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AB-64 Cannabis: licensure and regulation.(2017-2018)

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Date Published: 06/27/2017 09:00 PM
AB64:v95#DOCUMENT

Amended  IN  Senate  June 27, 2017
Amended  IN  Assembly  May 30, 2017
Amended  IN  Assembly  April 05, 2017
Amended  IN  Assembly  March 28, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 64


Introduced by Assembly Members Bonta, Cooley, Jones-Sawyer, Lackey, and Wood

December 12, 2016


An act to amend Sections 19334, 26055, 26001, 26053, 26070, 26150, 26151, 26152, 26153, 26154, and 26200 26100, 26110, and 26130 of, to add Sections Section 14235.5 and 19322.5 to, and to add Article 12 (commencing with Section 19349) to Chapter 3.5 of Division 8 of, the Business and Professions Code, and to amend Section 11362.775 of the Health and Safety Code, to amend Section 34019 of the Revenue and Taxation Code, and to amend Sections 23152, 23153, and 23222 of the Vehicle Code, relating to cannabis, and making an appropriation therefor. cannabis.


LEGISLATIVE COUNSEL'S DIGEST


AB 64, as amended, Bonta. Cannabis: medical and nonmedical. licensure and regulation.
(1) Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure enacted as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances. Existing law, the Medical Cannabis Regulation and Safety Act (MCRSA), also authorizes a person who obtains both a state license under MCRSA and the relevant local license to engage in commercial medical medicinal cannabis activity pursuant to those licenses, as specified. Under MCRSA, responsibility for the state licensure and regulation of commercial medical cannabis activity is generally divided Both MCRSA and AUMA generally divide responsibility for state licensure and regulation between the Bureau of Marijuana Control (bureau) within the Department of Consumer Affairs, which serves as the lead state agency and administers provisions relating to the transportation, storage unrelated to manufacturing activities, testing, distribution, and sale of medical cannabis; agency, the Department of Food and Agriculture, which administers provisions relating to the cultivation of medical cannabis; and the State Department of Public Health, which administers provisions relating to the manufacturing of medical cannabis. Health. AUMA requires the licensing authorities to begin issuing licenses to engage in commercial adult-use cannabis activity by January 1, 2018.

This bill would specify that licensees under the MCRSA may operate for profit or not for profit.

(2)Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure enacted by the approval of Proposition 64 at the November 8, 2016, statewide general election, authorizes a person 21 years of age or older to possess and use up to 28.5 grams of marijuana and up to 8 grams of concentrated cannabis, and to possess up to 6 living marijuana plants and the marijuana produced by those plants, subject to certain restrictions, as specified. AUMA also authorizes a person who obtains a state license under AUMA to engage in commercial nonmedical marijuana activity pursuant to that license and applicable local ordinances. AUMA generally divides responsibility for the state licensure and regulation of commercial nonmedical marijuana activity between the bureau, the Department of Food and Agriculture, and the State Department of Public Health, and requires those state licensing authorities to begin issuing licenses by January 1, 2018.

Both MCRSA and AUMA require state licensure to engage in retail sale or delivery. Under MCRSA, persons may engage in those activities with respect to medical cannabis with a Type 10, or “dispensary,” or Type 10A, or “producing dispensary,” license. Under AUMA, persons may engage in those activities with respect to nonmedical marijuana with a Type 10, or “retailer,” or Type 12, or “microbusiness,” license.

This bill would specify that a dispensary, producing dispensary, or retailer license may be issued for storefront locations with premises with direct physical access for the public or nonstorefront locations with premises without direct physical access for the public. The bill would define “premises” for these purposes to mean a “brick and mortar” facility.

(3)AUMA authorizes the Department of Consumer Affairs to issue retailer licenses, distributor licenses, and microbusiness licenses. AUMA authorizes a microbusiness licensee to cultivate nonmedical marijuana on an area less than 10,000 square feet and to act as a distributor, a Level 1 manufacturer, and a retailer, provided the licensee complies with all requirements imposed by AUMA on licensed cultivators, distributors, Level 1 manufacturers, and retailers to the extent the licensee engages in such activities.

This bill would specify that a microbusiness license does not authorize the distribution of nonmedical marijuana or marijuana products except those produced at the licensed cultivation or manufacturing sites of the microbusiness licensee and sold at the licensed retail establishments under the exclusive control of the microbusiness licensee.

(4)AUMA prescribes various restrictions and requirements on the advertising or marketing of nonmedical marijuana and marijuana products applicable to commercial nonmedical marijuana licensees under that act. These restrictions and requirements include, among other things, a prohibition on advertising or marketing on a billboard or similar advertising device located on an interstate highway or state highway that crosses the border of any other state.

This bill would expand that prohibition to apply to advertising or marketing on all interstate highways or state highways and would apply those restrictions and requirements, with this expanded prohibition, to entities regardless of licensure under AUMA, with certain exceptions. The bill would place similar restrictions and requirements on the advertising or marketing of medical cannabis and medical cannabis products.

(5)AUMA states that its licensure and regulation provisions do not supersede or limit the authority of a local jurisdiction to adopt and enforce local ordinances to regulate licensed businesses, except as provided. AUMA provides that an applicant need not provide documentation that the applicant has obtained a license, permit, or other authorization to operate from the local jurisdiction in which the applicant seeks to operate. AUMA prohibits state licensing authorities from approving an application for a state license if approval of the state license would violate the provisions of a local ordinance or regulation adopted to regulate licensed nonmedical marijuana businesses.

The bill would require the determination of a state licensing authority that an applicant for a state license is not in compliance with a local nonmedical marijuana business ordinance or regulation to be based on a written or electronic notification provided to the licensing authority by the local jurisdiction in response to an inquiry from the licensing authority. The bill would require the licensing authority to deem the applicant to be in compliance with all local nonmedical marijuana business ordinances or regulations if the local jurisdiction does not provide a written or electronic notification, as specified, within 90 business days of receiving an inquiry from a state licensing authority.

Senate Bill 94 of the 2017–18 Regular Session (SB 94), effective immediately upon enactment, would consolidate the provisions providing for the licensure and regulation of commercial medicinal cannabis activity and commercial adult-use cannabis activity under a single regulatory scheme, which would be known as the Medicinal and Adult-Use Regulation and Safety Act (MAUCRSA), by repealing MCRSA, incorporating certain provisions of MCRSA into the licensing provisions of AUMA, and making a variety of conforming and related changes.
AUMA defines “delivery” for the above-described purposes as meaning the commercial transfer of adult-use cannabis or cannabis products to a customer and including the use by a retailer of any technology platform owned and controlled by the retailer, or independently licensed, that enables customers to arrange for or facilitate the commercial transfer by a licensed retailer of adult-use cannabis or cannabis products. Under MAUCRSA, if SB 94 is enacted, “delivery” would no longer include the use by a retailer of any technology platform independently licensed.
This bill would expand MAUCRSA’s definition of “delivery” to include the use by a retailer of any technology platform owned, leased, or controlled by the retailer.
(2) MCRSA and AUMA prohibit, and if SB 94 is enacted, MAUCRSA would prohibit, a person licensed to test cannabis or cannabis products from obtaining licensure for any other commercial cannabis activity. Although MCRSA also prohibits testing licensees from owning or having an ownership interest in any entity or premises licensed under a different category pursuant to MCRSA, and although AUMA also prohibits testing licensees from owning or having an ownership interest in a non-testing facility, SB 94 would repeal these additional prohibitions and instead prohibit a testing licensee from employing an individual who is also employed by any other licensee that does not hold a state testing laboratory license. SB 94 would condition a person’s eligibility for more than one license under MAUCRSA upon a requirement that the licensed premises be separate and distinct.
This bill, if SB 94 is enacted, would repeal that separate and distinct premises requirement. The bill would also prohibit a testing licensee under MAUCRSA from owning, or having an ownership interest in, a premises licensed under MAUCRSA for any activity except testing.
(3) Existing law makes it an infraction punishable by a fine not exceeding $100 for a person to possess not more than one ounce of cannabis while driving a motor vehicle, as specified, unless otherwise authorized by law. SB 94, effective immediately upon enactment, would repeal that provision and instead make it an infraction punishable by a fine not exceeding $100 for a person to possess a receptacle containing cannabis or cannabis product that has been opened, or a seal broken, or to possess loose cannabis flower not in a container, while driving a motor vehicle, with certain exceptions.
This bill would require a retailer, microbusiness, or nonprofit licensed under MAUCRSA to display a sign educating its customers on California’s laws on transporting cannabis or cannabis products in a vehicle, in accordance with the above-described provisions.

(6)

(4) Existing law, the Model State Trademark Law, provides for the registration of trademarks and service marks with the Secretary of State and requires the classification of goods and services for those purposes to conform to the classifications adopted by the United States Patent and Trademark Office.
This bill, for purposes of marks for which a certificate of registration is issued on or after January 1, 2018, would, notwithstanding those provisions, authorize the use of specified classifications for marks related to medical cannabis and nonmedical cannabis cannabis, including medicinal cannabis, goods and services that are lawfully in commerce under state law in the State of California.

(7)AUMA, commencing January 1, 2018, imposes an excise tax on the purchase of marijuana and marijuana products, including medical cannabis and medical cannabis products, and a separate cultivation tax on all harvested marijuana, including medical cannabis, as specified, and requires revenues from those taxes to be deposited into the California Marijuana Tax Fund, which is continuously appropriated for specified purposes pursuant to a specified schedule. Under AUMA, this schedule includes an annual allocation to the Department of the California Highway Patrol beginning with the 2018–19 fiscal year until the 2022–23 fiscal year, for the purposes of establishing and adopting protocols to determine whether a driver is operating a vehicle while impaired, among other purposes. This schedule also includes separate annual allocations to the Department of the California Highway Patrol and the Board of State and Community Corrections, beginning with the 2018–19 fiscal year, to fund grants to qualified nonprofit organizations and local governments for education, prevention, and enforcement of laws related to driving under the influence of alcohol and other drugs, among other purposes, and to fund grants to local governments to assist with local programs addressing public health and safety associated with the implementation of AUMA, respectively.

This bill would amend AUMA by modifying that schedule to require the disbursement of funds, prior to certain other disbursements, to the Department of the California Highway Patrol and the Board of State and Community Corrections for reasonable costs incurred managing the administration of those grants, would advance $3,000,000 as a loan from the General Fund to the Department of the California Highway Patrol for use in the 2017–18 fiscal year for the purposes for which allocations to the Department of the California Highway Patrol are required until the 2022–23 fiscal year, as described above, and would require that loan to be repaid from specified amounts disbursed from the California Marijuana Tax Fund. By modifying the schedule of disbursements and advancing a loan, this bill would make an appropriation.

(8)Existing law makes it a crime for a person who is under the influence of any drug, or the combined influence of alcohol and any drug, to drive a vehicle. Existing law also makes it a crime for a person who is under the influence of any drug, or the combined influence of alcohol and any drug, to drive a vehicle and concurrently do any act forbidden by law, or neglect any duty imposed by law in driving the vehicle, when the act or neglect proximately causes bodily injury to a person other than the driver.

This bill would recast these provisions without substantive change to provide for separate offenses for a person who is under the influence of marijuana or the combined influence of alcohol and marijuana and a person who is under the influence of a drug other marijuana or the combined influence of alcohol and a drug other than marijuana, as specified.

(9)Existing law makes it an infraction punishable by a fine not exceeding $100 for a person to possess not more than one ounce of marijuana while driving a motor vehicle, as specified, unless otherwise authorized by law.

This bill would make it an infraction punishable by a fine not exceeding $100 for a person to possess marijuana while driving a motor vehicle, as specified, unless the marijuana is stored in the vehicle as provided or the person is a licensee under MCRSA or AUMA acting in accordance with applicable regulations.

By creating a new crime, this bill would impose a state-mandated local program.

(10)

(5) Existing law exempts qualified medical marijuana medicinal cannabis patients with valid identification cards, the designated primary caregivers of those patients, and persons with identification cards who associate within the State of California in order, collectively or cooperatively, to cultivate cannabis for medical medicinal purposes from specified criminal liability, including possession, cultivation, and transport of cannabis until one year after the bureau posts a notice on its Internet Web site that licenses for medical commercial cannabis activity have begun being issued.
This bill would authorize these collectives and cooperatives to operate for profit or not for profit. The bill would limit the protection for collectives and collaboratives operating for profit to those collectives and collaboratives that possess a valid seller’s permit from the State Board of Equalization and a valid local license, permit, or other authorization.

(11)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(12)

(6) AUMA authorizes the Legislature to amend its provisions by a 2/3 vote of each house if the amendment furthers its purposes and intent.
This bill would state that the bill furthers the purposes and intent of AUMA for specified reasons.
Vote: 2/3   Appropriation: YESNO   Fiscal Committee: YES   Local Program: YESNO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares all of the following:
(a) In 1996, California became the first state in the nation to allow the use of medical medicinal cannabis after voters approved Proposition 215, the California Compassionate Use Act. In 2003, California enacted Senate Bill 420, the Medical Marijuana Program Act, which allowed the medical medicinal cannabis industry to organize as collectives and cooperatives, and provided limited protections from prosecution. In 2015, California enacted the Medical Cannabis Regulation and Safety Act (MCRSA), by passing Assembly Bill 266 (Bonta, Cooley, Jones-Sawyer, Lackey, and Wood), Assembly Bill 243 (Wood), and Senate Bill 643 (McGuire). The Medical Cannabis Regulation and Safety Act was the first proactive regulatory framework for medical medicinal cannabis in the state’s history. The MCRSA was revised in 2016 with the passage of Senate Bill 837 and Assembly Bill 2516, which made changes to implement the act and create a new cottage cultivation license.
(b) In 2016, two decades after the approval of Proposition 215, California voters approved Proposition 64, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA). The regulatory system contained within AUMA was modeled after the MCRSA, as approved by the Legislature in 2015, but contained policy differences and did not reflect legislative amendments made to the MCRSA prior to AUMA’s approval. Both acts require state licenses to be issued by the Department of Consumer Affairs, the Department of Food and Agriculture, and the State Department of Public Health, and both require compliance with local ordinances regulating commercial cannabis activity.
(c) AUMA directs the state to begin issuing licenses to businesses in the adult use cannabis industry by January 1, 2018, despite having only been approved by the voters on November 8, 2016. This is an aggressive timeline for implementation given that it leaves state licensing authorities with less than 14 months to engage in the stakeholder process, determine how to regulate the adult use adult-use cannabis industry and to what extent these regulations should differ from those they develop for the medical medicinal cannabis industry, and begin issuing multiple types of licenses under AUMA and the MCRSA, two systems with significant policy differences.
(d) The Blue Ribbon Commission report published on July 22, 2015, highlighted the benefits and drawbacks of a unitary, reconciled system for regulating medical and adult use medicinal and adult-use cannabis, suggesting that under such a system regulated businesses can reach the entire market of both adult use and medical adult-use and medicinal consumers under one set of licenses, which would help reduce the costs of compliance with regulations and enable the businesses to remain competitive with the illicit market.
(e) Robust standards for the cultivation, manufacturing, testing, distribution, and transportation of cannabis are required under both the MCRSA and AUMA and should be uniform in order to protect communities, the environment, public safety, and patients, while easing the transition for business.

(f)Both the MCRSA and AUMA place local control at the core of their regulatory structures, reflecting the diversity of opinions surrounding medical and adult use cannabis in cities throughout California. As such, the regulatory options at the state level should reflect that diversity by providing for medical dispensaries, adult use dispensaries, and nonstorefront dispensaries.

(f) Senate Bill 94 reconciled the Medical Cannabis Regulation and Safety Act and the Control, Regulate and Tax Adult Use of Marijuana Act and provided uniform standards for both medicinal and adult-use cannabis activity.
(g) AUMA provides for amendment by the Legislature when consistent with and furthering the intent and text of the initiative. Creating a viable regulatory structure for both medical and adult use, which this act does, is core to and furthers that intent.
(h) It is the intent of the Legislature that this act reconcile continue the reconciliation of the Medical Cannabis Regulation and Safety Act and the Control, Regulate and Tax Adult Use of Marijuana Act in order to protect public safety, communities, patients, consumers, and the environment.

SEC. 2.

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

14235.5.
 (a) Notwithstanding Section 14235, for purposes of marks for which a certificate of registration is issued on or after January 1, 2018, the following classifications may be used for marks related to medical cannabis and nonmedical cannabis cannabis, including medicinal cannabis, goods and services that are lawfully in commerce under state law in the State of California:
(1) 500 for goods that are medical cannabis, medical cannabis products, nonmedical cannabis, or nonmedical cannabis products. cannabis or cannabis products, including medicinal cannabis or medicinal cannabis products.
(2) 501 for services related to medical cannabis, medical cannabis products, nonmedical cannabis, or nonmedical cannabis products. cannabis or cannabis products, including medicinal cannabis or medicinal cannabis products.
(b) For purposes of this section, the following terms have the following meanings:

(1)“Medical cannabis” and “medical cannabis products” have the meanings provided in Section 19300.5.

(2)“Nonmedical cannabis” and “nonmedical section, “cannabis,” “cannabis products,” medicinal cannabis,” and “medicinal cannabis products” have the meanings provided for “marijuana” and “marijuana products,” respectively, in Section 26001.

SEC. 3.Section 19322.5 is added to the Business and Professions Code, to read:
19322.5.

A licensee may operate for profit or not for profit.

SEC. 4.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 either of the following:

(i)“Storefront dispensary” for licensees that have a premises, meaning a “brick and mortar” facility, with direct physical access for the public.

(ii)“Nonstorefront dispensary” for licensees that have a premises, meaning a “brick and mortar” facility, 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 either of the following:

(i)“Storefront producing dispensary” for licensees that have a premises, meaning a “brick and mortar” facility, with direct physical access for the public.

(ii)“Nonstorefront producing dispensary” for licensees that have a premises, meaning a “brick and mortar” facility, 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)The State Department of Public Health shall establish minimum security requirements for the storage of medical cannabis products at the manufacturing site.

(d)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.

(e)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. 5.Article 12 (commencing with Section 19349) is added to Chapter 3.5 of Division 8 of the Business and Professions Code, to read:
12.Advertising and Marketing Restrictions
19349.

For purposes of this article:

(a)“Advertise” means the publication or dissemination of an advertisement.

(b)“Advertisement” includes any written or verbal statement, illustration, or depiction that is calculated to induce sales of medical cannabis or medical cannabis products, including any written, printed, graphic, or other material, billboard, sign, or other outdoor display, public transit card, other periodical literature, publication, or in a radio or television broadcast, or in any other media; except that “advertisement” shall not include either of the following:

(1)Any label affixed to any medical cannabis or medical cannabis products, or any individual covering, carton, or other wrapper of that container that constitutes a part of the labeling under provisions of this chapter.

(2)Any editorial or other reading material, such as a news release, in any periodical or publication or newspaper for the publication of which no money or valuable consideration is paid or promised, directly or indirectly, by any licensee, and that is not written by or at the direction of the licensee.

(c)“Advertising sign” is any sign, poster, display, billboard, or any other stationary or permanently affixed advertisement promoting the sale of medical cannabis or medical cannabis products that are not cultivated, manufactured, distributed, or sold on the same lot.

(d)“Entity” means either of the following:

(1)Licensee.

(2)Business that is not a licensee and is not referenced in Section 1070 of the Evidence Code.

(e)“Market” or “Marketing” means any act or process of promoting or selling medical cannabis or medical cannabis products, including, but not limited to, sponsorship of sporting events, point-of-sale advertising, and development of products specifically designed to appeal to certain demographics.

19349.1.

(a)All advertisements and marketing shall accurately and legibly identify the entity responsible for its content.

(b)Any advertisements or marketing placed in broadcast, cable, radio, print, and digital communications shall be displayed only where at least 71.6 percent of the audience is reasonably expected to be 21 years of age or older, as determined by reliable, up-to-date audience composition data.

(c)Any advertisements or marketing involving direct, individualized communication or dialogue shall utilize a method of age affirmation to verify that the recipient is 21 years of age or older prior to engaging in that communication or dialogue. For purposes of this section, that method of age affirmation may include user confirmation, birth date disclosure, or other similar registration method.

(d)All advertising shall be truthful and appropriately substantiated.

19349.2.

An entity shall not do any of the following:

(a)Advertise or market in a manner that is false or untrue in any material particular, or that, irrespective of falsity, directly, or by ambiguity, omission, or inference, or by the addition of irrelevant, scientific, or technical matter, tends to create a misleading impression.

(b)Publish or disseminate advertisements or marketing containing any statement concerning a brand or product that is inconsistent with any statement on the labeling thereof.

(c)Publish or disseminate advertisements or marketing containing any statement, design, device, or representation that tends to create the impression that the medical cannabis originated in a particular place or region, unless the label of the advertised product bears an appellation of origin, and that appellation of origin appears in the advertisement.

(d)Advertise or market on a billboard or similar advertising device located on an interstate highway or state highway.

(e)Advertise or market medical cannabis or medical cannabis products in a manner intended to encourage persons under the age of 21 years to consume medical cannabis or medical cannabis products.

(f)Publish or disseminate advertisements or marketing containing symbols, language, music, gestures, cartoon characters, or other content elements known to appeal primarily to minors.

(g)Advertise or market medical cannabis or medical cannabis products on an advertising sign within 1,000 feet of a day care center, school providing instruction in kindergarten or any grades 1 through 12, playground, or youth center.

19349.3.

An entity shall not give away any amount of medical cannabis or medical cannabis products, or any medical cannabis accessories, as part of a business promotion or other commercial activity.

19349.4.

An entity shall not publish or disseminate advertisements or marketing containing any statement that is untrue in any particular manner or tends to create a misleading impression as to the effects of medical cannabis consumption.

19349.5.

(a)Subdivision (g) of Section 19349.2 shall not apply to the placement of advertising signs inside a licensed premises and that are not visible by normal unaided vision from a public place, provided that those advertising signs do not advertise medical cannabis or medical cannabis products in a manner intended to encourage persons under the age of 21 years to consume medical cannabis or medical cannabis products.

(b)This article does not apply to any noncommercial speech.

SEC. 6.Section 26055 of the Business and Professions Code is amended to read:
26055.

(a)Licensing authorities may issue state licenses only to qualified applicants.

(b)Revocation of a state license issued under this division shall terminate the ability of the licensee to operate within California until the licensing authority reinstates or reissues the state license.

(c)Separate licenses shall be issued for each of the premises of any licensee having more than one location, except as otherwise authorized by law or regulation.

(d)After issuance or transfer of a license, a licensee shall not change or alter the premises in a manner which materially or substantially alters the premises, the usage of the premises, or the mode or character of business operation conducted from the premises, from the plan contained in the diagram on file with the application, unless and until prior written assent of the licensing authority or bureau has been obtained. For purposes of this section, material or substantial physical changes of the premises, or in the usage of the premises, shall include, but not be limited to, a substantial increase or decrease in the total area of the licensed premises previously diagrammed, or any other physical modification resulting in substantial change in the mode or character of business operation.

(e)(1)Licensing authorities shall not approve an application for a state license under this division if approval of the state license will violate the provisions of any local ordinance or regulation adopted in accordance with Section 26200. The determination of the licensing authority that an applicant for a state license is not in compliance with any local ordinance or regulation adopted in accordance with Section 26200 shall be based on a written or electronic notification provided to the licensing authority by the local jurisdiction in response to an inquiry from the licensing authority.

(2)If the local jurisdiction does not provide a written or electronic notification of compliance or noncompliance with applicable local ordinances and regulations, and does not provide notification indicating that the completion of the local permitting process is still pending, within 90 business days of receiving an inquiry from a licensing authority, the licensing authority shall deem the applicant to be in compliance with all local ordinances and regulations adopted in accordance with Section 26200. This paragraph does not preclude a local jurisdiction from enforcing applicable local ordinances and regulations with respect to the applicant.

SEC. 7.Section 26070 of the Business and Professions Code is amended to read:
26070.

Retailers and Distributors.

(a)State licenses to be issued by the Department of Consumer Affairs are as follows:

(1)(A)“Retailer,” for the retail sale and delivery of marijuana or marijuana products to customers.

(B)A retailer may be either of the following:

(i)“Storefront retailer” for licensees that have a premises, meaning a “brick and mortar” facility, with direct physical access for the public.

(ii)“Nonstorefront retailer” for licensees that have a premises, meaning a “brick and mortar” facility, that does not have a storefront with direct physical access for the public.

(2)“Distributor,” for the distribution of marijuana and marijuana products. A distributor licensee shall be bonded and insured at a minimum level established by the licensing authority.

(3)“Microbusiness,” for the cultivation of marijuana on an area less than 10,000 square feet and to act as a licensed distributor, Level 1 manufacturer, and retailer under this division, provided such licensee complies with all requirements imposed by this division on licensed cultivators, distributors, Level 1 manufacturers, and retailers to the extent the licensee engages in such activities. Microbusiness licenses that authorize cultivation of marijuana shall include conditions requested by the Department of Fish and Wildlife and the State Water Resources Control Board to ensure that individual and cumulative effects of water diversion and discharge associated with cultivation do not affect the instream flows needed for fish spawning, migration, and rearing, and the flow needed to maintain flow variability, and otherwise protect fish, wildlife, fish and wildlife habitat, and water quality. A microbusiness license does not authorize the distribution of marijuana or marijuana products except those produced at the licensed cultivation or manufacturing sites of the microbusiness licensee and sold at the licensed retail establishments under the exclusive control of the microbusiness licensee.

(b)The bureau shall establish minimum security and transportation safety requirements for the commercial distribution and delivery of marijuana and marijuana products. The transportation safety standards established by the bureau shall include, but not be limited to, minimum standards governing the types of vehicles in which marijuana and marijuana products may be distributed and delivered and minimum qualifications for persons eligible to operate such vehicles.

(c)Licensed retailers and microbusinesses, and licensed nonprofits under Section 26070.5, shall implement security measures reasonably designed to prevent unauthorized entrance into areas containing marijuana or marijuana products and theft of marijuana or marijuana products from the premises. These security measures shall include, but not be limited to, all of the following:

(1)Prohibiting individuals from remaining on the licensee’s premises if they are not engaging in activity expressly related to the operations of the dispensary.

(2)Establishing limited access areas accessible only to authorized personnel.

(3)Other than limited amounts of marijuana used for display purposes, samples, or immediate sale, storing all finished marijuana and marijuana products in a secured and locked room, safe, or vault, and in a manner reasonably designed to prevent diversion, theft, and loss.

SEC. 8.Section 26150 of the Business and Professions Code is amended to read:
26150.

For purposes of this chapter:

(a)“Advertise” means the publication or dissemination of an advertisement.

(b)“Advertisement” includes any written or verbal statement, illustration, or depiction which is calculated to induce sales of marijuana or marijuana products, including any written, printed, graphic, or other material, billboard, sign, or other outdoor display, public transit card, other periodical literature, publication, or in a radio or television broadcast, or in any other media; except that such term shall not include:

(1)Any label affixed to any marijuana or marijuana products, or any individual covering, carton, or other wrapper of such container that constitutes a part of the labeling under provisions of this division.

(2)Any editorial or other reading material (e.g., news release) in any periodical or publication or newspaper for the publication of which no money or valuable consideration is paid or promised, directly or indirectly, by any licensee, and which is not written by or at the direction of the licensee.

(c)“Advertising sign” is any sign, poster, display, billboard, or any other stationary or permanently affixed advertisement promoting the sale of marijuana or marijuana products which are not cultivated, manufactured, distributed, or sold on the same lot.

(d)“Entity” means either of the following:

(1)Licensee.

(2)Business that is not a licensee and is not referenced in Section 1070 of the Evidence Code.

(e)“Health-related statement” means any statement related to health, and includes statements of a curative or therapeutic nature that, expressly or by implication, suggest a relationship between the consumption of marijuana or marijuana products and health benefits, or effects on health.

(f)“Market” or “Marketing” means any act or process of promoting or selling marijuana or marijuana products, including, but not limited to, sponsorship of sporting events, point-of-sale advertising, and development of products specifically designed to appeal to certain demographics.

SEC. 9.Section 26151 of the Business and Professions Code is amended to read:
26151.

(a)All advertisements and marketing shall accurately and legibly identify the entity responsible for its content.

(b)Any advertising or marketing placed in broadcast, cable, radio, print, and digital communications shall only be displayed where at least 71.6 percent of the audience is reasonably expected to be 21 years of age or older, as determined by reliable, up-to-date audience composition data.

(c)Any advertising or marketing involving direct, individualized communication or dialogue shall utilize a method of age affirmation to verify that the recipient is 21 years of age or older prior to engaging in such communication or dialogue. For purposes of this section, such method of age affirmation may include user confirmation, birth date disclosure, or other similar registration method.

(d)All advertising shall be truthful and appropriately substantiated.

SEC. 10.Section 26152 of the Business and Professions Code is amended to read:
26152.

No entity shall:

(a)Advertise or market in a manner that is false or untrue in any material particular, or that, irrespective of falsity, directly, or by ambiguity, omission, or inference, or by the addition of irrelevant, scientific, or technical matter, tends to create a misleading impression.

(b)Publish or disseminate advertising or marketing containing any statement concerning a brand or product that is inconsistent with any statement on the labeling thereof.

(c)Publish or disseminate advertising or marketing containing any statement, design, device, or representation which tends to create the impression that the marijuana originated in a particular place or region, unless the label of the advertised product bears an appellation of origin, and such appellation of origin appears in the advertisement.

(d)Advertise or market on a billboard or similar advertising device located on an interstate highway or state highway.

(e)Advertise or market marijuana or marijuana products in a manner intended to encourage persons under 21 years of age to consume marijuana or marijuana products.

(f)Publish or disseminate advertising or marketing containing symbols, language, music, gestures, cartoon characters, or other content elements known to appeal primarily to persons below the legal age of consumption.

(g)Advertise or market marijuana or marijuana products on an advertising sign within 1,000 feet of a day care center, school providing instruction in kindergarten or any grades 1 through 12, playground, or youth center.

SEC. 11.Section 26153 of the Business and Professions Code is amended to read:
26153.

An entity shall not gift any amount of marijuana or marijuana products, or any marijuana accessories, as part of a business promotion or other commercial activity.

SEC. 12.Section 26154 of the Business and Professions Code is amended to read:
26154.

An entity shall not publish or disseminate advertising or marketing containing any health-related statement that is untrue in any particular manner or tends to create a misleading impression as to the effects of marijuana consumption on the health of an individual.

SEC. 13.Section 26200 of the Business and Professions Code is amended to read:
26200.

(a)This division, except as provided by Sections 26054, 26080, and 26090, does not supersede or limit the authority of a local jurisdiction to adopt and enforce local ordinances to regulate businesses licensed under this division, including, but not limited to, local zoning and land use requirements, business license requirements, and requirements related to reducing exposure to secondhand smoke, or to completely prohibit the establishment or operation of one or more types of businesses licensed under this division within the local jurisdiction.

(b)This division does not require a licensing authority to undertake local law enforcement responsibilities, enforce local zoning requirements, or enforce local licensing requirements.

(c)A local jurisdiction shall notify the bureau upon revocation of any local license, permit, or authorization for a licensee to engage in commercial marijuana activity within the local jurisdiction. Within 10 days of notification, the bureau shall inform the relevant licensing authorities. Within 10 days of being so informed by the bureau, the relevant licensing authorities shall commence proceedings under Chapter 3 (commencing with Section 26030) to determine whether a license issued to the licensee should be suspended or revoked.

(d)Notwithstanding paragraph (1) of subdivision (a) of Section 11362.3 of the Health and Safety Code, a local jurisdiction may allow for the smoking, vaporizing, and ingesting of marijuana or marijuana products on the premises of a retailer or microbusiness licensed under this division if all of the following apply:

(1)Access to the area where marijuana consumption is allowed is restricted to persons 21 years of age and older.

(2)Marijuana consumption is not visible from any public place or nonage-restricted area.

(3)Sale or consumption of alcohol or tobacco is not allowed on the premises.

SEC. 14.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 or not for profit. A collective or cooperative that operates for profit shall retain the protections of this section only if it possesses a valid seller’s permit from the State Board of Equalization and a valid local license, permit, or other authorization.

(b)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)The collective or cooperative does either or both of the following:

(A)Utilizes only manufacturing processes that are either solventless or that employ only nonflammable, nontoxic solvents that are generally recognized as safe pursuant to the federal Food, Drug, and Cosmetic Act (21 U.S.C. Sec. 301 et seq.).

(B)Utilizes only manufacturing processes that use solvents exclusively within a closed-loop system that meets all of the following requirements:

(i)The system uses only solvents that are generally recognized as safe pursuant to the federal Food, Drug, and Cosmetic Act (21 U.S.C. Sec. 301 et seq.).

(ii)The system is designed to recapture and contain solvents during the manufacturing process, and otherwise prevent the off-gassing of solvents into the ambient atmosphere to mitigate the risks of ignition and explosion during the manufacturing process.

(iii)A licensed engineer certifies that the system was commercially manufactured, safe for its intended use, and built to codes of recognized and generally accepted good engineering practices, including, but not limited to, the American Society of Mechanical Engineers (ASME), the American National Standards Institute (ANSI), Underwriters Laboratories (UL), the American Society for Testing and Materials (ASTM), or OSHA Nationally Recognized Testing Laboratories (NRTLs).

(iv)The system has a certification document that contains the signature and stamp of a professional engineer and the serial number of the extraction unit being certified.

(2)The collective or cooperative receives and maintains approval from the local fire official for the closed-loop system, other equipment, the extraction operation, and the facility.

(3)The collective or cooperative meets required fire, safety, and building code requirements in one or more of the following:

(A)The California Fire Code.

(B)The National Fire Protection Association (NFPA) standards.

(C)International Building Code (IBC).

(D)The International Fire Code (IFC).

(E)Other applicable standards, including complying with all applicable fire, safety, and building codes in processing, handling, and storage of solvents or gasses.

(4)The collective or cooperative is in possession of a valid seller’s permit issued by the State Board of Equalization.

(5)The collective or cooperative is in possession of a valid local license, permit, or other authorization specific to the manufacturing of medical cannabis products, and in compliance with any additional conditions imposed by the city or county issuing the local license, permit, or other authorization.

(c)For purposes of this section, “manufacturing” means 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 Marijuana Control 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. 15.Section 34019 of the Revenue and Taxation Code is amended to read:
34019.

(a)Beginning with the 2017–18 fiscal year, the Department of Finance shall estimate revenues to be received pursuant to Sections 34011 and 34012 and provide those estimates to the Controller no later than June 15 of each year. The Controller shall use these estimates when disbursing funds pursuant to this section. Before any funds are disbursed pursuant to subdivisions (b), (c), (d), and (e), the Controller shall disburse from the Tax Fund to the appropriate account, without regard to fiscal year, the following:

(1)Reasonable costs incurred by the board for administering and collecting the taxes imposed by this part; provided, however, those costs shall not exceed 4 percent of tax revenues received.

(2)Reasonable costs incurred by the bureau, the Department of Consumer Affairs, the Department of Food and Agriculture, and the State Department of Public Health for implementing, administering, and enforcing Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code and Division 10 (commencing with Section 26000) of the Business and Professions Code to the extent those costs are not reimbursed pursuant to Section 26180 of the Business and Professions Code or pursuant to Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code. Disbursements from the Tax Fund may be made, until June 30, 2023, for the reasonable costs identified in this paragraph.

(3)Reasonable costs incurred by the Department of Fish and Wildlife, the State Water Resources Control Board, and the Department of Pesticide Regulation for carrying out their respective duties under Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code or Division 10 (commencing with Section 26000) of the Business and Professions Code to the extent those costs are not otherwise reimbursed.

(4)Reasonable costs incurred by the Controller for performing duties imposed by the Control, Regulate and Tax Adult Use of Marijuana Act, including the audit required by Section 34020.

(5)Reasonable costs incurred by the State Auditor for conducting the performance audit pursuant to Section 26191 of the Business and Professions Code.

(6)Reasonable costs incurred by the Legislative Analyst’s Office for performing duties imposed by Section 34017.

(7)Reasonable costs incurred by the Department of the California Highway Patrol and the Board of State and Community Corrections for managing grant administration pursuant to paragraph (3) of subdivision (f).

(8)Sufficient funds to reimburse the Division of Labor Standards Enforcement and the Division of Occupational Safety and Health within the Department of Industrial Relations and the Employment Development Department for the costs of applying and enforcing state labor laws to licensees under Chapter 3.5 (commencing with Section 19300) of Division 8 of the Business and Professions Code and Division 10 (commencing with Section 26000) of the Business and Professions Code.

(b)The Controller shall next disburse the sum of ten million dollars ($10,000,000) to a public university or universities in California annually beginning with 2018–19 fiscal year until the 2028–29 fiscal year to research and evaluate the implementation and effect of the Control, Regulate and Tax Adult Use of Marijuana Act, and shall, if appropriate, make recommendations to the Legislature and Governor regarding possible amendments to the Control, Regulate and Tax Adult Use of Marijuana Act. The recipients of these funds shall publish reports on their findings at a minimum of every two years and shall make the reports available to the public. The bureau shall select the universities to be funded. The research funded pursuant to this subdivision shall include, but not necessarily be limited to, all of the following:

(1)Impacts on public health, including health costs associated with marijuana use, as well as whether marijuana use is associated with an increase or decrease in use of alcohol or other drugs.

(2)The impact of treatment for maladaptive marijuana use and the effectiveness of different treatment programs.

(3)Public safety issues related to marijuana use, including studying the effectiveness of the packaging and labeling requirements and advertising and marketing restrictions contained in the act at preventing underage access to and use of marijuana and marijuana products, and studying the health-related effects among users of varying potency levels of marijuana and marijuana products.

(4)Marijuana use rates, maladaptive use rates for adults and youth, and diagnosis rates of marijuana-related substance use disorders.

(5)Marijuana market prices, illicit market prices, tax structures and rates, including an evaluation of how to best tax marijuana based on potency, and the structure and function of licensed marijuana businesses.

(6)Whether additional protections are needed to prevent unlawful monopolies or anti-competitive behavior from occurring in the nonmedical marijuana industry and, if so, recommendations as to the most effective measures for preventing such behavior.

(7)The economic impacts in the private and public sectors, including, but not necessarily limited to, job creation, workplace safety, revenues, taxes generated for state and local budgets, and criminal justice impacts, including, but not necessarily limited to, impacts on law enforcement and public resources, short and long term consequences of involvement in the criminal justice system, and state and local government agency administrative costs and revenue.

(8)Whether the regulatory agencies tasked with implementing and enforcing the Control, Regulate and Tax Adult Use of Marijuana Act are doing so consistent with the purposes of the act, and whether different agencies might do so more effectively.

(9)Environmental issues related to marijuana production and the criminal prohibition of marijuana production.

(10)The geographic location, structure, and function of licensed marijuana businesses, and demographic data, including race, ethnicity, and gender, of license holders.

(11)The outcomes achieved by the changes in criminal penalties made under the Control, Regulate and Tax Adult Use of Marijuana Act for marijuana-related offenses, and the outcomes of the juvenile justice system, in particular, probation-based treatments and the frequency of up-charging illegal possession of marijuana or marijuana products to a more serious offense.

(c)The Controller shall next disburse the sum of three million dollars ($3,000,000) annually to the Department of the California Highway Patrol beginning with the 2018–19 fiscal year until the 2022–23 fiscal year to establish and adopt protocols to determine whether a driver is operating a vehicle while impaired, including impairment by the use of marijuana or marijuana products, and to establish and adopt protocols setting forth best practices to assist law enforcement agencies. The department may hire personnel to establish the protocols specified in this subdivision. In addition, the department may make grants to public and private research institutions for the purpose of developing technology for determining when a driver is operating a vehicle while impaired, including impairment by the use of marijuana or marijuana products.

(d)The Controller shall next disburse the sum of ten million dollars ($10,000,000) beginning with the 2018–19 fiscal year and increasing ten million dollars ($10,000,000) each fiscal year thereafter until the 2022–23 fiscal year, at which time the disbursement shall be fifty million dollars ($50,000,000) each year thereafter, to the Governor’s Office of Business and Economic Development, in consultation with the Labor and Workforce Development Agency and the State Department of Social Services, to administer a community reinvestments grants program to local health departments and at least 50 percent to qualified community-based nonprofit organizations to support job placement, mental health treatment, substance use disorder treatment, system navigation services, legal services to address barriers to reentry, and linkages to medical care for communities disproportionately affected by past federal and state drug policies. The office shall solicit input from community-based job skills, job placement, and legal service providers with relevant expertise as to the administration of the grants program. In addition, the office shall periodically evaluate the programs it is funding to determine the effectiveness of the programs, shall not spend more than 4 percent for administrative costs related to implementation, evaluation, and oversight of the programs, and shall award grants annually, beginning no later than January 1, 2020.

(e)The Controller shall next disburse the sum of two million dollars ($2,000,000) annually to the University of California San Diego Center for Medicinal Cannabis Research to further the objectives of the center including the enhanced understanding of the efficacy and adverse effects of marijuana as a pharmacological agent.

(f)By July 15 of each fiscal year beginning with the 2018–19 fiscal year, the Controller shall, after disbursing funds pursuant to subdivisions (a), (b), (c), (d), and (e), disburse funds deposited in the Tax Fund during the prior fiscal year into sub-trust accounts, which are hereby created, as follows:

(1)Sixty percent shall be deposited in the Youth Education, Prevention, Early Intervention and Treatment Account, and disbursed by the Controller to the State Department of Health Care Services for programs for youth that are designed to educate about and to prevent substance use disorders and to prevent harm from substance use. The State Department of Health Care Services shall enter into interagency agreements with the State Department of Public Health and the State Department of Education to implement and administer these programs. The programs shall emphasize accurate education, effective prevention, early intervention, school retention, and timely treatment services for youth, their families and caregivers. The programs may include, but are not limited to, the following components:

(A)Prevention and early intervention services including outreach, risk survey and education to youth, families, caregivers, schools, primary care health providers, behavioral health and substance use disorder service providers, community and faith-based organizations, fostercare providers, juvenile and family courts, and others to recognize and reduce risks related to substance use, and the early signs of problematic use and of substance use disorders.

(B)Grants to schools to develop and support student assistance programs, or other similar programs, designed to prevent and reduce substance use, and improve school retention and performance, by supporting students who are at risk of dropping out of school and promoting alternatives to suspension or expulsion that focus on school retention, remediation, and professional care. Schools with higher than average dropout rates should be prioritized for grants.

(C)Grants to programs for outreach, education and treatment for homeless youth and out-of-school youth with substance use disorders.

(D)Access and linkage to care provided by county behavioral health programs for youth, and their families and caregivers, who have a substance use disorder or who are at risk for developing a substance use disorder.

(E)Youth-focused substance use disorder treatment programs that are culturally and gender competent, trauma-informed, evidence-based and provide a continuum of care that includes screening and assessment (substance use disorder as well as mental health), early intervention, active treatment, family involvement, case management, overdose prevention, prevention of communicable diseases related to substance use, relapse management for substance use and other co-occurring behavioral health disorders, vocational services, literacy services, parenting classes, family therapy and counseling services, medication-assisted treatments, psychiatric medication, and psychotherapy. When indicated, referrals must be made to other providers.

(F)To the extent permitted by law and where indicated, interventions shall utilize a two-generation approach to addressing substance use disorders with the capacity to treat youth and adults together. This would include supporting the development of family-based interventions that address substance use disorders and related problems within the context of families, including parents, foster parents, caregivers, and all their children.

(G)Programs to assist individuals, as well as families and friends of drug using young people, to reduce the stigma associated with substance use including being diagnosed with a substance use disorder or seeking substance use disorder services. This includes peer-run outreach and education to reduce stigma, anti-stigma campaigns, and community recovery networks.

(H)Workforce training and wage structures that increase the hiring pool of behavioral health staff with substance use disorder prevention and treatment expertise. Provide ongoing education and coaching that increases substance use treatment providers’ core competencies and trains providers on promising and evidenced-based practices.

(I)Construction of community-based youth treatment facilities.

(J)The departments may contract with each county behavioral health program for the provision of services.

(K)Funds shall be allocated to counties based on demonstrated need, including the number of youth in the county, the prevalence of substance use disorders among adults, and confirmed through statistical data, validated assessments or submitted reports prepared by the applicable county to demonstrate and validate need.

(L)The departments shall periodically evaluate the programs they are funding to determine the effectiveness of the programs.

(M)The departments may use up to 4 percent of the moneys allocated to the Youth Education, Prevention, Early Intervention and Treatment Account for administrative costs related to implementation, evaluation, and oversight of the programs.

(N)If the Department of Finance ever determines that funding pursuant to marijuana taxation exceeds demand for youth prevention and treatment services in the state, the departments shall provide a plan to the Department of Finance to provide treatment services to adults as well as youth using these funds.

(O)The departments shall solicit input from volunteer health organizations, physicians who treat addiction, treatment researchers, family therapy and counseling providers, and professional education associations with relevant expertise as to the administration of any grants made pursuant to this paragraph.

(2)Twenty percent shall be deposited in the Environmental Restoration and Protection Account, and disbursed by the Controller as follows:

(A)To the Department of Fish and Wildlife and the Department of Parks and Recreation for the cleanup, remediation, and restoration of environmental damage in watersheds affected by marijuana cultivation and related activities including, but not limited to, damage that occurred prior to enactment of this part, and to support local partnerships for this purpose. The Department of Fish and Wildlife and the Department of Parks and Recreation may distribute a portion of the funds they receive from the Environmental Restoration and Protection Account through grants for purposes specified in this paragraph.

(B)To the Department of Fish and Wildlife and the Department of Parks and Recreation for the stewardship and operation of state-owned wildlife habitat areas and state park units in a manner that discourages and prevents the illegal cultivation, production, sale and use of marijuana and marijuana products on public lands, and to facilitate the investigation, enforcement and prosecution of illegal cultivation, production, sale, and use of marijuana or marijuana products on public lands.

(C)To the Department of Fish and Wildlife to assist in funding the watershed enforcement program and multiagency taskforce established pursuant to subdivisions (b) and (c) of Section 12029 of the Fish and Game Code to facilitate the investigation, enforcement, and prosecution of these offenses and to ensure the reduction of adverse impacts of marijuana cultivation, production, sale, and use on fish and wildlife habitats throughout the state.

(D)For purposes of this paragraph, the Secretary of the Natural Resources Agency shall determine the allocation of revenues between the departments. During the first five years of implementation, first consideration should be given to funding purposes specified in subparagraph (A).

(E)Funds allocated pursuant to this paragraph shall be used to increase and enhance activities described in subparagraphs (A), (B), and (C), and not replace allocation of other funding for these purposes. Accordingly, annual General Fund appropriations to the Department of Fish and Wildlife and the Department of Parks and Recreation shall not be reduced below the levels provided in the Budget Act of 2014 (Chapter 25 of the Statutes of 2014).

(3)Twenty percent shall be deposited into the State and Local Government Law Enforcement Account and disbursed by the Controller as follows:

(A)To the Department of the California Highway Patrol for conducting training programs for detecting, testing, and enforcing laws against driving under the influence of alcohol and other drugs, including driving under the influence of marijuana. The department may hire personnel to conduct the training programs specified in this subparagraph.

(B)To the Department of the California Highway Patrol to fund internal California Highway Patrol programs and grants to qualified nonprofit organizations and local governments for education, prevention, and enforcement of laws related to driving under the influence of alcohol and other drugs, including marijuana; programs that help enforce traffic laws, educate the public in traffic safety, provide varied and effective means of reducing fatalities, injuries and economic losses from collisions; and for the purchase of equipment related to enforcement of laws related to driving under the influence of alcohol and other drugs, including marijuana.

(C)To the Board of State and Community Corrections for making grants to local governments to assist with law enforcement, fire protection, or other local programs addressing public health and safety associated with the implementation of the Control, Regulate and Tax Adult Use of Marijuana Act. The board shall not make any grants to local governments which have banned the cultivation, including personal cultivation under paragraph (3) of subdivision (b) of Section 11362.2 of the Health and Safety Code, or retail sale of marijuana or marijuana products pursuant to Section 26200 of the Business and Professions Code or as otherwise provided by law.

(D)For purposes of this paragraph, the Department of Finance shall determine the allocation of revenues between the agencies; provided, however, beginning in the 2022–23 fiscal year the amount allocated pursuant to subparagraph (A) shall not be less than ten million dollars ($10,000,000) annually and the amount allocated pursuant to subparagraph (B) shall not be less than forty million dollars ($40,000,000) annually. In determining the amount to be allocated before the 2022–23 fiscal year pursuant to this paragraph, the Department of Finance shall give initial priority to subparagraph (A).

(g)Funds allocated pursuant to subdivision (f) shall be used to increase the funding of programs and purposes identified and shall not be used to replace allocation of other funding for these purposes.

(h)(1)Prior to July 1, 2028, the Legislature shall not change the allocations to programs specified in subdivisions (d) and (f).

(2)On and after July 1, 2028, the Legislature may amend this section by majority vote to further the purposes of the Control, Regulate and Tax Adult Use of Marijuana Act, including allocating funds to programs other than those specified in subdivisions (d) and (f). Any revisions pursuant to this subdivision shall not result in a reduction of funds to accounts established pursuant to subdivisions (d) and (f) in any subsequent year from the amount allocated to each account in the 2027–28 fiscal year.

SEC. 16.Section 23152 of the Vehicle Code is amended to read:
23152.

(a)It is unlawful for a person who is under the influence of any alcoholic beverage to drive a vehicle.

(b)It is unlawful for a person who has 0.08 percent or more, by weight, of alcohol in his or her blood to drive a vehicle.

For purposes of this article and Section 34501.16, percent, by weight, of alcohol in a person’s blood is based upon grams of alcohol per 100 milliliters of blood or grams of alcohol per 210 liters of breath.

In any prosecution under this subdivision, it is a rebuttable presumption that the person had 0.08 percent or more, by weight, of alcohol in his or her blood at the time of driving the vehicle if the person had 0.08 percent or more, by weight, of alcohol in his or her blood at the time of the performance of a chemical test within three hours after the driving.

(c)It is unlawful for a person who is addicted to the use of any drug to drive a vehicle. This subdivision shall not apply to a person who is participating in a narcotic treatment program approved pursuant to Article 3 (commencing with Section 11875) of Chapter 1 of Part 3 of Division 10.5 of the Health and Safety Code.

(d)It is unlawful for a person who has 0.04 percent or more, by weight, of alcohol in his or her blood to drive a commercial motor vehicle, as defined in Section 15210. In a prosecution under this subdivision, it is a rebuttable presumption that the person had 0.04 percent or more, by weight, of alcohol in his or her blood at the time of driving the vehicle if the person had 0.04 percent or more, by weight, of alcohol in his or her blood at the time of the performance of a chemical test within three hours after the driving.

(e)Commencing July 1, 2018, it shall be unlawful for a person who has 0.04 percent or more, by weight, of alcohol in his or her blood to drive a motor vehicle when a passenger for hire is a passenger in the vehicle at the time of the offense. For purposes of this subdivision, “passenger for hire” means a passenger for whom consideration is contributed or expected as a condition of carriage in the vehicle, whether directly or indirectly flowing to the owner, operator, agent, or any other person having an interest in the vehicle. In a prosecution under this subdivision, it is a rebuttable presumption that the person had 0.04 percent or more, by weight, of alcohol in his or her blood at the time of driving the vehicle if the person had 0.04 percent or more, by weight, of alcohol in his or her blood at the time of the performance of a chemical test within three hours after the driving.

(f)It is unlawful for a person who is under the influence of any drug other than marijuana to drive a vehicle.

(g)It is unlawful for a person who is under the combined influence of any alcoholic beverage and drug other than marijuana to drive a vehicle.

(h)It is unlawful for a person who is under the influence of marijuana to drive a vehicle.

(i)It is unlawful for a person who is under the combined influence of any alcoholic beverage and marijuana to drive a vehicle.

SEC. 17.Section 23153 of the Vehicle Code is amended to read:
23153.

(a)It is unlawful for a person, while under the influence of any alcoholic beverage, to drive a vehicle and concurrently do any act forbidden by law, or neglect any duty imposed by law in driving the vehicle, when the act or neglect proximately causes bodily injury to any person other than the driver.

(b)It is unlawful for a person, while having 0.08 percent or more, by weight, of alcohol in his or her blood, to drive a vehicle and concurrently do any act forbidden by law, or neglect any duty imposed by law in driving the vehicle, when the act or neglect proximately causes bodily injury to any person other than the driver.

In any prosecution under this subdivision, it is a rebuttable presumption that the person had 0.08 percent or more, by weight, of alcohol in his or her blood, at the time of driving the vehicle if the person had 0.08 percent or more, by weight, of alcohol in his or her blood, at the time of the performance of a chemical test within three hours after driving.

(c)In proving the person neglected any duty imposed by law in driving the vehicle, it is not necessary to prove that any specific section of this code was violated.

(d)It is unlawful for a person, while having 0.04 percent or more, by weight, of alcohol in his or her blood, to drive a commercial motor vehicle, as defined in Section 15210 and concurrently to do any act forbidden by law, or neglect any duty imposed by law in driving the vehicle, when the act or neglect proximately causes bodily injury to a person other than the driver. In a prosecution under this subdivision, it is a rebuttable presumption that the person had 0.04 percent or more, by weight, of alcohol in his or her blood at the time of driving the vehicle if the person had 0.04 percent or more, by weight, of alcohol in his or her blood at the time of performance of a chemical test within three hours after driving.

(e)Commencing July 1, 2018, it is unlawful for a person, while having 0.04 percent or more, by weight, of alcohol in his or her blood, to drive a motor vehicle when a passenger for hire is a passenger in the vehicle at the time of the offense, and concurrently to do any act forbidden by law or neglect any duty imposed by law in driving the vehicle, when the act or neglect proximately causes bodily injury to any person other than the driver. For purposes of this subdivision, “passenger for hire” means a passenger for whom consideration is contributed or expected as a condition of carriage in the vehicle, whether directly or indirectly flowing to the owner, operator, agent, or any other person having an interest in the vehicle. In a prosecution under this subdivision, it is a rebuttable presumption that the person had 0.04 percent or more, by weight, of alcohol in his or her blood at the time of driving the vehicle if the person had 0.04 percent or more, by weight, of alcohol in his or her blood at the time of performance of a chemical test within three hours after driving.

(f)It is unlawful for a person, while under the influence of any drug other than marijuana, to drive a vehicle and concurrently do any act forbidden by law, or neglect any duty imposed by law in driving the vehicle, when the act or neglect proximately causes bodily injury to any person other than the driver.

(g)It is unlawful for a person, while under the combined influence of any alcoholic beverage and drug other than marijuana, to drive a vehicle and concurrently do any act forbidden by law, or neglect any duty imposed by law in driving the vehicle, when the act or neglect proximately causes bodily injury to any person other than the driver.

(h)It is unlawful for a person who is under the influence of marijuana to drive a vehicle and concurrently do any act forbidden by law, or neglect any duty imposed by law in driving the vehicle, when the act or neglect proximately causes bodily injury to any person other than the driver.

(i)It is unlawful for a person who is under the combined influence of any alcoholic beverage and marijuana to drive a vehicle and concurrently do any act forbidden by law, or neglect any duty imposed by law in driving the vehicle, when the act or neglect proximately causes bodily injury to any person other than the driver.

SEC. 18.Section 23222 of the Vehicle Code is amended to read:
23222.

(a)A person shall not have in his or her possession on his or her person, while driving a motor vehicle upon a highway or on lands, as described in Section 38001, any bottle, can, or other receptacle, containing any alcoholic beverage which has been opened, or a seal broken, or the contents of which have been partially removed.

(b)Except as authorized by law, every person who possesses, while driving a motor vehicle upon a highway or on lands, as described in Section 38001, not more than one avoirdupois ounce of marijuana, other than concentrated cannabis as defined by Section 11006.5 of the Health and Safety Code, is guilty of an infraction punishable by a fine of not more than one hundred dollars ($100).

(c)A person shall not have marijuana or marijuana products, including edibles and concentrates, in his or her possession while driving a motor vehicle upon a highway or on lands described in Section 38001 unless either of the following applies:

(1)The marijuana or marijuana products are located in one of the following:

(A)The trunk of the vehicle.

(B)In an area of the vehicle not normally occupied or directly accessible by the driver or passengers if the vehicle does not have a trunk. For purposes of this subdivision, a glove compartment is directly accessible by the driver.

(C)Notwithstanding subparagraph (B) and if the vehicle does not have a trunk, marijuana or marijuana products may be located in a glove compartment if in a sealed package with the original manufacturer’s seal intact.

(2)The person is a licensee under Chapter 3.5 (commencing with Section 19300) of Division 8 of, or under Division 10 (commencing with Section 26000) of, the Business and Professions Code acting in accordance with applicable regulations.

SEC. 19.

The sum of three million dollars ($3,000,000) is hereby advanced as a loan from the General Fund to the Department of the California Highway Patrol for use in the 2017–18 fiscal year for the purposes described in subdivision (c) of Section 34019 of the Revenue and Taxation Code. Moneys advanced pursuant to this section shall be repaid from amounts to be disbursed to the Department of the California Highway Patrol pursuant to subdivision (c) of Section 34019 of the Revenue and Taxation Code.

SEC. 20.

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.

SEC. 3.

 Section 26001 of the Business and Professions Code, as amended by Section 5 of Senate Bill 94 of the 2017–18 Regular Session, is amended to read:

26001.
 For purposes of this division, the following definitions shall apply:
(a) “A-license” means a state license issued under this division for cannabis or cannabis products that are intended for adults who are 21 years of age and over and who do not possess physician’s recommendations.
(b) “A-licensee” means any person holding a license under this division for cannabis or cannabis products that are intended for adults who are 21 years of age and over and who do not possess physician’s recommendations.
(c) “Applicant” means an owner applying for a state license pursuant to this division.
(d) “Batch” means a specific quantity of homogeneous cannabis or cannabis product that is one of the following types:
(1) Harvest batch. “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. “Manufactured cannabis batch” means either of the following:
(A) An amount of cannabis concentrate or extract that is produced in one production cycle using the same extraction methods and standard operating procedures.
(B) An amount of a type of manufactured cannabis produced in one production cycle using the same formulation and standard operating procedures.
(e) “Bureau” means the Bureau of Cannabis Control within the Department of Consumer Affairs, formerly named the Bureau of Marijuana Control, the Bureau of Medical Cannabis Regulation, and the Bureau of Medical Marijuana Regulation.
(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” 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 division, “cannabis” does not mean “industrial hemp” as defined by Section 11018.5 of the Health and Safety Code.
(g) “Cannabis accessories” has the same meaning as in Section 11018.2 of the Health and Safety Code.
(h) “Cannabis concentrate” means 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 division. 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.
(i) “Cannabis products” has the same meaning as in Section 11018.1 of the Health and Safety Code.
(j) “Child resistant” means designed or constructed to be significantly difficult for children under five years of age to open, and not difficult for normal adults to use properly.
(k) “Commercial cannabis activity” includes the cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery or sale of cannabis and cannabis products as provided for in this division.
(l) “Cultivation” means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of cannabis.
(m) “Cultivation site” means a location where cannabis is planted, grown, harvested, dried, cured, graded, or trimmed, or a location where any combination of those activities occurs.
(n) “Customer” means a natural person 21 years of age or over or a natural person 18 years of age or older who possesses a physician’s recommendation.
(o) “Day care center” has the same meaning as in Section 1596.76 of the Health and Safety Code.
(p) “Delivery” means the commercial transfer of cannabis or cannabis products to a customer. “Delivery” also includes the use by a retailer of any technology platform owned and owned, leased, or controlled by the retailer.
(q) “Director” means the Director of Consumer Affairs.
(r) “Distribution” means the procurement, sale, and transport of cannabis and cannabis products between licensees.
(s) “Dried flower” means all dead cannabis that has been harvested, dried, cured, or otherwise processed, excluding leaves and stems.
(t) “Edible cannabis product” means cannabis product 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 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 Cannabis Control Fund established pursuant to Section 26210.
(v) “Kind” means applicable type or designation regarding a particular cannabis variant or cannabis product type, including, but not limited to, strain name or other grower trademark, or growing area designation.
(w) “Labeling” means any label or other written, printed, or graphic matter upon a cannabis product, upon its container or wrapper, or that accompanies any cannabis product.
(x) “Labor peace agreement” means an agreement between a licensee and any 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) “License” means a state license issued under this division, and includes both an A-license and an M-license, as well as a testing laboratory license.
(z) “Licensee” means any person holding a license under this division, regardless of whether the license held is an A-license or an M-license, and includes the holder of a testing laboratory license.
(aa) “Licensing authority” means the state agency responsible for the issuance, renewal, or reinstatement of the license, or the state agency authorized to take disciplinary action against the licensee.
(ab) “Live plants” means living cannabis flowers and plants, including seeds, immature plants, and vegetative stage plants.
(ac) “Local jurisdiction” means a city, county, or city and county.
(ad) “Lot” means a batch or a specifically identified portion of a batch.
(ae) “M-license” means a state license issued under this division for commercial cannabis activity involving medicinal cannabis.
(af) “M-licensee” means any person holding a license under this division for commercial cannabis activity involving medicinal cannabis.
(ag) “Manufacture” means to compound, blend, extract, infuse, or otherwise make or prepare a cannabis product.
(ah) “Manufacturer” means a licensee that conducts the production, preparation, propagation, or compounding of cannabis or 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 cannabis or cannabis products or labels or relabels its container.
(ai) “Medicinal cannabis” or “medicinal cannabis product” means cannabis or a cannabis product, respectively, intended to be sold for use pursuant to the Compassionate Use Act of 1996 (Proposition 215), found at Section 11362.5 of the Health and Safety Code, by a medicinal cannabis patient in California who possesses a physician’s recommendation.
(aj) “Nursery” means a licensee that produces only clones, immature plants, seeds, and other agricultural products used specifically for the propagation and cultivation of cannabis.
(ak) “Operation” means any act for which licensure is required under the provisions of this division, or any commercial transfer of cannabis or cannabis products.
(al) “Owner” means any of the following:
(1) A person with an aggregate ownership interest of 20 percent or more in the person applying for a license or a licensee, unless the interest is solely a security, lien, or encumbrance.
(2) The chief executive officer of a nonprofit or other entity.
(3) A member of the board of directors of a nonprofit.
(4) An individual who will be participating in the direction, control, or management of the person applying for a license.
(am) “Package” means any container or receptacle used for holding cannabis or cannabis products.
(an) “Person” includes any 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 the plural as well as the singular.
(ao) “Physician’s recommendation” means a recommendation by a physician and surgeon that a patient use cannabis provided in accordance with the Compassionate Use Act of 1996 (Proposition 215), found at Section 11362.5 of the Health and Safety Code.
(ap) “Premises” means the designated structure or structures and land specified in the application that is owned, leased, or otherwise held under the control of the applicant or licensee where the commercial cannabis activity will be or is conducted. The premises shall be a contiguous area and shall only be occupied by one licensee.
(aq) “Purchaser” means the customer who is engaged in a transaction with a licensee for purposes of obtaining cannabis or cannabis products.
(ar) “Sell,” “sale,” and “to sell” include any transaction whereby, for any consideration, title to cannabis or cannabis products is transferred from one person to another, and includes the delivery of cannabis or cannabis products pursuant to an order placed for the purchase of the same and soliciting or receiving an order for the same, but does not include the return of cannabis or cannabis products by a licensee to the licensee from whom the cannabis or cannabis product was purchased.
(as) “Testing laboratory” means a laboratory, facility, or entity in the state that offers or performs tests of cannabis or cannabis products and that is both of the following:
(1) Accredited by an accrediting body that is independent from all other persons involved in commercial cannabis activity in the state.
(2) Licensed by the bureau.
(at) “Unique identifier” means an alphanumeric code or designation used for reference to a specific plant on a licensed premises and any cannabis or cannabis product derived or manufactured from that plant.
(au) “Youth center” has the same meaning as in Section 11353.1 of the Health and Safety Code.

SEC. 4.

 Section 26053 of the Business and Professions Code, as amended by Section 37 of Senate Bill 94 of the 2017–18 Regular Session, is amended to read:

26053.
 (a) All commercial cannabis activity shall be conducted between licensees, except as otherwise provided in this division.
(b) A person that holds a state testing laboratory license under this division is prohibited from licensure for any other activity, except testing, as authorized under this division. A person that holds a state testing laboratory license shall not employ an individual who is also employed by any other licensee that does not hold a state testing laboratory license. A person that holds a state testing laboratory license shall not own, or have an ownership interest in, a premises licensed pursuant to this division for any activity except testing.
(c) Except as provided in subdivision (b), a person may apply for and be issued more than one license under this division, provided the licensed premises are separate and distinct. division.
(d) Each applicant or licensee shall apply for, and if approved, shall obtain, a separate license for each location where it engages in commercial cannabis activity.

SEC. 5.

 Section 26070 of the Business and Professions Code, as amended by Section 59 of Senate Bill 94 of the 2017–18 Regular Session, is amended to read:
26070.

Retailers and Distributors.

26070.
 (a) State licenses to be issued by the bureau related to the sale and distribution of cannabis and cannabis products are as follows:
(1) “Retailer,” for the retail sale and delivery of cannabis or cannabis products to customers. A retailer shall have a licensed premises which is a physical location from which commercial cannabis activities are conducted. A retailer’s premises may be closed to the public. A retailer may conduct sales exclusively by delivery.
(2) “Distributor,” for the distribution of cannabis and cannabis products. A distributor licensee shall be bonded and insured at a minimum level established by the licensing authority.
(3) (A) “Microbusiness,” for the cultivation of cannabis on an area less than 10,000 square feet and to act as a licensed distributor, Level 1 manufacturer, and retailer under this division, provided such licensee can demonstrate compliance with all requirements imposed by this division on licensed cultivators, distributors, Level 1 manufacturers, and retailers to the extent the licensee engages in such those activities. Microbusiness licenses that authorize cultivation of cannabis shall include the license conditions described in subdivision (b) of Section 26060.1.
(B) In coordination with each other, the licensing authorities shall establish a process by which an applicant for a microbusiness license can demonstrate compliance with all the requirements under this division for the activities that will be conducted under the license.
(C) The bureau may enter into interagency agreements with licensing authorities to implement and enforce the provisions of this division related to microbusinesses. The costs of activities carried out by the licensing authorities as requested by the bureau pursuant to the interagency agreement shall be calculated into the application and licensing fees collected pursuant to this division, and shall provide for reimbursement to state agencies for associated costs as provided for in the interagency agreement.
(b) The bureau shall establish minimum security and transportation safety requirements for the commercial distribution and delivery of cannabis and cannabis products. The transportation of cannabis and cannabis products shall only be conducted by persons holding a distributor license under this division or employees of those persons. Transportation safety standards established by the bureau shall include, but not be limited to, minimum standards governing the types of vehicles in which cannabis and cannabis products may be distributed and delivered and minimum qualifications for persons eligible to operate such vehicles.
(c) The driver of a vehicle transporting cannabis or cannabis products shall be directly employed by a licensee authorized to transport cannabis or cannabis products.
(d) Notwithstanding any other law, all vehicles transporting cannabis and cannabis products for hire shall be required to have a valid motor carrier permit pursuant to Chapter 2 (commencing with Section 34620) of Division 14.85 of the Vehicle Code. The Department of the California Highway Patrol shall have authority over the safe operation of these vehicles, including, but not limited to, requiring licensees engaged in the transportation of cannabis or cannabis products to participate in the Basic Inspection of Terminals (BIT) program pursuant to Section 34501.12 of the Vehicle Code.
(e) Prior to transporting cannabis or cannabis products, a licensed distributor shall do both of the following:
(1) Complete an electronic shipping manifest as prescribed by the licensing authority. The shipping manifest shall include the unique identifier, pursuant to Section 26069, issued by the Department of Food and Agriculture for the original cannabis product.
(2) Securely transmit the manifest to the bureau and the licensee that will receive the cannabis product. The bureau shall inform the Department of Food and Agriculture of information pertaining to commercial cannabis activity for the purpose of the track and trace program identified in Section 26067.
(f) During transportation, the licensed distributor shall maintain a physical copy of the shipping manifest and make it available upon request to agents of the Department of Consumer Affairs and law enforcement officers.
(g) The licensee receiving the shipment shall maintain each electronic shipping manifest and shall make it available upon request to the Department of Consumer Affairs and any law enforcement officers.
(h) Upon receipt of the transported shipment, the licensee receiving the shipment shall submit to the licensing authority a record verifying receipt of the shipment and the details of the shipment.
(i) Transporting, or arranging for or facilitating the transport of, cannabis or cannabis products in violation of this chapter is grounds for disciplinary action against the license.
(j) Licensed retailers and microbusinesses, and licensed nonprofits under Section 26070.5, shall implement security measures reasonably designed to prevent unauthorized entrance into areas containing cannabis or cannabis products and theft of cannabis or cannabis products from the premises. These security measures shall include, but not be limited to, all of the following:
(1) Prohibiting individuals from remaining on the licensee’s premises if they are not engaging in activity expressly related to the operations of the retailer.
(2) Establishing limited access areas accessible only to authorized personnel.
(3) Other than limited amounts of cannabis used for display purposes, samples, or immediate sale, storing all finished cannabis and cannabis products in a secured and locked room, safe, or vault, and in a manner reasonably designed to prevent diversion, theft, and loss.
(k) A retailer 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 retailer.
(3) Diversion, theft, loss, or any criminal activity by any agent or employee of the retailer pertaining to the operation of the retailer.
(4) The loss or unauthorized alteration of records related to cannabis or cannabis products, registered qualifying patients, primary caregivers, or retailer employees or agents.
(5) Any other breach of security.
(l) Beginning January 1, 2018, a licensee may sell cannabis or cannabis products that have not been tested for a limited and finite time as determined by the bureau. The cannabis and or cannabis products must have a label affixed to each package containing the cannabis or cannabis products that clearly states “This product has not been tested as required by the Medicinal and Adult-Use Cannabis Regulation and Safety Act” and must comply with any other requirement as determined by the bureau.
(m) A retailer, microbusiness, or licensed nonprofit under Section 26070.5 shall display a sign educating its customers on California’s laws on transporting cannabis or cannabis products in a vehicle, in accordance with Section 23222 of the Vehicle Code.

SEC. 6.

 Section 26100 of the Business and Professions Code, as renumbered from Section 26100 of the Business and Professions Code by Section 66 of Senate Bill 94 of the 2017–18 Regular Session, is amended to read:

26100.
 (a) Except as otherwise provided by law, cannabis or cannabis products shall not be sold pursuant to a license provided for under this division unless a representative sample of the cannabis or cannabis products has been tested by a licensed testing laboratory.
(b) The bureau shall develop criteria to determine which batches shall be tested. All testing of the samples shall be performed on the final form in which the cannabis or cannabis product will be consumed or used.
(c) Testing of batches to meet the requirements of this division shall only be conducted by a licensed testing laboratory.
(d) For each batch tested, the testing laboratory shall issue a certificate of analysis for selected lots at a frequency determined by the bureau with supporting data, to report both of the following:
(1) Whether the chemical profile of the sample conforms to the labeled content of 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) The terpenes required by the bureau in 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 established by the bureau. In establishing the levels, the bureau shall consider the American Herbal Pharmacopoeia monograph, guidelines set by the Department of Pesticide Regulation pursuant to subdivision (d) of Section 26060, and any other relevant sources. For purposes of this paragraph, “contaminants” includes, but is not limited to, all of the following:
(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.
(e) Standards for residual levels of volatile organic compounds shall be established by the bureau.
(f) The testing laboratory shall conduct all testing required by this section in a manner consistent with general requirements for the competence of testing and calibrations activities, including sampling and using verified methods.
(g) All testing laboratories performing tests pursuant to this section shall obtain and maintain ISO/IEC 17025 accreditation as required by the bureau in regulation.
(h) If a test result falls outside the specifications authorized by law or regulation, the testing laboratory shall follow a standard operating procedure to confirm or refute the original result.
(i) A testing laboratory shall destroy the remains of the sample of medical cannabis or medical cannabis product upon completion of the analysis, as determined by the bureau through regulations.
(j) Any presale inspection, testing transfer, or transportation of cannabis products pursuant to this section shall conform to a specified chain of custody protocol and any other requirements imposed under this division.
(k) This division does 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. This division also does not prohibit a licensee from performing testing on the licensee’s premises of cannabis or cannabis products obtained from another licensee. Onsite testing by the licensee shall not be certified by the bureau and does not exempt the licensee from the requirements of quality assurance testing at a testing laboratory pursuant to this section.

SEC. 7.

 Section 26110 of the Business and Professions Code, as added by Section 73 of Senate Bill 94 of the 2017–18 Regular Session, is amended to read:

26110.
 (a) Cannabis batches are subject to quality assurance and testing prior to sale at a retailer, microbusiness, or nonprofit licensed under Section 26070.5, except for immature cannabis plants and seeds, as provided for in this division.
(b) A licensee that holds a valid distributor license may act as the distributor for the licensee’s cannabis and cannabis products.
(c) The distributor shall store, as determined by the bureau, the cannabis batches on the premises of the distributor before testing and continuously until either of the following occurs:
(1) The cannabis batch passes the testing requirements pursuant to this division and is transported to a licensed retailer.
(2) The cannabis batch fails the testing requirements pursuant to this division and is destroyed or transported to a manufacturer for remediation as allowed by the bureau or the State Department of Public Health.
(d) The distributor shall arrange for a testing laboratory to obtain a representative sample of each cannabis batch at the distributor’s licensed premises. After obtaining the sample, the testing laboratory representative shall maintain custody of the sample and transport it to the testing laboratory.
(e) Upon issuance of a certificate of analysis by the testing laboratory that the cannabis batch has passed the testing requirements pursuant to this division, the distributor shall conduct a quality assurance review before distribution to ensure the labeling and packaging of the cannabis and cannabis products conform to the requirements of this division.
(f) (1) There shall be a quality assurance compliance monitor who is an employee or contractor of the bureau and who shall not hold a license in any category or own or have an ownership interest in a licensee or the premises of a licensee.
(2) The quality assurance compliance monitor shall conduct random quality assurance reviews at a distributor’s licensed premises before distribution to ensure the labeling and packaging of the cannabis and cannabis products conform to the requirements of this division.
(3) The quality assurance compliance monitor shall have access to all records and test results required of a licensee by law in order to conduct quality assurance analysis and to confirm test results. All records of inspection and verification by the quality assurance compliance monitor shall be provided to the bureau. Failure to comply shall be noted by the quality assurance compliance monitor for further investigation. Violations shall be reported to the bureau. The quality assurance compliance monitor shall also verify the tax payments collected and paid under Sections 34011 and 34012 Section 34012.5 of the Revenue and Tax Taxation Code are accurate. The monitor shall also have access to the inputs and assumptions in the track and trace system and shall be able to verify the accuracy of those and that they are commensurate with the tax payments.
(g) After testing, all cannabis and cannabis products fit for sale may be transported only from the distributor’s premises to the premises of a licensed retailer, microbusiness, or nonprofit.
(h) A licensee is not required to sell cannabis or cannabis products to a distributor and may directly contract for sale with a licensee authorized to sell cannabis and cannabis products to purchasers.
(i) A distributor performing services pursuant to this section may collect a fee from the licensee for the services provided. The fee may include, but is not limited to, the costs incurred for laboratory testing. A distributor may also collect applicable state or local taxes and fees.
(j) This section does 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. The testing conducted on the licensee’s premises by the licensee does not meet the testing requirements pursuant to this division.

SEC. 8.

 Section 26130 of the Business and Professions Code, as amended by Section 77 of Senate Bill 94 of the 2017–18 Regular Session, is amended to read:

26130.
 (a) The State Department of Public Health shall promulgate regulations governing the licensing of cannabis manufacturers and standards for the manufacturing, packaging, and labeling of all manufactured cannabis products. Licenses to be issued are as follows:
(1) “Manufacturing Level 1,” for sites that manufacture cannabis products using nonvolatile solvents, or no solvents. A Manufacturing Level 1 M-Type 6 licensee shall only manufacture cannabis products for sale by a retailer with an M-Type 10 license.
(2) “Manufacturing Level 2,” for sites that manufacture cannabis products using volatile solvents. A Manufacturing Level 2 M-Type 7 licensee shall only manufacture cannabis products for sale by a retailer with an M-Type 10 license.
(b) For purposes of this section, “volatile solvents” shall have the same meaning as in paragraph (3) of subdivision (d) (b) of Section 11362.3 of the Health and Safety Code, unless otherwise provided by law or regulation.
(c) Edible cannabis products shall be:
(1) Not designed to be appealing to children or easily confused with commercially sold candy or foods that do not contain cannabis.
(2) Produced and sold with a standardized concentration of cannabinoids not to exceed ten (10) 10 milligrams tetrahydrocannabinol (THC) per serving.
(3) Delineated or scored into standardized serving sizes if the cannabis product contains more than one serving and is an edible cannabis product in solid form.
(4) Homogenized to ensure uniform disbursement of cannabinoids throughout the product.
(5) Manufactured and sold under sanitation standards established by the State Department of Public Health, in consultation with the bureau, that are similar to the standards for preparation, storage, handling, and sale of food products.
(6) Provided to customers with sufficient information to enable the informed consumption of the product, including the potential effects of the cannabis product and directions as to how to consume the cannabis product, as necessary.
(7) Marked with a universal symbol, as determined by the State Department of Public Health through regulation.
(d) Cannabis, including concentrated cannabis, included in a cannabis product manufactured in compliance with law is not considered an adulterant under state law.

SEC. 9.

 Section 11362.775 of the Health and Safety Code, as amended by Section 140 of Senate Bill 94 of the 2017–18 Regular Session, 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 medicinal 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 or not for profit. A collective or cooperative that operates for profit shall retain the protections of this section only if it possesses a valid seller’s permit from the State Board of Equalization and a valid local license, permit, or other authorization.
(b) A collective or cooperative that operates pursuant to this section and manufactures medicinal 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) The collective or cooperative does either or both of the following:
(A) Utilizes only manufacturing processes that are either solventless or that employ only nonflammable, nontoxic solvents that are generally recognized as safe pursuant to the federal Food, Drug, and Cosmetic Act (21 U.S.C. Sec. 301 et seq.).
(B) Utilizes only manufacturing processes that use solvents exclusively within a closed-loop system that meets all of the following requirements:
(i) The system uses only solvents that are generally recognized as safe pursuant to the federal Food, Drug, and Cosmetic Act (21 U.S.C. Sec. 301 et seq.).
(ii) The system is designed to recapture and contain solvents during the manufacturing process, and otherwise prevent the off-gassing of solvents into the ambient atmosphere to mitigate the risks of ignition and explosion during the manufacturing process.
(iii) A licensed engineer certifies that the system was commercially manufactured, safe for its intended use, and built to codes of recognized and generally accepted good engineering practices, including, but not limited to, the American Society of Mechanical Engineers (ASME), the American National Standards Institute (ANSI), Underwriters Laboratories (UL), the American Society for Testing and Materials (ASTM), or OSHA Nationally Recognized Testing Laboratories (NRTLs).
(iv) The system has a certification document that contains the signature and stamp of a professional engineer and the serial number of the extraction unit being certified.
(2) The collective or cooperative receives and maintains approval from the local fire official for the closed-loop system, other equipment, the extraction operation, and the facility.
(3) The collective or cooperative meets required fire, safety, and building code requirements in one or more of the following:
(A) The California Fire Code.
(B) The National Fire Protection Association (NFPA) standards.
(C) International Building Code (IBC).
(D) The International Fire Code (IFC).
(E) Other applicable standards, including complying with all applicable fire, safety, and building codes in processing, handling, and storage of solvents or gasses.
(4) The collective or cooperative is in possession of a valid seller’s permit issued by the State Board of Equalization.
(5) The collective or cooperative is in possession of a valid local license, permit, or other authorization specific to the manufacturing of medicinal cannabis products, and in compliance with any additional conditions imposed by the city or county issuing the local license, permit, or other authorization.
(c) For purposes of this section, “manufacturing” means compounding, converting, producing, deriving, processing, or preparing, either directly or indirectly by chemical extraction or independently by means of chemical synthesis, medicinal cannabis products.
(d) This section shall remain in effect only until one year after the Bureau of Cannabis Control posts a notice on its Internet Web site that the licensing authorities have commenced issuing licenses pursuant to the Medicinal and Adult-Use Cannabis Regulation and Safety Act (Division 10 (commencing with Section 26000) 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. 21.SEC. 10.

 The Legislature finds and declares that this act furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act by accomplishing all of the following:
(a) Reducing barriers to entry into the legal, regulated market by ensuring that the market is not dominated by a monopoly power.

(b)Preventing large, vertically integrated companies from using a microbusiness license to circumvent and undermine the system of state licensing in which every marijuana business is overseen by a specialized agency with relevant expertise.

(c)Ensuring that the Department of the California Highway Patrol and the Board of State and Community Corrections have the resources necessary to kick-start development of impaired driving protocols and administration of grant programs for education, local law enforcement, public health, and community investment required by the Control, Regulate and Tax Adult Use of Marijuana Act.

(d)

(b) Taking nonmedical marijuana adult-use cannabis production and sales out of the hands of the illegal market and bringing them under a regulatory structure that prevents access by minors and protects public safety, public health, and the environment.

(e)

(c) Strictly controlling the cultivation, processing, manufacture, distribution, testing, and sale of nonmedical marijuana adult-use cannabis through a system of state licensing, regulation, and enforcement.

(f)

(d) Allowing local governments to enforce state laws and regulations for nonmedical marijuana adult-use cannabis businesses if that authority is delegated to them by the state, and enact additional local requirements for nonmedical marijuana adult-use cannabis businesses, but not require that they do so for a nonmedical marijuana an adult-use cannabis business to be issued a state license and be legal under state law.