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AB-1417 Cannabis advertisement and marketing.(2019-2020)

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Date Published: 07/11/2019 09:00 PM
AB1417:v94#DOCUMENT

Amended  IN  Senate  July 11, 2019
Amended  IN  Senate  June 25, 2019
Amended  IN  Assembly  April 29, 2019
Amended  IN  Assembly  April 22, 2019
Amended  IN  Assembly  March 28, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 1417

Introduced by Assembly Member Blanca Rubio
(Coauthor: Assembly Member Low)

February 22, 2019

An act to amend Sections 26038 and 26151 of, and to add Section 26151.5 to, the Business and Professions Code, relating to cannabis, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


AB 1417, as amended, Blanca Rubio. Cannabis advertisement and marketing.
The Control, Regulate and Tax Adult Use of Marijuana Act of 2016 (AUMA), an initiative measure approved 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. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities. MAUCRSA imposes duties on the Bureau of Cannabis Control in the Department of Consumer Affairs, the Department of Food and Agriculture, and the State Department of Public Health with respect to the creation, issuance, denial, suspension, and revocation of licenses issued pursuant to MAUCRSA. MAUCRSA authorizes those licensing authorities to issue a citation to a licensee or unlicensed person for any act or omission that violates or has violated a provision of MAUCRSA or a regulation adopted pursuant to MAUCRSA, as specified. MAUCRSA provides that these sanctions are separate from, and in addition to, all other administrative, civil, or criminal remedies. MAUCRSA authorizes those licensing authorities to recover from the licensee or person who was the subject of the citation costs of investigation and enforcement, as specified.
MAUCRSA requires all cannabis advertisements and marketing to accurately and legibly identify the licensee responsible for that content by adding, at a minimum, the licensee’s license number.
This bill would impose a civil penalty on any licensee that violates that requirement, not to exceed $2,500 per day for each violation. The bill would provide that, in assessing the civil penalty, consideration is required to be given to the appropriateness of the amount assessed taking into account specified factors. The bill would allow the Attorney General, a district attorney, or a city attorney or prosecutor, or a person in the public interest prosecutor to bring a civil action for the civil penalty, as specified.
MAUCRSA, in addition to the requirement that all cannabis advertisements and marketing accurately and legibly identify the licensee responsible for the content, also places certain audience restrictions and age affirmation requirements on cannabis advertisement and marketing.
This bill would require an operator of an internet website, online service, online application, or mobile application to display a clear and reasonable statement, meeting specified requirements, to individuals who visit or use the internet website, online service, online application, or mobile application, and who are presented with any advertising or marketing for cannabis goods, containing specified explanations, including, among others, that cannabis products sold by unlicensed entities may not meet the safety, quality, or other standards required for the lawful sale of cannabis products by the State of California. The bill would prohibit an operator of an internet website, online service, online application, or mobile application that is operated primarily for the purpose of promoting, or disseminating information about, the sale of cannabis products in the State of California from displaying an advertisement for the sale of cannabis products unless the advertisement displays the license number of the licensee to which the advertisement pertains. This bill would impose a civil penalty on any person that violates these requirements, not to exceed $2,500 per day for each violation. The bill would provide that, in assessing the civil penalty, consideration is required to be given to the appropriateness of the amount assessed taking into account specified factors. The bill would allow the Attorney General, a district attorney, or a city attorney or prosecutor, or a person in the public interest prosecutor to bring a civil action for the civil penalty, as specified.
MAUCRSA requires moneys that are collected pursuant to the above-described provision authorizing a licensing authority to issue a citation, and that are associated with the recovery of investigation and enforcement costs, to be deposited into the Cannabis Control Fund, and requires an administrative fine amount to be deposited directly into the Cannabis Fines and Penalties Account. MAUCRSA requires, except as otherwise provided, moneys collected pursuant to MAUCRSA as a result of fines or penalties imposed under MAUCRSA to be deposited directly into the Cannabis Fines and Penalties Account, and requires these moneys to be available, upon appropriation by the Legislature.
This bill would require all civil penalties collected by civil action brought by the Attorney General or a person in the public interest pursuant to the provisions of this bill described above to be deposited into the Cannabis Advertisement Penalties Account, which this bill would create as an account in the Cannabis Control Fund, and would require, upon appropriation by the Legislature, all amounts deposited in the account to be allocated to licensing authorities to be used toward enforcement efforts against unlicensed commercial cannabis activity. The bill would require all civil penalties collected by a civil action brought by a district attorney or a city attorney or prosecutor to be used towards enforcement efforts against unlicensed commercial cannabis activity after reimbursement for costs.
MAUCRSA imposes specified restrictions on advertising or marketing placed in broadcast, cable, radio, print, and digital communications.
This bill would prohibit a technology platform from substituting an internal identification system in place of an active state licensee number issued by a state licensing authority pursuant to MAUCRSA. This bill would also require any advertising or marketing by a licensee placed in broadcast, cable, radio, print, and digital communication to contain a license number.
MAUCRSA imposes a civil penalty on a person engaging in commercial cannabis activity without a license as required by the act, of up to 3 times the amount of the license fee for each violation. That act provision requires all civil penalties imposed and collected pursuant to that provision by a licensing authority to be deposited into the General Fund, except as specified.
This bill would extend that civil penalty to persons aiding and abetting that unlicensed commercial cannabis activity.
MAUCRSA requires civil penalties collected by the Attorney General in an action brought against a person pursuant to the act on behalf of the people to be deposited into the General Fund.
This bill would extend that requirement to actions for civil penalties brought against a persons person pursuant to MAUCRSA by the Attorney General on the behalf of any participating agency. This bill would also instead require any civil penalties to be first used to reimburse the Attorney General and the participating agency for the costs of investigating and bringing the action for civil penalties, with the remainder collected, if any, to be deposited into the General Fund. By authorizing the expenditure of civil penalties, which are general funds, to be used to reimburse the Attorney General and the participating agency, this bill would make an appropriation.
AUMA authorizes the Legislature to amend the act to further the purposes and intent of the act with a 2/3 vote of the membership of both houses of the Legislature, except as provided.
This bill would declare that its provisions further the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act.
Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 26038 of the Business and Professions Code is amended to read:

26038.
 (a) A person engaging in commercial cannabis activity without a license as required by this division, or aiding and abetting such activity, shall be subject to civil penalties of up to three times the amount of the license fee for each violation, and the court may order the destruction of cannabis associated with that violation in accordance with Section 11479 of the Health and Safety Code. Each day of operation shall constitute a separate violation of this section. All civil penalties imposed and collected pursuant to this section by a licensing authority shall be deposited into the General Fund except as provided in subdivision (b). A violator shall be responsible for the cost of the destruction of cannabis associated with their violation.
(b) If an action for civil penalties is brought against a person pursuant to this division by the Attorney General on behalf of the people or on behalf of any participating agency, the penalty shall first be used to reimburse the Attorney General and the participating agency for the costs of investigating and bringing the action for civil penalties, with the remainder collected, if any, to be deposited into the General Fund. If the action is brought by a district attorney or county counsel, the penalty shall first be used to reimburse the district attorney or county counsel for the costs of bringing the action for civil penalties, with the remainder, if any, to be deposited into the General Fund. If the action is brought by a city attorney or city prosecutor, the penalty collected shall first be used to reimburse the city attorney or city prosecutor for the costs of bringing the action for civil penalties, with the remainder, if any, to be deposited into the General Fund.
(c) Notwithstanding subdivision (a), criminal penalties shall continue to apply to an unlicensed person engaging in commercial cannabis activity in violation of this division.

SEC. 2.

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

26151.
 (a) (1) All advertisements and marketing shall accurately and legibly identify the licensee responsible for its content, by adding, at a minimum, the licensee’s license number.
(2) A technology platform shall not display an advertisement by a licensee on an internet web page unless the advertisement displays the license number of the licensee.
(3) An outdoor advertising company subject to the Outdoor Advertising Act (Chapter 2 (commencing with Section 5200) of Division 3) shall not display an advertisement by a licensee unless the advertisement displays the license number of the licensee.
(4) A technology platform shall not substitute an internal identification system in place of an active license number issued by a licensing authority pursuant to this division.
(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. Any advertising or marketing by a licensee placed in broadcast, cable, radio, print, and digital communication shall contain a license number.
(c) Any advertising or marketing involving direct, individualized communication or dialogue controlled by the licensee shall utilize a method of age affirmation to verify that the recipient is 21 years of age or older before engaging in that communication or dialogue controlled by the licensee. 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.
(e) (1) Any licensee who has violated paragraph (1) of subdivision (a) shall be liable for a civil penalty not to exceed two thousand five hundred dollars ($2,500) per day for each violation in addition to any other penalty established by law. In assessing a civil penalty under this subdivision, consideration shall be given to the appropriateness of the amount assessed taking into account all of the following:
(A) The nature and extent of the violation.
(B) Whether the licensee took good faith measures to comply with paragraph (1) of subdivision (a).
(C) The history of previous violations.
(2) A civil penalty may be assessed and recovered pursuant to this section in a civil action brought in any court of competent jurisdiction by any of the following:
(A) The Attorney General in the name of the people of the State of California.
(B) Any district attorney.
(C) Any city attorney of a city having a population in excess of 750,000 or, with the consent of the district attorney, by a city prosecutor in any city or city and county having a full-time city prosecutor.

(D)Any person who brings the action in the public interest if both of the following apply:

(i)The action is commenced more than 60 days after the person has given notice of the violation that is the subject of the action to the Attorney General and the district attorney and any city attorney or prosecutor in whose jurisdiction the violation is alleged to occur and to the alleged violator.

(ii)Neither the Attorney General nor any district attorney nor any city attorney or prosecutor has commenced and is diligently prosecuting an action against that violation.

(3) (A) Notwithstanding subdivision (b) of Section 26038, all civil penalties collected by a civil action brought by the Attorney General or by a person in the public interest pursuant to this subdivision shall be deposited into the Cannabis Advertisement Penalties Account, which is hereby created as an account in the Cannabis Control Fund. Upon appropriation by the Legislature, all amounts deposited in the Cannabis Advertisement Penalties Account shall be allocated to licensing authorities to be used toward enforcement efforts against unlicensed commercial cannabis activity.
(B) All civil penalties collected by a civil action brought by a district attorney or a city attorney or prosecutor shall be used towards enforcement efforts against unlicensed commercial cannabis activity, after reimbursement to the city or county, as applicable, for the costs of bringing the civil action.

SEC. 3.

 Section 26151.5 is added to the Business and Professions Code, to read:

26151.5.
 (a) An operator of an internet website, online service, online application, or mobile application shall display a clear and reasonable statement to individuals who visit or use the internet website, online service, online application, or mobile application, and who are presented with any advertising or marketing for cannabis goods, explaining all of the following:
(1) The unlicensed sale of cannabis products by any entity not licensed for that sale by the State of California and the locality within which that entity is doing business violates California law.
(2) The cannabis products sold by unlicensed entities may not meet the safety, quality, or other standards required for the lawful sale of cannabis products by the State of California.
(3) Consumers who purchase cannabis products from unlicensed entities do so at their own risk.
(b) The clear and reasonable statement required pursuant to this section shall be prominently displayed on any homepage and landing page of the operator’s internet website, online service, online application, or mobile application.
(c) An operator of an internet website, online service, online application, or mobile application that is operated primarily for the purpose of promoting, or disseminating information about, the sale of cannabis products in the State of California shall not display an advertisement for the sale of cannabis products unless the advertisement displays the license number issued pursuant to this division of the licensee to which the advertisement pertains.
(d) (1) Any person who has violated this section shall be liable for a civil penalty not to exceed two thousand five hundred dollars ($2,500) per day for each violation in addition to any other penalty established by law. In assessing a civil penalty under this subdivision, consideration shall be given to the appropriateness of the amount assessed taking into account all of the following:
(A) The nature and extent of the violation.
(B) Whether the licensee took good faith measures to comply with paragraph (1) of subdivision (a).
(C) The history of previous violations.
(2) A civil penalty may be assessed and recovered pursuant to this section in a civil action brought in any court of competent jurisdiction by any of the following:
(A) The Attorney General in the name of the people of the State of California.
(B) Any district attorney.
(C) Any city attorney of a city having a population in excess of 750,000 or, with the consent of the district attorney, by a city prosecutor in any city or city and county having a full-time city prosecutor.

(D)Any person who brings the action in the public interest if both of the following apply:

(i)The action is commenced more than 60 days after the person has given notice of the violation which is the subject of the action to the Attorney General and the district attorney and any city attorney in whose jurisdiction the violation is alleged to occur and to the alleged violator.

(ii)Neither the Attorney General nor any district attorney nor any city attorney or prosecutor has commenced and is diligently prosecuting an action against such violation.

(3) (A) Notwithstanding subdivision (b) of Section 26038, all civil penalties collected by a civil action brought by the Attorney General or by a person in the public interest pursuant to this subdivision shall be deposited into the Cannabis Advertisement Penalties Account, which is hereby created as an account in the Cannabis Control Fund. Upon appropriation by the Legislature, all amounts deposited in the Cannabis Advertisement Penalties Account shall be allocated to licensing authorities to be used toward enforcement efforts against unlicensed commercial cannabis activity.
(B) All civil penalties collected by a civil action brought by a district attorney or a city attorney or prosecutor shall be used toward enforcement efforts against unlicensed commercial cannabis activity, after reimbursement to the city or county, as applicable, for the costs of bringing the civil action.

SEC. 4.

 The Legislature finds and declares that this act furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act.