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AB-1138 Unlawful cannabis activity: civil enforcement.(2021-2022)

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Date Published: 09/14/2021 09:00 PM
AB1138:v94#DOCUMENT

Enrolled  September 14, 2021
Passed  IN  Senate  September 09, 2021
Passed  IN  Assembly  September 09, 2021
Amended  IN  Senate  September 03, 2021
Amended  IN  Senate  July 15, 2021
Amended  IN  Senate  July 08, 2021
Amended  IN  Assembly  April 21, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 1138


Introduced by Assembly Member Blanca Rubio
(Coauthors: Assembly Members Lackey and Smith)
(Coauthors: Senators Archuleta, Hurtado, Ochoa Bogh, and Wilk)

February 18, 2021


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


LEGISLATIVE COUNSEL'S DIGEST


AB 1138, Blanca Rubio. Unlawful cannabis activity: civil enforcement.
The Control, Regulate and Tax Adult Use of Marijuana Act (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 establishes the Department of Cannabis Control and imposes duties on the department with respect to the creation, issuance, denial, suspension, and revocation of licenses issued pursuant to MAUCRSA.
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.
This bill would impose a civil penalty on persons aiding and abetting unlicensed commercial cannabis activity of up to 3 times the amount of the license fee for each violation, but in no case more than $30,000 for each violation. The bill would prohibit filing an action for civil penalties brought against a person pursuant to MAUCRSA 3 years after the discovery of the violation.
The bill would require a court to consider certain factors in assessing a penalty for engaging in or aiding and abetting unlicensed commercial cannabis activity. The bill would require that certain factors be demonstrated in order to prove that a person aided and abetted an unlicensed cannabis activity. The bill would authorize an action for civil penalties on persons aiding and abetting unlicensed commercial cannabis activity to be brought exclusively by the Attorney General, or in jurisdictions meeting specified population requirements, by the city prosecutor or city or county counsel.
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 instead require civil penalties collected by the Attorney General in an action brought against a person pursuant to MAUCRSA on behalf of the people, the department, or a participating agency to be first used to reimburse the Attorney General and the department or participating agency for the costs of investigating and prosecuting the action brought 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 department, or 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) (1) A person engaging in commercial cannabis activity without a license as required by this division shall be subject to civil penalties of up to three times the amount of the license fee for each violation. Each day of operation shall constitute a separate violation of this section.
(2) A person aiding and abetting unlicensed commercial cannabis activity shall be subject to civil penalties of up to three times the amount of the license fee for each violation, but in no case shall the penalty exceed thirty thousand dollars ($30,000) for each violation. Each day of operation of unlicensed commercial cannabis activity that a person is found to have aided and abetted shall constitute a separate violation of this section.
(3) In assessing a penalty, a court shall give due consideration to the appropriateness of the amount of the civil penalty with respect to factors the court determines to be relevant, including the following:
(A) The gravity of the violation by the licensee or person.
(B) The good faith of the licensee or person.
(C) The licensee’s or person’s history of previous violations.
(D) Whether, and to what extent, the licensee or person profited from the unlicensed cannabis activity.
(4) Cannabis associated with a violation described in this subdivision may be destroyed in accordance with Section 11479 of the Health and Safety Code. The person in violation shall be responsible for the cost of the destruction of cannabis associated with their violation.
(b) An action for civil penalties brought against a person pursuant to this division shall not be commenced unless the action is filed within three years from the date of the violation.
(c) All civil penalties imposed and collected pursuant to this section by a court shall be deposited into the General Fund except as provided in subdivision (e).
(d) For the purposes of this section, in order to prove that a person aided and abetted an unlicensed cannabis activity all of the following must be demonstrated:
(1) The person was an owner, officer, controlling shareholder, or in a similar position of authority allowing them to make command or control decisions regarding the operations and management of the unlicensed cannabis activity or the property in which the activity is taking place.
(2) The person had actual knowledge that the cannabis activity was unlicensed and that the cannabis activity required a license.
(3) The person provided substantial assistance or encouragement to the unlicensed cannabis activity.
(4) The person’s conduct was a substantial factor in furthering the unlicensed cannabis activity.
(e) (1) 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 the department or a participating agency, the penalty shall first be used to reimburse the Attorney General and the department or the participating agency for the costs of investigating and prosecuting the action, including expert fees and reasonable attorney’s fees, with the remainder, if any, to be deposited into the General Fund.
(2) If the action is brought by a county counsel, the penalty shall first be used to reimburse the county counsel for the costs of bringing the action for civil penalties, with the remainder, if any, to be deposited into the General Fund.
(3) 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.
(4) Actions for civil penalties pursuant to paragraph (2) of subdivision (a) shall be brought exclusively by the Attorney General on behalf of the people, on behalf of the department, or on behalf of the participating agency, or by a city or county counsel or city prosecutor in a city or county having a population in excess of 750,000.
(f) Notwithstanding subdivision (a), criminal penalties shall continue to apply to an unlicensed person engaging in commercial cannabis activity in violation of this division.
(g) This section does not limit, preempt, or otherwise affect any other state or local law, rule, regulation, or ordinance applicable to the conduct described in subdivision (a), or otherwise relating to commercial cannabis activities.

SEC. 2.

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