enforce the provisions of this chapter related to the bureau.
(b) Commencing January 1, 2023, the bureau shall be subject to review by the appropriate policy committees of the Legislature.

SEC. 4.

 Section 19302.1 of the Business and Professions Code is amended to read:

19302.1.
 (a) The Governor shall appoint a chief of the bureau, subject to confirmation by the Senate, at a salary to be fixed and determined by the Director of Consumer Affairs with the approval of the Director of Finance. The chief shall serve under the direction and supervision of the director and at the pleasure of the Governor.
(b) Every power granted to or duty imposed upon the Director of Consumer Affairs under this chapter may be exercised or performed in the name of the director by a deputy or assistant director or by the chief, subject to conditions and limitations that the director may prescribe. In addition to every power granted or duty imposed with this chapter, the director shall have all other powers and duties generally applicable in relation to bureaus that are part of the Department of Consumer Affairs.
(c) The Director of Consumer Affairs may employ and appoint all employees necessary to properly administer the work of the bureau, in accordance with civil service laws and regulations. The Governor may also appoint a deputy chief and an assistant chief counsel to the bureau. These positions shall hold office at the pleasure of the Governor.
(d) The Department of Consumer Affairs shall have the sole authority to create, issue, renew, discipline, suspend, or revoke licenses for the transportation, storage unrelated to manufacturing activities, testing, distribution, and sale of medical cannabis within the state and to collect fees in connection with activities the bureau regulates. The bureau shall have the authority to create licenses in addition to those identified in this chapter that the bureau deems necessary to effectuate its duties under this chapter. The State Department of Public Health shall seek and include feedback from the scientific community and cannabis testing industry when promulgating testing regulations. The State Department of Public Health shall review and update medical cannabis testing standards on an annual basis, incorporating new testing technology, such as DNA testing for contaminants.
(e) The Department of Food and Agriculture shall administer the provisions of this chapter related to and associated with the cultivation of medical cannabis and will serve as lead agency for the purpose of fulfilling the requirements of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code). The Department of Food and Agriculture shall have the authority to create, issue, renew, discipline, suspend, or revoke licenses for the cultivation of medical cannabis and to collect fees in connection with activities it regulates. The Department of Food and Agriculture shall have the authority to create licenses in addition to those identified in this chapter that it deems necessary to effectuate its duties under this chapter.
(f) The State Department of Public Health shall administer the provisions of this chapter related to and associated with the manufacturing of medical cannabis. The State Department of Public Health shall have the authority to create, issue, renew, discipline, suspend, or revoke licenses for the manufacturing of medical cannabis and medical cannabis products and to collect fees in connection with activities it regulates. The State Department of Public Health shall have the authority to create licenses in addition to those identified in this chapter that it deems necessary to effectuate its duties under this chapter.

SEC. 5.

 Section 19310.5 is added to the Business and Professions Code, to read:

19310.5.
 (a) It is the intent of the Legislature to enact a statute that improves the medical cannabis industry’s ability to comply with federal law and regulations that would allow improved access to banking services.
(b) (1) The State Board of Equalization, in conjunction with the Department of Business Oversight, shall form an advisory group made up of representatives from financial institutions, nonbank financial service providers, the medical cannabis industry, law enforcement, and federal banking regulators. By July 1, 2017, the board, in conjunction with the department, shall submit a report to the Legislature with recommendations from the advisory group that will improve financial monitoring of medical cannabis businesses.
(2) A report submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code. The requirement for submitting a report imposed in paragraph (1) is inoperative on July 1, 2021, pursuant to Section 10231.5 of the Government Code.
(c) The advisory group shall examine strategies, such as the use of integrated point-of-sale systems with state track and trace systems and other measures that will improve financial monitoring of medical cannabis businesses.

SEC. 9.SEC. 6.

 Section 19316 of the Business and Professions Code is amended to read:

19316.
 (a) (1) Pursuant to Section 7 of Article XI of the California Constitution, a city, county, or city and county may, except as described in paragraph (2), adopt ordinances that establish additional standards, requirements, and regulations for local licenses and permits for commercial cannabis activity. 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.
(2) Packaging safety standards shall be uniform across the state and shall be established by the State Department of Public Health, in accordance with Section 19347.
(3) For purposes of this subdivision, packaging safety standards do not include packaging requirements related to appellations of origin or other branding or marketing materials.
(b) 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. Notwithstanding Sections 101375, 101400, and 101405 of the Health and Safety Code or any contract entered into pursuant thereto, or any other law, the city shall further assume complete 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. A city may contract in writing with the county in which it is located to arrange for the county to fulfill any regulatory functions relating to those licensees within the city limits if the county has agreed to assume such responsibility.
(c) 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.

SEC. 7.

 Section 19317 of the Business and Professions Code is amended to read:

19317.
 (a) Notwithstanding any other law, the actions of a licensee, its employees, and its agents that are (1) permitted pursuant to both a state license and a license or permit issued by the local jurisdiction following the requirements of the applicable local ordinances, and (2) conducted in accordance with the requirements of this chapter and regulations adopted pursuant to this chapter, are not unlawful under state law and shall not be an offense subject to arrest, prosecution, or other sanction under state law, or be subject to a civil fine or be a basis for seizure or forfeiture of assets under state law.
(b) Notwithstanding any other law, actions of a person who, in good faith, allows his or her property to be used by a licensee, its employees, and its agents, as permitted pursuant to both a state license and a local license or permit following the requirements of the applicable local ordinances, are not unlawful under state law and shall not be an offense subject to arrest, prosecution, or other sanction under state law, or be subject to a civil fine or be a basis for seizure or forfeiture of assets under state law.

SEC. 8.

 Section 19319.5 is added to the Business and Professions Code, to read:

19319.5.
 (a) It is not a violation of this chapter or any other state law, for a business, with a valid business license, or research institution engaged in the research of medical cannabis, medical cannabis products, or devices used for the medical use of cannabis or cannabis products, to possess, transport, purchase, or otherwise legally obtain, pursuant to this chapter, small amounts of medical cannabis or medical cannabis products, not to exceed eight ounces per month, as necessary to conduct research and development related to medical cannabis or medical cannabis products in a city, county, or city and county that expressly authorizes that activity by local ordinance, zoning variance, conditional use permit, or any other express written authorization. A business or research institution engaged in the research of medical cannabis shall obtain written authorization from its local jurisdiction that the business or institution has met all requirements of the local jurisdiction to conduct research on medical cannabis, medical cannabis products, or devices used for the medical use of cannabis or cannabis products.
(b) (1) It is not a violation of this chapter or any other state law for a licensee to sell medical cannabis or medical cannabis products in an amount not to exceed eight ounces per month to a business or research institution engaged in the research of medical cannabis, if the business or research institution provides to the licensee a copy of the written authorization to conduct research within the business’s or institution’s jurisdiction and a copy of the local ordinance, zoning variance, conditional use permit, or any other express written authorization. The licensee shall keep on file that written authorization for at least three years and make it available upon request to local authorities for auditing purposes.
(2) Medical cannabis or medical cannabis products subject to this section shall only be obtained from a licensee who is permitted under this chapter to dispense or deliver medical cannabis or medical cannabis products.
(3) All medical cannabis and medical cannabis products purchased for research purposes shall be subject to all requirements of the track and trace program established pursuant to Section 19335.
(c) Notwithstanding subdivisions (a) and (b), it shall not be a violation of this chapter or any other state law for the California Marijuana Research Program authorized under Section 11362.9 of the Health and Safety Code to obtain medical cannabis or medical cannabis products from a licensee. All medical cannabis and medical cannabis products obtained under this subdivision shall be reported to the bureau and to the track and trace program established pursuant to Section 19335.

SEC. 9.

 Section 19320 of the Business and Professions Code is amended to read:

19320.
 (a) All commercial cannabis activity shall be conducted between licensees, except as otherwise provided in this chapter.
(b)  Licensing authorities administering this chapter may issue state licenses only to qualified applicants engaging in commercial cannabis activity pursuant to this chapter. One year after the Bureau of Medical Cannabis Regulation posts a notice on its Internet Web site that the licensing authorities have commenced issuing licenses, no person shall engage in commercial cannabis activity without possessing both a state license and a local permit, license, or other authorization. An entity seeking licensure pursuant to this chapter shall obtain a local license, permit, or other authorization prior to applying for state licensure. State licensing entities shall not issue a license to any applicant that is unable to provide documentation confirming authorization to operate from the local government in which the applicant proposes to operate. 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 local license, permit, or other authorization from the local jurisdiction in which he or she proposes to operate, following the requirements of the applicable local ordinance.
(c) Each licensee shall obtain a separate license for each location where it engages in commercial medical cannabis activity. However, transporters only need to obtain licenses for each physical location where the licensee conducts business while not in transport or where any equipment that is not currently transporting medical cannabis or medical cannabis products permanently resides.
(d) Revocation of a local license, permit, or other authorization shall terminate the ability of a medical cannabis business to operate within that local jurisdiction until the local jurisdiction reinstates or reissues the local license, permit, or other authorization. Local authorities shall notify the bureau upon revocation of a local license, permit, or other authorization. The bureau shall inform relevant licensing authorities.
(e) Revocation of a state license shall terminate the ability of a medical cannabis licensee to operate within California until the licensing authority reinstates or reissues the state license.
(f) In addition to the provisions of this chapter, local jurisdictions retain the power to assess fees and taxes, as applicable, on facilities that are licensed pursuant to this chapter and the business activities of those licensees.
(g) Nothing in this chapter shall be construed to supersede or limit state agencies, including the Department of Food and Agriculture, the State Water Resources Control Board, and the Department of Fish and Wildlife, from establishing fees to support their medical cannabis regulatory programs.

SEC. 10.

 Section 19322 of the Business and Professions Code is amended to read:

19322.
 (a) A person or entity shall not submit an application for a state license issued by a licensing authority pursuant to this chapter unless that person or entity first receives a license, permit, or authorization specific to commercial cannabis activity from the local jurisdiction. An applicant for any type of state license issued pursuant to this chapter shall do all of the following:
(1) Electronically submit to the Department of Justice fingerprint images and related information required by the Department of Justice for the purpose of obtaining information as to the existence and content of a record of state or federal convictions and arrests, and information as to the existence and content of a record of state or federal convictions and arrests for which the Department of Justice establishes that the person is free on bail or on his or her own recognizance, pending trial or appeal.
(A) The Department of Justice shall provide a response to the licensing authority pursuant to paragraph (1) of subdivision (p) of Section 11105 of the Penal Code.
(B) The licensing authority shall request from the Department of Justice subsequent notification service, as provided pursuant to Section 11105.2 of the Penal Code, for applicants.
(C) The Department of Justice shall charge the applicant a fee sufficient to cover the reasonable cost of processing the requests described in this paragraph.
(2) Provide documentation issued by the local jurisdiction in which the proposed business is operating certifying that the applicant is or will be in compliance with all local ordinances and regulations.
(3) Provide evidence of the legal right to occupy and use the proposed location. For an applicant seeking a cultivator, distributor, manufacturing, testing, transporter, or dispensary license, provide a statement from the owner of real property or their agent where the cultivation, distribution, manufacturing, testing, transport, or dispensing of commercial medical cannabis activities will occur, as proof to demonstrate the landowner has acknowledged and consented to permit cultivation, distribution, manufacturing, testing, transport, or dispensary activities to be conducted on the property by the tenant applicant.
(4) If the application is for a cultivator or a dispensary, provide evidence that the proposed location is located beyond at least a 600-foot radius from a school, as required by Section 11362.768 of the Health and Safety Code.
(5) Provide a statement, signed by the applicant under penalty of perjury, that the information provided is complete, true, and accurate.
(6) (A) For an applicant with 20 or more employees, provide a statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement.
(B) For the purposes of this paragraph, “employee” does not include a supervisor.
(C) For purposes of this paragraph, “supervisor” means an individual having authority, in the interest of the licensee, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibility to direct them or to adjust their grievances, or effectively to recommend such action, if, in connection with the foregoing, the exercise of that authority is not of a merely routine or clerical nature, but requires the use of independent judgment.
(7) Provide the applicant’s valid seller’s permit number issued pursuant to Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code or indicate that the applicant is currently applying for a seller’s permit.
(8) Provide any other information required by the licensing authority.
(9) For an applicant seeking a cultivation license, provide a statement declaring the applicant is an “agricultural employer,” as defined in the Alatorre-Zenovich-Dunlap-Berman Agricultural Labor Relations Act of 1975 (Part 3.5 (commencing with Section 1140) of Division 2 of the Labor Code), to the extent not prohibited by law.
(10) Pay all applicable fees required for licensure by the licensing authority.
(11) Provide proof of a bond to cover the costs of destruction of medical cannabis or medical cannabis products if necessitated by a violation of licensing requirements.
(b) For applicants seeking licensure to cultivate, distribute, manufacture, test, or dispense medical cannabis or medical cannabis products, the application shall also include a detailed description of the applicant’s operating procedures for all of the following, as required by the licensing authority:
(1) Cultivation.
(2) Extraction and infusion methods.
(3) The transportation process.
(4) Inventory procedures.
(5) Quality control procedures.
(6) Security protocols.

SEC. 11.

 Section 19322.5 is added to the Business and Professions Code, to read:

19322.5.
 A licensee may operate as a for-profit business, as a not-for-profit entity, or as a combination of both.

SEC. 12.

 The heading of Article 5 (commencing with Section 19326) of Chapter 3.5 of Division 8 of the Business and Professions Code is amended to read:

Article  5. Medical Cannabis Regulation

SEC. 13.

 Section 19326 of the Business and Professions Code is amended to read:

19326.
 (a) A person other than a transporter shall not transport medical cannabis or medical cannabis products from one licensee to another licensee, unless otherwise specified in this chapter.
(b) (1) All cultivators, manufacturers, and licensees holding a producing dispensary license in addition to a cultivation or manufacturing license shall send all medical cannabis and medical cannabis products cultivated or manufactured to a distributor, as defined in Section 19300.5, for presale quality assurance and inspection by a distributor and for a batch testing by a testing laboratory prior to distribution to a dispensary.
(2) Notwithstanding paragraph (1), a cultivator shall not be required to send medical cannabis to a distributor if the medical cannabis is to be used, sold, or otherwise distributed by methods approved pursuant to this chapter by a manufacturer for further manufacturing.
(c) (1) Upon receipt of medical cannabis or medical cannabis products from a cultivator, manufacturer, or a licensee holding a producing dispensary license in addition to a cultivation or a manufacturing license, the distributor shall first inspect the product to ensure the identity and quantity of the product and ensure a random sample of the medical cannabis or medical cannabis product is tested by a testing laboratory.
(2) Upon issuance of a certificate of analysis by the testing laboratory that the product is fit for dispensing, medical cannabis and medical cannabis products shall undergo a quality assurance review by the distributor prior to distribution to ensure the quantity and content of the medical cannabis or medical cannabis product, and for tracking and taxation purposes by the state. The bureau shall specify the manner in which medical cannabis and medical cannabis products meant for wholesale purposes shall be packaged and sealed prior to transport, testing, quality assurance, quality control testing, or distribution.
(3) This section does not limit the ability of licensed cultivators, manufacturers, and dispensaries to directly enter into contracts with one another indicating the price and quantity of medical cannabis or medical cannabis products to be distributed. However, a distributor responsible for executing the contract is authorized to collect a fee for the services rendered, including, but not limited to, costs incurred by a testing laboratory, as well as applicable state or local taxes and fees.
(d) Medical cannabis and medical cannabis products shall be tested by a licensed testing laboratory, prior to dispensing, pursuant to Section 19344.
(e) This chapter shall not prohibit a licensee from performing testing on the licensee’s premises for the purposes of quality assurance of the product in conjunction with reasonable business operations. On-site testing by the licensee shall not be certified by the Bureau of Medical Cannabis Regulation.
(f) The bureau shall promulgate regulations relating to the amounts of each batch of medical cannabis or medical cannabis product that a cultivator or manufacturer is required to send to a distributor for inspection and a testing laboratory for testing. The regulations shall focus on reducing diversion, ensuring the quality of the product for the health and safety of patients, and allowing for efficiency in enforcement.

SEC. 14.

 Section 19327.5 is added to the Business and Professions Code, to read:

19327.5.
 (a) (1) The bureau may establish advertising, marketing, signage, and other labeling requirements and restrictions, including a prohibition on advertising, marketing, and other promotion of medical cannabis or medical cannabis products provided by a person engaging in commercial cannabis activity but not in full compliance with this chapter.
(2) The bureau may place conditions on a license restricting advertising, marketing, and other promotion by the licensee.
(b) (1) One year after the bureau posts a notice on its Internet Web site that the licensing authorities have commenced issuing licenses pursuant to the Medical Cannabis Regulation and Safety Act, all advertisements for licensees under this chapter shall include the valid state license number of the licensee.
(2) The bureau may provide information to verify a state license is active and in good standing for purposes of complying with this section.
(c) A licensee under this chapter shall not display an advertisement that shows the consumption of medical cannabis while driving or operating machinery.

SEC. 15.

 Section 19328 of the Business and Professions Code is amended to read:

19328.
 (a) Except as provided in paragraphs (9) and (10), a licensee may only hold a state license in up to two separate license categories, as follows:
(1) Type 1, 1A, 1B, 2, 2A, or 2B licensees may also hold either a Type 6 or 7 state license.
(2) Type 6 or 7 licensees, or a combination thereof, may also hold either a Type 1, 1A, 1B, 2, 2A, or 2B state license.
(3) Type 6 or 7 licensees, or a combination thereof, may also hold a Type 10A state license.
(4) Type 10A licensees may also hold either a Type 6 or 7 state license, or a combination thereof.
(5) Type 1, 1A, 1B, 2, 2A, or 2B licensees, or a combination thereof, may also hold a Type 10A state license.
(6) Type 10A licensees may hold a Type 1, 1A, 1B, 2, 2A, or 2B state license, or a combination thereof.
(7) Type 11 licensees shall also hold a Type 12 state license, but shall not hold any other type of state license.
(8) Type 12 licensees may hold a Type 11 state license.
(9) A Type 10A licensee may hold a Type 6 or 7 state license and may also hold a 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B, 4 or combination thereof if, under the 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B, 4 or combination of licenses thereof, no more than four acres of total canopy size of cultivation by the licensee is occurring throughout the state during the period that the respective licenses are valid. All cultivation pursuant to this section shall comply with local ordinances. This paragraph shall become inoperative on January 1, 2026.
(10) All cultivators and manufacturers may hold a Type 12 transporter license. All cultivators and manufacturers who are issued Type 12 transporter licenses shall comply with the following:
(A) Cultivators shall only transport medical cannabis from a cultivation site to a manufacturer or a distributor.
(B) Manufacturers shall only transport medical cannabis and medical cannabis products as follows:
(i) Between a cultivation site and a manufacturing site.
(ii) Between a manufacturing site and a manufacturing site.
(iii) Between a manufacturing site and a distributor.
(b) Except as provided in subdivision (a), a person or entity that holds a state license is prohibited from licensure for any other activity authorized under this chapter, and is prohibited from holding an ownership interest in real property, personal property, or other assets associated with or used in any other license category.
(c) (1) In a jurisdiction that adopted a local ordinance, prior to July 1, 2015, requiring qualified businesses to cultivate, manufacture, and dispense medical cannabis or medical cannabis products, with all commercial cannabis activity being conducted by a single qualified business, upon licensure that business shall not be subject to subdivision (a) if it meets all of the following conditions:
(A) The business was cultivating, manufacturing, and dispensing medical cannabis or medical cannabis products on January 1, 2016, and has continuously done so since that date.
(B) The business has been in full compliance with all applicable local ordinances at all times prior to licensure.
(C) The business is registered with the State Board of Equalization for tax purposes.
(2) A business licensed pursuant to paragraph (1) is not required to conduct all cultivation or manufacturing within the bounds of a local jurisdiction, but all cultivation and manufacturing shall have commenced prior to January 1, 2016, and have been in full compliance with applicable local ordinances.
(3) This subdivision shall become inoperative on January 1, 2026.

SEC. 16.

 Section 19332 of the Business and Professions Code is amended to read:

19332.
 (a) The Department of Food and Agriculture shall promulgate regulations governing the licensing of indoor and outdoor commercial cultivation sites.
(b) The Department of Pesticide Regulation shall develop guidelines for the use of pesticides in the cultivation of cannabis and residue in harvested cannabis.
(c) The Department of Food and Agriculture shall serve as the lead agency for purposes of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) related to the licensing of cannabis cultivation.
(d) Pursuant to Section 13149 of the Water Code, the State Water Resources Control Board, in consultation with the Department of Fish and Wildlife and the Department of Food and Agriculture, shall ensure that individual and cumulative effects of water diversion and discharge associated with cultivation of cannabis do not affect the instream flows needed for fish spawning, migration, and rearing, and the flows needed to maintain natural flow variability.
(e) The Department of Food and Agriculture shall have the authority necessary for the implementation of the regulations it adopts pursuant to this chapter. The regulations shall do all of the following:
(1) Provide that weighing or measuring devices used in connection with the sale or distribution of medical cannabis are required to meet standards equivalent to Division 5 (commencing with Section 12001).
(2) Require that medical cannabis cultivation by licensees is conducted in accordance with state and local laws. Nothing in this chapter, and no regulation adopted by the department, shall be construed to supersede or limit the authority of the State Water Resources Control Board, regional water quality control boards, or the Department of Fish and Wildlife to implement and enforce their statutory obligations or to adopt regulations to protect water quality, water supply, and natural resources.
(3) Establish procedures for the issuance and revocation of unique identifiers for activities associated with a medical cannabis cultivation license, pursuant to Article 8 (commencing with Section 19337). All medical cannabis shall be labeled with the unique identifier issued by the Department of Food and Agriculture.
(4) Prescribe standards, in consultation with the bureau, for the reporting of information as necessary related to unique identifiers, pursuant to Article 8 (commencing with Section 19337).
(f) The Department of Pesticide Regulation shall require that the application of pesticides or other pest control in connection with the indoor or outdoor cultivation of medical cannabis complies with Division 6 (commencing with Section 11401) of the Food and Agricultural Code and its implementing regulations.
(g) State cultivator license types issued by the Department of Food and Agriculture include:
(1) Type 1, or “specialty outdoor,” for outdoor cultivation using no artificial lighting of less than or equal to 5,000 square feet of total canopy size on one premises, or up to 50 mature plants on noncontiguous plots.
(2) Type 1A, or “specialty indoor,” for indoor cultivation using exclusively artificial lighting of less than or equal to 5,000 square feet of total canopy size on one premises.
(3) Type 1B, or “specialty mixed-light,” for cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the licensing authority, of less than or equal to 5,000 square feet of total canopy size on one premises.
(4) Type 2, or “small outdoor,” for outdoor cultivation using no artificial lighting between 5,001 and 10,000 square feet, inclusive, of total canopy size on one premises.
(5) Type 2A, or “small indoor,” for indoor cultivation using exclusively artificial lighting between 5,001 and 10,000 square feet, inclusive, of total canopy size on one premises.
(6) Type 2B, or “small mixed-light,” for cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the licensing authority, between 5,001 and 10,000 square feet, inclusive, of total canopy size on one premises.
(7) Type 3, or “outdoor,” for outdoor cultivation using no artificial lighting from 10,001 square feet to one acre, inclusive, of total canopy size on one premises. The Department of Food and Agriculture shall limit the number of licenses allowed of this type.
(8) Type 3A, or “indoor,” for indoor cultivation using exclusively artificial lighting between 10,001 and 22,000 square feet, inclusive, of total canopy size on one premises. The Department of Food and Agriculture shall limit the number of licenses allowed of this type.
(9) Type 3B, or “mixed-light,” for cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the licensing authority, between 10,001 and 22,000 square feet, inclusive, of total canopy size on one premises. The Department of Food and Agriculture shall limit the number of licenses allowed of this type.
(10) Type 4, or “nursery,” for cultivation of medical cannabis solely as a nursery. Type 4 licensees may transport live plants, if the licensee also holds a Type 12 transporter license issued pursuant to this chapter.

SEC. 17.

 Section 19334 of the Business and Professions Code is amended to read:

19334.
 (a) State licenses to be issued by the Department of Consumer Affairs are as follows:
(1) (A) “Dispensary,” Type 10 license as defined in this chapter. This license shall allow for delivery pursuant to Section 19340.
(B) A dispensary may be one of the following:
(i) “Storefront dispensary” for licensees who have a brick and mortar dispensary with direct physical access for the public.
(ii) “Nonstorefront dispensary” for licensees who have a brick and mortar dispensary that does not have a storefront with direct physical access for the public.
(2) “Distributor,” Type 11 license for the distribution of medical cannabis and medical cannabis products from manufacturer to dispensary. A distributor licensee shall hold a Type 12 or transporter license. Each location where product is stored for the purposes of distribution must be individually licensed. A distributor licensee shall not hold a license in a cultivation, manufacturing, dispensing, or testing license category and shall not own, or have an ownership interest in, premises licensed in those categories other than a security interest, lien, or encumbrance on property that is used by a licensee. A distributor shall be bonded and insured at a minimum level established by the licensing authority.
(3) (A) “Producing dispensary,” Type 10A for dispensers who have no more than three licensed dispensary facilities and wish to hold either a cultivation or manufacturing license or both. This license shall allow for delivery where expressly authorized by local ordinance. Each dispensary must be individually licensed.
(B) A producing dispensary may be one of the following:
(i) “Storefront producing dispensary” for licensees who have a brick and mortar producing dispensary with direct physical access for the public.
(ii) “Nonstorefront producing dispensary” for licensees who have a brick and mortar producing dispensary that does not have a storefront with direct physical access for the public.
(4) “Transport,” Type 12 license for transporters of medical cannabis or medical cannabis products between licensees. A Type 12 licensee shall be bonded and insured at a minimum level established by the licensing authority.
(b) The bureau shall establish minimum security requirements for the commercial transportation, storage, and delivery of medical cannabis and medical cannabis products.
(c) A licensed dispensary shall implement sufficient security measures to both deter and prevent unauthorized entrance into areas containing medical cannabis or medical cannabis products and theft of medical cannabis or medical cannabis products at the dispensary. These security measures shall include, but not be limited to, all of the following:
(1) Preventing individuals from remaining on the premises of the dispensary if they are not engaging in activity expressly related to the operations of the dispensary.
(2) Establishing limited access areas accessible only to authorized dispensary personnel.
(3) Storing all finished medical cannabis and medical cannabis products in a secured and locked room, safe, or vault, and in a manner as to prevent diversion, theft, and loss, except for limited amounts of cannabis used for display purposes, samples, or immediate sale.
(4) Requiring all medical cannabis and medical cannabis products used for display purposes, samples, or immediate sale to be stored out of reach of any individual who is not employed by the dispensary.
(d) A dispensary shall notify the licensing authority and the appropriate law enforcement authorities within 24 hours after discovering any of the following:
(1) Significant discrepancies identified during inventory. The level of significance shall be determined by the bureau.
(2) Diversion, theft, loss, or any criminal activity pertaining to the operation of the dispensary.
(3) Diversion, theft, loss, or any criminal activity by any agent or employee of the dispensary pertaining to the operation of the dispensary.
(4) The loss or unauthorized alteration of records related to medical cannabis or medical cannabis products, registered qualifying patients, primary caregivers, or dispensary employees or agents.
(5) Any other breach of security.

SEC. 26.SEC. 18.

 Section 19340 of the Business and Professions Code is amended to read:

19340.
 (a) Deliveries, as defined in this chapter, can only be made by a dispensary and in a city, county, or city and county that does not explicitly prohibit it by local ordinance.
(b) Upon approval of the licensing authority, a licensed dispensary that delivers medical cannabis or medical cannabis products shall comply with both of the following:
(1) The city, county, or city and county in which the licensed dispensary is located, and in which each delivery is made, do not, by ordinance, explicitly prohibit delivery.
(2) All employees of a dispensary delivering medical cannabis or medical cannabis products shall carry a copy of the dispensary’s current license authorizing those services with them during deliveries and the employee’s government-issued identification, and shall present that license and identification upon request to state and local law enforcement, employees of regulatory authorities, and other state and local agencies enforcing this chapter.
(c) A county shall have the authority to impose a tax, pursuant to Article 11 (commencing with Section 19348), on each delivery transaction completed by a licensee.
(d) During delivery, the licensee shall maintain a physical copy of the delivery request and shall make it available upon request of the licensing authority and law enforcement officers. The delivery request documentation shall comply with all applicable privacy laws and regulations.
(e) The qualified patient or primary caregiver requesting the delivery shall maintain a copy of the delivery request and shall make it available, upon request, to the licensing authority and law enforcement officers.
(f) A local jurisdiction shall not prevent carriage of medical cannabis or medical cannabis products on public roads by a licensee acting in compliance with this chapter.
(g) The bureau shall establish the following regulations regarding the delivery of medical cannabis and medical cannabis products:
(1) Employee training standards that ensure qualified patients and primary caregivers have adequate information regarding the medical cannabis or medical cannabis products that a dispensary delivers, and to provide employees with information regarding state and federal laws and regulations.
(2) Protocols to provide qualified patients and primary caregivers with information regarding laws, regulations, and local ordinances relevant to providing medical cannabis or medical cannabis products to qualified patients and primary caregivers in the local jurisdiction in which the dispensary is located and the local jurisdiction in which the qualified patients and primary caregivers are located.
(3) A system for registering and maintaining the status of all delivery personnel of dispensaries, including protocols for suspending the registrations of individuals who move out of this state, who discontinue employment at a dispensary, or who are under suspension or inspection by a dispensary or local or state agencies. This system shall be made available to local and state law enforcement, qualified patients, primary caregivers, and any other entity deemed appropriate by the bureau. Any fees associated with registration of delivery personnel shall be set by the bureau and shall not exceed the reasonable amount necessary to cover the costs to regulate the delivery personnel and maintain the system.
(4) The operating hours for delivery.
(5) A requirement that any person who delivers medical cannabis or medical cannabis products be employed by or contract with only one dispensary at a time.
(6) Minimum requirements for patient information that is stored by each delivery operation, including, but not limited to, the contact information for the patient and, if applicable, his or her primary caregiver, the physician’s recommendation, and the identification card issued pursuant to Article 2.5 (commencing with Section 11362.7) of Chapter 6 of Division 10 of the Health and Safety Code. All identifying information obtained about a qualified patient or primary caregiver shall be confidential and must be maintained and disclosed pursuant to applicable privacy laws and regulations.
(h) The bureau shall establish requirements for all dispensary employees who deliver medical cannabis or medical cannabis products, including, but not limited to, the following:
(1) Possession of a valid driver’s license issued by the Department of Motor Vehicles.
(2) Provide the bureau with a current address.
(3) Provide the bureau with necessary automobile and insurance information.
(4) Registration with the bureau.

SEC. 19.

 Section 19341 of the Business and Professions Code is amended to read:

19341.
 The State Department of Public Health shall promulgate regulations governing the licensing of manufacturers. The State Department of Public Health shall establish minimum security requirements for the storage of medical cannabis products at the manufacturing site. The State Department of Public Health shall develop standards for the manufacturing and labeling of all manufactured medical cannabis products. Licenses to be issued are as follows:
(a) “Manufacturing level 1,” for manufacturing sites that produce medical cannabis products using nonvolatile solvents.
(b) “Manufacturing level 2,” for manufacturing sites that produce medical cannabis products using volatile solvents. The State Department of Public Health shall limit the number of licenses of this type.

SEC. 20.

 Section 19344 of the Business and Professions Code is amended to read:

19344.
 (a) A testing laboratory shall issue a certificate of analysis for each lot, with supporting data, to report both of the following:
(1) Whether the chemical profile of the lot conforms to the specifications of the lot for compounds, including, but not limited to, all of the following, unless limited through regulation by the bureau:
(A) Tetrahydrocannabinol (THC).
(B) Tetrahydrocannabinolic Acid (THCA).
(C) Cannabidiol (CBD).
(D) Cannabidiolic Acid (CBDA).
(E) Terpenes required by the bureau in a regulation.
(F) Cannabigerol (CBG).
(G) Cannabinol (CBN).
(H) Any other compounds or contaminants required by the bureau.
(2) That the presence of contaminants does not exceed the levels set by the bureau. In setting the levels, the bureau shall consider the American Herbal Pharmacopoeia monograph, guidelines set by the Department of Pesticide Regulation pursuant to subdivision (b) of Section 19332, and any other relevant sources, including, but not limited to:
(A) Residual solvent or processing chemicals.
(B) Foreign material, including, but not limited to, hair, insects, or similar or related adulterant.
(C) Microbiological impurities as identified by the bureau in regulation.
(b) Residual levels of volatile organic compounds shall be below the specifications set by the bureau.
(c) The bureau shall conduct periodic audits of the results of testing laboratories to verify their accuracy.

SEC. 21.

 Section 19345 of the Business and Professions Code is amended to read:

19345.
 (a) Except as provided in this chapter, a licensed testing laboratory shall not acquire or receive medical cannabis or medical cannabis products except from a licensee in accordance with this chapter, and shall not transfer or transport medical cannabis or medical cannabis products, from the licensed premises the medical cannabis or medical cannabis products were acquired or received. All transfer or transportation shall be performed pursuant to a specified chain of custody protocol.
(b) A licensed testing laboratory may receive and test samples of medical cannabis or medical cannabis products from a qualified patient or primary caregiver only if he or she presents his or her valid recommendation for cannabis for medical purposes from a physician. A licensed testing laboratory shall not certify samples from a qualified patient or caregiver for resale or transfer to another party or licensee. All tests performed by a licensed testing laboratory for a qualified patient or caregiver shall be recorded with the name of the qualified patient or caregiver and the amount of medical cannabis or medical cannabis product received.
(c) The bureau shall develop procedures related to all of the following:
(1) Ensuring that testing of medical cannabis and medical cannabis products occurs prior to transport to dispensaries or any other business.
(2) Specifying how often licensees shall test medical cannabis and medical cannabis products.
(3) Requiring the destruction of harvested batches whose testing samples indicate noncompliance with health and safety standards required by state law, unless remedial measures can bring the medical cannabis or medical cannabis products into compliance with quality assurance standards as specified by state law.
(d) Cultivators and manufacturers shall pay all costs related to and associated with the testing of medical cannabis and medical cannabis products required by this chapter.

SEC. 22.

 Section 19350 of the Business and Professions Code is amended to read:

19350.
 Each licensing authority shall establish a scale of application, licensing, and renewal fees, based upon the cost of enforcing this chapter, as follows:
(a) Each licensing authority shall charge each licensee a licensure and renewal fee, as applicable. The licensure and renewal fee shall be calculated to cover the costs of administering this chapter. The licensure fee may vary depending upon the varying costs associated with administering the various regulatory requirements of this chapter as they relate to the nature and scope of the different licensure activities, including, but not limited to, the track and trace program required pursuant to Section 19335, but shall not exceed the reasonable regulatory costs to the licensing authority.
(b) The total fees assessed pursuant to this chapter shall be set at an amount that will fairly and proportionately generate sufficient total revenue to fully cover the total costs of administering this chapter.
(c) All license fees shall be set on a scaled basis by the licensing authority, dependent on the size of the business. License fees shall cover the costs of administering the track and trace program managed by the Department of Food and Agriculture, as identified in Article 7.5 (commencing with Section 19335).
(d) The licensing authority shall deposit all fees collected in a fee account specific to that licensing authority, to be established in the Medical Cannabis Regulation and Safety Act Fund. Moneys in the licensing authority fee accounts shall be used, upon appropriation of the Legislature, by the designated licensing authority for the administration of this chapter.
(e) The fees established by licensing authorities pursuant to this chapter shall be in addition to, and shall not limit, any fees or taxes imposed by a city, county, or city and county in which the licensee operates.

SEC. 23.

 Section 19351 of the Business and Professions Code is amended to read:

19351.
 (a) The Medical Cannabis Regulation and Safety Act Fund is hereby established within the State Treasury. Moneys in the fund shall be available upon appropriation by the Legislature. Notwithstanding Section 16305.7 of the Government Code, the fund shall include any interest and dividends earned on the moneys in the fund.
(b) (1) Funds for the establishment and support of the regulatory activities pursuant to this chapter shall be advanced as a General Fund or special fund loan, and shall be repaid by the initial proceeds from fees collected pursuant to this chapter or any rule or regulation adopted pursuant to this chapter, by January 1, 2022. Should the initial proceeds from fees not be sufficient to repay the loan, moneys from the Medical Cannabis Fines and Penalties Account shall be made available to the bureau, by appropriation of the Legislature, to repay the loan.
(2) Funds advanced pursuant to this subdivision shall be appropriated to the bureau, which shall distribute the moneys to the appropriate licensing authorities, as necessary to implement the provisions of this chapter.
(3) The Director of Finance may provide an initial operating loan from the General Fund to the Medical Cannabis Regulation and Safety Act Fund that does not exceed ten million dollars ($10,000,000).
(c) Except as otherwise provided, all moneys collected pursuant to this chapter as a result of fines or penalties imposed under this chapter shall be deposited directly into the Medical Cannabis Fines and Penalties Account, which is hereby established within the fund, and shall be available, upon appropriation by the Legislature to the bureau, for the purposes of funding the enforcement grant program pursuant to subdivision (d).
(d) (1) The bureau shall establish a grant program to allocate moneys from the Medical Cannabis Fines and Penalties Account to state and local entities for the following purposes:
(A) To assist with medical cannabis regulation and the enforcement of this chapter and other state and local laws applicable to cannabis activities.
(B) For allocation to state and local agencies and law enforcement to remedy the environmental impacts of cannabis cultivation.
(2) The costs of the grant program under this subdivision shall, upon appropriation by the Legislature, be paid for with moneys in the Medical Cannabis Fines and Penalties Account.
(3) The grant program established by this subdivision shall only be implemented after the loan specified in subdivision (b) is repaid.

SEC. 24.

 Section 19360 of the Business and Professions Code is amended to read:

19360.
 (a) A person engaging in commercial cannabis activity without a license and associated unique identifiers required by this chapter shall be subject to civil penalties of up to twice the amount of the license fee for each violation, and the department, state or local authority, or court may order the destruction of medical cannabis associated with that violation. A violator shall be responsible for the cost of the destruction of medical cannabis associated with his or her violation, in addition to any amount covered by a bond required as a condition of licensure. Each day of operation shall constitute a separate violation of this section. All civil penalties imposed and collected pursuant to this section by a licensing authority shall be deposited into the Medical Cannabis Fines and Penalties Account established pursuant to Section 19351, except as provided in subdivision (b).
(b) If an action for civil penalties is brought against a licensee pursuant to this chapter by the Attorney General on behalf of the people, the penalty collected shall be deposited into the Medical Cannabis Fines and Penalties Account. If the action is brought by a district attorney or county counsel, the penalty collected shall be paid to the treasurer of the county in which the judgment was entered. If the action is brought by a city attorney or city prosecutor, the penalty collected shall be paid to the treasurer of the city or city and county in which the judgment was entered. If the action is brought by a city attorney and is adjudicated in a superior court located in the unincorporated area or another city in the same county, the penalty shall be paid one-half to the treasurer of the city in which the complaining attorney has jurisdiction and one-half to the treasurer of the county in which the judgment is entered.
(c) Notwithstanding subdivision (a), criminal penalties shall continue to apply to an unlicensed person or entity engaging in commercial cannabis activity in violation of this chapter, including, but not limited to, those individuals covered under Section 11362.7 of the Health and Safety Code.

SEC. 25.

 Section 12029 of the Fish and Game Code is amended to read:

12029.
 (a) The Legislature finds and declares all of the following:
(1) The environmental impacts associated with cannabis cultivation have increased, and unlawful water diversions for cannabis irrigation have a detrimental effect on fish and wildlife and their habitat, which are held in trust by the state for the benefit of the people of the state.
(2) The remediation of existing cannabis cultivation sites is often complex and the permitting of these sites requires greater department staff time and personnel expenditures. The potential for cannabis cultivation sites to significantly impact the state’s fish and wildlife resources requires immediate action on the part of the department’s lake and streambed alteration permitting staff.
(b) In order to address unlawful water diversions and other violations of the Fish and Game Code associated with cannabis cultivation, the department shall establish the watershed enforcement program to facilitate the investigation, enforcement, and prosecution of these offenses.
(c) The department, in coordination with the State Water Resources Control Board and the Department of Food and Agriculture, shall establish a permanent multiagency task force to address the environmental impacts of cannabis cultivation. The multiagency task force, to the extent feasible and subject to available resources, shall expand its enforcement efforts on a statewide level to ensure the reduction of adverse impacts of cannabis cultivation on fish and wildlife and their habitats throughout the state.
(d) In order to facilitate the remediation and permitting of cannabis cultivation sites, the department may adopt regulations to enhance the fees on any entity  medical cannabis cultivation related activities  subject to Section 1602 for cannabis cultivation sites that require remediation. The fee schedule established pursuant to this subdivision shall not exceed the fee limits in Section 1609.

SEC. 36.SEC. 26.

 Section 52334 of the Food and Agricultural Code is amended to read:

52334.
 (a) Notwithstanding any other law, on and after January 1, 2015, a city, county, or district, including a charter city or county, shall not adopt or enforce an ordinance that regulates plants, crops, or seeds without the consent of the secretary. An ordinance enacted before January 1, 2015, shall be considered part of the comprehensive program of the department and shall be enforceable.
The (b)   declaration of a plant, seed, nursery stock, or crop as invasive is a power reserved for the  An ordinance that regulates cannabis or marijuana as defined in subdivision (f) of Section 19300.5 of the Business and Professions Code, or medical cannabis or medical marijuana, as defined in subdivision (ag) of Section 19300.5 of the Business and Professions Code, shall not require the consent of the  secretary.

SEC. 37.SEC. 27.

 Section 11362.765 of the Health and Safety Code is amended to read:

11362.765.
 (a) Subject to the requirements of this article, the individuals specified in subdivision (b) shall not be subject, on that sole basis, to criminal liability under Section 11357, 11358, 11359, 11360, 11366, 11366.5, or 11570. This section does not  However, nothing in this section shall  authorize the individual to smoke or otherwise consume cannabis unless otherwise authorized by this article, nor shall anything in this section authorize any individual or group to cultivate or distribute cannabis for profit. in any manner other than as set forth in this article, the Medical Cannabis Regulation and Safety Act (Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code), or as described in the Compassionate Use Act of 1996. 
(b) Subdivision (a) shall apply to all of the following:
(1) A qualified patient or a person with an identification card who transports or processes cannabis for his or her own personal medical use.
(2) A designated primary caregiver who transports, processes, administers, delivers, or gives away cannabis for medical purposes, in amounts not exceeding those established in subdivision (a) of Section 11362.77, only to the qualified patient of the primary caregiver, or to the person with an identification card who has designated the individual as a primary caregiver.
(3) An individual who provides assistance to a qualified patient or a person with an identification card, or his or her designated primary caregiver, in administering medicinal medical  cannabis to the qualified patient or person or acquiring the skills necessary to cultivate or administer cannabis for medical purposes to the qualified patient or person.
(c) A primary caregiver who receives compensation for actual expenses, including reasonable compensation incurred for services provided to an eligible qualified patient or person with an identification card to enable that person to use cannabis under this article, or for payment for out-of-pocket expenses incurred in providing those services, or both, shall not, on the sole basis of that fact, be subject to prosecution or punishment under Section 11359 or 11360.

SEC. 28.

 Section 11362.775 of the Health and Safety Code is amended to read:

11362.775.
 (a) Subject to subdivision (d), 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 cannabis for medical purposes, shall not solely on the basis of that fact be subject to state criminal sanctions under Section 11357, 11358, 11359, 11360, 11366, 11366.5, or 11570. A collective or cooperative that operates pursuant to this section may operate for profit, not for profit, or any combination thereof. A collective or cooperative that operates for profit shall only retain the protections of this section if it possesses a valid, State Board of Equalization-issued seller’s permit and a valid local license, permit, or other authorization.
(b) (1) It is unlawful for 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 in order collectively or cooperatively to cultivate cannabis for medical purposes, to submit for placement an advertisement that fails to include in the text of the advertisement the collective’s or cooperative’s valid State Board of Equalization-issued seller’s permit number.
(2) A violation of this subdivision is an infraction, punishable by a fine of five hundred dollars ($500) for the first violation and one thousand dollars ($1,000) for each subsequent violation. Actions pursuant to this section may be brought by the Attorney General in the name of the people of the state, by a district attorney, by a city attorney, or by a city prosecutor in a city or city and county having a full-time prosecutor.
(3) For purposes of this section, “advertisement” means a notice, announcement, or information in a public medium, including, but not limited to, television, Internet Web site, billboard, or printed publication, that promotes a location where medical cannabis is sold or dispensed or a service that is involved in the delivery of medical cannabis.
(c) A collective or cooperative that operates pursuant to this section and manufactures medical cannabis products shall not, solely on the basis of that fact, be subject to state criminal sanctions under Section 11379.6 if the collective or cooperative abides by all of the following requirements:
(1) Utilizes only manufacturing processes that are either solventless or employ only nonflammable, nontoxic, food grade solvents as provided in the Medical Cannabis Regulation and Safety Act (Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code) or pursuant to any regulations adopted pursuant to that act.
(2) Is in possession of a valid seller’s permit issued by the State Board of Equalization.
(3) Is in possession of a valid local license, permit, or other authorization specific to the manufacturing of medical cannabis products.
(4) For purposes of this subdivision, “manufacturing” includes compounding, converting, producing, deriving, processing, or preparing, either directly or indirectly by chemical extraction or independently by means of chemical synthesis, medical cannabis products.
(d) This section shall remain in effect only until one year after the Bureau of Medical Cannabis Regulation posts a notice on its Internet Web site that the licensing authorities have commenced issuing licenses pursuant to the Medical Cannabis Regulation and Safety Act (Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code).
(e) This section is repealed one year after the date upon which the notice is posted pursuant to subdivision (d).

SEC. 29.

 Section 11362.777 of the Health and Safety Code is amended to read:

11362.777.
 (a) The Department of Food and Agriculture shall establish a Medical Cannabis Cultivation Program to be administered by the secretary and, except as specified in subdivision (c), shall administer this section as it pertains to the commercial cultivation of medical cannabis. For purposes of this section and Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code, medical cannabis is an agricultural product.
(b) (1) A person or entity shall not cultivate medical cannabis without first obtaining both of the following:
(A) A license, permit, or other entitlement, specifically permitting cultivation pursuant to these provisions, from the city, county, or city and county in which the cultivation will occur.
(B) A state license issued by the department pursuant to this section.
(2) A person or entity shall not submit an application for a state license pursuant to this section unless that person or entity has received a license, permit, or other entitlement, specifically permitting cultivation pursuant to these provisions, from the city, county, or city and county in which the cultivation will occur.
(3) A person or entity shall not submit an application for a state license pursuant to this section if the proposed cultivation of cannabis will violate the provisions of any local ordinance or regulation, or if medical cannabis 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.
(c) (1) Except as otherwise specified in this subdivision, and without limiting any other local regulation, a city, county, or city and county, through its current or future land use regulations or ordinance, may issue or deny a permit to cultivate medical cannabis pursuant to this section. A city, county, or city and county may inspect the intended cultivation site for suitability before issuing a permit. After the city, county, or city and county has approved a permit, the applicant shall apply for a state medical cannabis cultivation license from the department. A locally issued cultivation permit shall only become active upon licensing by the department and receiving final local approval. A person shall not cultivate medical cannabis before obtaining a license, permit, or other authorization from the city, county, or city and county and a state medical cannabis cultivation license from the department.
(2) A city, county, or city and county that issues or denies conditional licenses to cultivate medical cannabis pursuant to this section shall notify the department in a manner prescribed by the secretary.
(3) A city, county, or city and county’s locally issued conditional permit requirements must be at least as stringent as the department’s state licensing requirements.
(d) (1) The secretary may prescribe, adopt, and enforce regulations relating to the implementation, administration, and enforcement of this section, including, but not limited to, applicant requirements, collections, reporting, refunds, and appeals.
(2) The secretary may prescribe, adopt, and enforce any emergency regulations as necessary to implement this section. Any emergency regulation prescribed, adopted, or enforced pursuant to this section shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and, for purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulation is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, and general welfare.
(3) The secretary may enter into a cooperative agreement with a county agricultural commissioner to carry out the provisions of this section, including, but not limited to, administration, investigations, inspections, licensing and assistance pertaining to the cultivation of medical cannabis. Compensation under the cooperative agreement shall be paid from assessments and fees collected and deposited pursuant to this section and shall provide reimbursement to the county agricultural commissioner for associated costs.
(e) (1) The department, in consultation with, but not limited to, the Bureau of Medical Cannabis Regulation, the State Water Resources Control Board, and the Department of Fish and Wildlife, shall implement a unique identification program for medical cannabis. In implementing the program, the department shall consider issues, including, but not limited to, water use and environmental impacts. In implementing the program, the department shall ensure compliance with Section 19332.2 of the Business and Professions Code.
(2) The department shall establish a program for the identification of permitted medical cannabis plants at a cultivation site during the cultivation period. The unique identifier shall be attached at the base of each plant. A unique identifier, such as, but not limited to, a zip tie, shall be issued for each medical cannabis plant.
(A) Unique identifiers will only be issued to those persons appropriately licensed by this section.
(B) Information associated with the assigned unique identifier and licensee shall be included in the trace and track program specified in Section 19335 of the Business and Professions Code.
(C) The department may charge a fee to cover the reasonable costs of issuing the unique identifier and monitoring, tracking, and inspecting each medical cannabis plant.
(D) The department may promulgate regulations to implement this section.
(3) The department shall take adequate steps to establish protections against fraudulent unique identifiers and limit illegal diversion of unique identifiers to unlicensed persons.
(f) (1) A city, county, or city and county that issues or denies licenses, permits, or other entitlements to cultivate medical cannabis pursuant to this section shall notify the department in a manner prescribed by the secretary.
(2) Unique identifiers and associated identifying information administered by a city, county, or city and county shall adhere to the requirements set by the department and be the equivalent to those administered by the department.
(g) This section does not apply to a qualified patient cultivating cannabis pursuant to Section 11362.5 if the area he or she uses to cultivate cannabis does not exceed 100 square feet and he or she cultivates cannabis for his or her personal medical use and does not sell, distribute, donate, or provide cannabis to any other person or entity. This section does not apply to a primary caregiver cultivating cannabis pursuant to Section 11362.5 if the area he or she uses to cultivate cannabis does not exceed 500 square feet and he or she cultivates cannabis exclusively for the personal medical use of no more than five specified qualified patients for whom he or she is the primary caregiver within the meaning of Section 11362.7 and does not receive remuneration for these activities, except for compensation provided in full compliance with subdivision (c) of Section 11362.765. For purposes of this section, the area used to cultivate cannabis shall be measured by the aggregate area of vegetative growth of live cannabis plants on the premises. Exemption from the requirements of this section does not limit or prevent a city, county, or city and county from exercising its police authority under Section 7 of Article XI of the California Constitution.
SEC. 30.
 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.