Three New Medical Marijuana Bills Approved by the California Legislature, Pending Approval by Governor

September 28, 2015 | Bulletin No. 1273978.1

Background

On September 14, 2015, three new medical marijuana bills were approved by the California Legislature and are now pending approval by Governor Brown. According to a bulletin issued by the League of California Cities, the Governor's approval is anticipated since his staff was closely involved in the final drafting of each measure. The adopted bills pending approval are: AB 243, which primarily addresses state regulation of marijuana cultivation, as well as the scope of local control related to marijuana cultivation; AB 266, which primarily governs the licensing of medical marijuana dispensaries, manufacturers, testing laboratories, and transport; and SB 643, which primarily addresses medical recommendations for medical marijuana and regulates professional standards for such recommendations. This will also addresses the transportation and storage of medical marijuana unrelated to manufacturing. The bills also establish a licensing classification system for medical marijuana cultivation.

Medical Marijuana Cultivation

AB 243 requires that the Department of Food and Agriculture, the Department of Pesticide Regulation, the State Department of Public Health, the Department of Fish and Wildlife, and the State Water Resources Control Board promulgate regulations or standards relating to medical marijuana and its cultivation, particularly in regard to pesticide use, edible medical marijuana preparation and labeling. AB 243 further requires various state agencies to take specified actions to mitigate the impact that marijuana cultivation has on the environment.

Under AB 243, a person or entity seeking to cultivate medical marijuana must obtain licensing approvals from local agencies as well as from the newly created Medical Marijuana Cultivation Program before cultivating medical marijuana. The licensing requirements do not apply to a qualified patient cultivating in an area of less than 100 square feet, or to primary caregivers who are cultivating medical marijuana in an area of less than 500 feet, and for use by no more than five qualified patients. Nonetheless, AB 243 specifically states that the exemption of certain activities from licensing requirements does not prevent local agencies from limiting or banning medical marijuana cultivation, storage, manufacturing, transportation, provision, and more.

Note that if a local agency "does not have land use regulations or ordinances regulating or prohibiting the cultivation of marijuana, either expressly or otherwise under principles of permissive zoning, or chooses not to administer a conditional permit program […], then commencing March 1, 2016, [the state] shall be the sole licensing authority for medical marijuana cultivation applicants in that city, county, or city and county." Thus, a local agency that may want to engage in local zoning regulation related to medical marijuana should do so before March 1, 2016.

Manufacturer, Dispensary and Laboratory Licensing

AB 266 establishes the Medical Marijuana Regulation and Safety Act ("Act") for the licensure and regulation of medical marijuana and establishes a Bureau of Medical Marijuana Regulation, to be housed within the Department of Consumer Affairs (DCA) which will be responsible to administer and enforce the provisions of the Act. AB 266 also requires the Board of Equalization to adopt a system for reporting the movement of commercial cannabis and cannabis products.

The new statutes protect local licensing, zoning and police power authority over medical marijuana cultivation, provision, manufacturing, transportation, and laboratory testing as they establish a statewide regulatory scheme, and provides for dual licensing by the state and local governments. In fact, local revocation of a license or permit will unilaterally terminate the ability of the business to operate in that jurisdiction. AB 266 places an upper limit on medical marijuana cultivation by any single licensee of four acres statewide, subject to local ordinances.  

State licenses will be issued beginning in January 2018. And, AB 266 specifies that the DCA will issue licenses for the following: Dispensary, Distributor, Transport, and Special Dispensary Status for licensees who have a maximum of three dispensaries.

SB 266 includes a grandfather exemption for vertically integrated businesses (businesses that operate and control their own cultivation, manufacturing, and dispensing operations) if a local ordinance allowed or required such a business model and was enacted on or before July 1, 2015.

Transportation

AB 266 requires the establishment of uniform health and safety standards, testing standards, and security requirements at dispensaries and during transport of medical cannabis products.

Medical Standards and Regulation

SB 643 sets forth standards for a physician and surgeon prescribing medical cannabis and requires the Medical Board of California to prioritize its investigative and prosecutorial resources to identify and discipline physicians and surgeons that have repeatedly recommended excessive cannabis to patients for medical purposes or repeatedly recommended cannabis to patients for medical purposes without a good faith examination. AB 643 also prohibits a physician and surgeon who recommends cannabis to a patient for a medical purpose from accepting, soliciting, or offering any form of remuneration from a facility licensed under the Medical Marijuana Regulation and Safety Act.

This bill will require the Governor, under the Medical Marijuana Regulation and Safety Act, to appoint, subject to confirmation by the Senate, a chief of the Bureau of Medical Marijuana Regulation. The bill provides that the DCA has the sole authority to create, issue, renew, discipline, suspend, or revoke licenses for the transportation and storage, unrelated to manufacturing, of medical marijuana, and would authorize the DCA to collect fees for its regulatory activities and impose specified duties on this DCA in this regard. Beginning January 1, 2016, physicians that recommend cannabis without a prior examination may be subject to discipline for unprofessional conduct. In addition, new restrictions will be placed on advertising for physician recommendations for medical marijuana.

What this case means to you

Some speculate that the Legislature is establishing the regulatory infrastructure to position the state to transition from medical marijuana to recreational marijuana. Regardless, once signed by the Governor, these bills provide for a comprehensive overhaul of California's medical marijuana laws governing every aspect of medical marijuana, including cultivation, medical standards, manufacturing, laboratory testing, environmental impacts, distribution, and more. While creating this comprehensive state regulatory system, the Legislature has nonetheless carved out a broad area of local authority, including licensing, zoning, and other police powers. Any local agencies that seek to regulate conditional permitting for cultivation should do so prior to March 1, 2016 under the new Health and Safety Code section 11362.777(c)(4).

Questions

This is a complex set of bills. If you have questions about the scope of your local authority as a result of this legislation, or if you have any other questions concerning this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.

Mona Ebrahimi | 916.321.4500

Maggie W. Stern | 916.321.4500