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AB-924 Indian tribes: commercial cannabis activity.(2017-2018)

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Date Published: 06/27/2017 09:00 PM
AB924:v98#DOCUMENT

Amended  IN  Senate  June 27, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 924


Introduced by Assembly Member Gray Bonta

February 16, 2017


An act to amend Section 19605.25 of the Business and Professions Code, relating to horse racing. An act to add Chapter 23 (commencing with Section 26240) to Division 10 of the Business and Professions Code, relating to cannabis.


LEGISLATIVE COUNSEL'S DIGEST


AB 924, as amended, Gray Bonta. Horse racing: minisatellite wagering facilities. Indian tribes: commercial cannabis activity.
The Medical Cannabis Regulation and Safety Act (MCRSA), enacted by the Legislature, provides for the state licensure and regulation of commercial medical cannabis activities by specified state agencies. The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative statute enacted by the approval of Proposition 64 at the November 8, 2016, statewide general election, provides for state licensure and regulation of commercial adult use cannabis activity by specified state agencies. AUMA authorizes the Legislature to amend its provisions by a bill passed with a 2/3 vote of each house of the Legislature, if the amendment furthers its purposes and intent. AUMA also authorizes the Legislature to amend other provisions by a bill passed by a majority vote if the bill implements specified substantive provisions and the amendments are consistent with and further the purposes and intent of the act.
Under the existing federal doctrine of tribal immunity and the federal Indian Commerce Clause, the state, with certain exceptions, is precluded from asserting regulatory authority over the activities of federally recognized Indian tribes conducted on their own lands. Under federal law, absent express federal law to the contrary, the state may assert the same regulatory authority over Indians conducting activities beyond their own lands that the state asserts over all citizens of the state.
This bill would amend AUMA by authorizing the Governor to enter into an agreement with a federally recognized Indian tribe authorizing commercial cannabis activity that requires the tribe to establish a cannabis regulatory commission that would exercise exclusive regulatory authority over all commercial cannabis activity, by both Indians and non-Indians, in Indian country and that requires the commission to adopt standards that meet or exceed the standards adopted under the state’s regulatory framework governing commercial cannabis activity. The bill would also require the agreement to contain provisions exempting a tribe from state cultivation or sales taxes related to commercial cannabis activity if the tribe imposes an equivalent tax and exclusively uses that tax revenue to fund essential government services, as defined, provided by a tribe, and exempting a tribe from any sales or cannabis tax imposed by a local government whose geographical boundaries contain the Indian country. The bill would require the agreement to contain provisions requiring a tribe, when engaging in sales of cannabis outside Indian country, to sell only to an entity operating with a state license.

Existing law authorizes the California Horse Racing Board to approve an additional 15 minisatellite wagering sites in each zone under certain conditions, including that no site is within 20 miles of a racetrack, a satellite wagering facility, or a tribal casino that has a satellite wagering facility. Existing law provides that if the proposed facility is within 20 miles of one of the above-referenced satellite facilities, then the consent of each facility within a 20-mile radius must be given before the proposed facility may be approved by the board.

Existing law provided that until January 1, 2013, if the proposed minisatellite wagering site is in the northern zone in a fair district where the fair has operated a satellite wagering facility for the previous 5 years, the approval of the fair must be obtained even if the proposed location is more than 20 miles from the existing satellite wagering facility operated by the fair.

This bill would delete this obsolete provision.

Vote: MAJORITY2/3   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) In November 1996, voters approved Proposition 215, which decriminalized the use of medicinal cannabis in California. Since the proposition was passed, most, if not all, of the regulation has been performed by local governments.
(b) In 2015, California enacted three bills (Assembly Bill 243 (Wood, Chapter 688 of the Statutes of 2015); Assembly Bill 266 (Bonta, Chapter 689 of the Statutes of 2015); and Senate Bill 643 (McGuire, Chapter 719 of the Statutes of 2015)) that collectively established a comprehensive state regulatory framework for the licensing and enforcement of cultivation, manufacturing, retail sale, transportation, storage, delivery, and testing of medicinal cannabis in California. This regulatory scheme is known as the Medical Cannabis Regulation and Safety Act (MCRSA).
(c) In November 2016, voters approved Proposition 64, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA). Under Proposition 64, adults 21 years of age or older may legally grow, possess, and use cannabis for nonmedicinal purposes, with certain restrictions. In addition, beginning on January 1, 2018, AUMA makes it legal under state law to sell and distribute cannabis through a regulated business.
(d) Although California has chosen to legalize the cultivation, distribution, and use of cannabis, it remains an illegal Schedule I controlled substance under federal law. The intent of Proposition 64 and MCRSA was to ensure a comprehensive regulatory system that takes production and sales of cannabis away from an illegal market and curtails the illegal diversion of cannabis from California into other states or countries. The state has legalized cannabis through MCRSA and AUMA.
(e) The state has criminal jurisdiction over Indian land located within the state pursuant to federal law commonly known as Public Law 280 (PL-280).
(f) The United States Department of Justice, in a document known as the Cole Memorandum, has set forth a policy lowering the priority of cannabis enforcement under certain circumstances.
(g) The United States Department of Justice, in a document known as the Wilkinson Memorandum, has extended the terms of the Cole Memorandum to apply to Indian tribes.
(h) Indian tribes have civil jurisdiction over their tribal land within the state and have the inherent right to engage in commercial cannabis activity on tribal land pursuant to federal court interpretation of PL-280.
(i) MCRSA and AUMA did not consider how Indian tribes would interact with the regulated California marketplace where state licensed businesses are limited to conducting business only with other state licensed businesses.
(j) California has an interest in ensuring the health and safety of the California consumers of cannabis products that were cultivated or manufactured on tribal land.
(k) California has an interest in promoting economic development and self-sufficiency by Indian tribes.

SEC. 2.

 Chapter 23 (commencing with Section 26240) is added to Division 10 of the Business and Professions Code, to read:
CHAPTER  23. Agreements with Tribal Governments
Article  1. Definitions

26240.
 (a) “Agreement” means an Indian tribal cannabis agreement authorized under this chapter and entered into between the State of California and an Indian tribe.
(b) “Cannabis regulatory commission” means a commission created by an Indian tribe to enforce the agreement and regulate commercial cannabis activity on tribal land.
(c) “Essential governmental services” means services provided by an Indian tribe that has entered into an agreement, including, but not limited to, health care, early childhood development programs, job placement, mental health treatment, substance use disorder treatment, education, elder care, social services, administration, public facilities, fire, police, courts, sewer, water, environmental and land use, park and wildlife restoration, transportation, utility services, and community and economic development.
(d) “Indian country” shall have the meaning given in Section 1151 of Title 18 of the United States Code.
(e) “Tribe” means an Indian tribe, band, nation, or community wholly or partially located within the geographical boundaries of the State of California that the United States Secretary of the Interior acknowledges to exist as an Indian tribe pursuant to the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. Sec. 479a).

Article  2. Agreements

26241.
 (a) The Governor may enter into an agreement with a tribe authorizing commercial cannabis activity between an entity in Indian country and an entity operating with a state license pursuant to this division. The Governor may delegate authority to negotiate this agreement to the Chief of the Bureau of Medical Cannabis Regulation.
(b) An agreement is deemed approved when executed by the Governor or his or her designee and does not require approval by the Legislature.

26242.
 An agreement described in subdivision (a) of Section 26241 shall contain all of the following conditions:
(a) A tribe authorizing commercial cannabis activity in Indian country shall establish a cannabis regulatory commission that is responsible for regulatory enforcement within the tribe’s jurisdiction.
(b) To the extent consistent with federal law, the cannabis regulatory commission shall exercise exclusive regulatory authority over all commercial cannabis activity, by both Indians and non-Indians, in Indian country.
(c) The regulations adopted by the cannabis regulatory commission shall meet or exceed the standards adopted under the state regulatory scheme governing commercial cannabis activity, including all rights and responsibilities under the scheme that are assigned to state or local agencies. A tribe may issue tribal licenses for cultivation, manufacturing, distribution, testing, or retail in Indian country. A tribe may authorize multiple tribal licenses per premise and multiple premises per location. Premises are not required to be separate and distinct.
(d) A tribe is not subject to state cultivation or sales taxes related to commercial cannabis activity if the tribe imposes an equivalent tax on Indians and non-Indians engaging in commercial cannabis activity in Indian country and the tax revenue is used exclusively to fund essential governmental services.
(e) Commercial cannabis activity in Indian country is not subject to any sales or cannabis tax imposed by a local government whose geographical boundaries contain the Indian country. A tribe is encouraged to enter into a good faith agreement with the local government in order to mitigate impacts from increased utilization of public safety services.
(f) A tribe conducting commercial cannabis activity in Indian country, when engaging in sales outside Indian country, shall sell cannabis only to an entity operating with a state license.
(g) A tribe shall maintain exclusive authority over its land use and water resources.

SECTION 1.Section 19605.25 of the Business and Professions Code is amended to read:
19605.25.

(a)The board may approve an additional 15 minisatellite wagering sites in each zone, if all of the following conditions are met:

(1)No site is within 20 miles of a racetrack, a satellite wagering facility, or a tribal casino that has a satellite wagering facility. If the proposed minisatellite wagering facility is within 20 miles of one of the above-referenced satellite facilities, then the consent of each facility within a 20-mile radius must be given before the proposed minisatellite wagering facility may be approved by the board.

(2)An agreement in accordance with subdivision (a) of Section 19605.3 has been executed and approved by the board. In addition to the requirements set forth in that provision, the agreement shall specify which components of its racing program, including live, out-of-zone, out-of-state, and out-of-country races, an association or fair will make available to the site. The terms and conditions of the agreement, including all fees payable pursuant to paragraph (3) of that provision, a portion of which may be paid to horsemen in the form of purses, shall be subject to the approval of the horsemen’s organization responsible for negotiating purse agreements with the association or fair.

(3)The site is approved by the board.

(4)The wagers are accepted in an area that is accessible only to those who are at least 21 years of age.

(5)The board has approved the accommodation, equipment used in conducting wagering at the site, communications system, technology, and method used by the site to accept wagers and transmit odds, results, and other data related to wagering.

(b)Parimutuel clerks shall be available to service the self-service tote machines at these locations, and to cash wagering vouchers on a regularly scheduled basis.

(c)For purposes of commissions, deductions, and distribution of handle, wagers placed at minisatellite wagering sites shall be treated as if they were placed at satellite wagering facilities authorized under Section 19605, 19605.1, or 19605.2. Section 19608.4 shall apply to minisatellite wagering facilities.

(d)The written consent of the San Mateo County Fair shall be obtained before the approval of any minisatellite wagering site located within a 20-mile radius of its fairground.

(e)Minisatellite wagering facilities created pursuant to this section are not eligible for satellite wagering commission distributions pursuant to Section 19604.

(f)The board, in adopting regulations to implement this section, shall minimize the expense to both the operator of the minisatellite wagering facility and the host racetrack.

(g)If there are more than 15 applications for minisatellite wagering facilities in any zone, the board shall determine which facilities will generate the largest handle, and give priority to the approval of those facilities. The board shall license a minisatellite wagering facility for up to five years, and then review the operation and the size of the handle, and determine if it is in the best interest of horse racing to relicense the facility or, in the alternative, license another minisatellite wagering facility that might generate a greater handle.

(h)Except as may be provided in the agreement required pursuant to paragraph (2) of subdivision (a), no association or fair shall be required to make all or part of its racing program available to a minisatellite wagering facility. Notwithstanding subdivision (e) of Section 19608.2, all costs incurred by the organization executing that agreement in excess of the amounts distributable to the organization from wagers placed at the site on that racing program, shall be borne by the minisatellite wagering facility.