Existing law, the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), which includes the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), enacted by the voters at the November 8, 2016, statewide general election, provides for the licensure and regulation of commercial cannabis activity. MAUCRSA specifies the requirements to obtain a license to engage in commercial cannabis activity. 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 and requiring the tribe to establish a tribal cannabis regulatory commission or agency, as defined, 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 states 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 jurisdiction 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. establish the Cannabis Regulatory Enforcement Act for Tribal Entities or the CREATE Act and would require a tribe entering into a tribal cannabis regulatory agreement with the Governor, as ratified by the Legislature, to establish a tribal cannabis regulatory commission or agency pursuant to the tribes established governmental process.

Existing law, the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), which includes the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), enacted by the voters at the November 8, 2016, statewide general election, provides for the licensure and regulation of commercial cannabis activity. MAUCRSA specifies the requirements to obtain a license to engage in commercial cannabis activity. 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 and requiring the tribe to establish a tribal cannabis regulatory commission or agency, as defined, 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 states 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 jurisdiction 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.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2017 - 2018 Regular Session

AB 924 (Bonta) - Indian tribes: commercial cannabis activity

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

Establishes the Cannabis Regulatory Enforcement Act for Tribal Entities (CREATE Act), which requires a tribe entering into a tribal cannabis regulatory agreement with the Governor, to establish a tribal cannabis regulatory commission or agency, pursuant to a tribe’s established governmental process.

Fiscal Impact:

Staff notes the following fiscal analysis includes significant unknowns as the bill’s broad language lends itself to various implementation approaches. In addition, the negotiated contents of a future agreement between a tribe and the Governor are unknowable at this time; costs could vary greatly, depending on the content and scope of the agreement. Staff notes the bill also presents possible General Fund cost pressures to backfill activities to the extent that special fund revenues would be insufficient to cover costs of the bill’s provisions.

• Indeterminate, ongoing administrative cost pressures (likely, range from low- to mid-hundreds of thousands, special fund) for each impacted department to review, and if necessary, amend existing regulations, and/or promulgate new regulations related to cannabis on tribal lands. Typically, a single, simple regulatory package takes about 15-18 months on average to develop. Depending on the complexity of the regulations and whether there are substantive differences between existing cannabis law and any proposed changes on tribal lands, additional staff resources may be needed.
• Ongoing, but unknown enforcement costs (ranging from mid-hundreds of thousands to possibly, millions, special fund) for various departments, including but not limited to, Bureau of Cannabis Control under the Department of Consumer Affairs, Department of Fish and Wildlife (DFW), Department of Food and Agriculture (CDFA), Department of Public Health (CDPH), and State Water Resources Control Board (Water Board), for compliance for licensing, product packaging, and other specified requirements set forth in existing law that may be run in parallel to a construct to be negotiated.
• Potential cannabis revenue gains or losses depending on the nature of the agreement and negotiations between specified tribes and the Governor, as to remittance of the sales of products on tribal lands.
• At the time of the analysis, it was unclear the bill’s referenced “existing established governmental process.” If the Little Hoover Commission could serve as a proxy for a non-tribal governmental commission, it has a $1 million annual budget and is comprised of seven staff: an executive director, three managers, and three analysts. The Little Hoover Commission’s personnel costs (salaries and benefits) total about $700,000 annually; operating expenses and equipment comprise the other $300,000 per year. Given that the bill does not specify (1) the number of Commission members, (2) how they would be staffed, and (3) whether members would receive per diem or have their travel expenses reimbursed, there may special fund cost pressures. In addition, it remains unclear whether each individual tribe would be responsible for its own commission or if there could be a group of tribes that would enter into an agreement with the Governor, and one single regulatory commission or agency to represent the tribes.

Background:

Tribal sovereignty refers to the inherent authority of Federally Recognized Tribes to govern themselves within the borders of the United States of America. The federal government recognizes tribal nations as "domestic dependent nations". The Constitution and other federal laws grant local sovereignty to tribal nations, but do not grant full sovereignty equivalent to that of foreign nations, hence the term "domestic dependent nations." Existing limitations to these authorities are defined through acts of Congress, treaties, and federal court decisions.

The original tribal state gaming compacts in California established the Revenue Sharing Trust Fund (RSTF) to ensure that all federally recognized tribes in California received some of the benefits from tribal gaming, regardless of whether they operated a casino. Tribes contribute to the RSTF based on the terms of their tribal compact: some contribute a flat fee, some contribute based on the number of slot machines, and some contribute a percentage of their revenue. The money in the RSTF is distributed to tribes that either do not operate a casino or have a casino with less than 350 slot machines. Each of the 72 tribes currently eligible for the RSTF receives $1.1 million per year (distributed in quarterly increments by the CGCC), regardless of size, need, effective use of prior distributions, or any other consideration. The bill does not appear to mirror existing gaming compact language.

In 2015, California enacted three bills —AB 243 (Wood, Chapter 688); AB 266 (Bonta, Chapter 689); and SB 643 (McGuire, Chapter 719)—that collectively established a 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). Senate Bill 837 (Committee on Budget, Chapter 32, Statutes of 2016) built upon the MCRSA framework and added comprehensive environmental safeguards that require the State Water Resources Control Board, in consultation with the Department of Fish and Wildlife, to adopt principles and guidelines governing the use of water for cannabis cultivation with the goal of protecting streams and rivers from illegal diversion. California voters recently approved Proposition 64, the Adult Use of Marijuana Act (AUMA) in November 2016. Under Proposition 64, adults 21 years of age or older can legally grow, possess, and use cannabis for non-medicinal purposes, with certain restrictions. In addition, beginning on January 1, 2018, AUMA makes it legal to sell and distribute cannabis through a regulated business. In June 2017, Senate Bill 94 (Committee on Budget, Chapter 27), integrated MCRSA with AUMA to create the Medicinal and Adult‐Use Cannabis Regulation and Safety Act (MAUCRSA). Under MAUCRSA, a single regulatory system governs the medical and adult use cannabis industry in California.

Previous versions of SB 924 encapsulated the crux of the policy discussion, specifically, how MAUCRSA and Proposition 64 did not include provisions related to how Indian tribes would interact with the regulated California marketplace, in which state-licensed businesses are limited to conducting business with other state-licensed businesses.

Proposed Law:

Establishes the Cannabis Regulatory Enforcement Act for Tribal Entities (CREATE Act), which requires a tribe entering into a tribal cannabis regulatory agreement with the Governor, to establish a tribal cannabis regulatory commission or agency, pursuant to a tribe’s established governmental process.

Staff Comments:

Any agreement between the Governor and a tribe must receive legislative review and ratification. To the extent the Governor does negotiate an agreement with a tribe related to cannabis regulatory structures for tribes, staff notes a more detailed fiscal estimate may be available to reflect the components of that agreement.

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SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2017 - 2018 Regular

Indian tribes: commercial cannabis activity

Authorizes the Governor to enter into an agreement with a federally recognized Indian tribe to engage in California’s commercial cannabis market, upon ratification by the Legislature.

Background

Federal law relating to cannabis. Federal law prohibits the manufacture, possession, sale, or distribution of cannabis. In 1970, Congress enacted the Controlled Substances Act (CSA) which sets forth five schedules of specified drugs. For a drug to be designated a Schedule I controlled substance, CSA states the substance must have “a high potential for abuse," and have "no currently accepted medical use” in the United States. Federal law lists cannabis as a Schedule I controlled substance.

State law relating to cannabis. In 1996, California voters approved Proposition 215, known as the Compassionate Use Act of 1996 (CUA). Under CUA, qualified patients with specified illnesses, and their primary caregivers, cannot be prosecuted for possessing or cultivating medical cannabis upon the written or oral recommendation or approval of an attending physician. In other words, CUA allowed qualified patients and primary caregivers to obtain and use medical cannabis.

The Legislature clarified CUA by enacting SB 420 (Vasconcellos, 2003). SB 420 exempts qualified patients and caregivers from prosecution for using or cultivating medical cannabis. It also protects patients with valid identification cards from both arrest and criminal liability for possession, transportation, delivery, or cultivation of cannabis. The industry remained largely unregulated at the state level until 2015, when the Legislature enacted the Medical Marijuana Regulation and Safety Act (MMRSA). MMRSA comprised a package of legislation that comprehensively regulated many aspects of medical cannabis including cultivation, manufacturing, transportation, distribution, sale, and product safety. In 2016, several bills made slight changes to MMRSA, including renaming the Act the Medical Cannabis Regulation and Safety Act.

On November 8^th, 2016, California voters approved Proposition 64—the Control, Regulate and Tax Adult Use of Marijuana Act (Act)—which legalized the recreational use of cannabis by adults age 21 and older. The Act provides for the licensure and regulation of commercial adult marijuana activities by various state agencies.

The Act imposes a cannabis excise tax upon purchasers of cannabis or cannabis products sold in this state, equal to 15% of the retail sale’s gross receipts. The initiative establishes a cultivation tax as well at the following rates:

• $9.25 per dry-weight ounce on cannabis flowers, and
• $2.75 per dry-weight ounce on cannabis leaves.

State and local governments also impose sales and use taxes on cannabis, on top of the excise tax and the cultivation tax. The sales and use tax is based upon the retailer's gross receipts. The state sales and use tax rate is equal to 7.25%, and local rates generally add up to an additional 2%, and even more in some jurisdictions. The cultivation tax would not apply to cannabis cultivated for personal use.

Less than a year later in June 2017, the Legislature enacted SB 94 (Committee on Budget and Fiscal Review, 2017), which integrated MMRSA with the Act to create the Medicinal and Adult Use Cannabis Regulation and Safety Act (MAUCRSA). Among other things, MAUCRSA consolidated the licensure and regulation of commercial medicinal and adult-use cannabis activities.

Tribal sovereignty. Native Americans occupy a unique legal position in America. The U.S Constitution vests Congress with the authority to engage in relations with tribes—sovereign nations that existed long before the founding of the Republic. This sovereignty was first affirmed in 1832 by the United States Supreme Court in Worcester v. Georgia, 31 U.S. 515, which stated that “the Indian nations had always been considered as distinct, independent political communities retaining their original natural rights as undisputed possessors of the soil, from time immemorial.” In other words, tribes have an inherent right to self-govern. As a result, state laws generally do not apply to Native Americans on tribal land, except where explicitly allowed by the federal government.

Public Law 280. Before 1953, both the federal government and tribal courts shared jurisdiction over almost all civil and criminal matters involving Native Americans on tribal lands. The states had no jurisdiction. In 1953 Congress passed Public Law 280 (PL 280) which gave six states—including California—criminal jurisdiction and civil adjudicatory jurisdiction over tribal lands located in their states. However, the transfer of authority for criminal jurisdiction depends on if the victim and offender are either Native American or non-Native American. For example, states have exclusive authority for criminal offenses (ex. murder, rape, assault, etc.) of non-Native Americans committed against both Native Americans and non-Native Americans on tribal land. Yet, states and tribes share jurisdiction if both the offender and victim are Native American and the act is committed on tribal lands.

Civil adjudicatory jurisdiction is more complicated. While PL 280 opens state courts to civil and criminal actions involving Native Americans, it doesn’t subject tribes to the full range of state regulation. The U. S. Supreme Court ruled in Bryan v. Itasca County, Itasca County, 426 U.S. 373 (1976) that in PL 280, it “was not the Congress’s intention to extend to the States the ‘full panoply of civil regulatory powers,’ but essentially to afford Indians a judicial forum to resolve disputes among themselves and with non-Indians.”

PL 280 did not authorize state civil regulatory jurisdiction. States may not apply laws related to such matters as environmental control, land use (ex. zoning), fire codes, labor laws, and licenses if those laws are part of a general state regulatory scheme. It also denied states the power to legislate certain matters such as federally guaranteed hunting and fishing rights, which are matters considered so central to the very definition of tribes. The state—generally—cannot levy taxes on tribal lands either.

In other words, PL 280 significantly changed the division of legal authority among, tribal, federal, and state governments. Tribes, without any tribal consent, had to deal with increased state authority and state control over a broad range of reservation activities. Generally, PL 280 brought about an increased role for the state criminal justice systems on tribal lands.

Indian Regulatory Gaming Act. In 1988, Congress enacted the Indian Regulatory Gaming Authority (IGRA) as the federal statute governing Indian gaming in the United States. IGRA provided a statutory basis for the operation of gaming by tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments. It established a statutory basis for regulating tribal gaming to ensure that tribes were the primary beneficiary of the gaming operation and that gaming was conducted both fairly and honestly by both operators and players. Additionally, it established federal standards for gaming as well as a National Indian Gaming Commission to address any congressional concerns.

The tribal gaming regulatory system rests on overlapping jurisdiction among the three sovereigns involved: the federal government, the state in which a tribe is located, and the tribe itself. IGRA makes Class III gaming activities (ex. slot machines) lawful on the lands of federally recognized tribes only if such activities are authorized by a tribal ordinance; located in a state that permits gaming for any purpose by any person, organization or entity; and conducted in conformity with a gaming compact entered into between the tribe and the state. The compact must also be approved by the Secretary of the Interior. States enter into compacts out of respect for the sovereignty of tribes.

In California, the Governor—under the California Constitution—is authorized to negotiate and conclude compacts with tribes. However, these compacts are subject to ratification by the Legislature. Additionally, these compacts can be amended years later. Amendments are negotiated between the Governor and tribes, and then brought back to the Legislature for additional ratification. Once ratified, the amendments supersede the old compact. The first compacts, ratified in 1999, were around 50 pages. However, compacts have become more and more detailed. Today, compacts typically range between 150-250 pages. U.S district courts have jurisdiction over issues that cannot be settled with amendments or good faith negotiations.

Cannabis and tribes. California cannabis laws—MMRSA, the Act, and MAUCRSA—were silent regarding Native Americans participating in cannabis activities and did not include any provisions regarding the governance of such activity. Thus far, the California Bureau of Cannabis Control has denied Native Americans on tribal land the ability to seek state licensees unless they cede all licensing power to the state. The Bureau’s emergency regulations require any applicant to “submit a written waiver of sovereign immunity to the Bureau with any license application or renewal.” Since state cannabis law—MAUCRSA—only allows licensed cannabis businesses to engage with other licensed cannabis businesses, tribal cannabis businesses without state licenses are locked out of the legal market. While the budding cannabis industry could provide tribes with an exciting new economic opportunity, it also brings a great deal of uncertainty as to how to best integrate tribes into California’s legal market since they have sovereign immunity.

The author would like to establish an agreement—between the state and tribes—that allow tribes to engage in the state’s commercial cannabis market.

Proposed Law

Assembly Bill 924 authorizes the Governor to negotiate—on behalf of the State of California—an agreement with tribes to engage in the state’s commercial cannabis market. A tribe entering into a cannabis agreement with the state must establish a tribal cannabis regulatory commission or agency pursuant to its establishing governmental process to oversee tribal cannabis activity. The Legislature must ratify any agreement.

The bill also includes findings and declarations to support its purposes.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “Under current law, tribes are not addressed in the Medical Cannabis Regulation and Safety Act (MCRSA) passed by the California legislature in 2015, the Adult Use of Marijuana Act (AUMA) approved by the voters in 2016, or the Medicinal and Adult- Use Cannabis Regulation and Safety Act of 2017. State licensees are only permitted to work with other state licensees, and therefore cannot contract with tribal licensees. The state has adopted emergency regulations which provide that licensees in Indian country can apply for a state license, provided that the tribe waives its immunity from suit and its exclusive civil jurisdiction over on-reservation activities to the state. Tribes are subject to state criminal laws pursuant to P.L. 280, but they are not subject to the civil jurisdiction of the state. Tribes can establish cultivation, manufacturing, and retail commercial cannabis operations in Indian country under their own authority, and they can sell retail product to non-Indian consumers visiting the tribe.

The existing law excludes tribes from the California commercial cannabis market. Tribes can sell to California consumers from Indian country, and the product that is sold in Indian country is not required to be cultivated, manufactured, packaged, labeled, or tested pursuant to California standards. Such sales are also not subject to state taxation and tribes can significantly undercut the market. The only legal access for tribes to the commercial cannabis market is through the state emergency regulations, which require tribes to concede civil jurisdiction over Indian country to the state. Under the emergency regulations, tribes would have to act as if they are not sovereign governments for purposes of commercial cannabis, and this is unacceptable.”

2. And the enforcement goes to…. While PL 280 transferred criminal enforcement authority on tribal lands from the federal government to certain state governments—California included—it did not grant civil regulatory authority. In other words, PL 280 does not allow California to regulate compliance with either state cannabis laws or tribal lands. For example, if Native Americans had state cannabis licenses, and they were not complying with state cannabis laws, the state has no ability to regulate the licensees’ actions. The state can enlist tribal governments for help, but with sovereign immunity, tribes have ultimate authority over regulatory issues. Thus, states cannot apply cannabis law uniformly to both state licensees off tribal land and on tribal land. As a result, inadequate enforcement of regulations and taxes presents a significant risk, which could result in market dislocation leaving state cannabis growers at a disadvantage due to higher costs. However, tribes are already growing and selling cannabis outside of California’s legal market, and providing tribes a mechanism for fair competition may help create equity in the state’s cannabis industry. The Committee may wish to consider the trades off AB 924 presents by allowing tribes with sovereign immunity access to California’s cannabis market.

3. Process. When introduced on February 16^th, 2017, AB 924 made technical and clarifying changes to Horse Racing Law pertaining to the operation of mini-satellite wagering sites in California. The Assembly approved the bill on May 5^th, 2017, by a vote of 77 to 0. However, once in Senate Rules Committee, the bill was stripped of its original content and amended to return to commercial cannabis activity and tribes. The newly amended bill called for the Governor to negotiate an agreement between the state and the tribes that allowed tribes to participate in the state’s commercial cannabis market. On June 18^th, 2018, the author amended AB 924 to include new language, which laid out the minimum requirements that must be included in an agreement negotiated between the Governor and the tribes in greater detail. On Monday June 25^th, 2018, the Senate Committee on Business, Professions, and Economic Development approved AB 924 out of Committee by a vote of 8 to 0 as pursuant to amendments to be taken in the Senate Committee on Governance and Finance. The amendments revised the findings and declarations, deleted its former contents and inserted its current provisions allowing the Governor to negotiate an agreement subject to ratification by the Legislature.

4. Keep in mind. Negotiating an agreement between the state and tribes regarding tribal integration into the state’s cannabis market is difficult. The complex history of tribal and state law, the overlapping jurisdiction among the two sovereign entities, and the classification of marijuana at the federal level will not be easy to navigate. As an agreement is discussed, it’s important to keep the following issues in mind:

1. Regulatory Commission. AB 924 calls for any tribe entering into an agreement with the state to establish a tribal regulatory commission to oversee tribal cannabis activity. How will these regulatory commissions be funded? Will these regulatory commissions hold their licensees to the same standards as state licensees are held?
2. Environment. Cannabis cultivation has an impact on the environment and state cannabis growers are subject to strict environmental laws. Will tribes be subject to similar environmental standards? If tribes are not subject to the same environmental standards, how will the state and local jurisdiction fund programs to mitigate tribal cannabis activity’s impact on the environment?
3. Labor. In California, workers are subject to certain labor requirements such as minimum wage, labor conditions, and employment practices. Tribes have their own, separate, employment standards.
4. Taxes. Generally tribes are exempt from state taxes, including sales and use tax. Whether the retailer is a Native American or non-Native American though, they must collect the tax and remit it to the state for sales to non-Native Americans. If state taxes or other taxes equivalent to the state’s cannabis taxes are not imposed, there could be price variances among tribal cannabis products and state cannabis products.
5. Compliance Audits. If any agreement allows for compliance audits as a means of verifying state and tribal activity, how will these compliance audits be conducted? Is there a minimum amount of time needed for notification before a compliance audit is conducted? Who is paying for the additional costs associated with compliance audits? How often can compliance audits be conducted?
6. Fees. Tribal cannabis activity could generate additional costs for the state. These costs could include, law enforcement as well as agreement implementation, compliance, and administrative costs. Where will the additional funding come from to support the extra services needed? Can states charge fees on tribal cannabis activity to help pay for the incremental costs incurred?
7. Local governments. How will tribes interact with local jurisdictions whose borders touch tribal lands? Will agreements be made between local jurisdictions and tribes as well? Can local jurisdictions impose fees if there is an increase in the demand for public services due to tribal cannabis activity?
8. Disagreements. When any agreement is made, and there is a disagreement between the state and tribes, how will the disagreement be handled? If there are disagreements with tribal gaming compacts, the federal government helps mitigate the situation through the National Indian Gaming Commission or the U.S District Court. However, cannabis’s status as a Schedule I drug means the federal government cannot be involved.
9. Details. Any agreement between the state and the tribe should be as detailed as possible. Tribal gaming compacts range between 150 to 250 pages. Terms such as “reasonable” and “unreasonable” should be defined to reduce confusion.

Assembly Actions

Prior vote not relevant to the June 26^th version of the bill.

Support and Opposition

(6/25/18)

Support: Unknown.

Opposition: Unknown. 

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SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Jerry Hill, Chair

2017 - 2018 Regular

Bill No: AB 924 Hearing Date: June 25, 2018

Subject: Indian tribes: commercial cannabis activity

SUMMARY:

Requires a tribe entering into a tribal cannabis regulatory agreement with the Governor, with ratification by the Legislature, to establish a tribal cannabis regulatory commission or agency pursuant to the tribe’s established governmental process.

Existing law:

1. Establishes the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) to regulate the cultivation, distribution, transport, storage, manufacturing, processing, and sale of both medicinal cannabis and adult-use cannabis. (Business and Professions Code (BPC) § 26000)
2. Delegates to the following authorities: (BPC § 26012):
   1. The Bureau of Cannabis Control (Bureau) under the Department of Consumer Affairs shall have the sole authority to create, issue, deny, renew, discipline, suspend, or revoke licenses for microbusinesses, transportation, storage unrelated to manufacturing activities, distribution, testing, and sale of cannabis and cannabis products within the state.
   2. The Department of Food and Agriculture shall administer the provisions of this division related to and associated with the cultivation of cannabis. The Department of Food and Agriculture shall have the authority to create, issue, deny, and suspend or revoke cultivation licenses for violations of this division.
   3. The State Department of Public Health shall administer the provisions of this division related to and associated with the manufacturing of cannabis products. The State Department of Public Health shall have the authority to create, issue, deny, and suspend or revoke manufacturing licenses for violations of this division.
   4. The licensing authorities shall have the authority to collect fees in connection with activities they regulate concerning cannabis. The licensing authorities may create licenses in addition to those identified in this division that the licensing authorities deem necessary to effectuate their duties under this division.
3. Requires any applicant or licensee that may fall within the scope of sovereign immunity that may be asserted by a federally recognized tribe or other sovereign entity to waive any sovereign immunity defense that the applicant or licensee may have, may be asserted on its behalf, or may otherwise be asserted in any state administrative or judicial enforcement actions against the applicant or licensee, regardless of the form of relief sought, whether monetary or otherwise, under the state laws and regulations governing commercial cannabis activity. The applicant or licensee must submit a written waiver of sovereign immunity to the Bureau with any license application or renewal, which is valid for the period of the license. (Title 16, California Code of Regulations (CCR) § 5009)
4. Requires the sovereign immunity waiver to include that the applicant or licensee has the lawful authority to enter into the waiver required by this section, the applicant or licensee hereby waives sovereign immunity, and the applicant or licensee agrees to adhere to certain conditions, including the following: (16 CCR § 5009)
   1. Conduct all commercial cannabis activity in full compliance with the state laws and regulations governing commercial cannabis activity, including submission to all enforcement provisions thereof;
   2. Allow access as required by state statute or regulation by persons or entities charged with duties under the state laws and regulations governing commercial cannabis activity to any premises or property at which the applicant conducts any commercial cannabis activity, including premises or property where records of commercial cannabis activity are maintained by or for the applicant or licensee;
   3. Provide any and all records, reports, and other documents as may be required under the state laws and regulations governing commercial cannabis activity;
   4. Conduct commercial cannabis activity with other state commercial cannabis licensees only, unless otherwise specified by state law;
   5. Meet all of the requirements for licensure under the state laws and regulations governing the conduct of commercial cannabis activity, and provide truthful and accurate documentation and other information of the applicant’s qualifications and suitability for licensure as may be requested.

Existing federal law:

1. Defines “Indian tribe” to mean any Indian or Alaska Native tribe, band, nation, pueblo, village or community that the Secretary of the Interior acknowledges to exist as an Indian tribe. (25 United States Code (USC) § 5130)
2. Defines “Indian Country” to mean: (18 USC § 1151)
   1. All land within the limits of any Indian reservation under the jurisdiction of the United States Government, notwithstanding the issuance of any patent, and, including rights-of-way running through the reservation.
   2. All dependent Indian communities within the borders of the United States whether within the original or subsequently acquired territory thereof, and whether within or without the limits of a state.
   3. All Indian allotments, the Indian titles to which have not been extinguished, including rights-of-way running through the same.

This bill:

1. Authorizes the Governor or his designee to enter into an agreement with a federally recognized Indian tribe who will establish a cannabis regulatory commission that would exercise regulatory authority over all commercial cannabis activity under the jurisdiction of the tribe. The agreement will provide that if the commission adopts and enforces certain standards that meet or exceed standards under the state’s regulatory framework, licensees of the state will be permitted to interact with licensees of the tribe as if they were licensees of the state.
2. Requires the tribe, when engaging in sales of cannabis outside Indian country, to sell only to an entity operating with a state license.
3. Requires tribe to establish the same license types as the state, testing lab licensees of the tribe cannot hold other license types, alcohol and tobacco sale are not permitted at commercial cannabis retail locations, a buffer for schools, and tribal licensees with 20 or more employees must enter into a labor peace agreement.
4. Requires the tribe to share license applications and licensee disciplinary actions with the state and the local government, and the tribe will establish environmental protections standards and share them with the state, and the tribe’s water pollution discharge standards will meet or exceed or those establishing by the state.
5. Requires the tribe to report transactions and activities into the state track and trace system.
6. Requires the tribe’s standards for distributors, retailers, manufacturers, and testing labs to meet or exceed state standards, and the tribe’s packaging and labeling requirements and quality assurance requirements must meet or exceed state standards.
7. Requires the tribal licensees to either participate in the state unemployment compensation system or a similar program established by the tribe, and the tribe must provide a forum for the resolution of disputes related to commercial cannabis product liability.
8. Requires the tribe to impose equivalent taxes to the existing state commercial cannabis cultivation and sales taxes on any commercial cannabis activity within Indian country. The tribe would collect the equivalent taxes and exclusively use that tax revenue to fund essential government services.
9. Requires the tribe to enter into enforceable memorandum of agreements with adjacent local government to address and mitigate off-reservation impacts of commercial cannabis activity.
10. Permits the agreement to be for a term of ten years.

FISCAL EFFECT:

This bill is keyed fiscal by the Legislative Counsel. This bill has not been analyzed in its current form.

COMMENTS:

1. Purpose. This bill is Author sponsored. According to the Author’s office, “Under current law, tribes are not addressed in the Medical Cannabis Regulation and Safety Act (MCRSA) passed by the California legislature in 2015, the Adult Use of Marijuana Act (AUMA) approved by the voters in 2016, or the Medicinal and Adult-Use Cannabis Regulation and Safety Act of 2017. State licensees are only permitted to work with other state licensees, and therefore cannot contract with tribal licensees. The state has adopted emergency regulations which provide that licensees in Indian country can apply for a state license, provided that the tribe waives its immunity from suit and its exclusive civil jurisdiction over on-reservation activities to the state. Tribes are subject to state criminal laws pursuant to P.L. 280, but they are not subject to the civil jurisdiction of the state. Tribes can establish cultivation, manufacturing, and retail commercial cannabis operations in Indian country under their own authority, and they can sell retail product to non-Indian consumers visiting the tribe.

“The existing law excludes tribes from the California commercial cannabis market. Tribes can sell to California consumers from Indian country, and the product that is sold in Indian country is not required to be cultivated, manufactured, packaged, labeled, or tested pursuant to California standards. Such sales are also not subject to state taxation and tribes can significantly undercut the market. The only legal access for tribes to the commercial cannabis market is through the state emergency regulations, which require tribes to concede civil jurisdiction over Indian country to the state. Under the emergency regulations, tribes would have to act as if they are not sovereign governments for purposes of commercial cannabis, and this is unacceptable.”

1. Cannabis Background. Cannabis was first legalized in California for medical consumption by Proposition 215, also known as the Compassionate Use Act, in 1996. Proposition 215 protected qualified patients and primary caregivers from prosecution related to the possession and cultivation of cannabis for medicinal purposes.

The Legislature passed the Medical Cannabis Regulation and Safety Act (MCRSA) in 2015. MCRSA established, for the first time, a comprehensive statewide licensing and regulatory framework for the cultivation, manufacture, transportation, testing, distribution, and sale of medicinal cannabis to be administered by the newly established Bureau within Department of Consumer Affairs, the Department of Public Health, and the Department of Food and Agriculture, with implementation relying on each agency’s area of expertise.

Shortly following the passage of MCRSA in November 2016, California voters passed Proposition 64, the "Control, Regulate and Tax Adult Use of Marijuana Act" (Prop 64), which legalized adult-use cannabis. Cannabis activities on tribal land or the governance thereof was not mentioned in Prop 64.

Less than a year later in June 2017, the California State Legislature passed a budget trailer bill, SB 94 (Committee on Budget and Fiscal Review, Chapter 27, Statutes of 2017), that integrated MCRSA with Prop 64 to create MAUCRSA. Cannabis activities on tribal land or the governance thereof was not mentioned.

On May 18, 2018, the Administration readopted emergency regulations implementing MAUCRSA that initially went into effect in December 2017. Provisions were added that allow a tribal member or entity to conduct business in the California market as a licensee in accordance with all statutes and regulations, as specified.

1. Suggested Author’s Amendments.
   
   1. Make Legislative findings and declarations, as specified, about the state of cannabis regulation and tribal sovereignty.
   2. State that the provisions of this bill authorizing the Governor to enter into government-to-government agreements with Indian tribes concerning the control, regulation, and taxation of commercial cannabis in Indian country, with ratification by the Legislature, will further the purposes and intent of Proposition 64. 
   3. Declare that this bill is to be known as the Cannabis Regulatory Enforcement Act for Tribal Entities, or the “CREATE Act.”
   4. Specify that a tribe entering into a cannabis regulatory agreement with the Governor, with ratification by the Legislature, establish a tribal cannabis regulatory commission or agency pursuant to the tribe’s established governmental process.

NOTE:

Double-referral to Senate Governance and Finance Committee

SUPPORT AND OPPOSITION:

Support: None on file as of June 22, 2018

Opposition: None on file as of June 22, 2018

-- END --

Mockup of AB 924 as suggested to be amended

Amended in Senate June 18, 2018

Amended in Senate June 27, 2017

California Legislature—2017–18 Regular Session

ASSEMBLY BILL No. 924

Introduced by Assembly Member Bonta

February 16, 2017

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, Bonta. 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

Existing law, the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), which includes the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), enacted by the voters at the November 8, 2016, statewide general election, provides for the licensure and regulation of commercial cannabis activity. MAUCRSA specifies the requirements to obtain a license to engage in commercial cannabis activity. 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 and requiring the tribe to establish a tribal cannabis regulatory commission or agency, as defined, 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 jurisdiction 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.

Vote:   ²/₃. Appropriation:   no. Fiscal committee:   yes. State-mandated local program:   no.

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

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SECTION 1.   The Legislature finds and declares all of the

2

following:

3

(a) In November 1996, voters approved Proposition 215, which

4

decriminalized the use of medicinal cannabis in California. Since

P3    1

the proposition was passed, most, if not all, of the regulation has

2

been performed by local governments.

3

(b) In 2015, California enacted three bills (Assembly Bill 243

4

(Wood, Chapter 688 of the Statutes of 2015); Assembly Bill 266

5

(Bonta, Chapter 689 of the Statutes of 2015); and Senate Bill 643

6

(McGuire, Chapter 719 of the Statutes of 2015)) that collectively

7

established a comprehensive state regulatory framework for the

8

licensing and enforcement of cultivation, manufacturing, retail

9

sale, transportation, storage, delivery, and testing of medicinal

10

cannabis in California. This regulatory scheme is known as the

11

Medical Cannabis Regulation and Safety Act (MCRSA).

12

(c) In November 2016, voters approved Proposition 64, the

13

Control, Regulate and Tax Adult Use of Marijuana Act (AUMA).

14

Under Proposition 64, adults 21 years of age or older may legally

15

grow, possess, and use cannabis for nonmedicinal purposes, with

16

certain restrictions. In addition, beginning on January 1, 2018,

17

AUMA makes it legal under state law to sell and distribute

18

cannabis through a regulated business.

19

(d) In 2017, California enacted Senate Bill 94 and Assembly

20

Bill 133 (Chapters 27 and 253 of the Statutes of 2017), which

21

enacted the Medicinal and Adult-Use Cannabis Regulation and

22

Safety Act (MAUCRSA) to consolidate the license and regulation

23

of commercial medicinal and adult-use cannabis activities under

24

a single regulatory framework.

23

25

(d)

26

(e) Although California has chosen to legalize the cultivation,

27

distribution, and use of cannabis, it remains an illegal Schedule I

28

controlled substance under federal law. The intent of Proposition

29

64 and MCRSA MAUCRSA was to ensure a comprehensive

30

regulatory system that takes production and sales of cannabis away

31

from an illegal market and curtails the illegal diversion of cannabis

32

from California into other states or countries. The state has

33

legalized cannabis through MCRSA MAUCRSA and AUMA.

31

34

(e)

35

(f) The state has criminal jurisdiction over Indian land located

36

within the state pursuant to federal law commonly known as Public

37

Law 280 (PL-280).

38

(f) The United States Department of Justice, in a document

39

known as the Cole Memorandum, has set forth a policy lowering

40

the priority of cannabis enforcement under certain circumstances.

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(g) The United States Department of Justice, in a document

2

known as the Wilkinson Memorandum, has extended the terms of

3

the Cole Memorandum to apply to Indian tribes.

4

(h) Indian tribes have civil jurisdiction over their tribal land

5

within the state and have the inherent right to engage in commercial

6

cannabis activity on tribal land pursuant to federal court

7

interpretation of PL-280.

8

(i) MCRSA and AUMA did not consider how Indian tribes

9

would interact with the regulated California marketplace where

10

state licensed businesses are limited to conducting business only

11

with other state licensed businesses.

12

(g) Indian tribes have inherent authority to engage in

13

commercial activity on tribal land and exclusive civil regulatory

14

jurisdiction over those activities. Public Law 280 neither divested

15

nor diminished tribes’ exclusive jurisdiction over activities on

16

tribal lands. Bryan v. Itasca County, (1976) 426 U.S. 373;

17

California v. Cabazon Band of Mission Indians, (1987) 480 U.S.

18

202; Native Village of Venetie I.R.A Council et. al. v. State of

19

Alaska, 944 F.2d 548 (9th Cir. 1991).

20

(h) MAUCRSA and Proposition 64 did not include provisions

21

to address how Indian tribes would interact with the regulated

22

California marketplace where state-licensed businesses are limited

23

to conducting business only with other state-licensed businesses.

12

24

(j)

25

(i) California has an interest in ensuring the health and safety

26

of the California consumers of cannabis products that were

27

cultivated or manufactured on tribal land.

28

(k)

29

(j) California has an interest in promoting economic

30

development and self-sufficiency by Indian tribes.

31

(k) Indian tribes have a vested interest in ensuring the protection

32

of the public health, welfare, and safety in connection with

33

commercial cannabis activity that occurs within a tribe’s

34

jurisdiction, including, but not limited to, protecting minors,

35

preserving environmental resources, and preventing the illegal

36

diversion of cannabis or cannabis products outside of the regulated

37

market.

38

(l) California is committed to interacting with Indian tribes on

39

a mutually respectful government-to-government basis to enhance

40

public health and safety, ensure a lawful and well-regulated

P5    1

cannabis market, encourage economic development in Indian

2

country, and provide fiscal benefits to both California tribes and

3

the state.

4

(m) Local governments serve a critical role in California’s

5

program for the regulation of commercial cannabis activities, and

6

should be afforded the ability to provide input concerning potential

7

impacts from commercial cannabis activity occurring on lands

8

adjacent to their jurisdiction.

9

(n) The purpose and intent of this measure is to establish a

10

framework for affording full faith and credit between the State of

11

California and federally recognized Indian tribes as an affirmation

12

of tribal sovereignty, including, but not limited to, recognition of

13

tribal laws, ordinances, resolutions, legislative acts, and

14

regulations governing commercial cannabis activity in Indian

15

country, and authorizing commercial cannabis activity between

16

tribally licensed entities and state-licensed entities in a manner

17

that protects public health and safety and the environment.

18

(o) The provisions of this bill authorizing the Governor to enter

19

into government-to-government agreements with Indian tribes

20

concerning the control, regulation, and taxation of commercial

21

cannabis activity in Indian country, with ratification by the Legislature, further the purposes and intent

22

of Proposition 64.

23

SEC. 2.   Chapter 23 (commencing with Section 26240) is added

24

to Division 10 of the Business and Professions Code, to read:

25

26

Chapter 23.  Agreements with Tribal Governments

27

28

Article 1.  Definitions

29

30

26240.   (a) “Agreement” means an Indian tribal cannabis

31

agreement authorized under this chapter and entered into between

32

the State of California and an Indian tribe.

33

(b) “Cannabis regulatory commission” means a commission

34

created by an Indian tribe to enforce the agreement and regulate

35

commercial cannabis activity on tribal land.

36

(c) “Essential governmental services” means services provided

37

by an Indian tribe that has entered into an agreement, including,

38

but not limited to, health care, early childhood development

39

programs, job placement, mental health treatment, substance use

40

disorder treatment, education, elder care, social services,

P6    1

administration, public facilities, fire, police, courts, sewer, water,

2

environmental and land use, park and wildlife restoration,

3

transportation, utility services, and community and economic

4

development.

5

(d) “Indian country” shall have the meaning given in Section

6

1151 of Title 18 of the United States Code.

7

(e) “Tribe” means an Indian tribe, band, nation, or community

8

wholly or partially located within the geographical boundaries of

9

the State of California that the United States Secretary of the

10

Interior acknowledges to exist as an Indian tribe pursuant to the

11

Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C.

12

Sec. 479a).

13

14

Article 2.  Agreements

15

16

26241.   (a) The Governor may enter into an agreement with a

17

tribe authorizing commercial cannabis activity between an entity

18

in Indian country and an entity operating with a state license

19

pursuant to this division. The Governor may delegate authority to

20

negotiate this agreement to the Chief of the Bureau of Medical

21

Cannabis Regulation.

22

(b) An agreement is deemed approved when executed by the

23

Governor or his or her designee and does not require approval by

24

the Legislature.

25

26242.   An agreement described in subdivision (a) of Section

26

26241 shall contain all of the following conditions:

27

(a) A tribe authorizing commercial cannabis activity in Indian

28

country shall establish a cannabis regulatory commission that is

29

responsible for regulatory enforcement within the tribe’s

30

jurisdiction.

31

(b) To the extent consistent with federal law, the cannabis

32

regulatory commission shall exercise exclusive regulatory authority

33

over all commercial cannabis activity, by both Indians and

34

non-Indians, in Indian country.

35

(c) The regulations adopted by the cannabis regulatory

36

commission shall meet or exceed the standards adopted under the

37

state regulatory scheme governing commercial cannabis activity,

38

including all rights and responsibilities under the scheme that are

39

assigned to state or local agencies. A tribe may issue tribal licenses

40

for cultivation, manufacturing, distribution, testing, or retail in

P7    1

Indian country. A tribe may authorize multiple tribal licenses per

2

premise and multiple premises per location. Premises are not

3

required to be separate and distinct.

4

(d) A tribe is not subject to state cultivation or sales taxes related

5

to commercial cannabis activity if the tribe imposes an equivalent

6

tax on Indians and non-Indians engaging in commercial cannabis

7

activity in Indian country and the tax revenue is used exclusively

8

to fund essential governmental services.

9

(e) Commercial cannabis activity in Indian country is not subject

10

to any sales or cannabis tax imposed by a local government whose

11

geographical boundaries contain the Indian country. A tribe is

12

encouraged to enter into a good faith agreement with the local

13

government in order to mitigate impacts from increased utilization

14

of public safety services.

15

(f) A tribe conducting commercial cannabis activity in Indian

16

country, when engaging in sales outside Indian country, shall sell

17

cannabis only to an entity operating with a state license.

18

(g) A tribe shall maintain exclusive authority over its land use

19

and water resources.

20

SEC. 2.   Chapter 23 (commencing with Section 26240) is added

21

to Division 10 of the Business and Professions Code, to read:

22

23

Chapter 23.  Agreements with Tribal Governments

24

25

Article 1.  General Provisions

26

27

26240.   This chapter shall be known, and may be cited, as the

28

Cannabis Regulatory Enforcement Act for Tribal Entities or the

29

“CREATE Act.”

30

26241.   As used in this chapter, the following definitions apply:

31

(a) “Agreement” means an Indian tribal cannabis agreement

32

authorized under this chapter and entered into between the state

33

and an Indian tribe.

34

(b) “Essential governmental services” means services provided

35

by an Indian tribe that has entered into an agreement, including,

36

but not limited to, health care, early childhood development

37

programs, job placement, mental health treatment, substance use

38

disorder treatment, education, elder care, social services,

39

administration, public facilities, fire, police, courts, sewer, water,

40

environmental and land use, park and wildlife restoration,

P8    1

transportation, utility services, community and economic

2

development, and general welfare consistent with the tribe’s

3

applicable law.

4

(c) “Indian country” shall have the same meaning as in Section

5

1151 of Title 18 of the United States Code.

6

(d) “State” means the State of California, including its

7

departments, agencies, bureaus, officials, employees, and agents,

8

but does not include a local jurisdiction or the departments,

9

agencies, bureaus, governing bodies, officials, employees, or agents

10

of a local jurisdiction.

11

(e) “State license” means a commercial cannabis license issued

12

by a licensing authority pursuant to this division.

13

(f) “Tribe” means an Indian tribe, band, nation, or community

14

wholly or partially located within the geographical boundaries of

15

the state that the United States Secretary of the Interior

16

acknowledges to exist as an Indian tribe pursuant to the Federally

17

Recognized Indian Tribe List Act of 1994 (25 U.S.C. Sec. 479a et

18

seq.).

19

(g) “Tribal cannabis regulatory commission or agency” means

20

an entity required pursuant to Section 26245 and created under

21

a tribe’s established governmental process for the purpose of

22

controlling and regulating commercial cannabis activity in Indian

23

country within the tribe’s jurisdiction.

24

(h) “Tribal cannabis regulatory program” means a program

25

established by an Indian tribe to control and regulate commercial

26

cannabis activity on land within Indian country.

27

(i) “Tribal-issued identification card” means an identification

28

card issued by a tribe to an enrolled member of the tribe that

29

includes, at a minimum, the name of the individual and a picture

30

of the individual.

31

(j) “Tribal license” means a commercial cannabis license issued

32

under a tribal cannabis regulatory program.

33

34

Article 2.  Agreements with Tribal Governments

35

36

26242.   (a) The Governor may enter into an agreement with a

37

tribe to do all of the following:

38

(1) Recognize the state’s exclusive authority to regulate

39

commercial cannabis and industrial hemp activity occurring within

40

the state’s jurisdiction, including through the state cannabis

P9    1

regulatory program, and local jurisdictions’ authority to regulate

2

commercial cannabis and industrial hemp activity within their

3

jurisdictions, including under locally enacted commercial cannabis

4

regulatory programs.

5

(2) Recognize and affirm the tribe’s exclusive authority to

6

regulate commercial cannabis and industrial hemp activities in

7

Indian country within the tribe’s jurisdiction.

8

(3) Authorize commercial cannabis activity between entities

9

located and licensed in Indian country and state licensees.

10

(4) Authorize commercial industrial hemp activity between the

11

tribe and the state, in accordance with the provisions of this

12

chapter.

13

(b) The Governor may delegate authority to negotiate this

14

agreement to the Chief of the Bureau of Cannabis Control, or his

15

or her designee, for all matters related to commercial cannabis

16

activity. The Governor may delegate authority to negotiate the

17

provisions of the agreement regarding industrial hemp, if any, to

18

the state’s Secretary of Food and Agriculture, or his or her

19

designee.

20

(c) An agreement is deemed approved when executed by the

21

Governor, or his or her designee, and does not require approval

22

by the Legislature.

23

(d) Notwithstanding any other law, a tribal licensee may engage

24

in commercial cannabis activity with a state licensee and a state

25

licensee may engage in commercial cannabis activity with a tribal

26

licensee, subject to the requirements and limitations set forth in

27

this chapter.

28

(e) This chapter does not require a tribe to enter into an

29

agreement before the tribe conducts commercial cannabis or

30

industrial hemp activities in Indian country within its jurisdiction.

31

However, a person or entity shall not conduct commercial cannabis

32

or industrial hemp activity between Indian country and the state

33

unless the tribe has entered into an agreement under this chapter

34

and implemented requirements for tribal licensees. A state licensee

35

shall not engage in commercial cannabis activity in Indian country

36

except with a tribal licensee.

37

(f) Notwithstanding any other law, the execution of, and

38

compliance with the terms of, an agreement does not constitute a

39

project for purposes of the California Environmental Quality Act

P10   1

(Division 13 (commencing with Section 21000) of the Public

2

Resources Code).

3

26243.   (a) An agreement shall include, but not be limited to,

4

the provisions and subject matter specified in this article.

5

(b) The provisions of this chapter only apply to agreements

6

entered into between a tribe and the state under this chapter.

7

26244.   (a) A tribe entering into an agreement shall establish

8

a cannabis regulatory program to control and regulate commercial

9

cannabis activity in Indian country within the tribe’s jurisdiction

10

in accordance with this chapter.

11

(b) A tribal licensee that engages in commercial cannabis

12

activity within the state shall do so in accordance with the

13

requirements of this division, including, but not limited to,

14

conducting commercial cannabis activity solely through state

15

licensees.

16

26245.   (a) A tribe entering into an tribal cannabis regulatory agreement with the Governor, with ratification by the Legislature, shall establish

17

a tribal cannabis regulatory commission or agency pursuant to

18

the tribe’s established governmental process.

19

(b) The tribal cannabis regulatory commission or agency shall,

20

among other things, administer the tribe’s cannabis regulatory

21

program, including issuance and renewal of tribal licenses for

22

commercial cannabis activity in Indian country within the tribe’s

23

jurisdiction and disciplinary actions against tribal licensees.

24

(c) The tribe shall require that protection of public health and

25

welfare be the highest priority for the tribal cannabis regulatory

26

commission or agency in exercising licensing, regulatory, and

27

disciplinary functions under the tribe’s cannabis regulatory

28

program, and that whenever the protection of public health and

29

welfare is inconsistent with other interests sought to be promoted,

30

the protection of public health and welfare shall be paramount.

31

(d) The tribal cannabis regulatory commission or agency shall

32

exercise exclusive regulatory authority over all commercial

33

cannabis activity, by both Indians and non-Indians, in Indian

34

country within the tribe’s jurisdiction, except in circumstances

35

mutually agreed to by the tribe and the state.

36

(e) The tribe shall establish through its own governmental

37

process a code of conduct applicable to persons responsible for

38

implementing and enforcing the tribe’s cannabis regulatory

39

program, including persons serving on the tribal cannabis

40

regulatory commission or agency. Among other things, the code

P11   1

of conduct shall prohibit persons whose responsibilities include

2

implementation or enforcement of the tribe’s cannabis regulatory

3

program from obtaining a tribal license or acquiring an ownership

4

stake in a tribal licensee, except where that person possesses an

5

ownership interest in a commercial cannabis business solely by

6

virtue of the person’s status as a member of the tribe.

7

26246.   (a) A tribe entering into an agreement shall establish

8

license types for commercial cannabis activity in Indian country

9

within the tribe’s jurisdiction that are the same as, or equivalent

10

to, the license types for commercial cannabis activity under this

11

division at the time the agreement becomes effective.

12

(b) All commercial cannabis activity in Indian country within

13

the tribe’s jurisdiction shall be conducted between tribal licensees.

14

A state licensee may apply for, and be issued, a tribal license as

15

provided for in the agreement.

16

(c) A testing laboratory licensed pursuant to this chapter shall

17

not be licensed in any other commercial cannabis activity in Indian

18

country within the tribe’s jurisdiction. A person holding a tribal

19

testing laboratory license shall not employ an individual who is

20

also employed by any other licensee that is not a testing laboratory.

21

(d) Except as provided in subdivision (c), an applicant may

22

apply for, and be issued, more than one tribal license.

23

(e) An applicant or a licensee shall apply for, and, if approved,

24

obtain, a separate tribal license for each location where it engages

25

in commercial cannabis activity in Indian country within the tribe’s

26

jurisdiction.

27

(f) A tribal licensee shall not sell alcoholic beverages or tobacco

28

products on or at a premises licensed under the tribe’s cannabis

29

regulatory program.

30

(g) A tribal licensee shall not be located within 600 feet of a

31

school providing instruction in kindergarten and grades 1 to 12,

32

inclusive, a day care center, or a youth center that is in existence

33

at the time the tribal license is issued, including a school, day care

34

center, or youth center located on adjacent land outside Indian

35

country within the tribe’s jurisdiction.

36

(h) A tribe with jurisdiction over an area of less than 40 acres

37

may specify a different radius than provided in subdivision (g) for

38

schools, day care centers, or youth centers located solely in Indian

39

country within the tribe’s jurisdiction.

P12   1

(i) The tribe shall establish a fee schedule for the application

2

and renewal of tribal licenses under its own governmental

3

processes.

4

(j) The tribe’s requirements for the process by which a person

5

or entity may apply for, and be issued, a tribal license shall be the

6

same as, or equivalent to, the requirements imposed on applicants

7

under this division, including all of the following:

8

(1) Each owner of the applicant electronically shall submit to

9

the California Department of Justice fingerprint images and related

10

information to the same extent and in the same manner as required

11

of a state license applicant pursuant to this division.

12

(2) The applicant shall provide evidence of the legal right to

13

occupy and use the proposed location where commercial cannabis

14

activities will occur.

15

(3) The applicant shall provide evidence that the proposed

16

location is in compliance with subdivisions (g) and (h) of this

17

section.

18

(4) An applicant with 20 or more employees shall provide a

19

statement that the applicant will enter into, or demonstrate that it

20

has already entered into, and abide by the terms of a labor peace

21

agreement.

22

(5) The applicant shall pay all applicable fees for licensure by

23

the tribe.

24

(6) The applicant shall provide a detailed description of the

25

operating procedures for cultivation, extraction and infusion

26

methods, the transportation process, inventory procedures, quality

27

control procedures, and security protocols, as required by the

28

tribe.

29

(7) (A) The applicant shall provide a complete, detailed

30

diagram of the proposed premises where the license privileges

31

will be exercised.

32

(B) A tribal licensee shall not change or alter the premises, the

33

usage of the premises, or the mode or character of the business

34

operations conducted from the premises, from the plan contained

35

in the diagram on file with the application, unless and until written

36

approval by the tribe’s cannabis regulatory commission or agency

37

is obtained.

38

(8) The applicant shall provide a complete list of every person

39

with a financial interest in the entity applying for the license.

40

“Person with a financial interest” does not include persons whose

P13   1

only interest in a license is an interest in a diversified mutual fund,

2

blind trust, or similar instrument.

3

(k) The tribal cannabis regulatory commission or agency shall

4

deny an application if either the applicant or the premises for

5

which a tribal license is applied, do not qualify for licensure under

6

the tribe’s cannabis regulatory program.

7

(l) The tribal cannabis regulatory commission or agency shall

8

utilize standards that meet or exceed the requirements set forth in

9

paragraphs (4) and (5) of subdivision (b) of Section 26057, as of

10

the effective date of the agreement, in evaluating whether to

11

approve or deny an application by a person with a prior criminal

12

offense.

13

(m) (1) A tribe may license wholly owned entities of the tribal

14

government using procedures that differ from those set forth in

15

subdivision (j), except that wholly owned entities of the tribal

16

government shall still comply with the labor peace requirement

17

in paragraph (4) of subdivision (j), and the wholly owned entity

18

applying for a tribal license shall designate at least one person as

19

an official representative for purposes of submitting fingerprints

20

to the California Department of Justice, as required under

21

paragraph (1) of subdivision (j).

22

(2) For purposes of this subdivision, “official representative”

23

means a person who is the chief executive officer of the wholly

24

owned entity, a member of the board of directors or other

25

governing body of the wholly owned entity, or an individual who

26

will be participating in the direction, control, or management of

27

the wholly owned entity.

28

(n) Upon receipt of an application for a tribal license, a tribal

29

cannabis regulatory commission or agency shall provide notice

30

of the application to each local jurisdiction located adjacent to

31

the tribe’s jurisdiction, including, but not limited to, the name of

32

the applicant, the type of license applied for, and the proposed

33

location where the applicant intends to conduct commercial

34

cannabis activity. The tribal cannabis regulatory commission or

35

agency shall consider objections and comments, if any, received

36

from a local jurisdiction in determining whether to approve or

37

deny an application for a tribal license and, at the request of a

38

local jurisdiction, shall meet with representatives of the local

39

jurisdiction to discuss the application.

P14   1

26247.   (a) The tribal cannabis regulatory commission or

2

agency shall investigate and take disciplinary action against a

3

tribal licensee for noncompliance with the requirements of the

4

tribe’s cannabis regulatory program.

5

(b) The tribe and state shall mutually agree to provide

6

information to the other, upon request, concerning all licenses

7

applied for, issued, or renewed under their respective cannabis

8

regulatory programs, including information concerning

9

disciplinary actions against licensees under those programs.

10

26248.   (a) A tribe entering into an agreement shall authorize

11

the tribal cannabis regulatory agency or commission to take

12

disciplinary action against a tribal licensee, including for any of

13

the following:

14

(1) Failure to comply with the requirements of the tribe’s

15

cannabis regulatory program.

16

(2) Knowing violations of the applicable requirements for

17

environmental protection, water use, or energy use.

18

(3) Knowing violations of applicable laws conferring worker

19

protections or legal rights on the employees of a tribal licensee.

20

(4) The intentional and knowing sale of cannabis or cannabis

21

products to a person, other than a qualified patient, under 21 years

22

of age.

23

(5) The intentional and knowing sale of medicinal cannabis or

24

medicinal cannabis products to a person who is not a qualified

25

patient or a primary caregiver.

26

(6) The intentional and knowing sale, transfer, or transportation

27

of commercial cannabis or cannabis products to a person or entity

28

other than a tribal licensee or a state licensee.

29

(7) The intentional and knowing sale, transfer, or distribution

30

of cannabis or cannabis products that have not been certified as

31

meeting the required laboratory testing standards.

32

(8) Engaging in commercial cannabis activity within the state’s

33

jurisdiction without a state license, or engaging in commercial

34

cannabis activity within a local jurisdiction without a license,

35

permit, or other authorization required by the local jurisdiction.

36

(9) Failure to maintain safe conditions for inspection by the

37

tribal cannabis regulatory commission or agency.

38

(10) Failure to dispose of cannabis waste in a manner

39

designated by the tribal cannabis regulatory commission or agency.

40

(11) Failure to pay applicable taxes.

P15   1

(b) A tribe entering into an agreement shall authorize the tribal

2

cannabis regulatory commission or agency to suspend, revoke,

3

place on probation with terms and conditions, or otherwise

4

discipline tribal licensees, including through issuance of a fine,

5

under procedures established by the tribe.

6

26249.   A tribe entering into an agreement shall, at a minimum,

7

implement the following for tribal cultivation licensees:

8

(a) Size restrictions on tribal cultivation licenses that meet or

9

exceed the size restrictions that apply to the same or equivalent

10

type of state cultivation license.

11

(b) Standards for environmental protection, water use, and

12

energy use for tribal cultivation licensees, and share those

13

standards with the state.

14

(c) Requirements for pesticide use by tribal cultivation licensees

15

that meet or exceed the requirements applicable to state licensees.

16

(d) Requirements for weighing and measuring devices used by

17

a tribal licensee that meet or exceed the requirements applicable

18

to a state licensee.

19

(e) Appellation of origin and organics programs using standards

20

that meet or exceed the standards applicable to appellation of

21

origin and organics programs established pursuant to Sections

22

26062, 26062.5, and 26063.

23

(f) Security requirements, including, but not limited to, video

24

monitoring, fencing, lighting, and controlled access, that meet or

25

exceed the requirements applicable to state licensees.

26

26250.   (a) A tribe entering into an agreement shall agree to

27

record commercial cannabis transactions and activities in the

28

track and trace system established pursuant to Chapter 6.5

29

(commencing with Section 26067) to the same extent and in the

30

same manner as required of state licensees.

31

(b) A tribe entering into an agreement shall agree to implement

32

a program for the identification of permitted cannabis plants at

33

tribally licensed cultivation sites during the cultivation period that

34

is the same as, or equivalent to, the program used to identify

35

permitted cannabis plants at state-licensed cultivation sites.

36

26251.   (a) A tribe entering into an agreement shall agree to

37

all of the following:

38

(1) Transportation of cannabis and cannabis products in Indian

39

country within a tribe’s jurisdiction shall only be permitted by a

40

tribal distribution licensee.

P16   1

(2) Delivery of cannabis or cannabis products in Indian country

2

within the tribe’s jurisdiction shall be prohibited, except by a tribal

3

licensee authorized to make deliveries.

4

(b) A tribe entering into an agreement shall impose requirements

5

on tribal licensees authorized to distribute or deliver cannabis or

6

cannabis products that meet or exceed the requirements applicable

7

to state licensees, including all of the following:

8

(1) Minimum standards governing the types of vehicles in which

9

cannabis and cannabis products may be distributed or delivered.

10

(2) Minimum qualifications for persons eligible to operate

11

distribution and delivery vehicles, including that a driver of a

12

delivery vehicle be directly employed by a tribal licensee

13

authorized to transport cannabis or cannabis products.

14

(3) That a shipping manifest be completed and maintained for

15

all transportation and delivery activities.

16

26252.   A tribe entering into an agreement shall impose

17

requirements on tribal retail licensees that meet or exceed the

18

standards applicable to state retail licensees, including all of the

19

following:

20

(a) Requiring security measures that are reasonably designed

21

to prevent unauthorized entrance into areas containing cannabis

22

or cannabis products and theft of cannabis or cannabis products

23

from the premises.

24

(b) Prohibiting an individual from remaining on the tribal

25

licensee’s premises if he or she is not engaging in an activity

26

expressly related to the operations of the tribal licensee.

27

(c) Establishing limited access areas accessible only to

28

authorized personnel.

29

(d) Other than limited amounts of cannabis used for display

30

purposes, samples, or immediate sale, requiring storage of all

31

finished cannabis and cannabis products in a secured and locked

32

room, safe, or vault, and in a manner reasonably designed to

33

prevent diversion, theft, and loss.

34

(e) Requiring tribal licensees to notify the tribal cannabis

35

regulatory commission or agency and the appropriate state or

36

local law enforcement authorities within 24 hours after discovering

37

any of the following:

38

(1) Significant discrepancies identified during inventory, as

39

determined by the tribal cannabis regulatory commission or

40

agency.

P17   1

(2) Diversion, theft, loss, or any criminal activity pertaining to

2

the operation of the tribal licensee.

3

(3) Diversion, theft, loss, or any criminal activity by an agent

4

or employee of the tribal licensee pertaining to the operation of

5

the tribal licensee.

6

(4) The loss or unauthorized alteration of records related to

7

cannabis or cannabis products, qualified patients, primary

8

caregivers, or licensee employees or agents.

9

(f) Maintaining adequate video monitoring of the licensed retail

10

premises with video retention capability that meets or exceeds the

11

requirements applicable to state licensees.

12

(g) Prohibiting a tribal retail licensee from selling cannabis

13

and cannabis products to individual customers for personal use

14

in amounts that exceed the limits imposed by law.

15

26253.   A tribe entering into an agreement shall impose

16

requirements for the manufacture of cannabis products by tribal

17

licensees that meet or exceed the manufacturing requirements

18

applicable to state manufacturing licensees.

19

26254.   (a) A tribe entering into an agreement shall impose

20

standards for the testing of cannabis or cannabis products by a

21

testing laboratory licensed pursuant to this chapter that meet or

22

exceed the standards applicable to state licensed testing

23

laboratories.

24

(b) Cannabis and cannabis products cultivated or manufactured

25

in Indian country within a tribe’s jurisdiction and that are

26

distributed for sale solely within Indian country within the tribe’s

27

jurisdiction shall be tested and certified by a testing laboratory

28

licensed pursuant to this chapter before the cannabis or cannabis

29

product may be distributed to a retailer for sale to customers.

30

(c) Cannabis and cannabis products cultivated or manufactured

31

in Indian country within a tribe’s jurisdiction shall be tested and

32

certified by a testing laboratory licensed pursuant to Chapter 10

33

(commencing with Section 26100) before the cannabis or cannabis

34

product may be distributed to a state licensee located outside of

35

Indian country within the tribe’s jurisdiction.

36

26255.   (a) A tribe entering into an agreement shall impose

37

requirements for the packaging and labeling of cannabis and

38

cannabis products that meet or exceed the packaging and labeling

39

requirements established pursuant to Chapter 12 (commencing

40

with Section 26120).

P18   1

(b) A tribe entering into an agreement shall impose requirements

2

for the destruction of cannabis waste that meet or exceed the

3

cannabis waste destruction requirements imposed pursuant to this

4

division.

5

26256.   (a) A tribe entering into an agreement shall impose

6

requirements for quality assurance and inspection of cannabis or

7

cannabis products cultivated, manufactured, or sold in Indian

8

country within the tribe’s jurisdiction that meet or exceed the

9

requirements applicable to cannabis or cannabis products

10

cultivated, manufactured, or sold by state licensees, including all

11

of the following:

12

(1) Cannabis or cannabis products shall not be sold by a tribal

13

licensee unless a representative sample of the cannabis or cannabis

14

product has been tested by a testing laboratory licensed pursuant

15

to this chapter and certified as safe for sale to consumers.

16

(2) A tribal licensee authorized to distribute or transport

17

cannabis or cannabis products shall transport all batches of

18

cannabis or cannabis products cultivated or manufactured by a

19

tribal licensee to a tribal or state licensed testing laboratory, as

20

required pursuant to Section 26254.

21

(3) A tribal licensee shall not distribute or transport cannabis

22

or cannabis products to a licensed retailer unless and until the

23

cannabis or cannabis product has been certified by a licensed

24

testing laboratory as meeting the applicable testing requirements,

25

and determined by the distributor to have satisfied the applicable

26

packaging and labeling requirements.

27

(b) A cannabis or cannabis product cultivated, manufactured,

28

packaged, labeled, or tested in Indian country within the tribe’s

29

jurisdiction shall not be distributed to a state retail licensee located

30

outside the tribe’s jurisdiction until a distributor licensed pursuant

31

to Chapter 7 (commencing with Section 26070) inspects the

32

cannabis or cannabis product in accordance with Section 26080

33

and determines the cannabis or cannabis product complies with

34

the packaging, labeling, and testing requirements imposed by law.

35

26257.   (a) A tribe entering into an agreement shall establish

36

a process for the identification of adulterated or misbranded

37

cannabis products, and the destruction of those products, using

38

standards that meet or exceed the standards and procedures

39

established pursuant to this division.

P19   1

(b) To ensure the protection of public health and welfare, an

2

agreement shall include procedures for notice and recall of

3

adulterated or misbranded cannabis or cannabis products

4

originating from tribal licensees, as negotiated between the tribe

5

and the state.

6

26258.   (a) Except as provided in subdivision (e), a tribe

7

entering into an agreement shall agree to prohibit tribal licensees

8

from doing any of the following:

9

(1) Selling cannabis or cannabis products to a person under 21

10

years of age.

11

(2) Allowing a person under 21 years of age on the tribal

12

licensee’s premises.

13

(3) Employing or retaining a person under 21 years of age.

14

(4) Selling or transferring cannabis or cannabis products, unless

15

the person to whom the cannabis or cannabis product is to be

16

transferred or sold first presents documentation that reasonably

17

appears to be a valid tribal- or state-issued identification card

18

showing that the person is 21 years of age or older.

19

(b) The tribal cannabis regulatory commission or agency may

20

utilize persons under 21 years of age in the enforcement of the

21

tribe’s cannabis regulatory program, including for purposes of

22

investigating grounds for potential disciplinary action against

23

tribal licensees, or employees or agents of tribal licensees.

24

(c) The state may also conduct premises and compliance checks

25

for tribal licensees. Prior to conducting a premises or compliance

26

check, the state agency shall contact the tribal cannabis regulatory

27

commission or agency to provide, at a minimum, 24 hours’ written

28

notice of the premises or compliance check and obtain prior

29

approval from the tribe. Tribal consent shall not be unreasonably

30

withheld. An authorized tribal representative may observe and

31

participate in a premises or compliance check. The state shall

32

share the results of a premises and compliance check with the

33

tribe.

34

(d) To the extent the tribal cannabis regulatory commission or

35

agency obtains information concerning criminal acts in connection

36

with commercial cannabis activity, including information regarding

37

persons or entities who sell or furnish cannabis to persons under

38

21 years of age, the tribe shall agree to promptly furnish that

39

information to state and local law enforcement agencies.

40

(e) Notwithstanding subdivision (a), each of the following apply:

P20   1

(1) A tribal licensee that is authorized under tribal law to engage

2

in the cultivation, distribution, manufacture, or sale of medicinal

3

cannabis or medicinal cannabis products may allow on its premises

4

a person 18 years of age or older who possesses documentation

5

that reasonably appears to be a valid tribal- or state-issued

6

identification card showing the person is a qualified patient.

7

(2) A tribal licensee that is authorized under tribal law to

8

transfer or sell medicinal cannabis or medicinal cannabis products

9

may transfer or sell medicinal cannabis or medicinal cannabis

10

products to a person 18 years of age or older who possesses

11

documentation that reasonably appears to be a valid tribal- or

12

state-issued identification card showing the person is a qualified

13

patient.

14

26259.   (a) A tribe entering into an agreement shall impose

15

restrictions on marketing and advertising by tribal licensees that

16

meet or exceed the restrictions established in Chapter 15

17

(commencing with Section 26150).

18

(b) A tribe entering into an agreement shall prohibit a tribal

19

licensee from giving away any amount of cannabis or cannabis

20

product, or any cannabis accessories, as part of a business

21

promotion or other commercial activity, to the same extent as that

22

prohibition applies to a state licensee.

23

26260.   A tribe entering into an agreement shall establish and

24

implement protocols and training programs to detect impaired

25

driving in Indian country within the tribe’s jurisdiction, including

26

impaired driving caused by ingestion of cannabis or cannabis

27

products.

28

26261.   A tribe entering into an agreement shall establish all

29

of the following:

30

(a) Recordkeeping requirements for tribal licensees that meet

31

or exceed the standards applicable to state licensees.

32

(b) Annual reporting and performance audit requirements for

33

the tribal cannabis regulatory commission or agency that meet or

34

exceed the requirements applicable to state licensing authorities.

35

26262.   (a) A tribe entering into an agreement shall, through

36

its own governmental process, establish requirements that tribal

37

cannabis licensees do all of the following:

38

(1) Adhere to tribally designated labor and worker-protection

39

standards, including, but not limited to, minimum wage, employee

40

training, and workplace safety requirements.

P21   1

(2) Adhere to tribal law that is no less stringent than federal

2

laws and state laws forbidding harassment, including sexual

3

harassment, in the workplace, forbidding employers from

4

discrimination in connection with the employment of persons to

5

work or working for tribal licensees on the basis of race, color,

6

religion, ancestry, national origin, gender, marital status, medical

7

condition, sexual orientation, age, or disability, and forbidding

8

employers from retaliation against persons who oppose

9

discrimination or participate in employment discrimination

10

proceedings, provided that punitive damages are not required to

11

be included, and that nothing herein precludes the tribe from giving

12

a preference in employment to members of federally recognized

13

Indian tribes pursuant to a duly adopted tribal ordinance.

14

(3) Allow representatives of recognized labor organizations to

15

communicate with employees of tribal licensees.

16

(4) Engage in good faith negotiations with designated

17

representatives of recognized employee organizations, to the extent

18

employees of the tribal licensee have agreed to be represented by

19

that employee organization.

20

(b) For purposes of this section, “employee organization” means

21

an organization that includes employees of the tribal licensee and

22

that has as one of its primary purposes representing those

23

employees in their relations with the tribal licensee.

24

26263.   (a) All tribal licensees shall participate in those state

25

statutory programs relating to employment as provided for in this

26

chapter, including, but not limited to, participating in the state’s

27

workers compensation program, participating in the state’s

28

program for providing unemployment compensation benefits,

29

withholding all taxes due the state, and complying with all earnings

30

withholding and assignment orders issued by California state

31

courts.

32

(b) All tribal licensees shall participate in the state’s workers’

33

compensation program with respect to employees employed at

34

commercial cannabis facilities in Indian country within the

35

jurisdiction of the tribe. The workers’ compensation program

36

includes, but is not limited to, state laws relating to securing the

37

payment of compensation through one or more insurers duly

38

authorized to write workers’ compensation insurance in this state

39

or through self-insurance as permitted under the state’s workers’

40

compensation laws. If the tribal licensee participates in the state’s

P22   1

workers’ compensation program, it agrees that all disputes arising

2

from the workers’ compensation laws shall be heard by the

3

Workers’ Compensation Appeals Board pursuant to the Labor

4

Code. The tribal licensee shall consent to the jurisdiction of the

5

Workers’ Compensation Appeals Board and the courts of the State

6

of California for purposes of enforcement.

7

(c) In lieu of participating in the state’s statutory workers’

8

compensation system, the tribe may create and maintain a system

9

that provides redress for cannabis employees’ work-related injuries

10

through requiring insurance or self-insurance that meets or exceeds

11

the workers’ compensation coverage standards set forth in state

12

law, including the provision of remedies for aggrieved workers.

13

A tribe that elects to establish its own workers’ compensation

14

system shall forward to the state all relevant ordinances that have

15

been adopted and all other documents establishing the system and

16

demonstrating that the system is fully operational and meets or

17

exceeds the workers’ compensation coverage standards set forth

18

in state law. Notwithstanding any other law, an entity that has

19

both a tribal license and a state license may only provide workers’

20

compensation coverage through the state’s workers’ compensation

21

program.

22

(d) All tribal licensees shall participate in the state’s program

23

for providing unemployment compensation benefits and

24

unemployment compensation disability benefits with respect to

25

employees employed at a cannabis-related business located within

26

Indian country under the jurisdiction of the tribe. Participation

27

shall include compliance with the provisions of the Unemployment

28

Insurance Code and the tribe shall consent to the jurisdiction of

29

the state agencies charged with the enforcement of that code and

30

of the courts of the State of California for purposes of enforcement.

31

(e) As a matter of comity, with respect to persons, including

32

nonresidents of California, who are employed at commercial

33

cannabis businesses licensed by the tribe, the tribal licensee shall

34

withhold all taxes due to the state as provided in the Unemployment

35

Insurance Code, and shall forward the amounts to the state. The

36

tribal licensee shall file with the Franchise Tax Board a copy of

37

any information return filed with the federal Secretary of the

38

Treasury, as provided in the Revenue and Taxation Code and the

39

regulations thereunder, except those pertaining to tribal members

40

living in Indian country within the tribe’s jurisdiction. For purposes

P23   1

of this subdivision, “tribal members” refers to the enrolled

2

members of the tribe.

3

26264.   (a) A tribe entering into an agreement shall impose

4

and maintain a tribal retail sales tax that is equal to at least 100

5

percent of the combined amount of the state cannabis excise tax,

6

imposed by Section 34011 of the Revenue and Taxation Code, and

7

the state sales and use tax imposed by Part 1 (commencing with

8

Section 6001) of Division 2 of the Revenue and Taxation Code, on

9

all sales of cannabis or cannabis products in Indian country,

10

subject to any mutually agreed-upon exemptions. Retail sales to

11

members of the tribe taking place wholly in Indian country within

12

the tribe’s jurisdiction may be exempted at the discretion of the

13

tribe. The tribe may choose to levy a tribal tax on any transaction

14

that is otherwise exempt.

15

(b) A tribe entering into an agreement shall impose and maintain

16

a tribal cultivation tax on all harvested cannabis that enters the

17

commercial market in either Indian country, the state, or both,

18

that is equal to at least 100 percent of the state cultivation tax

19

imposed by Section 34012 of the Revenue and Taxation Code.

20

(c) A tribe entering into an agreement shall agree to use the

21

proceeds of the tribal tax for essential government services.

22

(d) The agreement shall provide for an independent audit of

23

collection of the tribal retail sales tax and tribal cultivation tax to

24

determine compliance with this section. The results of the

25

independent audit shall be provided only to the tribal cannabis

26

regulatory commission or agency and to the state. The state shall

27

keep the audit results confidential.

28

(e) Commercial cannabis activity in Indian country is not subject

29

to any sales or cannabis tax imposed by a local jurisdiction whose

30

geographical boundaries contain the Indian country.

31

(f) The state agrees not to impose any fees, including escrow

32

account fees, on a tribe under this agreement for cannabis products

33

generated from a tribal source and sold on tribal lands.

34

26265.   (a) The tribe and the state shall agree to maintain

35

regular and open communication regarding the administration

36

and implementation of an agreement.

37

(b) The tribe and the state shall further agree, if either party

38

believes that the goals and objectives of the agreement are not

39

being met, to meet promptly to discuss any issues and concerns.

P24   1

(c) The tribe and the state shall each designate one or more

2

persons to serve as the designated primary contacts regarding

3

administration of the agreement. Unless another contact is

4

identified by the state, the Chief of the Bureau of Cannabis Control

5

shall be the primary contact for the state regarding administration

6

of the agreement.

7

(d) To facilitate regular and open communication with the state,

8

the tribe shall ensure that a tribal representative is available to

9

speak with representatives from the state’s licencing authorities

10

on a continuous basis, 24 hours a day, seven days a week.

11

(e) The tribe and the state shall mutually agree to investigate

12

instances of alleged noncompliance with the commercial cannabis

13

regulatory programs upon request by the other and in accordance

14

with mutually agreed-upon procedures. The tribe shall agree to

15

reasonably cooperate with state investigations concerning persons

16

or entities holding tribal licenses, and the state shall agree to

17

reasonably cooperate with investigations by the tribe concerning

18

persons or entities holding state licenses.

19

(f) The tribe and the state shall negotiate mutually agreeable

20

procedures to address public health and welfare emergencies

21

concerning cannabis or cannabis products that are cultivated,

22

distributed, manufactured, or sold in Indian country within the

23

tribe’s jurisdiction, including for the prompt recall of adulterated

24

or misbranded cannabis or cannabis products. At a minimum, in

25

situations concerning time sensitive health and safety matters, the

26

tribe shall allow the state to enter Indian country within the tribe’s

27

jurisdiction to conduct investigative activities, including the

28

embargo or seizure of potentially adulterated or misbranded

29

cannabis or cannabis products, within 12 hours of providing notice

30

of the need for entry if the tribe or the tribal cannabis regulatory

31

commission or agency fails to respond to the entry request within

32

that time frame.

33

(g) The agreement shall further require the tribe to facilitate

34

and assist state criminal enforcement activities against persons

35

engaging in unlicensed commercial cannabis activities in Indian

36

country within the tribe’s jurisdiction.

37

26266.   (a) The tribe shall adopt, and at all times shall maintain

38

in continuous force, an ordinance that provides for all of the

39

following:

P25   1

(1) That California tort law governs all claims of bodily injury

2

and personal injury arising out of the use of cannabis or cannabis

3

products produced by a tribal licensee that would otherwise be

4

shielded from liability by the immunity of the tribal government.

5

The ordinance is not required to include punitive damages. The

6

tribe may include in the ordinance a requirement that a person

7

with claims for money damages against the tribe file those claims

8

within the time periods applicable for the filing of claims for money

9

damages against public entities under Division 3.6 (commencing

10

with Section 810) of Title 1 of the Government Code.

11

(2) The waiver of the tribe’s sovereign immunity and its right

12

to assert sovereign immunity with respect to the arbitration or

13

resolution of claims in the tribe’s tribal court system, if a tribal

14

court system is established. The ordinance shall allow for the

15

dispute to be settled either in the tribe’s tribal court system, or by

16

binding arbitration before a neutral arbitrator. The decision to

17

choose either the tribal court system or a neutral arbitrator shall

18

be at the claimant’s sole discretion. Resolution of the dispute before

19

the tribal court system shall be at no cost to the claimant, excluding

20

claimant’s attorney’s fees. The cost and expenses of the arbitration

21

shall be initially borne equally by the parties and the parties shall

22

pay their share of the arbitration costs at the time of claimant’s

23

election of the arbitration option, but the arbitrator may award

24

costs to the prevailing party not to exceed those allowable in a

25

suit in superior court.

26

(3) To effectuate its consent to the tribal court system or

27

arbitration in the ordinance, the tribe shall, in the exercise of its

28

sovereignty, expressly waive, and also waive its right to assert,

29

sovereign immunity in connection with the arbitrator’s jurisdiction

30

and in any action to enforce the parties’ obligation to arbitrate,

31

confirm, correct, modify, or vacate the arbitral award rendered

32

in the arbitration, or enforce or execute a judgment based upon

33

the award.

34

(4) The ordinance may also require that the claimant first

35

exhaust the tribe’s administrative remedies for resolving the claim

36

in accordance with the following standards:

37

(A) The claimant shall bring his or her claim within 180 days

38

of receipt of written notice of the tribal dispute process, as long

39

as notice is served personally on the claimant or by certified mail

40

with an executed return receipt by the claimant, and the 180-day

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limitation period is prominently displayed on the front page of the

2

notice.

3

(B) Arbitration shall be stayed until the completion of the tribal

4

dispute process or 180 days from the date the claim is filed in the

5

tribal dispute process, whichever occurs first, unless the parties

6

mutually agree to a longer period.

7

(b) Upon notice that a claimant claims to have suffered an injury

8

or damage covered by this section, the tribe shall provide notice

9

by personal service or certified mail, return receipt requested, that

10

the claimant is required within the specified limitation period to

11

first exhaust the tribal dispute process, if any, and, if dissatisfied

12

with the resolution, is entitled to arbitrate his or her claim de novo

13

before a retired judge.

14

26267.   (a) As part of an agreement, the Governor may

15

authorize commercial activity concerning the cultivation,

16

manufacture, distribution, or sale of industrial hemp between

17

persons or entities authorized by the tribe to conduct those

18

activities in Indian country within the tribe’s jurisdiction and

19

persons or entities authorized by the state to conduct those

20

activities.

21

(b) The terms, if any, upon which the Governor authorizes

22

commercial industrial hemp activity between a tribe and persons

23

or entities authorized by the state shall be designed to create parity,

24

to the extent possible, between the state’s regulatory program for

25

commercial industrial hemp activity and the tribe’s regulatory

26

program for commercial industrial hemp activity.

27

26268.   (a) A tribe entering an agreement shall engage in good

28

faith discussions with each local jurisdiction whose geographic

29

boundaries contain all or part of Indian country within the tribe’s

30

jurisdiction to identify the impacts, if any, from commercial

31

cannabis activity occurring in Indian country within the tribe’s

32

jurisdiction, including increased utilization of public safety

33

services, environmental, water, or energy impacts, or other

34

mutually identified impacts. The tribe and local jurisdiction may

35

enter into enforceable written agreements or a memorandum of

36

understanding to mitigate the impacts.

37

(b) A memorandum of understanding between a tribe and a

38

local jurisdiction pursuant to this section may include provisions

39

to facilitate the mutual sharing of information between the tribe

40

and the local jurisdiction concerning all licenses applied for,

P27   1

issued, or renewed under this division, including information

2

concerning disciplinary actions against state or tribal licensees.

3

(c) The tribe shall require all tribal licensees to comply with

4

the terms of each memorandum of understanding executed under

5

this section, and the tribe shall investigate and discipline tribal

6

licensees for violations of the memorandum of understanding,

7

including through suspension or revocation of the tribal license.

8

(d) Each local jurisdiction that enters into a memorandum of

9

understanding pursuant to this section shall investigate violations

10

of the memorandum of understanding by persons or entities

11

authorized by the local jurisdiction to engage in commercial

12

cannabis activities. The local government shall discipline a person

13

or entity who is authorized by the local jurisdiction to engage in

14

commercial cannabis activity and who is determined to have

15

violated the memorandum of understanding, including through

16

suspension or revocation of the authorization to conduct

17

commercial cannabis activity within the local jurisdiction.

18

26269.   (a) In recognition of the government-to-government

19

relationship of the tribe and the state, the parties shall make their

20

best efforts to resolve disputes that arise under agreements by

21

good faith negotiation, when possible.

22

(b) Except for the right of either party to seek injunctive relief

23

against the other when circumstances are deemed to require

24

immediate relief, the tribe and the state shall seek to resolve

25

disputes by first meeting and conferring in good faith in order to

26

foster a spirit of cooperation and efficiency in the administration

27

and monitoring of the performance and compliance of the terms,

28

provisions, and conditions of the agreement, as follows:

29

(1) Either party shall give the other, as soon as possible after

30

the event giving rise to the concern, written notice setting forth

31

the facts giving rise to the dispute and, with specificity, the issues

32

to be resolved. The parties may authorize persons other than the

33

primary contacts referenced in subdivision (c) of Section 26265

34

to provide the notice required by this paragraph.

35

(2) The other party shall respond in writing to the facts and

36

issues set forth in the notice within 15 days of receiving the notice,

37

unless both parties agree in writing to an extension of time.

38

(3) The parties shall meet and confer in good faith by telephone

39

or in person in an attempt to resolve the dispute through

40

negotiation within 30 days after receipt of the notice set forth in

P28   1

paragraph (1), unless both parties agree in writing to an extension

2

of time.

3

(4) If the dispute is not resolved to the satisfaction of the parties

4

after the first meeting, either party may seek to have the dispute

5

resolved by an arbitrator in accordance with this section, but

6

neither party is required to agree to submit to arbitration.

7

(5) Disputes that are not otherwise resolved by arbitration or

8

other mutually agreed-upon means may be resolved in the United

9

States District Court in the judicial district where the tribal licensee

10

is located, or, if the federal court lacks jurisdiction, in a state court

11

of competent jurisdiction located in the County of Sacramento.

12

The disputes to be submitted to court action include, but are not

13

limited to, claims of breach of the agreement, provided that the

14

remedies expressly provided in paragraph (2) of subdivision (e)

15

are the sole and exclusive remedies available to either party for

16

issues arising out of the agreement, and supersede any remedies

17

otherwise available, whether at law, tort, contract, or in equity.

18

Notwithstanding any other law or the agreement, neither the state

19

nor the tribe shall be liable for damages or attorney’s fees in an

20

action based, in whole or in part, on the fact that the parties have

21

either entered into an agreement, or have obligations under an

22

agreement. The parties are entitled to all rights of appeal permitted

23

by law in the court system in which the action is brought.

24

(c) The tribe shall not be precluded from pursuing arbitration

25

or judicial remedy against the state on the ground that the tribe

26

has failed to exhaust its state administrative remedies. The state

27

is not precluded from pursuing arbitration or judicial remedy

28

against the tribe on the ground that the state has failed to exhaust

29

tribal administrative remedies.

30

(d) The agreement shall provide that arbitration between the

31

tribe and the state shall be conducted as follows:

32

(1) Arbitration shall be before a neutral arbitrator. Discovery

33

in the arbitration proceedings shall be governed by Section 1283.05

34

of the Code of Civil Procedure, provided that discovery authorized

35

by that section shall not be conducted without leave of the

36

arbitrator. The parties shall equally bear the cost of arbitration.

37

(2) In an arbitration under this section, the parties will bear

38

their own attorney’s fees.

39

(3) The arbitration shall take place within 75 miles of Indian

40

country within the tribe’s jurisdiction, or as otherwise mutually

P29   1

agreed by the parties. The parties shall agree that either party

2

may file a state or federal court action to enforce the parties’

3

obligation to arbitrate, confirm, correct, or vacate the arbitral

4

award rendered in the arbitration in accordance with Chapter 4

5

(commencing with Section 1285) of Title 9 of Part 3 of the Code

6

of Civil Procedure, or enforce or execute a judgment based upon

7

the award. In an action brought with respect to the arbitration

8

award, venue is proper in a state court located within the County

9

of Sacramento or in a federal court located in the Eastern District

10

of California.

11

(e) For the purpose of actions or arbitrations based on disputes

12

between the state and a tribe that arise under an agreement and

13

the enforcement of a judgment or award resulting therefrom, the

14

state and the tribe expressly waive their right to assert their

15

sovereign immunity from suit and enforcement of any ensuing

16

judgment or arbitral award and consent to the arbitrator’s

17

jurisdiction and further consent to be sued in federal or state court,

18

as the case may be, provided that all of the following apply:

19

(1) The dispute shall be limited solely to issues arising under

20

the agreement.

21

(2) Neither the tribe nor the state shall make a claim for

22

restitution or monetary damages, except that payment of money

23

expressly required by the terms of the agreement may be sought.

24

Solely injunctive relief, specific performance, including

25

enforcement of a provision of the agreement expressly requiring

26

the payment of money to one or another of the parties, and

27

declaratory relief that is limited to a determination of the respective

28

obligations of the parties under the agreement may be sought.

29

(3) This subdivision does not constitute a waiver of the sovereign

30

immunity of either the tribe or the state with respect to any third

31

party that is made a party or intervenes as a party to the action.

32

(f) If intervention, joinder, or other participation by an

33

additional party in an action between the state and the tribe would

34

result in the waiver of the tribe’s or the state’s sovereign immunity

35

as to that additional party, the waivers of either the tribe or the

36

state provided herein may be revoked, except where joinder is

37

required to preserve the court’s jurisdiction, in which case the

38

state and the tribe may not revoke their waivers of sovereign

39

immunity as to each other.

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(g) The waivers and consents to jurisdiction expressly provided

2

for in this section and elsewhere in this chapter shall extend to all

3

arbitrations and civil actions expressly authorized by the

4

agreement, including actions to compel arbitration, any arbitration

5

proceeding herein, any action to confirm, modify, or vacate any

6

arbitral award or to enforce any judgment, and any appellate

7

proceeding emanating from any of these proceedings, whether in

8

state or federal court.

9

(h) Except as stated in the agreement or this chapter, a waiver

10

or consent to be sued, either express or implied, is not granted by

11

either party, whether in state statute or otherwise.

12

26270.   (a) (1) If, at any time after the effective date of an

13

agreement, the state enters into an agreement, compact, or consent

14

decree with another federally recognized Indian tribe or

15

governmental agency thereof dealing with the regulation of

16

commercial cannabis in Indian country that includes a most

17

favored nation provision, then, upon a tribe's written request, its

18

agreement will be amended to include the same provision. This

19

does not require that the state offer a tribe the option to receive

20

the same terms offered to every other tribe or tribal government

21

agency in the absence of a most favored nation provision in the

22

agreement.

23

(2) For purposes of this subdivision, “most favored nation”

24

means language by which the state agrees to accord a tribe or

25

tribal government agency the same favorable terms that are offered

26

in later agreements with any other tribe or tribal government

27

agency.

28

(b) In an action filed by a third party challenging either the

29

tribe’s or the state's authority to enter into or enforce an

30

agreement, the tribe and the state shall support the agreement and

31

defend each of their authority to enter into and implement this

32

agreement. This provision does not waive the sovereign immunity

33

of the tribe or any of its subdivisions or enterprises.

34

(c) An agreement shall remain in effect for 10 years, unless the

35

tribe and the state mutually agree, in writing, that the agreement

36

should be vacated or terminated and superseded by a new

37

agreement between the parties within that time frame.

38

(d) An agreement shall be automatically renewed for successive

39

periods of 10 years, unless the tribe or the state provides written

40

notice to the other, no later than 120 days before the expiration

P31   1

of the then-current 10-year period, that it wishes to modify the

2