The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities.

Existing law requires an applicant for any type of MAUCRSA license to provide a statement, signed by the applicant under penalty of perjury, that the information provided is complete, true, and accurate. Existing law requires the issuance of MAUCRSA licenses to be valid for 12 months from the date of issuance and authorizes the license to be renewed annually. MAUCRSA prohibits a licensing authority from approving an application for a state license if approval of the state license will violate the provisions of certain local ordinances or regulations. MAUCRSA, until January 1, 2019, authorizes a state licensing authority to issue a temporary license if the applicant submits, among other things, a copy of a specified authorization issued by a local jurisdiction. MAUCRSA requires the temporary license to be valid for a period of 120 days and authorizes the temporary license to be extended for additional 90-day period at the discretion of the licensing authority. MAUCRSA establishes the Cannabis Control Appeals Panel and authorizes any person aggrieved by specified decisions of a licensing authority related to disciplining any license to appeal the licensing authoritys written decision to the panel. MAUCRSA prohibits the refusal by the licensing authority to issue or extend a temporary license from entitling the applicant or licensee to a hearing or an appeal of the decision.

This bill, until January 1, 2020, would authorize a licensing authority to issue a provisional license if specified conditions are met. By requiring additional applications to be signed under penalty of perjury, the bill would expand the scope of the crime of perjury, and would thereby impose a state-mandated local program. The bill would require the provisional annual license to be valid for 12 months and would prohibit the license from being renewed. The bill would require the provisions of MAUCRSA to apply to a provisional license in the same manner as to an annual license, except as specified. The bill would exempt the issuance of a provisional license from the California Environmental Quality Act. The bill would prohibit the refusal by the licensing authority to issue a provisional license or revocation or suspension by the licensing authority of a provisional license from entitling the applicant or licensee to a hearing or an appeal of the decision.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

The Control, Regulate and Tax Adult Use of Marijuana Act, an initiative measure, authorizes the Legislature to amend the act to further the purposes and intent of the act with a ²/₃ vote of the membership of both houses of the Legislature.

This bill would declare that its provisions further specified purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act.

This bill would declare that it is to take effect immediately as an urgency statute.

The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities.

Existing law requires an applicant for any type of MAUCRSA license to provide a statement, signed by the applicant under penalty of perjury, that the information provided is complete, true, and accurate. Existing law requires the issuance of MAUCRSA licenses to be valid for 12 months from the date of issuance and authorizes the license to be renewed annually. MAUCRSA prohibits a licensing authority from approving an application for a state license if approval of the state license will violate the provisions of certain local ordinances or regulations. MAUCRSA, until January 1, 2019, authorizes a state licensing authority to issue a temporary license if the applicant submits, among other things, a copy of a specified authorization issued by a local jurisdiction. MAUCRSA requires the temporary license to be valid for a period of 120 days and authorizes the temporary license to be extended for additional 90-day period at the discretion of the licensing authority. MAUCRSA establishes the Cannabis Control Appeals Panel and authorizes any person aggrieved by specified decisions of a licensing authority related to disciplining any license to appeal the licensing authoritys written decision to the panel. MAUCRSA prohibits the refusal by the licensing authority to issue or extend a temporary license from entitling the applicant or licensee to a hearing or an appeal of the decision.

This bill, until January 1, 2020, would authorize a licensing authority to issue a provisional license if specified conditions are met. By requiring additional applications to be signed under penalty of perjury, the bill would expand the scope of the crime of perjury, and would thereby impose a state-mandated local program. The bill would require the provisional annual license to be valid for 12 months and would prohibit the license from being renewed. The bill would require the provisions of MAUCRSA to apply to a provisional license in the same manner as to an annual license, except as specified. The bill would exempt the issuance of a provisional license from the California Environmental Quality Act. The bill would prohibit the refusal by the licensing authority to issue a provisional license or revocation or suspension by the licensing authority of a provisional license from entitling the applicant or licensee to a hearing or an appeal of the decision.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

The Control, Regulate and Tax Adult Use of Marijuana Act, an initiative measure, authorizes the Legislature to amend the act to further the purposes and intent of the act with a ²/₃ vote of the membership of both houses of the Legislature.

This bill would declare that its provisions further specified purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act.

This bill would declare that it is to take effect immediately as an urgency statute.

The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities. Under existing law, the Department of Food and Agriculture may issue cannabis cultivation licenses to commercial cannabis businesses that differ depending on the size of the cultivation site and whether the site is indoor, outdoor, or mixed.

Existing law requires an applicant for any type of MAUCRSA license to provide a statement, signed by the applicant under penalty of perjury, that the information provided is complete, true, and accurate. Existing law requires the issuance of MAUCRSA licenses to be valid for 12 months from the date of issuance and authorizes the license to be renewed annually. MAUCRSA prohibits a licensing authority from approving an application for a state license if approval of the state license will violate the provisions of certain local ordinances or regulations. MAUCRSA, until January 1, 2019, authorizes a state licensing authority to issue a temporary license if the applicant submits, among other things, a copy of a specified authorization issued by a local jurisdiction. MAUCRSA requires the temporary license to be valid for a period of 120 days and authorizes the temporary license to be extended for additional 90-day period at the discretion of the licensing authority. MAUCRSA establishes the Cannabis Control Appeals Panel and authorizes any person aggrieved by specified decisions of a licensing authority related to disciplining any license to appeal the licensing authoritys written decision to the panel. MAUCRSA prohibits the refusal by the licensing authority to issue or extend a temporary license from entitling the applicant or licensee to a hearing or an appeal of the decision.

This bill, until January 1, 2020, would authorize a holder of a temporary license for cultivation to apply for a provisional annual licensing authority to issue a provisional license if specified conditions are met, including attesting to submitting a complete application for a license, permit, or other authorization issued by the local jurisdiction. met. By expanding requiring additional applications to be signed under penalty of perjury, the bill would expand the scope of the crime of perjury, the bill would and would thereby impose a state-mandated local program. The bill would require the provisional annual license to be valid for 12 months and require the fees to be equal to the fees for a nonprovisional would prohibit the license of the same classification. from being renewed. The bill would require a holder of the provisions of MAUCRSA to apply to a provisional annual license to participate in the track and trace program in the same manner as the holder of a nonprovisional license. to an annual license, except as specified. This bill would exempt the issuance of a provisional annual license from the California Environmental Quality Act. The bill would prohibit the refusal by the licensing authority to issue a provisional license or revocation or suspension by the licensing authority of a provisional license from entitling the applicant or licensee to a hearing or an appeal of the decision.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

This bill would declare that its provisions further specified purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act.

This bill would declare that it is to take effect immediately as an urgency statute.

The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities. Under existing law, the Department of Food and Agriculture may issue cannabis cultivation licenses to commercial cannabis businesses that differ depending on the size of the cultivation site and whether the site is indoor, outdoor, or mixed.

Existing law establishes in each county a county department of agriculture under the control of a county agricultural commissioner. Existing law requires a county agricultural commissioner to compile, and to transmit to the Secretary of Food and Agriculture, reports of the condition, acreage, production, and value of the agricultural products in the county.

This bill would provide that a county agricultural commissioner may include cannabis produced in the county in an above-described report, as an addendum to the report. The bill would provide that this data may be organized by categories including, but not limited to, state cultivator license type and other specified categories. The bill would prohibit a county agricultural commissioner from seeking reimbursement from certain funding sources for expenses incurred pursuant to this authority.

The Control, Regulate and Tax Adult Use of Marijuana Act of 2016 (AUMA), an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities. Under existing law, the Department of Food and Agriculture may issue cannabis cultivation licenses to commercial cannabis businesses that differ depending on the size of the cultivation site and whether the site is indoor, outdoor, or mixed.

Existing law establishes in each county a county department of agriculture under the control of a county agricultural commissioner. Existing law requires a county agricultural commissioner to compile, and to transmit to the Secretary of Food and Agriculture, reports of the condition, acreage, production, and value of the agricultural products in the county.

This bill would provide that, for purposes of this report, agricultural products that a county agricultural commissioner may include cannabis produced in the county. The bill would require any data on cannabis production to be included county in an above-described report, as an addendum to the report. The bill would provide that this data may be organized by categories including, but not limited to, state cultivator license type and other specified categories. The bill would prohibit a county agricultural commissioner from seeking reimbursement from certain funding sources for expenses incurred pursuant to this authority.

The Control, Regulate and Tax Adult Use of Marijuana Act of 2016 (AUMA), an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities. Under existing law, the Department of Food and Agriculture may issue cannabis cultivation licenses to commercial cannabis businesses that differ depending on the size of the cultivation site and whether the site is indoor, outdoor, or mixed.

Existing law establishes in each county a county department of agriculture under the control of a county agricultural commissioner. Existing law requires a county agricultural commissioner to compile, and to transmit to the Secretary of Food and Agriculture, reports of the condition, acreage, production, and value of the agricultural products in the county.

This bill would provide that, for purposes of this report, agricultural products may include cannabis produced in the county. The bill would require any data on cannabis production to be included as an addendum to the report. The bill would provide that, if cannabis is included in a report, that this data on cannabis production may be organized by categories including, but not limited to, state cultivator license type and other specified categories.

The Control, Regulate and Tax Adult Use of Marijuana Act of 2016 (AUMA), an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities. Under existing law, the Department of Food and Agriculture may issue cannabis cultivation licenses to commercial cannabis businesses that differ depending on the size of the cultivation site and whether the site is indoor, outdoor, or mixed.

Existing law establishes in each county a county department of agriculture under the control of a county agricultural commissioner. Existing law requires a county agricultural commissioner to compile, and to transmit to the Secretary of Food and Agriculture, reports of the condition, acreage, production, and value of the agricultural products in the county.

This bill would provide that, for purposes of this report, agricultural products may include cannabis produced in the county. The bill would require provide that, if cannabis is included in a report, data on cannabis production be, at a minimum, categorized as provided, including may be organized by categories including, but not limited to, state cultivator license type. type and other specified categories.

The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 provides the authority and procedures for the initiation, conduct, and completion of changes of organization and reorganization of cities and districts by local agency formation commissions. Under that act, upon disincorporation of a city, on and after the effective date of that disincorporation, the territory of the disincorporated city, all inhabitants within the territory, and all persons formerly entitled to vote by reason of residing within that territory, are no longer subject to the jurisdiction of the disincorporated city.

This bill would make a nonsubstantive change to this provision.

SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Jerry Hill, Chair

2017 - 2018 Regular

Bill No: SB 1459 Hearing Date: August 31, 2018

Subject: Cannabis: provisional license.

SUMMARY:

Establishes a provisional cannabis license that may be issued at the sole discretion of a licensing authority, as specified, until January 1, 2020.

NOTE: This bill was heard in the Assembly Business and Professions Committee on 8/29/18 and approved 18-1-0.  The 8/27/18 amendments to this measure rewrite the bill as defined in Senate Rule 29.10 (e), in that it:  “makes a change of . . . policy significance that may be appropriate for review by a standing committee.”  Therefore, the bill has been referred to this Committee pursuant to Senate Rule 29.10 (d) for consideration.  The Committee may by a vote of the majority of the membership do any of the following:  1) hold the bill or 2) return the bill as approved by the committee to the Senate floor for consideration of the bill as amended in the Assembly.

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. Establishes the Bureau of Cannabis Control (Bureau) under the Department of Consumer Affairs to regulate cannabis with 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. (BPC §§ 26010, 26012 (a)(1))
3. Requires the California Department of Food and Agriculture (CDFA) to administer the portions of MAUCRSA related to and associated with the cultivation of cannabis. Delegates to CDFA the authority to create, issue, deny, and suspend or revoke cultivation licenses for violations of MAUCRSA. (BPC § 26012 (a)(2))
4. Requires the State Department of Public Health (DPH) to administer the provisions of MAUCRSA related to and associated with the manufacturing of cannabis products. DPH shall have the authority to create, issue, deny, and suspend or revoke manufacturing licenses for violations of MAUCRSA. (BPC § 26012 (a)(3))
5. Authorizes a licensing authority, in its sole discretion, to issue a temporary license until January 1, 2019 that is valid for 120 days and may be extended for additional 90-day periods at the discretion of the licensing authority. Temporary licenses shall only be eligible for an extension of the expiration date if the applicant has submitted a complete application for licensure. A temporary license is a conditional license and authorizes the holder to engage in commercial cannabis activity as would be permitted under the privileges of the license for which the applicant has submitted an application. (BPC § 26050.1)
6. Exempts the issuance or extension of a temporary license by a licensing authority from a hearing or appeal of the decision. (BPC § 26050.1 (b)(4))
7. Establishes criteria for providing evidence of California Environmental Quality Act (CEQA) compliance or CEQA exemption for a cultivation license from CDFA. (Title 3, California Code of Regulations (CCR) § 8102 (r)).
8. Establishes criteria for providing evidence of CEQA compliance or CEQA exemption for the Bureau. (16 CCR §§ 5010, 5010.2)
9. Establishes criteria for providing evidence of CEQA compliance or CEQA exemption for a manufacturing license from DPH. (17 CCR § 40132)
10. Authorizes a license applicant to voluntarily provide proof of a license, permit, or other authorization from the local jurisdiction verifying that the applicant is in compliance with the local jurisdiction. The licensing authority shall notify the local jurisdiction of any applicant that voluntarily submits a valid, unexpired license, permit, or other authorization from the local jurisdiction. (BPC § 26055 (e))
11. Requires a licensing authority to deny an application for a license that the local jurisdiction has notified the Bureau is prohibited. The licensing authority shall notify the local jurisdiction of each application denied due to the local jurisdiction’s indication that the commercial cannabis activity for which a license is sought is prohibited. (BPC § 26055 (g)(1))
12. States that if an applicant has not provided adequate proof of compliance with local laws:
    1. The licensing authority shall notify the local jurisdiction of the receipt of an application for commercial cannabis activity.
    2. A local jurisdiction may notify the licensing authority that the applicant is not in compliance with a local ordinance or regulation. In this instance, the licensing authority shall deny the application.
    3. A local jurisdiction may notify the licensing authority that the applicant is in compliance with all applicable local ordinances and regulations. In this instance, the licensing authority may proceed with the licensing process. (BPC § 26055 (g)(2))

This bill:

1. Authorizes a licensing authority to, in its sole discretion, issue a provisional license to an applicant if the following conditions are met:
   1. The applicant holds or held a temporary license for the same premises and the same commercial cannabis activity.
   2. The applicant has submitted a completed license application to the licensing authority, including evidence that compliance with CEQA is underway.
2. States that provisional license shall be valid for 12 months from the date issued and shall not be renewed. Except as specified in this bill, the provisions of MAUCRSA shall apply to a provisional license in the same manner as to an annual license.
3. States that, without limiting any other statutory exemption or categorical exemption, CEQA not apply to the issuance of a provisional license by the licensing authority.
4. Exempts provisional licenses from the hearing and appeals process.
5. Will remain in effect only until January 1, 2020.
6. States that this bill furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act of 2016.
7. Declares this bill an urgency statute necessary for the immediate preservation of the public peace, health, or safety because the significant number of cultivation license applications pending with local authorities that do not have adequate resources to process these applications before the applicants’ temporary licenses expire on January 1, 2019 threatens to create a major disruption in the commercial cannabis marketplace.

FISCAL EFFECT:

Unknown. This bill is keyed fiscal by Legislative Counsel.

COMMENTS:

1. Purpose. This bill is Author sponsored. According to the Author’s office, “Many cannabis businesses currently in possession of temporary licenses are still waiting for final approvals while local jurisdictions conduct CEQA reviews, complete their Conditional Use Permit processes and/or issue building permits.

“The Bureau of Cannabis Control had originally informed counties that an application and renewal for temporary licenses with ‘pending’ for the answer to the status of annual license applications, was sufficient. Counties were caught by surprise by this recent change in position and for a number of reasons, including limited staff time, resources and the sheer number of applications, local governments need additional time to process the significant number of permit applications.”

1. Cannabis Regulatory 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 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.

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.

1. Temporary Cannabis Licenses. MAUCRSA authorized the licensing authorities to issue four-month temporary licenses to applicants, with opportunities for 90- day extensions, through December 31, 2018. The temporary license required proof of local authorization and entitled the holder to engage in commercial cannabis activity without completing the annual licensing application requirements, including CEQA review. The state issued temporary licenses at no cost, and temporary licensees did not have access to the track and trace system, though they were obligated to maintain paper records.

The temporary license was intended as an intermediary step while the state and local jurisdictions managed their own efforts to come into compliance with the cannabis regulatory structure. However, many local jurisdictions found themselves unprepared to fulfill their obligations by the time the temporary licenses expired.

1. “Complete” license application: Local Authorization. This bill requires a completed license application as a condition of receiving a provisional license.

The statutory requirement for a license application is permissive as to the applicant providing proof to the licensing authority of a license, permit, or other authorization from the local jurisdiction verifying that the applicant is in compliance with local requirements. While a local jurisdiction must provide the Bureau a copy of any ordinance or regulation related to commercial cannabis activity, the Bureau is not mandated to independently verify compliance.

Current law presumes that an applicant is in compliance with all local ordinances unless the licensing authority is notified otherwise by the local jurisdiction. Upon receipt of an application containing a local endorsement, the licensing authority is required to notify the local jurisdiction, and must deny an application if the local jurisdiction notifies the state that the applicant is noncompliant. If an application does not contain evidence of local compliance, the licensing authority still has to notify the local jurisdiction, and the jurisdiction has 60 days to notify the licensing authority whether or not an applicant is compliant. This bill maintains those conditions for issuance of a provisional license.

1. “Complete” license application: CEQA. A “complete” application for all license types requires evidence of compliance with, or exemption from, CEQA. In most cases, this CEQA review is performed at the local level, with the local jurisdiction acting as the "lead agency," which determines the potential environmental impacts of the project. However, if the local jurisdiction does not undertake CEQA review, such a review may need to be performed at the state level, causing the state to be the “lead agency”. The scope of the required CEQA review varies from case-to-case, based on the nature of the application and any prior environmental reviews that have been conducted, and these can often be extensive and time-consuming.

According to stakeholders, some local jurisdictions have issued temporary or provisional local permits for commercial cannabis activities, but will not complete their full local permitting process, including any associated CEQA review, prior to January 1, 2019.

1. Impact of this bill. This bill will allow an applicant who holds or held a temporary license to obtain a provisional license, with all the rights and responsibilities of an annual license, without proof of full CEQA compliance. The provisional license will be subject to annual licensing fees, track and trace, and all other statutory and regulatory obligations, although the decision to issue or deny this license will not be subject to a hearing or appeal, similar to the issuance of the temporary license.

After the expiration of the provisional license, an annual license will be required to continue operations. This bill gives applicants, local jurisdictions, and the state additional time to comply with CEQA.

1. Related legislation. AB 2020 (Quirk) expands the venue options for the site of a temporary cannabis event to any location expressly approved by a local jurisdiction, as specified. (Status: This bill is in engrossing and enrolling.)

AB 2641 (Wood) established a temporary cannabis retailer license for qualified cannabis manufacturers and cultivators to sell their own products at temporary cannabis events, as specified. (Status: This bill was held under submission in the Senate Committee on Appropriations.)

1. Arguments in Support. The Rural County Representatives of California (RCRC) write, “As recently-amended, SB 1459 creates a provisional cultivation license to address the looming backlog of pending license applications at both the local and state level. Effective January 1, 2019, unless action taken by the Legislature, authorization to issue temporary cultivation licenses expires. After January 1^st, cultivation licenses issued will be permanent and a variety of requirements will accompany this type of licensure. As both local governments and the state works to consider and approve hundreds of pending applications, SB 1459 would provide an option to address the looming backlog by allowing, for one year only, a provisional license. For those RCRC member counties that have sanctioned commercial cannabis activities and have moved forward with their process, SB 1459 will be most welcome.”

The County of Humboldt writes, “Rural counties like Humboldt have inherently smaller staffs, reflective of a more rural population. Yet, Humboldt in particular is a very desirable location for many cannabis cultivators to grow their product. As a result of Proposition 64’s passage and the crisp time frame for permittees to apply first to the local agency for a local permit then for a temporary state license, there are over 900 temporary permits issued in Humboldt with a corresponding number of temporary state licenses. These temporary state licenses will expire at the end of the year or 120 days after issuance; whichever is later. An impossible task lies ahead for our staff to finalize all 900 local permits to enable issuance of annual state licenses without assistance from the State.

“While our staff is working as quickly as possible, these applications are complicated and staff must ensure that cultivator operations comply with our environmental laws and regulations. Rushing these through would be a mistake, as that could lead to real environmental damage. Letting permits expire as applicants run out of time would also be a mistake, as the entire goal includes bringing cultivators into taxing, permitting, and environmental compliance; without a permit, none of these things can happen.”

SUPPORT AND OPPOSITION:

Support:

California Cannabis Industry Association

California Growers Association

California State Association of Counties

California Teamsters

Cannabis Distributors Association

CMG/Caliva

County of Humboldt

County of Monterey

County of Santa Barbara

League of California Cities

National Organization for the Reform of Marijuana Laws, California Chapter

Rural County Representatives of California

Soma Rosa Farms

Southern California Coalition

United Food & Commercial Workers Union, Western States Council (UFCW)

WeDrop

Opposition:

None on file.

-- END --

 UNFINISHED BUSINESS 

Bill No: SB 1459

Author:

:

Vote:

PRIOR SENATE VOTES NOT RELEVANT

SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 8-0, 8/31/18 (Pursuant to Senate Rule 29.10)

AYES: Hill, Allen, Dodd, Galgiani, Glazer, Hernandez, Pan, Wilk

NO VOTE RECORDED: Fuller

ASSEMBLY FLOOR: Not available

SUBJECT: Cannabis: provisional license

SOURCE: Author

DIGEST:

This bill establishes a provisional cannabis license that may be issued at the sole discretion of a licensing authority, as specified, until January 1, 2020.

Assembly Amendments delete the prior version of the bill and insert the current language.

ANALYSIS:

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. Establishes the Bureau of Cannabis Control (Bureau) under the Department of Consumer Affairs to regulate cannabis with 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. (BPC §§ 26010, 26012 (a)(1))
3. Requires the California Department of Food and Agriculture (CDFA) to administer the portions of MAUCRSA related to and associated with the cultivation of cannabis. Delegates to CDFA the authority to create, issue, deny, and suspend or revoke cultivation licenses for violations of MAUCRSA. (BPC § 26012 (a)(2))
4. Requires the State Department of Public Health (DPH) to administer the provisions of MAUCRSA related to and associated with the manufacturing of cannabis products. DPH shall have the authority to create, issue, deny, and suspend or revoke manufacturing licenses for violations of MAUCRSA. (BPC § 26012 (a)(3))
5. Authorizes a licensing authority, in its sole discretion, to issue a temporary license until January 1, 2019 that is valid for 120 days and may be extended for additional 90-day periods at the discretion of the licensing authority. Temporary licenses shall only be eligible for an extension of the expiration date if the applicant has submitted a complete application for licensure. A temporary license is a conditional license and authorizes the holder to engage in commercial cannabis activity as would be permitted under the privileges of the license for which the applicant has submitted an application. (BPC § 26050.1)

This bill:

1. Authorizes a licensing authority to, in its sole discretion, issue a provisional license to an applicant if the following conditions are met:
   1. The applicant holds or held a temporary license for the same premises and the same commercial cannabis activity.
   2. The applicant has submitted a completed license application to the licensing authority, including evidence that compliance with CEQA is underway.
2. States that provisional license shall be valid for 12 months from the date issued and shall not be renewed. Except as specified in this bill, the provisions of MAUCRSA shall apply to a provisional license in the same manner as to an annual license.
3. States that, without limiting any other statutory exemption or categorical exemption, CEQA not apply to the issuance of a provisional license by the licensing authority.
4. Exempts provisional licenses from the hearing and appeals process.
5. Remains in effect only until January 1, 2020.
6. States that this bill furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act of 2016.
7. Declares this bill an urgency statute necessary for the immediate preservation of the public peace, health, or safety because the significant number of cultivation license applications pending with local authorities that do not have adequate resources to process these applications before the applicants’ temporary licenses expire on January 1, 2019, threatens to create a major disruption in the commercial cannabis marketplace.

Background

Cannabis regulatory 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 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.

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.

Temporary Cannabis Licenses. MAUCRSA authorized the licensingauthorities to issue four-month temporary licenses to applicants, with opportunities for 90- day extensions, through December 31, 2018. The temporary license required proof of local authorization and entitled the holder to engage in commercial cannabis activity without completing the annual licensing application requirements, including CEQA review. The state issued temporary licenses at no cost, and temporary licensees did not have access to the track and trace system, though they were obligated to maintain paper records.

The temporary license was intended as an intermediary step while the state and local jurisdictions managed their own efforts to come into compliance with the cannabis regulatory structure. However, many local jurisdictions found themselves unprepared to fulfill their obligations by the time the temporary licenses expired.

“Complete” license application: Local Authorization. This bill requires a completed license application as a condition of receiving a provisional license.

The statutory requirements for a license application is permissive as to the applicant providing proof to the licensing authority of a license, permit, or other authorization from the local jurisdiction verifying that the applicant is in compliance with local requirements. While a local jurisdiction must provide the Bureau a copy of any ordinance or regulation related to commercial cannabis activity, the Bureau is not mandated to independently verify compliance.

Current law presumes that an applicant is in compliance with all local ordinances unless the licensing authority is notified otherwise by the local jurisdiction. Upon receipt of an application containing a local endorsement, the licensing authority is required to notify the local jurisdiction, and must deny an application if the local jurisdiction notifies the state that the applicant is noncompliant. If an application does not contain evidence of local compliance, the licensing authority still has to notify the local jurisdiction, and the jurisdiction has 60 days to notify the licensing authority whether or not an applicant is compliant. This bill maintains those conditions for issuance of a provisional license.

“Complete” license application: CEQA. A “complete” application for all license types requires evidence of compliance with, or exemption from, CEQA. In most cases, this CEQA review is performed at the local level, with the local jurisdiction acting as the "lead agency," which determines the potential environmental impacts of the project. However, if the local jurisdiction does not undertake CEQA review, such a review may need to be performed at the state level, causing the state to be the “lead agency”. The scope of the required CEQA review varies from case-to-case, based on the nature of the application and any prior environmental reviews that have been conducted, and these can often be extensive and time-consuming.

According to stakeholders, some local jurisdictions have issued temporary or provisional local permits for commercial cannabis activities, but will not complete their full local permitting process, including any associated CEQA review, prior to January 1, 2019.

Impact of this bill. This bill will allow an applicant who holds or held a temporary license to obtain a provisional license, with all the rights and responsibilities of an annual license, without proof of full CEQA compliance. The provisional license will be subject to annual licensing fees, track and trace, and all other statutory and regulatory obligations, although the decision to issue or deny this license will not be subject to a hearing or appeal, similar to the issuance of the temporary license.

After the expiration of the provisional license, an annual license will be required to continue operations. This bill gives applicants, local jurisdictions, and the state additional time to comply with CEQA.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

Unknown.

SUPPORT: (Verified 8/30/18)

California Cannabis Industry Association

California Growers Association

California State Association of Counties

California Teamsters

Cannabis Distributors Association

CMG/Caliva

County of Humboldt

County of Monterey

County of Santa Barbara

League of California Cities

National Organization for the Reform of Marijuana Laws, California Chapter

Rural County Representatives of California

Soma Rosa Farms

Southern California Coalition

United Food & Commercial Workers Union, Western States Council

WeDrop

OPPOSITION: (Verified 8/30/18)

None received

ARGUMENTS IN SUPPORT: The Rural County Representatives of California (RCRC) write, “As recently-amended, SB 1459 creates a provisional cultivation license to address the looming backlog of pending license applications at both the local and state level. Effective January 1, 2019, unless action taken by the Legislature, authorization to issue temporary cultivation licenses expires. After January 1^st, cultivation licenses issued will be permanent and a variety of requirements will accompany this type of licensure. As both local governments and the state works to consider and approve hundreds of pending applications, SB 1459 would provide an option to address the looming backlog by allowing, for one year only, a provisional license. For those RCRC member counties that have sanctioned commercial cannabis activities and have moved forward with their process, SB 1459 will be most welcome.”

Prepared by:

8/31/18 21:11:59

**** END ****

SENATE THIRD READING

STR Bill Id:SB 1459

Author:(Cannella)

As Amended Ver:August 27, 2018

2/3 vote. Urgency

SENATE VOTE: 37-0

SUMMARY: This bill allows the California cannabis licensing authorities, (the Department of Food and Agriculture (CDFA), Department of Public Health (DPH), and the Bureau of Cannabis Control (BCC)), to issue a provisional license for commercial cannabis activity if specified conditions are met, most notably, that the applicant has submitted application for a license, permit, or other authorization. Specifically, this bill:

1. Authorizes licensing authorities to issue a provisional license to the holder of a temporary cultivation license if specified conditions are met. Specified conditions include:
   1. The application confirms submitting a complete application for a license, permit, or other authorization issued by the local jurisdiction
   2. The applicant must hold or have held, a temporary cannabis license for the same premises;
2. Requires the provisional license to be valid for 12 months and is not renewable.
3. Except as provided in the bill, applies the requirements of an annual license to provisional licenses.
4. Clarifies that refusal by a licensing authority to issue a license pursuant to this section or revocation or suspension of a license does not entitle the applicant or licensee to a hearing or appeal of the decision.
5. Exempts the issuance of provisional licenses from the California Environmental Quality Act.
6. Includes an urgency clause and shall go into immediate effect.

COMMENTS:

Purpose. This bill is author sponsored. According to the author:

The sunset date in the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) states that temporary licenses will no longer be issued after the end of this year. With the release of the new draft amendments, counties were also notified that the State will no longer issue extensions to previously issued temporary licenses. Counties need time to operate these discretionary permits. Without action by the State to the CEQA and water permit issues, local businesses that counties allowed to operate (under prior regulations) while their permits were being processed, will have to stop operations at the end of this year, disrupting the market and prohibiting expected tax revenues. SB 1459 is necessary to avoid a major disruption in the commercial cannabis market place and allow state licensing agencies and local authorizing entities to immediately address a significant number of applications pending.

Background.

History of Legal Cannabis in California. In 1996, California voters passed Proposition 215, legalizing the use of medical cannabis (MC) in the state. In October 2015, nearly 20 years after the authorization of the use of MC, Governor Jerry Brown signed into law a trio of bills [AB 243 (Wood), Chapter 688, Statutes of 2015, AB 266 (Bonta, Cooley, Jones-Sawyer, Lackey, and Wood), Chapter 689, Statutes of 2015, and SB 643 (McGuire), Chapter 719, Statutes of 2015] collectively known as the Medical Cannabis Regulation and Safety Act (MCRSA). MCRSA established the state's first comprehensive regulatory framework for MC.

In 2016, the voters of California passed Proposition 64, the Adult Use of Marijuana Act (AUMA) to legalize the recreational use of cannabis in the state by 2018. In June 2017, AUMA and MCRSA were combined via the budget process to form one system for the regulation of cannabis, MAUCRSA.

Applicants for Licensure. Current law prescribes 11 steps for licensure for cannabis-related businesses. The licensing requirements include transmission of fingerprints, submission to a background check, and submission of fees as well as a requirement that applicants with more than 20 employees seeking licensure to engage in cannabis related business must submit to the licensing authority a statement that the applicant will enter into or demonstrate that it has already entered into a labor peace agreement.

Temporary Licenses. Temporary licenses began being issued by the BCC, CDFA, and DPH on January 1, 2018 and under current law may be issued through December 31, 2018. Temporary licenses allow a business to engage in commercial cannabis activity for a period of 120 days with possible extensions if the licensee meets certain requirements set by the licensing entities. The licensing entities may only issue a temporary license if the applicant has a valid license, permit, or other authorization issued by the local jurisdiction. All types of cannabis licenses are eligible for temporary licensure and effective July 1, 2018, all cannabis product, even that which is being cultivated or processed by a temporary licensee must meet minimum testing requirements as set by law.

Cannabis Cultivation. Cannabis cultivation has been the source of notable controversy in the infancy of the regulated market. The illegal cultivation market in California is well documented and as recently as 2017 the United States Drug Enforcement Agency's Cannabis Eradication and Suppression Unit eradicated more than 1,100 outdoor and 379 indoor Grow sites, seizing more than $2.5 Million in assets in the process.

As the regulatory agency for cannabis cultivation, the California Department of Food and Agriculture (CDFA) is responsible for promulgating regulations, licensing, and enforcement. As of Thursday, April 19, 2018, CDFA has issued 3,330 temporary licenses, though only nine have applied for annual licensure. Though CDFA cannot provide official estimates for illegal cultivation, a March 2018 Washington Post article estimated that in Humboldt County alone, there are estimated to be 12,500 cannabis cultivators and nearly 70,000 statewide.

Delays in Local Permitting. The majority of temporary cultivation permit holders are located in Humboldt, Monterey, and Santa Barbara counties and each are encountering tremendous challenges in processing permit applications. In Humboldt County local regulators have received 2,376 application and have only been able to approve 240 permits and Monterey County has received 103 applications and has approved 13. Santa Barbara County has experienced a number of local environmental disasters in recent years that have led to essential permitting staff being diverted to other efforts.

Analysis Prepared by: Jimmy Fremgen / B. & P. / (916) 319-3301 FN: 0005120

Date of Hearing: August 29, 2019

ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS

Evan Low, Chair

SBPCA Bill Id:SB 1459

Author:(Cannella) – As Amended Ver:August 27, 2018

Note: This bill was referred to this Committee pursuant to Assembly Rule 77.2. The Committee may pass the bill to the Assembly Floor, pass the bill to the Assembly Floor with amendments, or hold the bill in the Committee.

SENATE VOTE: N/A

SUBJECT: Cannabis: provisional license

SUMMARY: This bill allows the California cannabis licensing authorities, (the Department of Food and Agriculture (CDFA), Department of Public Health (DPH), and the Bureau of Cannabis Control (BCC)), to issue a provisional license for commercial cannabis activity if specified conditions are met, most notably, that the applicant has submitted application for a license, permit, or other authorization.

EXISTING LAW:

1. Establishes the Medicinal and Adult-Use Cannabis Regulation and Safety Act (Act). (Business and Professions Code (BPC) Section 26000)
2. Establishes the Bureau of Cannabis Control (Bureau) within the Department of Consumer Affairs to administer the Act. (BPC Section 26010)
3. Designates the following activities to the respective licensing authorities:
   1. The Bureau has the authority to create, issue deny, renew, discipline, suspend, or revoke licenses for microbusinesses, transportation, storage unrelated to manufacturing activities, distribution, testing, and the sale of cannabis and cannabis products.
   2. The Department of Food and Agriculture has the authority to create, issue, deny, and suspend or revoke cultivation licenses.
   3. The State Department of Public Health has the authority to create, issue, deny, and suspend or revoke manufacturing licenses. (BPC Section 26012)
4. Sets standards for quality assurance, inspection, and testing. (BPC Section 26110)
5. Defines terms related to cannabis regulation (BPC Section 26001)
6. Establishes the Cannabis Cultivation Program under the authority of the California Secretary of Food and Agriculture and sets standards for the tagging and tracking of cannabis plants. (BPC Section 26069)

THIS BILL:

1. Authorizes licensing authorities to issue a provisional license to the holder of a temporary cultivation license if specified conditions are met. Specified conditions include:
   1. The application confirms submitting a complete application for a license, permit, or other authorization issued by the local jurisdiction
   2. The applicant must hold or have held, a temporary cannabis license for the same premises;
2. Requires the provisional license to be valid for 12 months and is not renewable.
3. Except as provided in the bill, applies the requirements of an annual license to provisional licenses.
4. Clarifies that refusal by a licensing authority to issue a license pursuant to this section or revocation or suspension of a license does not entitle the applicant or licensee to a hearing or appeal of the decision.
5. Exempts the issuance of provisional licenses from the California Environmental Quality Act.
6. Includes an urgency clause and shall go into immediate effect.

FISCAL EFFECT: Unknown. This bill is keyed fiscal by legislative counsel.

COMMENTS:

Purpose. This bill is author sponsored. According to the author:

The sunset date in the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) states that temporary licenses will no longer be issued after the end of this year. With the release of the new draft amendments, counties were also notified that the State will no longer issue extensions to previously issued temporary licenses. Counties need time to operate these discretionary permits. Without action by the State to the CEQA and water permit issues, local businesses that counties allowed to operate (under prior regulations) while their permits were being processed, will have to stop operations at the end of this year, disrupting the market and prohibiting expected tax revenues. SB 1459 is necessary to avoid a major disruption in the commercial cannabis market place and allow state licensing agencies and local authorizing entities to immediately address a significant number of applications pending.

Background.

History of Legal Cannabis in California. In 1996, California voters passed Proposition 215, legalizing the use of medical cannabis (MC) in the state. In October 2015, nearly 20 years after the authorization of the use of MC, Governor Jerry Brown signed into law a trio of bills [AB 243 (Wood), Chapter 688, Statutes of 2015, AB 266 (Bonta, Cooley, Jones-Sawyer, Lackey, and Wood), Chapter 689, Statutes of 2015, and SB 643 (McGuire), Chapter 719, Statutes of 2015] collectively known as the Medical Cannabis Regulation and Safety Act (MCRSA). MCRSA established the state’s first comprehensive regulatory framework for MC.

In 2016, the voters of California passed Proposition 64, the Adult Use of Marijuana Act (AUMA) to legalize the recreational use of cannabis in the state by 2018. In June 2017, AUMA and MCRSA were combined via the budget process to form one system for the regulation of cannabis, MAUCRSA.

Applicants for Licensure. Current law prescribes 11 steps for licensure for cannabis-related businesses. The licensing requirements include transmission of fingerprints, submission to a background check, and submission of fees as well as a requirement that applicants with more than 20 employees seeking licensure to engage in cannabis related business must submit to the licensing authority a statement that the applicant will enter into or demonstrate that it has already entered into a labor peace agreement.

Temporary Licenses. Temporary licenses began being issued by the BCC, CDFA, and DPH on January 1, 2018 and under current law may be issued through December 31,2018. Temporary licenses allow a business to engage in commercial cannabis activity for a period of 120 days with possible extensions if the licensee meets certain requirements set by the licensing entities. The licensing entities may only issue a temporary license if the applicant has a valid license, permit, or other authorization issued by the local jurisdiction. All types of cannabis licenses are eligible for temporary licensure and effective July 1, 2018, all cannabis product, even that which is being cultivated or processed by a temporary licensee must meet minimum testing requirements as set by law.

Cannabis Cultivation. Cannabis cultivation has been the source of notable controversy in the infancy of the regulated market. The illegal cultivation market in California is well documented and as recently as 2017 the United States Drug Enforcement Agency’s Cannabis Eradication and Suppression Unit eradicated more than 1,100 outdoor and 379 indoor Grow sites, seizing more than $2.5 Million in assets in the process.

As the regulatory agency for cannabis cultivation, the California Department of Food and Agriculture (CDFA) is responsible for promulgating regulations, licensing, and enforcement. As of Thursday, April 19, 2018, CDFA has issued 3,330 temporary licenses, though only 9 have applied for annual licensure. Though CDFA cannot provide official estimates for illegal cultivation, a March 2018 Washington Post article estimated that in Humboldt County alone, there are estimated to be 12,500 cannabis cultivators and nearly 70,000 statewide.

Delays in Local Permitting. The majority of temporary cultivation permit holders are located in Humboldt, Monterey, and Santa Barbara counties and each are encountering tremendous challenges in processing permit applications. In Humboldt County local regulators have received 2,376 application and have only been able to approve 240 permits and Monterey County has received 103 applications and has approved 13. Santa Barbara County has experienced a number of local environmental disasters in recent years that have led to essential permitting staff being diverted to other efforts.

Prior Related Legislation. SB 94 (Committee on Budget and Fiscal Review, Chapter 27, Statutes of 2017) of the current legislative session, combined AUMA and MCRSA into one system for the regulation of cannabis, resulting in MAUCRSA.

ARGUMENTS IN SUPPORT:

The California Cannabis Industry Association writes in support, “Not only will SB 1459 prevent any costly disruption in compliant business activity, it will assure a stable regulated supply chain, so that both patients and consumers continue to have access to safe, compliant cannabis and cannabis products.”

The California Growers Association writes in support, “SB 1459 provides a critical “licensing bridge” for licensees who are now temporary license holders and are the foundation for permanently licensed cannabis industry when those licenses can be issued.”

The California Distributors Association writes in support, “Temporary licenses for commercial cannabis are set to expire in January 2019. Due to an incredibly high volume of applicants, we believe local governments need additional time to process commercial cannabis cultivation license applications. If additional time is not provided, it is likely that the clock will runout for many of our members on December 31, 2018 – resulting in a major disruption in the regulated cannabis marketplace in California.”

WeDrop writes in support, “With the state’s temporary license program set to expire on December 31, a provisional license program, as established in SB 1459, is critically need to ensure that compliant cannabis businesses may continue to legally operate while their local and state applications for annual licenses are pending.”

Rural County Representatives of California (RCRC) writes in support, “As both local governments and the state works to consider and approve hundreds of pending applications, SB 1459 would provide an option to address the looming backlog by allowing, for one year only, a provisional license. For those RCRC member counties that have sanctioned commercial cannabis activities and have moved forward with their process, SB 1459 will be most welcome.”

The County of Santa Barbara writes in support, “I am writing on behalf of the Santa Barbara County Board of Supervisors to state our support for SB 1459 (Cannella) which would allow for temporary cannabis cultivation licensees to apply for a provisional annual license to provide critical additional time for local governments and the state to process significant numbers of cannabis cultivation applications.”

The California State Association of Counties, Local governments are partners with the state in implementing Proposition 64 and the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). SB 1459 (Cannella) would provide a reasonable solution to help address this critical issue. It is for these reasons that we support this bill.

CMG/Caliva writes in support, “It is critical to note that SB 1459 does not absolve temporary or provisional licensees from having to comply with the full panopoly of regulations that are imposed on a permanent licensee. This element of the bill is essential to ensuring that the integrity of the industry is maintained as these last remaining hurdles are satisfied.”

ARGUMENTS IN OPPOSITION:

None on file

POLICY ISSUES:

Noticeably absent from the recently amended bill is a requirement for licensing authorities to coordinate with local jurisdictions. While there is nothing to prevent coordination of this type, there is also no requirement that licensing authorities consult or discuss provisional licensure with a local jurisdiction before issuing a license. This may lead to confusion in jurisdictions with bans or limits on license types. The author is encouraged to work with local government stakeholders and the administration to address this issue.

Additionally, while existing law implements an appeal process for both temporary and annual licenses, provisional licensure does not seem to include any semblance of due process for denied applicants. This is particularly striking since giving sole discretion to the licensing authorities is a large departure from the standard set by current law that requires coordination between local jurisdictions, applicants, and licensing authorities.

IMPLEMENTATION ISSUES:

The bill stipulates that an applicant must have submitted a complete license application to the licensing authority but does not describe what “complete” entails. There is significant space for confusion on this point as a “complete application” may be construed to include local approval for licensure under current law. This discrepancy may lead to further confusion and delays in the new provisional licensing structure. While regulations would be helpful to clarify this point, the promulgation of new regulations would most likely delay further the timeline for licensure, even under a provisional model.

REGISTERED SUPPORT:

California Cannabis Industry Association

California Growers Association

California Distributors Association

WeDrop

Rural County Representatives of California

County of Santa Barbara

California State Association of Counties

CMG/Caliva

REGISTERED OPPOSITION:

None on file

Analysis Prepared by: Jimmy Fremgen / B. & P. / (916) 319-3301

SENATE THIRD READING

STR Bill Id:SB 1459

Author:(Cannella)

As Amended Ver:July 3, 2018

Majority vote

SENATE VOTE: 37-0

SUMMARY: This bill allows a county agricultural commissioner (CAC) to include data on cannabis cultivation in their report on the county's agricultural products. A CAC may not seek reimbursement for this data collection work from either the California Department of Food and Agriculture (CDFA) or the funding source available as part of a cooperative agreement between CAC and a county board of supervisors.

FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill has minor and absorbable state costs. CDFA may incur modest costs to compile submitted data on cannabis production.

COMMENTS: This bill allows CACs to consider cannabis produced in their county as an agricultural product for the purpose of reporting on the condition, acreage, production, and value of county agricultural products. This bill also requires any data on cannabis production in the county to be included as an addendum to the report.

CACs report the status of agriculture in their respective counties to the Secretary of CDFA. The United States Department of Agriculture, National Agricultural Statistics Services (NASS) has a memorandum of understanding with agricultural commissioners to compile the data and produce a crop report. NASS provides an annual crop report manual for CACs to follow when compiling data for the report. According to the manual, "Providing crop statistics is basically a way to stabilize the agricultural marketplace. Planning for harvesting, processing, pricing, transportation, and credit is especially dependent on accurate knowledge of the current crop situation." The manual lists those who utilize crop data as:

1. Ranchers and growers
2. Agricultural suppliers
3. Agricultural credit suppliers
4. Agricultural research and education agencies
5. Agricultural regulatory agencies
6. Transportation agencies
7. Farm labor offices
8. Health and disease programs

The author states that cannabis is growing as an agricultural product in many counties throughout the state. Highlighting the significance of the crop and related production data into crop reports will help counties normalize cannabis as an agricultural product and encourage unlicensed growers to legitimize and become permitted and tax-paying businesses. This can be accomplished by allowing CACs to include as an addendum to their annual crop reports, the production of legal cannabis in the CAC's respective counties. As California develops and implements a regulatory structure for cannabis cultivation, data originating from the annual crop report would be helpful in maintaining the integrity of the regulatory structure.

Analysis Prepared by: Victor Francovich / AGRI. / (916) 319-2084 FN: 0003824

Date of Hearing: August 8, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

SBPCA Bill Id:SB 1459

Author:(Cannella) – As Amended Ver:July 3, 2018

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill allows a county agricultural commissioner (CAC) to include data on cannabis cultivation in their report on the county’s agricultural products. A CAC may not seek reimbursement for this data collection work from either the California Department of Food and Agriculture (CDFA) or the funding source available as part of a cooperative agreement between the CAC and a county board of supervisors.

FISCAL EFFECT:

Minor and absorbable state costs. The California Department of Food and Agriculture (CDFA) may incur modest costs to compile submitted data on cannabis production.

COMMENTS:

1. Background. Existing law requires a CAC to compile and record information in the annual crop report regarding production and value of the county’s commodities. This information is used by research institutions, schools, banks, and state agencies.

The United States Department of Agriculture, National Agricultural Statistics Services (NASS) has a memorandum of understanding with agricultural commissioners to compile the data and produce a crop report. NASS provides an annual crop report manual for CACs to follow when compiling data for the report. According to the manual:

Providing crop statistics is basically a way to stabilize the agricultural marketplace. Planning for harvesting, processing, pricing, transportation, and credit is especially dependent on accurate knowledge of the current crop situation.

1. Latest CAC reports. According to CAC reports aggregated by NASS for crop year 2015-16, the top the top 10 counties in terms of agricultural production were the counties of Kern, Tulare, Fresno, Monterey, Merced, Stanislaus, San Joaquin, Ventura, Imperial, and Kings. The top 10 commodities statewide were grapes, almond, milk and cream, cattle, nursery products, berries, lettuce, pistachios, walnuts, and oranges.
2. Purpose. According to the author, cannabis is growing as an agricultural product in many counties and SB 1459 will help counties understand the effects that agricultural cultivation is having on local communities and the environment.
3. Recent amendments. Recent author amendments to SB 1459 clarify the use of possible state or local government dollars to reimburse a CAC for compiling and reporting data on cannabis cultivation. These amendments specify that CDFA will not reimburse CACs for this effort.
4. Will this be used? It is unlikely any CAC will voluntarily provide cannabis cultivation data to CDFA as part of its annual report on county agricultural products. While these data would be helpful as a way to compare county cannabis cultivation in the context of the larger agricultural market, SB 1459’s provisions make participation voluntary and, following recent author amendments, it is unclear what source of funding CAC could use to fund this data collection effort.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: June 27, 2018

ASSEMBLY COMMITTEE ON AGRICULTURE

Anna Caballero, Chair

SBPCA Bill Id:SB 1459

Author:(Cannella) – As Amended Ver:April 23, 2018

SENATE VOTE: 37-0

SUBJECT: Cannabis cultivation: county agricultural commissioners: reporting.

SUMMARY: This bill allows a county agricultural commissioner (CAC) to include cannabis in his or her report on the county’s agricultural products, as an addendum.

EXISTING LAW:

1. Allows the California Department of Food and Agriculture (CDFA) to issue cannabis cultivation licenses to commercial cannabis businesses that differ, depending on the size of the cultivation site and whether the site is indoor, outdoor, or mixed.
   
2. Establishes in each county a county department of agriculture under the control of a CAC, and requires CACs to compile, and to transmit to the Secretary of CDFA, reports of the condition, acreage, production, and value of the agricultural products in the county.

FISCAL EFFECT: Unknown

COMMENTS: This bill allows CACs to consider cannabis produced in their county as an agricultural product for the purpose of reporting on the condition, acreage, production, and value of county agricultural products. This bill also requires any data on cannabis production in the county to be included as an addendum to the report.

CACs report the status of agriculture in their respective counties to the Secretary of CDFA. The United States Department of Agriculture, National Agricultural Statistics Services (NASS) has a memorandum of understanding with agricultural commissioners to compile the data and produce a crop report. NASS provides an annual crop report manual for CACs to follow when compiling data for the report. According to the manual, “Providing crop statistics is basically a way to stabilize the agricultural marketplace. Planning for harvesting, processing, pricing, transportation, and credit is especially dependent on accurate knowledge of the current crop situation.” The manual lists those who utilize crop data as:

1. Ranchers and growers
2. Agricultural suppliers
3. Agricultural credit suppliers
4. Agricultural research and education agencies
5. Agricultural regulatory agencies
6. Transportation agencies
7. Farm labor offices
8. Health and disease programs

The author states that cannabis is growing as an agricultural product in many counties throughout the State. Highlighting the significance of the crop and related production data into crop reports will help counties normalize cannabis as an agricultural product and encourage unlicensed growers to legitimize and become permitted and tax-paying businesses. This can be accomplished by allowing CACs to included, as an addendum to their annual crop reports, on the production of legal cannabis in the CAC's respective counties.

Furthermore, supporters point out that as California develops and implements a regulatory structure for cannabis cultivation, data originating from the annual crop report would be helpful in maintaining the integrity of the regulatory structure.

REGISTERED SUPPORT / OPPOSITION:

Support

County of Monterey (Sponsor)

California Growers Association

Rural County Representatives of California

Opposition

None on file

Analysis Prepared by: Victor Francovich / AGRI. / (916) 319-2084

 THIRD READING  

Bill No: SB 1459

Author:

:

Vote:

SENATE AGRICULTURE COMMITTEE: 4-0, 4/17/18

AYES: Galgiani, Wilk, Dodd, Pan

NO VOTE RECORDED: Berryhill

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SUBJECT:

SOURCE: County of Monterey

DIGEST:

This bill allows an agricultural commissioner to include cannabis in his or her report on the county’s agricultural products.

ANALYSIS: Existing law gives a county board of supervisors the ability to appoint a county agricultural commissioner. One of the commissioner’s duties is to provide an annual report to the Secretary of the California Department of Food and Agriculture (CDFA) on the condition of agriculture in his or her county and on what is being done to eradicate, control, or manage pests.

This bill allows a county agricultural commissioner to consider cannabis produced in their county as an agricultural product for the purpose of reporting on the condition, acreage, production, and value of county agricultural products. This bill also requires any data on cannabis production in the county to be included as an addendum to the report.

Background

County agricultural commissioners report the status of agriculture in their respective counties to the Secretary of CDFA. The United States Department of Agriculture, National Agricultural Statistics Services (NASS) has a memorandum of understanding with agricultural commissioners to compile the data and produce a crop report. NASS provides an annual crop report manual for California’s agricultural commissioners to follow when compiling data for the report. According to the manual, “Providing crop statistics is basically a way to stabilize the agricultural marketplace. Planning for harvesting, processing, pricing, transportation, and credit is especially dependent on accurate knowledge of the current crop situation.” The manual lists those who utilize crop data as:

• Ranchers and growers.
• Agricultural suppliers.
• Agricultural credit suppliers.
• Agricultural research and education agencies.
• Agricultural regulatory agencies.
• Transportation agencies.
• Farm labor offices.
• Health and disease programs.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 5/1/18)

County of Monterey (source)

California Growers Association

Higher Level of Care

Royal Coast, Inc.

Rural County Representatives of California

OPPOSITION: (Verified 5/1/18)

None received

ARGUMENTS IN SUPPORT: According to the author, “SB 1459 would provide that cannabis may be included in a county’s annual crop report if the county chooses to do so. Cannabis is growing as an agricultural product in many counties throughout the State. Highlighting the significance of the crop and related production data into crop reports will help counties normalize cannabis as an agricultural product and encourage unlicensed growers legitimize and become permitted and tax-paying businesses. The central location of the data collected will also help counties in understanding the effects that agricultural cultivation is having on their economies, environment, and communities.”

Prepared by:

5/2/18 14:27:16

**** END ****

SENATE COMMITTEE ON AGRICULTURE

Senator Cathleen Galgiani, Chair

2017 - 2018 Regular

Bill No: Hearing Date: 4/17/18

Subject:

SUMMARY

: This bill would allow an agricultural commissioner to include cannabis in his or her report on the county’s agricultural products.

BACKGROUND AND EXISTING LAW

:

County Agricultural Commissioners: Current law gives a county board of supervisors the ability to appoint a county agricultural commissioner (Food and Agricultural Code Section 2121). One of the commissioner’s duties is to provide an annual report to the California Department of Food and Agriculture (CDFA) secretary on the condition of agriculture in his or her county and on what is being done to eradicate, control, or manage pests (Food and Agricultural Code, Section 2272).

United States Department of Agriculture (USDA), National Agricultural Statistics Services (NASS): NASS is the statistical branch of the U.S. Department of Agriculture and a principal agency of the U.S. Federal Statistical System. The NASS California field office provides an annual crop report manual for California’s agricultural commissioners to follow when compiling data for the report. According to the manual, “Providing crop statistics is basically a way to stabilize the agricultural marketplace. Planning for harvesting, processing, pricing, transportation, and credit is especially dependent on accurate knowledge of the current crop situation.” The manual lists those who utilize crop data as:

1. Ranchers and growers
2. Agricultural suppliers
3. Agricultural credit suppliers
4. Agricultural research and education agencies
5. Agricultural regulatory agencies
6. Transportation agencies
7. Farm labor offices
8. Health and disease programs

Memorandum of Understanding (MOU): The County Agricultural Commissioners and Sealers Association (CACASA) and NASS have entered into an MOU to compile data for the crop report. The MOU includes details about what is expected from both CACASA and NASS.

Bureau of Cannabis Control: The lead agency for developing regulations for medical and adult-use cannabis in California. The bureau is responsible for licensing retailers, distributors, testing labs, and microbusinesses. It also defines cannabis or cannabis products for the purpose of licensing (Business and Professions Code, Section 26001).

CalCannabis Cultivation Licensing: A division of CDFA that licenses and regulates commercial cannabis cultivators in California. CalCannabis is organized into three branches: Licensing, Compliance and Enforcement, and Administration. Currently, CalCannabis has temporary licenses (valid for 120 days) and annual commercial licenses available for cultivators, nurseries, and processors (Code of Regulations, Title 3, Division 8, Chapter 1).

License Classifications:

(1) Type 1—Cultivation; Specialty outdoor; Small.

(2) Type 1A—Cultivation; Specialty indoor; Small.

(3) Type 1B—Cultivation; Specialty mixed-light; Small.

(4) Type 1C—Cultivation; Specialty cottage; Small.

(5) Type 2—Cultivation; Outdoor; Small.

(6) Type 2A—Cultivation; Indoor; Small.

(7) Type 2B—Cultivation; Mixed-light; Small.

(8) Type 3—Cultivation; Outdoor; Medium.

(9) Type 3A—Cultivation; Indoor; Medium.

(10) Type 3B—Cultivation; Mixed-light; Medium.

(11) Type 4—Cultivation; Nursery.

(12) Type 5—Cultivation; Outdoor; Large.

(13) Type 5A—Cultivation; Indoor; Large.

(14) Type 5B—Cultivation; Mixed-light; Large.

(15) Type 6—Manufacturer 1.

(16) Type 7—Manufacturer 2.

(17) Type 8—Testing laboratory.

(18) Type 10—Retailer.

(19) Type 11—Distributor.

(20) Type 12—Microbusiness.

PROPOSED LAW

: This bill allows a county agricultural commissioner to consider cannabis produced in their county as an agricultural product for the purpose of reporting on the condition, acreage, production, and value of county agricultural products.

COMMENTS

: According to the author, “SB 1459 would provide that cannabis may be included in a county’s annual crop report if the county chooses to do so. Cannabis is growing as an agricultural product in many counties throughout the State. Highlighting the significance of the crop and related production data into crop reports will help counties normalize cannabis as an agricultural product and encourage unlicensed growers legitimize and become permitted and tax-paying businesses. The central location of the data collected will also help counties in understanding the effects that agricultural cultivation is having on their economies, environment, and communities.”

Consistency: Among the functions and responsibilities of CDFA when compiling the data from each county is the promotion of uniformity in all phases of county crop reporting submitted to the USDA secretary (through NASS) to ensure compatibility. One of the functions and responsibilities of the county agricultural commissioner is to collect and present data in a “uniform manner so those reports are comparable and will be of the maximum value to the department.”

Since not all counties grow cannabis, data may be skewed and would make it difficult for agricultural commissioners and the department to ensure uniformity in the data. The committee may wish to consider an amendment stating if an agricultural commissioner reports data on cannabis they shall create an addendum to their annual crop report for that data. By keeping this information separate, the data reported by counties will not be skewed and will assist in maintaining uniformity required by CDFA and NASS.

Is this bill needed?: Current law states that an agricultural commissioner shall compile reports of the condition, acreage, production, and value of agricultural products in the commissioner’s county. It also states that an agricultural commissioner may publish such reports and shall transmit a copy of the reports to the secretary. Current law does not prohibit counties from collecting data and reporting it as part of their crop reports.

RELATED LEGISLATION

: None

SUPPORT

:

County of Monterey (Sponsor)

Higher Level of Care

Royal Coast, Inc.

OPPOSITION

:

None received

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