Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure approved by the voters 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. Existing law, 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 and establishes the Department of Cannabis Control to administer its provisions.

Existing law authorizes the Governor to enter into an agreement with another state or states authorizing medicinal or adult-use commercial cannabis activity, or both, between foreign licensees, who are licensed under the laws of the other state or states, and entities operating with a state license pursuant to MAUCRSA, provided that the commercial cannabis activities meet specified requirements, including meeting state license safety standards, as specified. Existing law prohibits the agreement from taking effect unless, among other things, federal law is amended to allow for, or the United States Department of Justice issues an opinion or memorandum allowing or tolerating, interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.

This bill would similarly authorize the Governor, or their designee, to enter into an agreement with a federally recognized Indian tribe in this state authorizing medicinal or adult-use commercial cannabis activity, or both, between entities licensed under the laws of a contracting tribe, as defined, and entities operating with a state license pursuant to MAUCRSA, provided that the commercial cannabis activities are lawful and subject to licensure under the laws of the tribal government, as specified, and meet specified requirements. The bill would make these provisions subject to federal approval or toleration of interstate cannabis activity as described above.

This bill would make its provisions severable.

AUMA authorizes the Legislature to amend the act to further the purposes and intent of the act with a ²/₃ vote of the membership of both houses of the Legislature.

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

Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure approved by the voters 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. Existing law, 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 and establishes the Department of Cannabis Control to administer its provisions.

Existing law authorizes the Governor to enter into an agreement with another state or states authorizing medicinal or adult-use commercial cannabis activity, or both, between foreign licensees, who are licensed under the laws of the other state or states, and entities operating with a state license pursuant to MAUCRSA, provided that the commercial cannabis activities are lawful and subject to licensure under the laws of the other state or states, as specified. meet specified requirements, including meeting state license safety standards, as specified. Existing law prohibits the agreement from taking effect unless, among other things, federal law is amended to allow for, or the United States Department of Justice issues an opinion or memorandum allowing or tolerating, interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.

This bill would similarly authorize the Governor Governor, or their designee, to enter into an agreement with a federally recognized Indian tribe in this state authorizing medicinal or adult-use commercial cannabis activity, or both, between foreign licensees, who are entities licensed under the laws of the tribal government, a contracting tribe, as defined, and entities operating with a state license pursuant to MAUCRSA, provided that the commercial cannabis activities are lawful and subject to licensure under the laws of the tribal government, as specified, and meet specified requirements. The bill would make these provisions subject to federal approval or toleration of interstate cannabis activity as described above.

This bill would make its provisions severable.

AUMA authorizes the Legislature to amend the act to further the purposes and intent of the act with a ²/₃ vote of the membership of both houses of the Legislature.

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

Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure approved by the voters, 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. Existing law, 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. activities and establishes the Department of Cannabis Control to administer its provisions. MAUCRSA gives the department the sole authority to issue, renew, or deny state licenses for commercial cannabis activity, and imposes various requirements on state licensees.

Existing law generally requires that all commercial cannabis activity be conducted between licensees and, among other things, requires that each applicant or licensee apply for, and, if approved, obtain, a separate license for each location where the applicant or licensee engages in commercial cannabis activity.

This bill would make nonsubstantive changes to those provisions. authorize a state licensee to engage in commercial cannabis activity with a tribal licensee, as described, if the department certifies that the relevant tribal government imposes requirements on the tribal licensee with regard to cannabis and cannabis products to be sold or otherwise transferred or distributed within the state that meet or exceed the requirements applicable to state licensees, as specified.

Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure approved by the voters, 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. Existing law, 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 generally requires that all commercial cannabis activity be conducted between licensees and, among other things, requires that each applicant or licensee apply for, and, if approved, obtain, a separate license for each location where the applicant or licensee engages in commercial cannabis activity.

This bill would make nonsubstantive changes to those provisions.

SENATE COMMITTEE ON

Senator Sabrina Cervantes, Chair

2025 - 2026 Regular Session

AB 2506 (Hart) - Cannabis: tribal-state agreements

Bill Summary:

AB 2506 authorizes the Governor to enter into an agreement with a federally recognized Indian tribe to allow for commercial cannabis activity between licensees of the Department of Cannabis Control (DCC) and licensees of the Indian Tribe, if specified conditions are met.

Fiscal Impact:

DCC estimates:

• Costs of $1.2 million in Fiscal Year 2027-28 and $901,000 annually ongoing (Cannabis Control Fund). This estimate includes support for four positions to develop and administer tribal-state agreements, prepare and manage agreement records, coordinate and support compliance reviews, and serve as dedicated liaisons for government-to-government tribal engagement.
• A one-time cost of $150,000 (Cannabis Control Fund) for track and trace system updates to support integration with tribal track and trace systems.

Background:

California's foundational cannabis laws, Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) and Proposition 64, established a closed commercial market that explicitly prohibited out-of-state distribution but remained entirely silent on the participation of Native American tribes. Consequently, while tribes have the authority to permit and regulate cannabis businesses, including retail access for California consumers, within their sovereign boundaries, the state's initial regulatory infrastructure lacked any framework to govern these tribal operations. Because California operates as a closed system, any cannabis entity regulated by an outside jurisdiction cannot legally conduct business within the state without first securing a California-issued license.

To integrate into this closed state market, tribes are currently bound by DCC regulations (Title 4, California Code of Regulations § 15009), which stipulate that a tribe cannot obtain a state cannabis license without providing a limited waiver of sovereign immunity. This mandatory rule requires the tribal applicant or licensee to expressly surrender any sovereign immunity defense in state administrative or judicial enforcement actions concerning commercial cannabis regulations, regardless of whether the state is seeking monetary or other forms of relief.

The DCC dictates strict, mandatory conditions that must be included within this waiver. Participating tribes must formally submit to the personal and subject matter jurisdiction of California courts, restrict their commercial cannabis activity exclusively to other state licensees (unless exceptions apply), and grant state regulatory personnel full access to inspect any licensed premises. Despite these stringent mandates, many of these explicit conditions are arguably redundant, as they outline standard compliance and oversight expectations that are already naturally implied by the affirmative act of applying for a state license.

Proposed Law:

• Authorizes the Governor, or their designee, to enter into an agreement with a federally recognized Indian tribe authorizing medicinal or adult-use commercial cannabis activity, or both, between entities licensed under the laws of the contracting tribe and entities operating with a state license, provided both of the following criteria are met:
  • The commercial cannabis activities are lawful and subject to licensure under the laws of the contracting tribe.
  • Regarding the transportation of cannabis or cannabis products, the agreement prohibits both of the following:
    • Transportation by any means other than those authorized under both the laws of the contracting tribe and DCC regulations.
    • Transportation through the jurisdiction of a state, federally recognized Indian tribe, district, commonwealth, territory, or possession of the United States that does not authorize such transportation.
• States the execution of, and compliance with the terms of the agreement do not constitute a project for purposes of the California Environmental Quality Act, as specified.
• States that the provisions of this bill do not prohibit a tribe from obtaining a state license.
• Authorizes reciprocal commercial cannabis activity between tribal licensees and state licensees, subject to the requirements and limitations imposed by the terms of the agreements.
• Prohibits a tribal licensee from engaging in commercial cannabis activity outside of designated Indian country without a license, permit, or other authorization issued by the local jurisdiction, and subjects the tribal licensee to state jurisdiction for any violations.
• Mandates that the agreement require the contracting tribe to impose standards on tribal licensees for cannabis and cannabis products sold, transferred, or distributed within this state. These standards must meet or exceed those applicable to state licensees, including all of the following:
  • Enforceable public health and safety standards equivalent to the requirements of MAUCRSA.
  • Mandatory participation in a seed-to-sale track-and-trace system regulating the cultivation, manufacturing, distribution, transportation, sale, and destruction of cannabis and cannabis products.
  • Testing standards for cannabis and cannabis products that meet or exceed those applicable to MAUCRSA-licensed testing laboratories.
  • Packaging and labeling requirements that meet or exceed those established under MAUCRSA.
  • Quality assurance and inspection requirements that meet or exceed those for products cultivated, manufactured, or sold by state licensees.
  • Restrictions on marketing, labeling, and advertising within the state that meet or exceed those established for state licensees under MAUCRSA.
  • A process for identifying and destroying adulterated or misbranded products, using standards that meet or exceed MAUCRSA procedures.
• Requires the agreement to include the following provisions:
  • A mandate that the contracting tribe impose restrictions on advertising, marketing, labeling, or sales within its jurisdiction that meet or exceed MAUCRSA specifications.
  • Procedures for the Department of Cannabis Control (DCC) and tribal regulatory authorities to address public health and welfare emergencies regarding products sold or intended for sale within the state, including the prompt recall or embargo of adulterated products.
  • A requirement that tribal regulatory authorities investigate alleged noncompliance with commercial cannabis regulatory programs upon the state's request, in accordance with mutually agreed-upon procedures.
  • A mutual cooperation clause requiring the contracting tribe to reasonably assist with California investigations of tribal licensees, and requiring the DCC to reasonably assist with tribal investigations of persons or entities holding a state license.
  • Mechanisms for the collection of all applicable taxes.
• Exempts the Governor from rulemaking procedures under the Administrative Procedure Act, provided the proposed agreement is submitted to the Joint Legislative Budget Committee for review, as specified.
• Prohibits an agreement from taking effect unless one of the following occurs:
  • Federal law is amended to allow the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
  • Federal law is enacted specifically prohibiting the expenditure of federal funds to prevent such interstate transfers.
  • The U.S. Department of Justice issues an opinion or memorandum allowing or tolerating the interstate transfer of cannabis between authorized businesses.
  • The California Attorney General issues a written opinion stating that authorization of commercial cannabis activity between tribal licensees and state licensees will not result in significant legal risk to the State of California under the federal Controlled Substances Act.
• Requires the DCC to notify the Governor and appropriate legislative policy committees upon the occurrence of any event allowing an agreement to take effect, and to post this notification on the DCC website.

Staff Comments:

This bill proposes a framework for tribal cannabis agreements that loosely resembles the tribal gaming compact process. However, the federal Indian Gaming Regulatory Act (IGRA) allows tribes to operate casinos on their lands when gambling is otherwise illegal in the state, but cannabis is already legal in California under MAUCRSA. Therefore, it is unclear how well this framework fits the DCC regulatory framework for commercial cannabis.

For example, it is unclear what the mechanism for state cost recovery to integrate tribal cannabis operations will take. Under IGRA, states are strictly limited to seeking compensation for direct regulatory costs, and tribes, as sovereign nations, are exempt from state taxation. Additionally, it is unknown how evolving state regulatory mandates would interact with these tribal agreements. To the extent that changes in cannabis laws require formal renegotiations of individual tribal agreements, there may be a related impact on the state’s legal and administrative costs. The actual fiscal impact of implementing this framework will depend on the number of tribes that choose to enter agreements and the structural complexity of subsequent negotiations.

-- END --

SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Dr. Aisha Wahab, Chair

2025 - 2026 Regular

Bill No: Hearing Date: June 29, 2026

Subject:

SUMMARY:

Authorizes the Governor or their designee to enter into an agreement with a federally recognized Indian tribe to allow for commercial cannabis activity between licensees of the Department of Cannabis Control (DCC) and licensees of the Indian Tribe, if specified conditions are met.

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, et seq.)
   
2. Establishes the DCC, under the jurisdiction of the Business, Consumer Services, and Housing Agency to administer and regulate provisions of MAUCRSA. (BPC § 26010)
   
3. Requires the DCC to make and prescribe reasonable rules and regulations as necessary to implement, administer, and enforce its duties, which must be consistent with the purpose and intent of the Control, Regulate and Tax Adult Use of Marijuana Act. (BPC § 26013)
   
4. Provides for 23 distinct license types including cultivation, manufacturer, testing laboratory, retailer, distributor, cannabis event organizer, combined activities, distributor, and processor. (BPC § 26050)
   
5. Prohibits a person from engaging in commercial cannabis activity without a license, which is subject to civil penalties up to three times the amount of the license fee for each violation, as specified. (BPC §§ 26037.5, 26038))
   
6. Establishes grounds for disciplinary action against cannabis licensees which include, but are not limited to the following:
   
7. Failure to comply with the provisions of this division or any rule or regulation adopted pursuant to this division.
8. Conduct that generally constitutes grounds for denial or discipline of a license of a license for licensing boards.
9. Any other grounds contained in regulations adopted by the DCC.
   
10. Failure to comply with any state law including, but not limited to, the payment of taxes as required under the Revenue and Taxation Code, except as provided.
11. Knowing violations of any state or local law, ordinance, or regulation conferring worker protections or legal rights on the employees of a licensee.
12. Failure to comply with the requirement of a local ordinance regulating commercial cannabis activity.
13. The intentional and knowing sale of cannabis or cannabis products by an A-licensee to a person under 21 years of age.
14. The intentional and knowing sale of medicinal cannabis or medicinal cannabis products by an M-licensee to a person without a physician’s recommendation.
15. Failure to maintain safe conditions for inspection by the DCC.
16. Failure to comply with any operating procedure submitted to the DCC in the application process.
    
17. Failure to comply with license conditions established for cultivation. (BPC § 26030)
    
18. Authorizes the DCC to suspend, revoke, place on probation with terms and conditions, or otherwise discipline licenses issued by the DCC and fine a licensee, after proper notice and hearing to the licensee, except in those cases when a license is procured by fraud, then the DCC does not need to wait for a hearing to discipline. (BPC § 26031(a))
    
19. Authorizes a peace officer, including a DCC peace officer, to seize cannabis, industrial hemp and cannabis products in any of the following circumstances:
    
20. The cannabis or cannabis product is subject to recall or embargo by the DCC.
    
21. The cannabis or cannabis product is subject to seizure or destruction.
    
22. The cannabis or cannabis product is seized related to an investigation or disciplinary action.
    
23. The industrial hemp or cannabis product is subject to seizure under the Sherman Food, Drug, and Cosmetic Law.
    
24. The industrial hemp is in violation of United States Domestic Industrial Hemp Program (7 U.S.C. § 990 et seq.), and, if applicable, the California State Regulatory Plan for Hemp Production, or an applicable tribal plan. (BPC § 26039.4)
25. Prohibits a cannabis licensee from selling alcoholic beverages or tobacco products on or at any licensed cannabis premises. (BPC § 26054(a))
    
26. Requires the DCC to establish a track and trace program for reporting the movement of cannabis, industrial hemp, and cannabis products throughout the distribution chain that utilizes a unique identifier which is capable of providing information that captures at a minimum, the cultivator from which the cannabis or industrial hemp cultivator from which the product originates, the transaction date, unique identifier number, date of retail sale, delivery information, and destruction of any product. (BPC § 26067)
    
27. Requires the DCC to establish a unique identifier program for cannabis and cannabis products, as specified. (BPC § 26069)
    
28. Prohibits a licensee from transporting, or distributing cannabis products out of the state, unless specifically allowed. (BPC § 26080(a))
    
29. Prohibits cannabis, cannabis products, or industrial hemp from being sold unless a representative sample of those products has been tested by a licensed testing laboratory. (BPC § 26100)
    
30. Prohibits an A-licensee from selling cannabis products to anyone under 21 years of age, as specified. (BPC § 26140)
    
31. Specifies that MAUCRSA does not supersede or limit the authority of a local jurisdiction to adopt and enforce local ordinances regulating cannabis licensees. (BPC § 26200)
32. Authorizes the Governor to enter into an agreement with another state to allow for medicinal or adult-use commercial cannabis activity between entities licensed under the laws of a contracting state (foreign licensees) and entities licensed by the DCC (state licensees), if specified criteria are met. (BPC § 26301)
33. Prohibits foreign licensees from engaging in commercial cannabis activity within the boundaries of California without a state license and subjects a foreign licensee to the jurisdiction of California for the purpose of actions taken for violation of California commercial cannabis laws and regulations. (BPC § 26302)
34. Requires an interstate cannabis agreement to require that the contracting state impose requirements on foreign licensees regarding cannabis and cannabis products to be sold or otherwise transferred or distributed within this state that meet or exceed the requirements applicable to state licensees, including all the following:
35. Enforceable public health and safety standards that are equivalent to the requirements of MAUCRSA.
36. Mandatory participation in a system administered by the state to regulate and track the cultivation, manufacturing, distribution, transportation, sale, and destruction of cannabis and cannabis products from seed to sale.
37. Standards for the testing of cannabis or cannabis products that meet or exceed the standards applicable to testing laboratories licensed under MAUCRSA.
38. Requirements for the packaging and labeling of cannabis and cannabis products that meet or exceed the packaging and labeling requirements established under MAUCRSA.
39. Requirements for quality assurance and inspection of cannabis or cannabis products that meet or exceed the requirements applicable to cannabis or cannabis products cultivated, manufactured, or sold by state licensees.
40. Restrictions on marketing, labeling, and advertising within this state by foreign licensees that meet or exceed the restrictions on state licensees established under MAUCRSA.
41. A process for the identification of adulterated or misbranded cannabis products, and the destruction of those products, using standards that meet or exceed the standards and procedures established under MAUCRSA. (BPC § 26303)
42. Requires an interstate cannabis agreement to require the DCC and the appropriate regulatory authorities of the contracting state to address public health and welfare emergencies concerning cannabis or cannabis products that are sold or intended for sale within California, including for the prompt recall or embargo of adulterated or misbranded cannabis or cannabis products. (BPC § 26304)
43. Requires an interstate cannabis agreement to include provisions determined by the Governor to promote the inclusion and support of individuals and communities in the cannabis industry who are linked to populations or neighborhoods that were negatively or disproportionately impacted by cannabis criminalization. (BPC § 26305)
44. Requires an interstate cannabis agreement to provide for collection of all applicable taxes. (BPC § 26306)

This bill:

1. Defines for purposes of this bill:
   
2. “Agreement” to mean an agreement relating to commercial cannabis authorized under the provisions of this bill and entered between this state and a federally recognized Indian tribe located in this state.
   
3. “Contracting tribe” to mean a federally recognized Indian tribe with which the Governor has entered into an agreement.
4. “Tribal license” to mean a commercial cannabis license issued under the laws of a contracting tribe.
   
5. “State license” to mean a commercial cannabis license issued by a licensing authority.
   
6. Authorizes the Governor or their designee to enter into an agreement with a federally recognized Indian tribe authorizing medicinal, recreational or both cannabis activities, between entities licensed under the laws of the contracting tribe and entities operating with a state license provided that the following are met:
   
7. The commercial cannabis activities are lawful and subject to licensure under laws of the contracting tribe and,
   
8. With respect to the transportation of cannabis or cannabis products, the agreement prohibits both of the following:
   
   • 1. The transportation of cannabis and cannabis products by any means other than those authorized under both the laws of the contracting tribe and the regulations of the DCC.
        
     2. The transportation of cannabis and cannabis products through the jurisdiction of a state, federally recognized Indian tribe, district, commonwealth, territory, or possession of the United States that does not authorize that transportation.
        
9. States the execution of, and compliance with the terms of the agreement do not constitute a project for purposes of the California Environmental Quality Act, as specified.
   
10. States that the provisions of this bill do not prohibit a tribe from obtaining a state license.
    
11. Authorizes a tribal licensee to engage in commercial cannabis activity with a state licensee and a state licensee to engage in commercial cannabis activity with a tribal licensee, subject to the requirements and limitations imposed by the provisions of the agreements.
    
12. Prohibits a tribal license from engaging in commercial cannabis activity outside of Indian country, as defined in Section 1151 of Title 18 of the United States Code, without a license, permit of other authorization issued by the local jurisdiction, and subjects a tribal licensee to jurisdiction of the state for purposes of actions taken for any violation.
    
13. Mandates an agreement require the contracting tribe impose requirements on tribal licensees regarding cannabis and cannabis products to be sold or otherwise transferred or distributed within this state that meet or exceed the requirements applicable to state licensees, including all the following:
14. Enforceable public health and safety standards that are equivalent to the requirements of MAUCRSA.
15. Mandatory participation in a system to regulate and track the cultivation, manufacturing, distribution, transportation, sale, and destruction of cannabis and cannabis products from seed to sale.
16. Standards for the testing of cannabis or cannabis products that meet or exceed the standards applicable to testing laboratories licensed under MAUCRSA.
    
17. Requirements for the packaging and labeling of cannabis and cannabis products that meet or exceed the packaging and labeling requirements established pursuant to MAURCRSA.
    
18. Requirements for quality assurance and inspection of cannabis or cannabis products that meet or exceed the requirements applicable to cannabis or cannabis products cultivated, manufactured, or sold by state licensees.
    
19. Restrictions on marketing, labeling, and advertising within this state by tribal licensees that meet or exceed the restrictions on state licensees established in MAUCRSA.
    
20. A process for the identification of adulterated or misbranded cannabis products, and the destruction of those products, using standards that meet or exceed the standards and procedures established pursuant to the requirements of MAUCRSA.
    
21. Requires an agreement to include the following:
    
22. The contracting tribe impose restrictions upon advertising, marketing, labeling, or sale within the contracting tribe that meet or exceed the restrictions specified in MAUCRSA.
    
23. Provisions requiring the department and the appropriate regulatory authorities of the contracting tribe to address public health and welfare emergencies concerning cannabis or cannabis products that are sold or intended for sale within this state, including for the prompt recall or embargo of adulterated.
    
24. Provisions requiring the appropriate regulatory authorities of each tribe to investigate instances of alleged noncompliance with the commercial cannabis regulatory programs upon request by the state and in accordance with mutually agreed upon procedures.
    
25. Provisions requiring the contracting tribe to reasonably cooperate with California investigations concerning tribal licensees and requiring the DCC to reasonably cooperate with investigations by the contracting tribe concerning persons on entities holding a state license.
    
26. Provide for the collection of all taxes.
    
27. Exempts the Governor from rulemaking procedures and requirements under the Administrative Procedures Act, as specified, provided that the Governor submits the proposed agreement to the Joint Legislative Budget Committee (budget committee) for review, as specified.
    
28. Prohibits an agreement from taking effect unless one of the following occur:
    
29. Federal law is amended to allow for the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
    
30. Federal law is enacted that specifically prohibits the expenditure of federal funds to prevent the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
    
31. The United States Department of Justice issues an opinion or memorandum allowing or tolerating the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
    
32. The Attorney General issues a written opinion that state law authorization, under an agreement for medicinal or adult-use commercial cannabis activity, or both, between foreign licensees and state licensees will not result in significant legal risk to the State of California under the federal Controlled Substances Act, based on review of applicable law, including federal judicial decisions and administrative actions.
    
33. Requires the DCC to notify the Governor and the appropriate policy committees of the Legislature upon the occurrence of an event 10) above and post the notification on the DCC’s website.

FISCAL EFFECT:

According to the Assembly Committee on Appropriations analysis, the bill will not result in state costs.

COMMENTS:

1. Purpose. Twenty-Nine Palms Band of Mission Indians is the sponsor of this bill. According to the Author, “AB 2506 supports tribal sovereignty in California while combating illegal cannabis. This bill builds off existing legislation and similar laws in Oregon and Washington, among others, to give the State the ability to certify that tribal entities can sell cannabis to state licensed retailers. This mirrors the existing structure that allows out-of-state growers to sell into California, requiring the exact same or stronger protections to safeguard consumers. This integration of tribal markets respects their sovereignty while broadening the availability and lowering the price of regulated and safe cannabis products.”
2. Background.

Department of Cannabis Control and Cannabis Regulation. In 1996, California first legalized cannabis for medical consumption via Proposition 215, also known as the Compassionate Use Act. Proposition 215 protected qualified patients and primary caregivers from prosecution related to the possession and cultivation of cannabis for medicinal purposes. In 2003, the Legislature authorized the formation of medical marijuana cooperatives—nonprofit organizations that cultivate and distribute marijuana for medical uses to their members through dispensaries. In 2015, the Legislature passed the Medical Cannabis Regulation and Safety Act (MCRSA), which established a comprehensive, statewide licensing and regulatory framework for the cultivation, manufacture, transportation, testing, distribution, and sale of medicinal cannabis.

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 recreational 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, the current regulatory structure for both medicinal and adult-use recreational cannabis. Beginning in 2018, adults 21 years of age or older can legally grow, possess, and use cannabis for nonmedical purposes, with certain restrictions. The initial regulatory structure for cannabis required three state agencies’ oversight including the Department of Consumer Affairs, Department of Public Health, and Department of Food and Agriculture. In 2020, the Governor proposed to consolidate the three-agency structure and establish a single-regulatory department with enforcement and licensing authority of both medicinal and recreational cannabis.

Today, the DCC is charged with licensing and enforcement of the regulated cannabis marketplace. The DCC has broad enforcement authority to act against both licensed and unlicensed individuals for any violation of MAUCRSA or the DCC’s regulations. The mission of the DCC is as follows: “Through innovative policies and effective implementation, the [DCC] advances and facilitates a well-regulated, legal market that benefits all Californians.” The DCC ensures compliance with state laws through licensing, inspections, and enforcement and works to eliminate the illegal cannabis market by promoting consumer protection and environmental stewardship.

Until January 1, 2028, when industrial hemp is authorized to be integrated into the regulated cannabis marketplace, California currently operates as a closed system. Cannabis or cannabis products are strictly prohibited from being transported outside of California and cannabis sourced in other states is not allowed into California’s cannabis marketplace. Cannabis products in California must meet strict regulatory requirements, derived from the voter initiative Prop 64.

California’s cannabis products are required to meet safety standards prior to retail sale and are subject to product laboratory testing requirements. Under current law, a separate license is required for every corner of the cannabis market, which includes growing cannabis, transporting cannabis, making cannabis products, testing cannabis products, selling cannabis, processing, and holding an event where cannabis is sold. Each of the license types is distinct and must be approved by both a local jurisdiction and the DCC before operating. A state license for any type of cannabis operations may not be granted unless a local jurisdiction has first approved that specific cannabis activity. Currently, 53% of California’s cities and counties do not permit any type of cannabis activity within their jurisdiction.

DCC requires all batches of cannabis and cannabis goods be tested before they can be sold. DCC-licensed testing laboratories test cannabis goods to make sure they are free of contaminants and are labeled with accurate amounts of cannabinoids and terpenes, or other additives. Licensed testing laboratories report results on a Certificate of Analysis, which states whether the batch passes or fails testing for each substance. Upon the integration of industrial hemp into the cannabis marketplace, those products will be subject to testing requirements, but industrial hemp cultivators will not be subject to cultivator license requirements prior to entry into the cannabis market.

Federal Regulation of Cannabis and Impact on State Regulators. One of the biggest impediments to the legalization of both recreational and medicinal cannabis across the country has been the federal government’s classification of cannabis (marijuana) as a schedule 1 drug under the federal Controlled Substance Act. Schedule 1 drugs are the most limited on the schedule and are viewed as having a high potential for abuse, have no currently accepted medical use and a lack of safety use under medical supervision. The schedule 1 status of cannabis under the Controlled Substances Act rendered cultivation and sale of cannabis illegal for recreational purposes as a matter of federal law.

Beginning in 2013, the Obama Administration helped pave the way for states to establish their own cannabis regulations and specified that federal oversight would not be enforced upon the states related to cannabis. This led some states to establish their own regulatory frameworks for legal cannabis. While federal guidance has shifted over the years as to federal enforcement threats or not, there has been an expansion of states that allow for some type of cannabis regulation, whether for medicinal use or recreational or both. There are currently 40 states that allow some form of legal cannabis, 24 states have authorized a recreational cannabis program, and 16 states have authorized a medicinal cannabis program. Because cannabis was deemed illegal at the federal level, cannabis cannot cross state lines without potentially becoming a federal crime.

In late 2025, President Trump issued an executive order which directed the United States Attorney General to complete a rulemaking process to reschedule medicinal cannabis from Schedule 1 to Schedule 3.The reclassification is currently undergoing the federal rulemaking process and will be considered at a formal Drug Enforcement Administration scheduled hearing later this month.

Indian Tribes. In California and across the nation, tribal governments have an inherent right to self-govern. The United States Constitution provides Congress with authority to “regulate Commerce with Indian Tribes.” There are currently 109 federally recognized tribes in California and several non-federally recognized tribes currently petitioning for federal recognition through the Bureau of Indian Affairs (BIA). States and tribes’ jurisdictions are intertwined in that a tribe’s boundaries are contained within a state’s boundaries and in some instances, tribal boundaries can overlap between two states. Tribes often pursue economic development initiatives by operating for-profit businesses that fund vital services provided to tribal members, such as healthcare, education, housing, social services, and cultural preservation. These businesses also create jobs for tribal members and non-tribal member residents of nearby communities, which are often in isolated or rural areas with few opportunities for work. Tribes may, but are not required to, register their businesses with the Secretary of State as “foreign corporations.” Tribes may choose instead to form a corporation as a tribally chartered corporation under tribal law or as a federally chartered corporation under Section 17 of the Indian Reorganization Act. Regardless of which law the business is formed under, tribes have the right to choose which is best for their businesses.

Tribes, Other States, and California’s Legal Cannabis Market. MCRSA and Prop 64 were silent regarding the participation of tribes in the legal framework but specifically prohibited a licensee from transporting or distributing cannabis outside of this state.

Tribes in California may choose to allow a cannabis business within tribal boundaries subject to the laws and regulations of the tribe. Cannabis manufactured, cultivated, sold or distributed within a reservation may be accessible to California consumers so long as the tribe permits retail cannabis activity within its boundaries. The various propositions and regulatory infrastructure for cannabis in California did not contemplate tribe participation and did not include any governance for such activity.

As a closed system in California, licensed cannabis operations regulated by any state outside of California are not authorized to conduct any type of cannabis business in California without first obtaining a California-issued license.

Under the current regulations promulgated by DCC (Title 4, California Code of Regulations § 15009), a tribe is prohibited from obtaining a California cannabis license unless the tribe provides a limited waiver of sovereign immunity. The regulations state:

“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 must 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 DCC’s regulations impose conditions about what must be included in the waiver and make it mandatory that each participating tribe agree to all the conditions. Some of those conditions include 1) submitting to the personal and subject matter jurisdiction of the California courts; 2) Conduct commercial cannabis activity with other state commercial cannabis licensees only, unless otherwise allowed; and 3) allow access by persons or entities charged with duties under the state laws and regulations governing commercial cannabis activity to any licensed premises or property at which they conduct any commercial cannabis activity, to name a few. Many of the conditions required by such a waiver would likely be unnecessary, as these would be conditions implied in the affirmative act of applying for a state license.

Sovereign Immunity. As government entities, tribes carry a right to sovereign immunity that other governments also enjoy, i.e. this issue is not a singular right granted only to tribes. For violations that qualify as crimes, Congress enacted Public Law 83-280 (67 Stat. 588) (P.L. 280) in 1953 to grant certain states criminal jurisdiction over American Indians and on reservations that previously came under tribal or federal court jurisdiction to be handled by the states to which P.L. 280 applies. California is a P.L. 280 state. Consequently, California maintains criminal jurisdiction over tribal members and others on reservations and rancherias.

Absent a state license, California offers limited opportunity for a tribe to engage in the legal cannabis marketplace outside of a self-governed tribe which permits it within those boundaries. That is why the Author has introduced this bill. The sponsor of this measure is Twenty-Nine Palms Band of Mission Indians of California. Currently, that Tribe has established an independent cannabis regulatory framework on its reservation that is reported to be consistent with many of California’s current requirements of licensees.

To address the limited pathway for a tribe to enter California’s regulated cannabis market without a state license which currently requires the limited waiver of sovereign immunity, this bill authorizes the Governor or their designee to enter into an “agreement” with a federally recognized Indian tribe in California for purposes of conducting medicinal or recreational cannabis activities between the contracting tribe and state licensees. Essentially, the agreement would permit a non-California licensee (a Tribe) to conduct business with a California licensee if the tribe has formed or established their own independent regulatory model for regulating cannabis.

This bill specifies that a tribe must impose requirements on its own cannabis-tribal licensee for products intended in the state’s licensed market that meet or exceed some of the current requirements that state licensees must abide by including health and safety standards, track and trace systems, testing standards, packaging and labeling standards, quality assurance inspections, prohibitions on marketing to children, and means to address adulterated or misbranded products.

State to State Cannabis Operations. As noted earlier, due to federal limitations on cannabis, states with legal cannabis regulatory systems do not conduct interstate cannabis transactions. In preparation that one-day, the federal oversight of the product will change and in an effort to help California producers, in 2018, the Legislature passed, and the Governor signed into law a bill which created a framework for the Governor to enter into “agreements” with other states that would allow for cross-jurisdictional cannabis commerce between licensed cannabis businesses across state lines. SB 1326 (Caballero, Chapter 396, Statutes of 2022) did not necessarily specifically include tribes but was instead focused primarily on state-to-state cannabis conduct. That bill was in preparation if changes at the federal level were to occur. To accommodate any legal quandary that might exist for the Governor to enter into those agreements, that bill included 4 actions, any one of which would need to occur before an agreement could be implemented:

• Federal law is amended to allow for the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
• Federal law is enacted that specifically prohibits the expenditure of federal funds to prevent the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
• The United States Department of Justice issues an opinion or memorandum allowing or tolerating the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
• The California Attorney General issues a written opinion, that state law authorization under an agreement for medicinal or adult-use commercial cannabis activity, or both, between foreign licensees and state licensees will not result in significant legal risk to the State of California under the federal Controlled Substances Act, based on review of applicable law, including federal judicial decisions and administrative actions.

The agreement proposed in this bill mirrors the current statutory authority that exists governing agreements for purposes of cannabis operations between states Similar to the state-to-state agreement, this bill requires the Joint Legislative Budget Committee (budget committee) to review any agreement between a Governor/designee. The budget committee will have 60 days to review the agreement and provide recommendations to the Governor. The Governor can consider those recommendations and make amendments to the agreement but is not required to accept any of the recommendations.

As of today, none of the four “actions” have occurred and there have been no agreements entered into on behalf the Governor with other states. It is unclear if or when the federal reclassification of cannabis for medicinal purposes from schedule 1 to schedule 3 will change the status for states to work together and if agreements will even then be necessary when that does occur for medicinal purposes. Also, if the federal government completely reclassifies cannabis from schedule 1 for recreational purpose, what the implications are going forward. This bill proposes to include the same actions, one of which must occur prior to any agreement taking effect.

Other States. Multiple states have established agreements with tribes for purposes of conducting cannabis business between state licensees and the Tribes including Minnesota, Washington, Nevada, Michigan, and New Mexico.

1. Related Legislation. SB 1326 (Caballero, Chapter 396, Statutes of 2022) allows the state to enter into an interstate cannabis agreement to allow cannabis or cannabis products to be transported across state lines. This bill requires the agreement to meet specified requirements, including that participating states must meet or exceed health and safety requirements and allows the state to engage in commercial activities with out-of-state licenses.
   

AB 1710 (Wood, Chapter 123, Statutes of 2019) would have authorized the County of Del Norte to enter into an agreement with the Elk Valley Rancheria, a federally recognized Indian tribe, regarding local authorization for the tribe to engage in commercial cannabis activity, with an agreement that the tribe comply with state laws and regulations regarding cannabis. (Status: This bill was amended to address an unrelated issue).

AB 924 (Bonta of 2018) would have required 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 tribe’s established governmental process. (Status: This bill was held on suspense in the Senate Committee on Appropriations).

AB 1096 (Bonta of 2017) would have authorized the Governor to enter into agreements concerning medical and recreational marijuana with a federally recognized sovereign Indian tribe. (Status: This bill was amended to address an unrelated topic.)

AB 2545 (Bonta of 2016) would have authorized the Governor to enter into agreements concerning medical cannabis with federally recognized sovereign Indian tribes, as defined. (Status: This bill died in Assembly Appropriations)

1. Arguments in Support. Twenty-Nine Palms Band of Mission Indians writes in support and notes, “AB 2506 promotes tribal self-sufficiency and economic development while reducing reliance on illicit cannabis sources by expanding access to regulated, safe cannabis products for retailers and California consumers…

Additionally, AB 2506 builds upon existing statutory safeguards governing cross-jurisdictional cannabis commerce to establish a practical and commonsense pathway for Tribal participation in California's regulated cannabis industry. By enabling partnerships between California Indian Tribes, the State of California, and the Department of Cannabis Control, the bill will help combat the illicit cannabis market while expanding economic opportunities for Tribal communities and increasing consumer access to regulated cannabis products.”

California NORML writes in support and notes, “The applicable tribal government must impose standards that meet California’s existing requirements for cannabis commerce. These include public health, testing, packaging, and marketing standards, among others. This bill will promote tribal self-sufficiency and economic development, while reducing reliance on illegal cannabis sources by broadening the availability of regulated, safe cannabis products for retailers and consumers.”

1. Implementation Issues for Consideration.

Integration into the licensed market. This bill would allow the Governor or its designee to enter into an agreement with a tribe that has its own licensing system for cannabis to transact business between the state-licensee and the Tribe’s licensees (who do not have a state license). However, while a tribe’s cannabis licensee will not be subject to California’s cannabis requirements, a DCC-license holder is. This means that all transportation of the product, laboratory testing, packaging and labeling requirements, retail requirements, etc. are to be maintained by the California license holder. The current draft of this bill does not contemplate what that structure might consist of, and it is unclear how, or if, the agreements will resolve this. If the Governor did enter into an agreement, would there be a DCC-licensee willing to engage if their license is ultimately subject to any discipline?

Taxes. Any agreement with a tribe subjects the tribe to the collection of all applicable taxes, but it’s unclear what a participating tribe’s tax liability would be under the provisions of this bill. Is the tribe subject to taxes for cultivation and delivery for products produced within the Tribe’s boundaries or are the taxes meant to be at the point of market integration? Could the unknown tax structure create an imbalance in the cannabis price market?

Local Governments. Under the regulated cannabis market, local jurisdictions have broad discretion to restrict any type of cannabis business within its boundaries, which the exception of delivery. It is presumed that any agreement would be required to take local jurisdictions preference into account, but it’s not clear that any agreement would be subject to the current authorization model for cannabis businesses that is required for state licensees. Depending on the Governor or designee, without statutory specification, agreements may be able to bypass local jurisdiction requirements.

Fees. Will there be any costs associated with entering into agreements? There will likely be extensive resources necessary to establish an agreement subject to the provisions of this bill. Will there be a similar fee required (like a state license fee) to address compliance and administrative time?

Unknowns about an Agreement. This bill provides broad authority for the Governor or their designee to determine the specific details of each agreement. This could make each agreement subject to different parameters and raise a few operational questions. What is the length of an agreement? Can a Governor or their designee change the terms of an agreement enacted by a previous Governor?

Reference to Indian Country. The language in this bill is modeled after current law which pertains to agreements for state-state cannabis transactions. Because tribal governments and other states are not identical, some of the provisions that are included in this bill may not be applicable and could likely be confusing. For example, this bill prohibits a tribal licensee from engaging in commercial cannabis activity outside of Indian country without a license, permit or other authorization by the local jurisdiction. Indian country is defined by 18 U.S. Code § 1151 as:

(a) 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,

(b) 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, and

(c) all Indian allotments, the Indian titles to which have not been extinguished, including rights-of-way running through the same.

Because Indian country encompasses any Indian reservation in the United States, is this language meant to imply that a tribal licensee is permitted to operate on any reservation, rancheria, colony, or tribal community? As sovereign entities, each tribe passes their own laws, and some do not permit cannabis within their boundaries. However, this language potentially contradicts each tribe’s right to self-determination. The Author may wish to clarify these references to align with the bill’s intent to preserve tribal sovereignty.

Should there be other pathways for Tribes to enter the licensed marketplace that do not include waivers of sovereign immunity? This bill establishes eligibility standards for a Tribe to enter into agreement with the Governor. A Tribe must have an established cannabis licensing infrastructure. While some tribes in California may be able to establish a such a regulatory structure, there may be other Tribes who do not have the resources of capabilities to establish such a structure that would meet the requirements of this bill but would like to enter the licensed cannabis market via a DCC-license, without of course stipulating to any waiver requirements.

1. Suggested Technical Amendment. On page 6, in line 26, strike the word “foreign” and replace it with “tribal”.

SUPPORT AND OPPOSITION:

Support:

Twenty-nine Palms Band of Mission Indians (source)

California Democratic Party Rural Caucus

California NORML

Opposition:

None received

-- END --

SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Dr. Aisha Wahab, Chair

2025 - 2026 Regular

Bill No: Hearing Date: June 29, 2026

Subject:

SUMMARY:

Authorizes the Governor or their designee to enter into an agreement with a federally recognized Indian tribe to allow for commercial cannabis activity between licensees of the Department of Cannabis Control (DCC) and licensees of the Indian Tribe, if specified conditions are met.

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, et seq.)
   
2. Establishes the DCC, under the jurisdiction of the Business, Consumer Services, and Housing Agency to administer and regulate provisions of MAUCRSA. (BPC § 26010)
   
3. Requires the DCC to make and prescribe reasonable rules and regulations as necessary to implement, administer, and enforce its duties, which must be consistent with the purpose and intent of the Control, Regulate and Tax Adult Use of Marijuana Act. (BPC § 26013)
   
4. Provides for 23 distinct license types including cultivation, manufacturer, testing laboratory, retailer, distributor, cannabis event organizer, combined activities, distributor, and processor. (BPC § 26050)
   
5. Prohibits a person from engaging in commercial cannabis activity without a license, which is subject to civil penalties up to three times the amount of the license fee for each violation, as specified. (BPC §§ 26037.5, 26038))
   
6. Establishes grounds for disciplinary action against cannabis licensees which include, but are not limited to the following:
   
7. Failure to comply with the provisions of this division or any rule or regulation adopted pursuant to this division.
8. Conduct that generally constitutes grounds for denial or discipline of a license of a license for licensing boards.
9. Any other grounds contained in regulations adopted by the DCC.
   
10. Failure to comply with any state law including, but not limited to, the payment of taxes as required under the Revenue and Taxation Code, except as provided.
11. Knowing violations of any state or local law, ordinance, or regulation conferring worker protections or legal rights on the employees of a licensee.
12. Failure to comply with the requirement of a local ordinance regulating commercial cannabis activity.
13. The intentional and knowing sale of cannabis or cannabis products by an A-licensee to a person under 21 years of age.
14. The intentional and knowing sale of medicinal cannabis or medicinal cannabis products by an M-licensee to a person without a physician’s recommendation.
15. Failure to maintain safe conditions for inspection by the DCC.
16. Failure to comply with any operating procedure submitted to the DCC in the application process.
    
17. Failure to comply with license conditions established for cultivation. (BPC § 26030)
    
18. Authorizes the DCC to suspend, revoke, place on probation with terms and conditions, or otherwise discipline licenses issued by the DCC and fine a licensee, after proper notice and hearing to the licensee, except in those cases when a license is procured by fraud, then the DCC does not need to wait for a hearing to discipline. (BPC § 26031(a))
    
19. Authorizes a peace officer, including a DCC peace officer, to seize cannabis, industrial hemp and cannabis products in any of the following circumstances:
    
20. The cannabis or cannabis product is subject to recall or embargo by the DCC.
    
21. The cannabis or cannabis product is subject to seizure or destruction.
    
22. The cannabis or cannabis product is seized related to an investigation or disciplinary action.
    
23. The industrial hemp or cannabis product is subject to seizure under the Sherman Food, Drug, and Cosmetic Law.
    
24. The industrial hemp is in violation of United States Domestic Industrial Hemp Program (7 U.S.C. § 990 et seq.), and, if applicable, the California State Regulatory Plan for Hemp Production, or an applicable tribal plan. (BPC § 26039.4)
25. Prohibits a cannabis licensee from selling alcoholic beverages or tobacco products on or at any licensed cannabis premises. (BPC § 26054(a))
    
26. Requires the DCC to establish a track and trace program for reporting the movement of cannabis, industrial hemp, and cannabis products throughout the distribution chain that utilizes a unique identifier which is capable of providing information that captures at a minimum, the cultivator from which the cannabis or industrial hemp cultivator from which the product originates, the transaction date, unique identifier number, date of retail sale, delivery information, and destruction of any product. (BPC § 26067)
    
27. Requires the DCC to establish a unique identifier program for cannabis and cannabis products, as specified. (BPC § 26069)
    
28. Prohibits a licensee from transporting, or distributing cannabis products out of the state, unless specifically allowed. (BPC § 26080(a))
    
29. Prohibits cannabis, cannabis products, or industrial hemp from being sold unless a representative sample of those products has been tested by a licensed testing laboratory. (BPC § 26100)
    
30. Prohibits an A-licensee from selling cannabis products to anyone under 21 years of age, as specified. (BPC § 26140)
    
31. Specifies that MAUCRSA does not supersede or limit the authority of a local jurisdiction to adopt and enforce local ordinances regulating cannabis licensees. (BPC § 26200)
32. Authorizes the Governor to enter into an agreement with another state to allow for medicinal or adult-use commercial cannabis activity between entities licensed under the laws of a contracting state (foreign licensees) and entities licensed by the DCC (state licensees), if specified criteria are met. (BPC § 26301)
33. Prohibits foreign licensees from engaging in commercial cannabis activity within the boundaries of California without a state license and subjects a foreign licensee to the jurisdiction of California for the purpose of actions taken for violation of California commercial cannabis laws and regulations. (BPC § 26302)
34. Requires an interstate cannabis agreement to require that the contracting state impose requirements on foreign licensees regarding cannabis and cannabis products to be sold or otherwise transferred or distributed within this state that meet or exceed the requirements applicable to state licensees, including all the following:
35. Enforceable public health and safety standards that are equivalent to the requirements of MAUCRSA.
36. Mandatory participation in a system administered by the state to regulate and track the cultivation, manufacturing, distribution, transportation, sale, and destruction of cannabis and cannabis products from seed to sale.
37. Standards for the testing of cannabis or cannabis products that meet or exceed the standards applicable to testing laboratories licensed under MAUCRSA.
38. Requirements for the packaging and labeling of cannabis and cannabis products that meet or exceed the packaging and labeling requirements established under MAUCRSA.
39. Requirements for quality assurance and inspection of cannabis or cannabis products that meet or exceed the requirements applicable to cannabis or cannabis products cultivated, manufactured, or sold by state licensees.
40. Restrictions on marketing, labeling, and advertising within this state by foreign licensees that meet or exceed the restrictions on state licensees established under MAUCRSA.
41. A process for the identification of adulterated or misbranded cannabis products, and the destruction of those products, using standards that meet or exceed the standards and procedures established under MAUCRSA. (BPC § 26303)
42. Requires an interstate cannabis agreement to require the DCC and the appropriate regulatory authorities of the contracting state to address public health and welfare emergencies concerning cannabis or cannabis products that are sold or intended for sale within California, including for the prompt recall or embargo of adulterated or misbranded cannabis or cannabis products. (BPC § 26304)
43. Requires an interstate cannabis agreement to include provisions determined by the Governor to promote the inclusion and support of individuals and communities in the cannabis industry who are linked to populations or neighborhoods that were negatively or disproportionately impacted by cannabis criminalization. (BPC § 26305)
44. Requires an interstate cannabis agreement to provide for collection of all applicable taxes. (BPC § 26306)

This bill:

1. Defines for purposes of this bill:
   
2. “Agreement” to mean an agreement relating to commercial cannabis authorized under the provisions of this bill and entered between this state and a federally recognized Indian tribe located in this state.
   
3. “Contracting tribe” to mean a federally recognized Indian tribe with which the Governor has entered into an agreement.
4. “Tribal license” to mean a commercial cannabis license issued under the laws of a contracting tribe.
   
5. “State license” to mean a commercial cannabis license issued by a licensing authority.
   
6. Authorizes the Governor or their designee to enter into an agreement with a federally recognized Indian tribe authorizing medicinal, recreational or both cannabis activities, between entities licensed under the laws of the contracting tribe and entities operating with a state license provided that the following are met:
   
7. The commercial cannabis activities are lawful and subject to licensure under laws of the contracting tribe and,
   
8. With respect to the transportation of cannabis or cannabis products, the agreement prohibits both of the following:
   
   • 1. The transportation of cannabis and cannabis products by any means other than those authorized under both the laws of the contracting tribe and the regulations of the DCC.
        
     2. The transportation of cannabis and cannabis products through the jurisdiction of a state, federally recognized Indian tribe, district, commonwealth, territory, or possession of the United States that does not authorize that transportation.
        
9. States the execution of, and compliance with the terms of the agreement do not constitute a project for purposes of the California Environmental Quality Act, as specified.
   
10. States that the provisions of this bill do not prohibit a tribe from obtaining a state license.
    
11. Authorizes a tribal licensee to engage in commercial cannabis activity with a state licensee and a state licensee to engage in commercial cannabis activity with a tribal licensee, subject to the requirements and limitations imposed by the provisions of the agreements.
    
12. Prohibits a tribal license from engaging in commercial cannabis activity outside of Indian country, as defined in Section 1151 of Title 18 of the United States Code, without a license, permit of other authorization issued by the local jurisdiction, and subjects a tribal licensee to jurisdiction of the state for purposes of actions taken for any violation.
    
13. Mandates an agreement require the contracting tribe impose requirements on tribal licensees regarding cannabis and cannabis products to be sold or otherwise transferred or distributed within this state that meet or exceed the requirements applicable to state licensees, including all the following:
14. Enforceable public health and safety standards that are equivalent to the requirements of MAUCRSA.
15. Mandatory participation in a system to regulate and track the cultivation, manufacturing, distribution, transportation, sale, and destruction of cannabis and cannabis products from seed to sale.
16. Standards for the testing of cannabis or cannabis products that meet or exceed the standards applicable to testing laboratories licensed under MAUCRSA.
    
17. Requirements for the packaging and labeling of cannabis and cannabis products that meet or exceed the packaging and labeling requirements established pursuant to MAURCRSA.
    
18. Requirements for quality assurance and inspection of cannabis or cannabis products that meet or exceed the requirements applicable to cannabis or cannabis products cultivated, manufactured, or sold by state licensees.
    
19. Restrictions on marketing, labeling, and advertising within this state by tribal licensees that meet or exceed the restrictions on state licensees established in MAUCRSA.
    
20. A process for the identification of adulterated or misbranded cannabis products, and the destruction of those products, using standards that meet or exceed the standards and procedures established pursuant to the requirements of MAUCRSA.
    
21. Requires an agreement to include the following:
    
22. The contracting tribe impose restrictions upon advertising, marketing, labeling, or sale within the contracting tribe that meet or exceed the restrictions specified in MAUCRSA.
    
23. Provisions requiring the department and the appropriate regulatory authorities of the contracting tribe to address public health and welfare emergencies concerning cannabis or cannabis products that are sold or intended for sale within this state, including for the prompt recall or embargo of adulterated.
    
24. Provisions requiring the appropriate regulatory authorities of each tribe to investigate instances of alleged noncompliance with the commercial cannabis regulatory programs upon request by the state and in accordance with mutually agreed upon procedures.
    
25. Provisions requiring the contracting tribe to reasonably cooperate with California investigations concerning tribal licensees and requiring the DCC to reasonably cooperate with investigations by the contracting tribe concerning persons on entities holding a state license.
    
26. Provide for the collection of all taxes.
    
27. Exempts the Governor from rulemaking procedures and requirements under the Administrative Procedures Act, as specified, provided that the Governor submits the proposed agreement to the Joint Legislative Budget Committee (budget committee) for review, as specified.
    
28. Prohibits an agreement from taking effect unless one of the following occur:
    
29. Federal law is amended to allow for the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
    
30. Federal law is enacted that specifically prohibits the expenditure of federal funds to prevent the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
    
31. The United States Department of Justice issues an opinion or memorandum allowing or tolerating the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
    
32. The Attorney General issues a written opinion that state law authorization, under an agreement for medicinal or adult-use commercial cannabis activity, or both, between foreign licensees and state licensees will not result in significant legal risk to the State of California under the federal Controlled Substances Act, based on review of applicable law, including federal judicial decisions and administrative actions.
    
33. Requires the DCC to notify the Governor and the appropriate policy committees of the Legislature upon the occurrence of an event 10) above and post the notification on the DCC’s website.

FISCAL EFFECT:

According to the Assembly Committee on Appropriations analysis, the bill will not result in state costs.

COMMENTS:

1. Purpose. Twenty-Nine Palms Band of Mission Indians is the sponsor of this bill. According to the Author, “AB 2506 supports tribal sovereignty in California while combating illegal cannabis. This bill builds off existing legislation and similar laws in Oregon and Washington, among others, to give the State the ability to certify that tribal entities can sell cannabis to state licensed retailers. This mirrors the existing structure that allows out-of-state growers to sell into California, requiring the exact same or stronger protections to safeguard consumers. This integration of tribal markets respects their sovereignty while broadening the availability and lowering the price of regulated and safe cannabis products.”
2. Background.

Department of Cannabis Control and Cannabis Regulation. In 1996, California first legalized cannabis for medical consumption via Proposition 215, also known as the Compassionate Use Act. Proposition 215 protected qualified patients and primary caregivers from prosecution related to the possession and cultivation of cannabis for medicinal purposes. In 2003, the Legislature authorized the formation of medical marijuana cooperatives—nonprofit organizations that cultivate and distribute marijuana for medical uses to their members through dispensaries. In 2015, the Legislature passed the Medical Cannabis Regulation and Safety Act (MCRSA), which established a comprehensive, statewide licensing and regulatory framework for the cultivation, manufacture, transportation, testing, distribution, and sale of medicinal cannabis.

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 recreational 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, the current regulatory structure for both medicinal and adult-use recreational cannabis. Beginning in 2018, adults 21 years of age or older can legally grow, possess, and use cannabis for nonmedical purposes, with certain restrictions. The initial regulatory structure for cannabis required three state agencies’ oversight including the Department of Consumer Affairs, Department of Public Health, and Department of Food and Agriculture. In 2020, the Governor proposed to consolidate the three-agency structure and establish a single-regulatory department with enforcement and licensing authority of both medicinal and recreational cannabis.

Today, the DCC is charged with licensing and enforcement of the regulated cannabis marketplace. The DCC has broad enforcement authority to act against both licensed and unlicensed individuals for any violation of MAUCRSA or the DCC’s regulations. The mission of the DCC is as follows: “Through innovative policies and effective implementation, the [DCC] advances and facilitates a well-regulated, legal market that benefits all Californians.” The DCC ensures compliance with state laws through licensing, inspections, and enforcement and works to eliminate the illegal cannabis market by promoting consumer protection and environmental stewardship.

Until January 1, 2028, when industrial hemp is authorized to be integrated into the regulated cannabis marketplace, California currently operates as a closed system. Cannabis or cannabis products are strictly prohibited from being transported outside of California and cannabis sourced in other states is not allowed into California’s cannabis marketplace. Cannabis products in California must meet strict regulatory requirements, derived from the voter initiative Prop 64.

California’s cannabis products are required to meet safety standards prior to retail sale and are subject to product laboratory testing requirements. Under current law, a separate license is required for every corner of the cannabis market, which includes growing cannabis, transporting cannabis, making cannabis products, testing cannabis products, selling cannabis, processing, and holding an event where cannabis is sold. Each of the license types is distinct and must be approved by both a local jurisdiction and the DCC before operating. A state license for any type of cannabis operations may not be granted unless a local jurisdiction has first approved that specific cannabis activity. Currently, 53% of California’s cities and counties do not permit any type of cannabis activity within their jurisdiction.

DCC requires all batches of cannabis and cannabis goods be tested before they can be sold. DCC-licensed testing laboratories test cannabis goods to make sure they are free of contaminants and are labeled with accurate amounts of cannabinoids and terpenes, or other additives. Licensed testing laboratories report results on a Certificate of Analysis, which states whether the batch passes or fails testing for each substance. Upon the integration of industrial hemp into the cannabis marketplace, those products will be subject to testing requirements, but industrial hemp cultivators will not be subject to cultivator license requirements prior to entry into the cannabis market.

Federal Regulation of Cannabis and Impact on State Regulators. One of the biggest impediments to the legalization of both recreational and medicinal cannabis across the country has been the federal government’s classification of cannabis (marijuana) as a schedule 1 drug under the federal Controlled Substance Act. Schedule 1 drugs are the most limited on the schedule and are viewed as having a high potential for abuse, have no currently accepted medical use and a lack of safety use under medical supervision. The schedule 1 status of cannabis under the Controlled Substances Act rendered cultivation and sale of cannabis illegal for recreational purposes as a matter of federal law.

Beginning in 2013, the Obama Administration helped pave the way for states to establish their own cannabis regulations and specified that federal oversight would not be enforced upon the states related to cannabis. This led some states to establish their own regulatory frameworks for legal cannabis. While federal guidance has shifted over the years as to federal enforcement threats or not, there has been an expansion of states that allow for some type of cannabis regulation, whether for medicinal use or recreational or both. There are currently 40 states that allow some form of legal cannabis, 24 states have authorized a recreational cannabis program, and 16 states have authorized a medicinal cannabis program. Because cannabis was deemed illegal at the federal level, cannabis cannot cross state lines without potentially becoming a federal crime.

In late 2025, President Trump issued an executive order which directed the United States Attorney General to complete a rulemaking process to reschedule medicinal cannabis from Schedule 1 to Schedule 3.The reclassification is currently undergoing the federal rulemaking process and will be considered at a formal Drug Enforcement Administration scheduled hearing later this month.

Indian Tribes. In California and across the nation, tribal governments have an inherent right to self-govern. The United States Constitution provides Congress with authority to “regulate Commerce with Indian Tribes.” There are currently 109 federally recognized tribes in California and several non-federally recognized tribes currently petitioning for federal recognition through the Bureau of Indian Affairs (BIA). States and tribes’ jurisdictions are intertwined in that a tribe’s boundaries are contained within a state’s boundaries and in some instances, tribal boundaries can overlap between two states. Tribes often pursue economic development initiatives by operating for-profit businesses that fund vital services provided to tribal members, such as healthcare, education, housing, social services, and cultural preservation. These businesses also create jobs for tribal members and non-tribal member residents of nearby communities, which are often in isolated or rural areas with few opportunities for work. Tribes may, but are not required to, register their businesses with the Secretary of State as “foreign corporations.” Tribes may choose instead to form a corporation as a tribally chartered corporation under tribal law or as a federally chartered corporation under Section 17 of the Indian Reorganization Act. Regardless of which law the business is formed under, tribes have the right to choose which is best for their businesses.

Tribes, Other States, and California’s Legal Cannabis Market. MCRSA and Prop 64 were silent regarding the participation of tribes in the legal framework but specifically prohibited a licensee from transporting or distributing cannabis outside of this state.

Tribes in California may choose to allow a cannabis business within tribal boundaries subject to the laws and regulations of the tribe. Cannabis manufactured, cultivated, sold or distributed within a reservation may be accessible to California consumers so long as the tribe permits retail cannabis activity within its boundaries. The various propositions and regulatory infrastructure for cannabis in California did not contemplate tribe participation and did not include any governance for such activity.

As a closed system in California, licensed cannabis operations regulated by any state outside of California are not authorized to conduct any type of cannabis business in California without first obtaining a California-issued license.

Under the current regulations promulgated by DCC (Title 4, California Code of Regulations § 15009), a tribe is prohibited from obtaining a California cannabis license unless the tribe provides a limited waiver of sovereign immunity. The regulations state:

“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 must 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 DCC’s regulations impose conditions about what must be included in the waiver and make it mandatory that each participating tribe agree to all the conditions. Some of those conditions include 1) submitting to the personal and subject matter jurisdiction of the California courts; 2) Conduct commercial cannabis activity with other state commercial cannabis licensees only, unless otherwise allowed; and 3) allow access by persons or entities charged with duties under the state laws and regulations governing commercial cannabis activity to any licensed premises or property at which they conduct any commercial cannabis activity, to name a few. Many of the conditions required by such a waiver would likely be unnecessary, as these would be conditions implied in the affirmative act of applying for a state license.

Sovereign Immunity. As government entities, tribes carry a right to sovereign immunity that other governments also enjoy, i.e. this issue is not a singular right granted only to tribes. For violations that qualify as crimes, Congress enacted Public Law 83-280 (67 Stat. 588) (P.L. 280) in 1953 to grant certain states criminal jurisdiction over American Indians and on reservations that previously came under tribal or federal court jurisdiction to be handled by the states to which P.L. 280 applies. California is a P.L. 280 state. Consequently, California maintains criminal jurisdiction over tribal members and others on reservations and rancherias.

Absent a state license, California offers limited opportunity for a tribe to engage in the legal cannabis marketplace outside of a self-governed tribe which permits it within those boundaries. That is why the Author has introduced this bill. The sponsor of this measure is Twenty-Nine Palms Band of Mission Indians of California. Currently, that Tribe has established an independent cannabis regulatory framework on its reservation that is reported to be consistent with many of California’s current requirements of licensees.

To address the limited pathway for a tribe to enter California’s regulated cannabis market without a state license which currently requires the limited waiver of sovereign immunity, this bill authorizes the Governor or their designee to enter into an “agreement” with a federally recognized Indian tribe in California for purposes of conducting medicinal or recreational cannabis activities between the contracting tribe and state licensees. Essentially, the agreement would permit a non-California licensee (a Tribe) to conduct business with a California licensee if the tribe has formed or established their own independent regulatory model for regulating cannabis.

This bill specifies that a tribe must impose requirements on its own cannabis-tribal licensee for products intended in the state’s licensed market that meet or exceed some of the current requirements that state licensees must abide by including health and safety standards, track and trace systems, testing standards, packaging and labeling standards, quality assurance inspections, prohibitions on marketing to children, and means to address adulterated or misbranded products.

State to State Cannabis Operations. As noted earlier, due to federal limitations on cannabis, states with legal cannabis regulatory systems do not conduct interstate cannabis transactions. In preparation that one-day, the federal oversight of the product will change and in an effort to help California producers, in 2018, the Legislature passed, and the Governor signed into law a bill which created a framework for the Governor to enter into “agreements” with other states that would allow for cross-jurisdictional cannabis commerce between licensed cannabis businesses across state lines. SB 1326 (Caballero, Chapter 396, Statutes of 2022) did not necessarily specifically include tribes but was instead focused primarily on state-to-state cannabis conduct. That bill was in preparation if changes at the federal level were to occur. To accommodate any legal quandary that might exist for the Governor to enter into those agreements, that bill included 4 actions, any one of which would need to occur before an agreement could be implemented:

• Federal law is amended to allow for the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
• Federal law is enacted that specifically prohibits the expenditure of federal funds to prevent the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
• The United States Department of Justice issues an opinion or memorandum allowing or tolerating the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
• The California Attorney General issues a written opinion, that state law authorization under an agreement for medicinal or adult-use commercial cannabis activity, or both, between foreign licensees and state licensees will not result in significant legal risk to the State of California under the federal Controlled Substances Act, based on review of applicable law, including federal judicial decisions and administrative actions.

The agreement proposed in this bill mirrors the current statutory authority that exists governing agreements for purposes of cannabis operations between states Similar to the state-to-state agreement, this bill requires the Joint Legislative Budget Committee (budget committee) to review any agreement between a Governor/designee. The budget committee will have 60 days to review the agreement and provide recommendations to the Governor. The Governor can consider those recommendations and make amendments to the agreement but is not required to accept any of the recommendations.

As of today, none of the four “actions” have occurred and there have been no agreements entered into on behalf the Governor with other states. It is unclear if or when the federal reclassification of cannabis for medicinal purposes from schedule 1 to schedule 3 will change the status for states to work together and if agreements will even then be necessary when that does occur for medicinal purposes. Also, if the federal government completely reclassifies cannabis from schedule 1 for recreational purpose, what the implications are going forward. This bill proposes to include the same actions, one of which must occur prior to any agreement taking effect.

Other States. Multiple states have established agreements with tribes for purposes of conducting cannabis business between state licensees and the Tribes including Minnesota, Washington, Nevada, Michigan, and New Mexico.

1. Related Legislation. SB 1326 (Caballero, Chapter 396, Statutes of 2022) allows the state to enter into an interstate cannabis agreement to allow cannabis or cannabis products to be transported across state lines. This bill requires the agreement to meet specified requirements, including that participating states must meet or exceed health and safety requirements and allows the state to engage in commercial activities with out-of-state licenses.
   

AB 1710 (Wood, Chapter 123, Statutes of 2019) would have authorized the County of Del Norte to enter into an agreement with the Elk Valley Rancheria, a federally recognized Indian tribe, regarding local authorization for the tribe to engage in commercial cannabis activity, with an agreement that the tribe comply with state laws and regulations regarding cannabis. (Status: This bill was amended to address an unrelated issue).

AB 924 (Bonta of 2018) would have required 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 tribe’s established governmental process. (Status: This bill was held on suspense in the Senate Committee on Appropriations).

AB 1096 (Bonta of 2017) would have authorized the Governor to enter into agreements concerning medical and recreational marijuana with a federally recognized sovereign Indian tribe. (Status: This bill was amended to address an unrelated topic.)

AB 2545 (Bonta of 2016) would have authorized the Governor to enter into agreements concerning medical cannabis with federally recognized sovereign Indian tribes, as defined. (Status: This bill died in Assembly Appropriations)

1. Arguments in Support. Twenty-Nine Palms Band of Mission Indians writes in support and notes, “AB 2506 promotes tribal self-sufficiency and economic development while reducing reliance on illicit cannabis sources by expanding access to regulated, safe cannabis products for retailers and California consumers…

Additionally, AB 2506 builds upon existing statutory safeguards governing cross-jurisdictional cannabis commerce to establish a practical and commonsense pathway for Tribal participation in California's regulated cannabis industry. By enabling partnerships between California Indian Tribes, the State of California, and the Department of Cannabis Control, the bill will help combat the illicit cannabis market while expanding economic opportunities for Tribal communities and increasing consumer access to regulated cannabis products.”

California NORML writes in support and notes, “The applicable tribal government must impose standards that meet California’s existing requirements for cannabis commerce. These include public health, testing, packaging, and marketing standards, among others. This bill will promote tribal self-sufficiency and economic development, while reducing reliance on illegal cannabis sources by broadening the availability of regulated, safe cannabis products for retailers and consumers.”

1. Arguments in Opposition. The California Cannabis Operators Association writes in opposition and notes, “…Importantly, our concerns are not rooted in any challenge to tribal sovereignty. To the contrary, we believe any framework governing commercial interaction between state licensees and tribal governments must be developed in a manner that respects tribal sovereignty and ensures clarity, consistency, and fairness across the marketplace. We also note that AB 2506 raises broader legal considerations that have yet to be fully addressed. While tribes maintain authority to regulate cannabis activity within their jurisdictions, cannabis remains illegal under federal law. The movement of cannabis across jurisdictional boundaries, particularly where commercial activity extends beyond tribal lands, may implicate federal enforcement risks that could affect both tribal enterprises and state licensees. These risks are not merely theoretical and warrant careful consideration in any framework that contemplates expanded commercial integration. Given these considerations, CaCOA believes the policy questions presented by AB 2506 are significant and would benefit from additional time, stakeholder engagement, and careful refinement.”
2. Implementation Issues for Consideration.

Integration into the licensed market. This bill would allow the Governor or its designee to enter into an agreement with a tribe that has its own licensing system for cannabis to transact business between the state-licensee and the Tribe’s licensees (who do not have a state license). However, while a tribe’s cannabis licensee will not be subject to California’s cannabis requirements, a DCC-license holder is. This means that all transportation of the product, laboratory testing, packaging and labeling requirements, retail requirements, etc. are to be maintained by the California license holder. The current draft of this bill does not contemplate what that structure might consist of, and it is unclear how, or if, the agreements will resolve this. If the Governor did enter into an agreement, would there be a DCC-licensee willing to engage if their license is ultimately subject to any discipline?

Taxes. Any agreement with a tribe subjects the tribe to the collection of all applicable taxes, but it’s unclear what a participating tribe’s tax liability would be under the provisions of this bill. Is the tribe subject to taxes for cultivation and delivery for products produced within the Tribe’s boundaries or are the taxes meant to be at the point of market integration? Could the unknown tax structure create an imbalance in the cannabis price market?

Local Governments. Under the regulated cannabis market, local jurisdictions have broad discretion to restrict any type of cannabis business within its boundaries, which the exception of delivery. It is presumed that any agreement would be required to take local jurisdictions preference into account, but it’s not clear that any agreement would be subject to the current authorization model for cannabis businesses that is required for state licensees. Depending on the Governor or designee, without statutory specification, agreements may be able to bypass local jurisdiction requirements.

Fees. Will there be any costs associated with entering into agreements? There will likely be extensive resources necessary to establish an agreement subject to the provisions of this bill. Will there be a similar fee required (like a state license fee) to address compliance and administrative time?

Unknowns about an Agreement. This bill provides broad authority for the Governor or their designee to determine the specific details of each agreement. This could make each agreement subject to different parameters and raise a few operational questions. What is the length of an agreement? Can a Governor or their designee change the terms of an agreement enacted by a previous Governor?

Reference to Indian Country. The language in this bill is modeled after current law which pertains to agreements for state-state cannabis transactions. Because tribal governments and other states are not identical, some of the provisions that are included in this bill may not be applicable and could likely be confusing. For example, this bill prohibits a tribal licensee from engaging in commercial cannabis activity outside of Indian country without a license, permit or other authorization by the local jurisdiction. Indian country is defined by 18 U.S. Code § 1151 as:

(a) 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,

(b) 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, and

(c) all Indian allotments, the Indian titles to which have not been extinguished, including rights-of-way running through the same.

Because Indian country encompasses any Indian reservation in the United States, is this language meant to imply that a tribal licensee is permitted to operate on any reservation, rancheria, colony, or tribal community? As sovereign entities, each tribe passes their own laws, and some do not permit cannabis within their boundaries. However, this language potentially contradicts each tribe’s right to self-determination. The Author may wish to clarify these references to align with the bill’s intent to preserve tribal sovereignty.

Should there be other pathways for Tribes to enter the licensed marketplace that do not include waivers of sovereign immunity? This bill establishes eligibility standards for a Tribe to enter into agreement with the Governor. A Tribe must have an established cannabis licensing infrastructure. While some tribes in California may be able to establish a such a regulatory structure, there may be other Tribes who do not have the resources of capabilities to establish such a structure that would meet the requirements of this bill but would like to enter the licensed cannabis market via a DCC-license, without of course stipulating to any waiver requirements.

1. Suggested Technical Amendment. On page 6, in line 26, strike the word “foreign” and replace it with “tribal”.

SUPPORT AND OPPOSITION:

Support:

Twenty-nine Palms Band of Mission Indians (source)

California Democratic Party Rural Caucus

California NORML

Opposition:

California Cannabis Operators Association

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2506

Author:(Hart)

As Amended Ver:April 8, 2026

2/3 vote

SUMMARY

Authorizes the Governor to enter into an agreement with a federally recognized Indian tribe to allow for commercial cannabis activity between licensees of the Department of Cannabis Control (DCC) and licensees of the tribal government if specified conditions are met.

Major Provisions

1. Provide that the Governor may enter into an agreement with an Indian tribe authorizing medicinal or adult-use commercial cannabis activity, or both, between entities licensed under the laws of the tribal government and entities operating with a state license, under the same conditions as required for an agreement with another state.
2. Requires an agreement between the state and a tribal government to include provisions requiring the DCC and the appropriate regulatory authorities of the tribal government to address public health and welfare emergencies concerning cannabis and to require the appropriate regulatory authorities of the tribal government to investigate instances of alleged noncompliance with the commercial cannabis regulatory programs in the same manner as required in agreements with other states.

COMMENTS

Brief History of Cannabis Regulation in California. Consumption of cannabis was first made lawful in California in 1996 when voters approved Proposition 215, the Compassionate Use Act. Proposition 215 protected qualified patients and caregivers from prosecution relating to the possession and cultivation of cannabis for medicinal purposes, if recommended by a physician. This regulatory scheme was further refined by SB 420 (Vasconcellos) in 2003, which established the state's Medical Marijuana Program.

After several years of lawful cannabis cultivation and consumption under state law, a lack of a uniform regulatory framework led to persistent problems. Cannabis's continued illegality under the federal Controlled Substances Act, which classifies cannabis as a Schedule I drug ineligible for prescription, generated periodic enforcement activities by the United States Department of Justice. Threat of action by the federal government created persistent apprehension within California's cannabis community.

After several prior attempts to improve the state's regulation of cannabis, the Legislature passed the Medical Marijuana Regulation and Safety Act—subsequently retitled 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. While entrusting state agencies to promulgate extensive regulations governing the implementation of the state's cannabis laws, MCRSA fully preserved local control. Under MCRSA, local governments may establish their own ordinances to regulate medicinal cannabis activity. Local jurisdictions could also choose to ban cannabis establishments altogether.

Not long after the Legislature enacted MCRSA, California voters passed Proposition 64, the Adult Use of Marijuana Act (AUMA). The passage of the AUMA legalized cannabis for non-medicinal adult use in a private home or licensed business; allowed adults 21 and over to possess and give away up to approximately one ounce of cannabis and up to eight grams of concentrate; and permitted the personal cultivation of up to six plants. The proponents of the AUMA sought to make use of much of the regulatory framework and authorities set out by MCRSA while making a few notable changes to the structure still being implemented.

In the spring of 2017, SB 94 (Committee on Budget and Fiscal Review) was passed to reconcile the distinct systems for the regulation, licensing, and enforcement of legal cannabis that had been established under the respective authorities of MCRSA and the AUMA. The single consolidated system established by the bill—known as the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA)—created a unified series of cannabis laws. On January 16, 2019, the state’s three cannabis licensing authorities—the Bureau of Cannabis Control, the California Department of Food and Agriculture, and the California Department of Public Health—officially announced that the Office of Administrative Law had approved final cannabis regulations promulgated by the three agencies respectively.

In early 2021, the Department of Finance released trailer bill language to create a new Department with centralized authority for cannabis licensing and enforcement activities. This new department was created through a consolidation of the three prior licensing authorities’ cannabis programs. As of July 1, 2021, the Department has been the single entity responsible for administering and enforcing the majority of MAUCRSA. New regulations went into effect on January 1, 2023 to effectuate the organizational consolidation and make other changes to cannabis regulation.

Tribal Governments and Cannabis. A document issued by the United States Attorney General in 2013 known as the "Cole memorandum" indicated that the existence of a strong and effective state regulatory system, and a cannabis operation's compliance with such a system, could allay the threat of federal enforcement interests. Federal prosecutors were urged under the memo to review cannabis cases on a case-by-case basis and consider whether a cannabis operation was in compliance with a strong and effective state regulatory system prior to prosecution.

The Cole memorandum was followed by a "Policy Statement Regarding Marijuana Issues in Indian Country," referred to as the "Wilkinson memorandum." This memorandum essentially extended the Cole memorandum to tribal lands contained within the borders of states that possess strong and effective state regulatory systems for cannabis, and that effectively comply with that regulatory system. Both the Cole and Wilkinson memoranda were rescinded by Attorney General Jeff Sessions in January 2018.

In March 2022, a coalition of nine United States senators sent a letter to then-Attorney General Merrick Garland, urging the Department of Justice to respect tribal sovereignty and cease enforcement of the Controlled Substances Act on tribal lands where cannabis activities are legalized by the tribes. The letter emphasized that tribal governments should have the right to determine their own cannabis policies without federal interference. In October 2025, Attorney General Pam Bondi testified in a Senate Judiciary Committee hearing that the federal Department of Justice would look into questions of whether tribal governments could legally transport cannabis products into state jurisdictions.

Neither the AUMA nor MAUCRSA included any language expressly authorizing recognized Indian tribes to engage in licensed cannabis activity within California. The DCC's regulations provide that a cannabis licensee "that may fall within the scope of sovereign immunity that may be asserted by a federally recognized Indian tribe or other sovereign entity must waive any sovereign immunity defense that the applicant or licensee may have." The DCC's prohibition on cannabis delivery to publicly owned lands also "applies to land held in trust by the United States for a tribe or an individual tribal member unless the delivery is authorized by and consistent with applicable tribal law."

It is generally accepted that members of a recognized Indian tribe may engage in cannabis activities on tribal land as long as this activity does not intermix with the market outside that tribal land and any involved individuals are exempted from the state's cannabis license requirements through a claim of sovereign immunity. However, this has led to frustration among tribes that wish to engage in the state's regulated industry without having to waive sovereign immunity, as required by the DCC's regulations. One obstacle to this policy goal is Public Law 280, which does not allow the state's licensing authorities to enter that tribal land to engage in civil regulatory enforcement, meaning a tribe's compliance with MAUCRSA could not be monitored and confirmed without a waiver of sovereign immunity.

Additionally, even to the extent that members of a tribe do not themselves intend to engage in regulated cannabis activities, they remain unable to lease any part of their land for cannabis cultivation to a California licensee. Tribal land is not technically within a local government capable of authorizing the activity locally under the state's scheme for dual-licensure, which requires businesses to obtain both state and local permission to operate. Meanwhile, tribal governments also see significant adverse impacts from the illicit cannabis market, including environmental damage and other criminal activity.

In mid-2018, the California Native American Cannabis Association (C-NACA), represented by former Lieutenant Governor Cruz Bustamante, advocated in support of AB 924 (Bonta), referred to as the Cannabis Regulatory Enforcement Act for Tribal Entities or the "CREATE Act." The bill proposed to authorize the Governor to enter into an agreement with a tribe that would authorize commercial cannabis and hemp activity between entities located and licensed in Indian country and state licensees. The bill provided that a tribe entering into an agreement would establish a cannabis regulatory program to enforce requirements comparable to MAUCRSA.

AB 924 received considerable pushback from Administration officials serving under Governor Jerry Brown, who opposed any proposal to authorize tribal licensees to engage in commercial cannabis activity within the jurisdiction of California without a limited waiver of sovereign immunity to allow the state's licensing authorities to conduct inspections and enforcement operations. On July 2, 2018, the bill was amended to primarily consist only of intent language, and on July 3, the Governor's office convened a meeting comprised of representatives of the Administration, the Legislature, C-NACA, and key cannabis stakeholders. This meeting resulted in the recognition of an irreconcilable ideological divergence between the Administration and tribal leaders regarding state regulatory oversight of cross-jurisdictional cannabis activity by tribal licensees. Following the demise of AB 924, C-NACA lobbied Governor Gavin Newsom for more favorable consideration of a similar proposal, but subsequently claimed to have been "ignored" by the newly elected governor.

Several recent court decisions have further developed this policy landscape. In January 2026, a federal judge dismissed most of the claims brought by representatives of the Round Valley Indian Tribe against the California Highway Patrol and local law enforcement for conducting raids on cannabis cultivation operations on tribal land, ruling that "when the state has jurisdiction to enforce a criminal law on a reservation, inherent tribal sovereignty does not prevent state law enforcement from investigating and prosecuting those laws." That same month, the Ninth Circuit Court of Appeals issued a ruling that held that the dormant commerce clause's protections for interstate commerce under the United States Constitution do not apply to commercial cannabis activities because of the illegal status of that activity under federal law. According to the Indigenous Cannabis Industry Association, approximately a quarter of all federally recognized Indian tribes are currently involved in some form of cannabis or hemp operation. However, California continues to disallow cannabis commerce between the state's licensed cannabis market and tribal licensees without a limited waiver of sovereign immunity.

In 2022, the Legislature enacted SB 1326 (Caballero), which authorized the Governor to enter into agreements with other states that allow for interstate commerce between licensed cannabis businesses across state lines, consistent with specified conditions and requirements. Amendments to the bill provided that this authority would not take effect until federal action or guidance to allow for such commerce, or until the Attorney General issues a written opinion that such commerce would not result in significant legal risk to the state. This bill would extend that same authority to allow the Governor to enter into agreements with tribal governments, allowing for commercial cannabis activity to take place between state and tribal licensees within the same framework that has been enacted for interstate commerce.

According to the Author

"AB 2506 supports tribal sovereignty in California while combating illegal cannabis. This bill builds off existing legislation and similar laws in Oregon and Washington, among others, to give the State the ability to certify that tribal entities can sell cannabis to state licensed retailers. This mirrors the existing structure that allows out-of-state growers to sell into California, requiring the exact same or stronger protections to safeguard consumers. This integration of tribal markets respects their sovereignty while broadening the availability and lowering the price of regulated and safe cannabis products."

Arguments in Support

Twentynine Palms Band of Mission Indians, the sponsor of this bill, writes: "AB 2506 seeks to utilize the existing statutory safeguards for cross-jurisdictional commercial cannabis activities to implement a commonsense policy that combats the illicit underground cannabis market by creating a pathway for California's Indian Tribes to partner with the State of California and the Department of Cannabis Control in order to enter into the State's cannabis market."

Arguments in Opposition

The California Cannabis Operators Association (CaCOA) opposes this bill. CaCOA writes: "Licensed operators continue to face significant challenges, including an entrenched illicit market, high taxes, and substantial regulatory costs. At this juncture, introducing a fundamental shift in the state's commercial framework, without fully resolving questions of regulatory parity and enforcement, risks further destabilizing an already fragile market and may inadvertently disadvantage operators who remain fully subject to the state's existing requirements."

FISCAL COMMENTS

According to the Assembly Committee on Appropriations, no state costs.

VOTES

ASM BUSINESS AND PROFESSIONS: 19-0-0

YES: Berman, Johnson, Addis, Ahrens, Alanis, Bains, Aguiar-Curry, Caloza, Chen, Elhawary, Hadwick, Haney, Hart, Irwin, Jackson, Lowenthal, Macedo, Nguyen, Pellerin

ASM APPROPRIATIONS: 13-0-2

YES: Wicks, Hoover, Aguiar-Curry, Caloza, Dixon, Fong, Mark González, Krell, Pacheco, Pellerin, Sharp-Collins, Solache, Tangipa

ABS, ABST OR NV: Arambula, Ta

UPDATED

VERSION: April 8, 2026

CONSULTANT: Robert Sumner / B. & P. / (916) 319-3301 FN: 0002526

Date of Hearing: May 6, 2026

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 2506

Author:(Hart) – As Amended Ver:April 8, 2026

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

SUMMARY:

This bill authorizes the Governor to enter into an agreement to allow commercial cannabis activity between licensees of the Department of Cannabis Control (DCC) and licensees of an Indian tribe if the activities are lawful and subject to licensure under the laws of the tribal government, subject to federal approval or tolerance.

FISCAL EFFECT:

No state costs.

COMMENTS:

1. Purpose. This bill is sponsored by the Twenty-Nine Palms Band of Mission Indians. According to the author:

[This bill] supports tribal sovereignty in California…[and] builds off existing legislation and similar laws in Oregon and Washington, among others, to give the State the ability to certify that tribal entities can sell cannabis to state licensed retailers. This mirrors the existing structure that allows out-of-state growers to sell into California, requiring the exact same or stronger protections to safeguard consumers. This integration of tribal markets respects their sovereignty while broadening the availability and lowering the price of regulated and safe cannabis products.

1. Background. According to the Assembly Business and Professions Committee analysis, it is generally accepted that members of a recognized Indian tribe may engage in cannabis activities on tribal land as long as this activity does not intermix with the market outside that tribal land and any involved individuals are exempted from the state’s cannabis license requirements through a claim of sovereign immunity. However, this has led to frustration among tribes that wish to engage in the state’s regulated industry without having to waive sovereign immunity, as required by the DCC’s regulations. One obstacle to this policy goal is Public Law 280, which does not allow the state’s licensing authorities to enter that tribal land to engage in civil regulatory enforcement, meaning a tribe’s compliance with state cannabis laws could not be monitored and confirmed without a waiver of sovereign immunity. Additionally, even if members of a tribe do not intend to engage in regulated cannabis activities, they remain unable to lease any part of their land for cannabis cultivation to a California licensee because tribal land is not technically within a local government capable of authorizing the activity locally under the state’s scheme for dual-licensure. Meanwhile, tribal governments also see significant adverse impacts from the illicit cannabis market, including environmental damage and other criminal activity.
2. Opposition. The California Cannabis Operators Association (CaCOA) writes in opposition:
   

Licensed operators continue to face significant challenges, including an entrenched illicit market, high taxes, and substantial regulatory costs…introducing a fundamental shift in the state’s commercial framework, without fully resolving questions of regulatory parity and enforcement, risks further destabilizing an already fragile market and may inadvertently disadvantage operators who remain fully subject to the state’s existing requirements.

1. Prior Legislation. AB 1710 (Wood), Chapter 123, Statutes of 2019, as introduced, would have authorized the County of Del Norte to enter into an agreement with the Elk Valley Rancheria tribe regarding local authorization for the tribe to engage in commercial cannabis activity, but was amended to address an unrelated topic.
   

AB 924 (Bonta), of the 2017-18 Legislative Session, would have required 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 tribe’s established governmental process. AB 924 was held on suspense in the Senate Committee on Appropriations.

Analysis Prepared by: Allegra Kim / APPR. / (916) 319-2081

Date of Hearing:

ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS

Marc Berman, Chair

ABPCA Bill Id:AB 2506

Author:(Hart) – As Amended Ver:March 2, 2026

SUBJECT: Cannabis licensure: tribal government licensure.

SUMMARY: Authorizes commercial cannabis activity between licensees of the Department of Cannabis Control (DCC) and licensees of an Indian tribe if the DCC certifies that the tribal government imposes requirements on its licensees that meet or exceed the state’s requirements.

EXISTING LAW:

1. Enacts the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) to provide for a comprehensive regulatory framework for the cultivation, distribution, transport, storage, manufacturing, processing, and sale of medicinal and adult-use cannabis. (Business and Professions Code (BPC) §§ 26000 et seq.)
2. Establishes the DCC within the Business, Consumer Services, and Housing Agency (previously established as the Bureau of Cannabis Control, the Bureau of Marijuana Control, the Bureau of Medical Cannabis Regulation, and the Bureau of Medical Marijuana Regulation), for purposes of administering and enforcing MAUCRSA. (BPC § 26010)
3. Establishes grounds for disciplinary action against cannabis licensees, including failures to comply with state requirements as well as local laws and ordinances. (BPC § 26030)
4. Authorizes the DCC to issue a citation to a licensee or unlicensed person for violating any provision of MAUCRSA. (BPC § 26031.5)
5. Prohibits a person or entity from engaging in commercial cannabis activity without a state license issued by the DCC. (BPC § 26037.5)
6. Authorizes the Attorney General or a city or county counsel or city prosecutor to bring an action against persons engaged in unlicensed commercial cannabis activity for civil penalties. (BPC § 26038)
7. Authorizes a cannabis licensee to bring an action in superior court against a person engaging in commercial cannabis activity without a license. (BPC § 26038.1)
8. Establishes a process for the voluntary recall and remediation or destruction of cannabis products that the DCC identifies as adulterated or misbranded. (BPC §§ 26039.1 – 26039.6)
9. Authorizes a peace officer, including a peace officer within the DCC, to seize cannabis, industrial hemp, and cannabis products in specified circumstances, including when industrial hemp is in violation of an applicable tribal plan. (BPC § 26039.4)
10. Provides the DCC with authority for issuing various types of commercial cannabis licenses including subtypes for cultivation, manufacturing, testing, retail, distribution, and microbusiness. (BPC § 26050)
11. Requires the DCC to establish a track and trace program for reporting the movement of cannabis and cannabis products throughout the distribution chain that utilizes a unique identifier and is capable of capturing and providing specified information. (BPC § 26067)
12. Prohibits cannabis or cannabis products from being sold unless a representative sample of has been tested by a licensed testing laboratory. (BPC § 26100)
13. Subjects cannabis and cannabis product batches to quality assurance standards and testing. (BPC § 26110)
14. Prohibits cannabis and cannabis product packages and labels from being made to be attractive to children. (BPC § 26120)
15. Requires the DCC to set packaging and labeling standards for manufactured cannabis products, including a requirement that products not be designed to be appealing to children or easily confused with commercially sold candy or other non-cannabis foods. (BPC § 26130)
16. Prohibits a cannabis licensee from doing any of the following:
    1. Advertising or marketing in a manner that is false or untrue in any, or that, irrespective of falsity, directly, or by ambiguity, omission, or inference, or by the addition of irrelevant, scientific, or technical matter, tends to create a misleading impression.
    2. Publishing or disseminating advertising or marketing containing any statement concerning a brand or product that is inconsistent with any statement on its labeling.
    3. Publishing or disseminating advertising or marketing containing any statement, design, device, or representation which tends to create the impression that the cannabis originated in a particular place or region, unless the label of the advertised product bears an appellation of origin, and such appellation of origin appears in the advertisement.
    4. Advertising or marketing on a billboard or similar advertising device located on an Interstate Highway or on a State Highway which crosses the California border.
    5. Advertising or marketing cannabis or cannabis products in a manner intended to encourage persons under 21 years of age to consume cannabis or cannabis products.
    6. Publishing or disseminating advertising or marketing that is attractive to children.
    7. Advertising or marketing cannabis or cannabis products on an advertising sign within 1,000 feet of a day care center, school providing instruction in kindergarten or any grades 1 to 12, inclusive, playground, or youth center.
    8. Publishing or disseminating advertising or marketing while the licensee’s license is suspended.

(BPC § 26152)

1. Prohibits a cannabis licensee from publishing or disseminating advertising or marketing containing any health-related statement that is untrue or tends to create a misleading impression as to the effects on health of cannabis consumption. (BPC § 26154)
2. Specifies that MAUCRSA does not supersede or limit the authority of a local jurisdiction to adopt and enforce local ordinances regulating cannabis licensees. (BPC § 26200)
3. Authorizes the Governor to enter into an agreement with another state to allow for medicinal or adult-use commercial cannabis activity between entities licensed under the laws of a contracting state (foreign licensees) and entities licensed by the DCC (state licensees), if specified criteria are met. (BPC § 26301)
4. Prohibits foreign licensees from engaging in commercial cannabis activity within the boundaries of California without a state license and subjects a foreign licensee to the jurisdiction of California for the purpose of actions taken for violation of California commercial cannabis laws and regulations. (BPC § 26302)
5. Requires an interstate cannabis agreement to require that the contracting state impose requirements on foreign licensees with regard to cannabis and cannabis products to be sold or otherwise transferred or distributed within this state that meet or exceed the requirements applicable to state licensees, including all of the following:
   1. Enforceable public health and safety standards that are equivalent to the requirements of MAUCRSA.
   2. Mandatory participation in a system administered by the state to regulate and track the cultivation, manufacturing, distribution, transportation, sale, and destruction of cannabis and cannabis products from seed to sale.
   3. Standards for the testing of cannabis or cannabis products that meet or exceed the standards applicable to testing laboratories licensed under MAUCRSA.
   4. Requirements for the packaging and labeling of cannabis and cannabis products that meet or exceed the packaging and labeling requirements established under MAUCRSA.
   5. Requirements for quality assurance and inspection of cannabis or cannabis products that meet or exceed the requirements applicable to cannabis or cannabis products cultivated, manufactured, or sold by state licensees.
   6. Restrictions on marketing, labeling, and advertising within this state by foreign licensees that meet or exceed the restrictions on state licensees established under MAUCRSA.
   7. A process for the identification of adulterated or misbranded cannabis products, and the destruction of those products, using standards that meet or exceed the standards and procedures established under MAUCRSA.

(BPC § 26303)

1. Requires an interstate cannabis agreement to require the DCC and the appropriate regulatory authorities of the contracting state to address public health and welfare emergencies concerning cannabis or cannabis products that are sold or intended for sale within California, including for the prompt recall or embargo of adulterated or misbranded cannabis or cannabis products. (BPC § 26304)
2. Requires an interstate cannabis agreement to include provisions determined by the Governor to promote the inclusion and support of individuals and communities in the cannabis industry who are linked to populations or neighborhoods that were negatively or disproportionately impacted by cannabis criminalization. (BPC § 26305)
3. Requires an interstate cannabis agreement to provide for collection of all applicable taxes. (BPC § 26306)
4. Exempts the Governor from the rulemaking procedures and requirements of the Administrative Procedure Act when entering into interstate cannabis agreements or amendments to agreements, provided that the Governor submit the proposed interstate cannabis agreement or amendment to the Joint Legislative Budget Committee for review and comment and post the proposed interstate cannabis agreement or amendment on the DCC’s website for public comment for 30 days. (BPC § 26307)
5. Provides that an interstate cannabis agreement shall not take effect unless one of the following occurs:
   1. Federal law is amended to allow for the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
   2. Federal law is enacted that specifically prohibits the expenditure of federal funds to prevent the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
   3. The United States Department of Justice issues an opinion or memorandum allowing or tolerating the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
   4. The Attorney General issues a written opinion that state law authorization under an interstate cannabis agreement will not result in significant legal risk to the State of California under the federal Controlled Substances Act, based on review of applicable law, including federal judicial decisions and administrative actions.

(BPC § 26308)

1. Provides California with criminal jurisdiction and civil adjudicatory jurisdiction over tribal lands within its borders, but not civil regulatory jurisdiction. (Public Law 83-280)

THIS BILL:

1. Defines “tribal licensee” as an entity that has been licensed by a federally recognized Indian tribe located within California.
2. Authorizes a state licensee to engage in commercial cannabis activity with a tribal licensee if the DCC certifies that the relevant tribal government imposes requirements on the tribal licensee with regard to cannabis and cannabis products to be sold or otherwise transferred or distributed within California that meet or exceed the requirements applicable to state licensees, including all of the following:
   1. Enforceable public health and safety standards that are equivalent to the requirements of MAUCRSA.
   2. Mandatory participation in a system administered by the state to regulate and track the cultivation, manufacturing, distribution, transportation, sale, and destruction of cannabis and cannabis products from seed to sale.
   3. Standards for the testing of cannabis or cannabis products that meet or exceed the standards applicable to testing laboratories licensed under MAUCRSA.
   4. Requirements for the packaging and labeling of cannabis and cannabis products that meet or exceed the packaging and labeling requirements established under MAUCRSA.
   5. Requirements for quality assurance and inspection of cannabis or cannabis products that meet or exceed the requirements applicable to cannabis or cannabis products cultivated, manufactured, or sold by state licensees.
   6. Restrictions on marketing, labeling, and advertising within this state by foreign licensees that meet or exceed the restrictions on state licensees established under MAUCRSA.
   7. A process for the identification of adulterated or misbranded cannabis products, and the destruction of those products, using standards that meet or exceed the standards and procedures established under MAUCRSA.
3. Finds and declares that the provisions of the bill further the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act (Proposition 64).

FISCAL EFFECT: Unknown; this bill is keyed fiscal by the Legislative Counsel.

COMMENTS:

Purpose. This bill is sponsored by Twenty-Nine Palms Band of Mission Indians. According to the author:

AB 2506 supports tribal sovereignty in California while combating illegal cannabis. This bill builds off existing legislation and similar laws in Oregon and Washington, among others, to give the State the ability to certify that tribal entities can sell cannabis to state licensed retailers. This mirrors the existing structure that allows out-of-state growers to sell into California, requiring the exact same or stronger protections to safeguard consumers. This integration of tribal markets respects their sovereignty while broadening the availability and lowering the price of regulated and safe cannabis products.

Background.

Brief History of Cannabis Regulation in California. Consumption of cannabis was first made lawful in California in 1996 when voters approved Proposition 215, the Compassionate Use Act. Proposition 215 protected qualified patients and caregivers from prosecution relating to the possession and cultivation of cannabis for medicinal purposes, if recommended by a physician. This regulatory scheme was further refined by SB 420 (Vasconcellos) in 2003, which established the state’s Medical Marijuana Program.

After several years of lawful cannabis cultivation and consumption under state law, a lack of a uniform regulatory framework led to persistent problems. Cannabis’s continued illegality under the federal Controlled Substances Act, which classifies cannabis as a Schedule I drug ineligible for prescription, generated periodic enforcement activities by the United States Department of Justice. Threat of action by the federal government created persistent apprehension within California’s cannabis community.

After several prior attempts to improve the state’s regulation of cannabis, the Legislature passed the Medical Marijuana Regulation and Safety Act—subsequently retitled 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. While entrusting state agencies to promulgate extensive regulations governing the implementation of the state’s cannabis laws, MCRSA fully preserved local control. Under MCRSA, local governments may establish their own ordinances to regulate medicinal cannabis activity. Local jurisdictions could also choose to ban cannabis establishments altogether.

Not long after the Legislature enacted MCRSA, California voters passed Proposition 64, the Adult Use of Marijuana Act (AUMA). The passage of the AUMA legalized cannabis for non-medicinal adult use in a private home or licensed business; allowed adults 21 and over to possess and give away up to approximately one ounce of cannabis and up to eight grams of concentrate; and permitted the personal cultivation of up to six plants. The proponents of the AUMA sought to make use of much of the regulatory framework and authorities set out by MCRSA while making a few notable changes to the structure still being implemented.

In the spring of 2017, SB 94 (Committee on Budget and Fiscal Review) was passed to reconcile the distinct systems for the regulation, licensing, and enforcement of legal cannabis that had been established under the respective authorities of MCRSA and the AUMA. The single consolidated system established by the bill—known as the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA)—created a unified series of cannabis laws. On January 16, 2019, the state’s three cannabis licensing authorities—the Bureau of Cannabis Control, the California Department of Food and Agriculture, and the California Department of Public Health—officially announced that the Office of Administrative Law had approved final cannabis regulations promulgated by the three agencies respectively.

In early 2021, the Department of Finance released trailer bill language to create a new Department with centralized authority for cannabis licensing and enforcement activities. This new department was created through a consolidation of the three prior licensing authorities’ cannabis programs. As of July 1, 2021, the Department has been the single entity responsible for administering and enforcing the majority of MAUCRSA. New regulations went into effect on January 1, 2023 to effectuate the organizational consolidation and make other changes to cannabis regulation.

Tribal Governments and Cannabis. A document issued by the United States Attorney General in 2013 known as the “Cole memorandum” indicated that the existence of a strong and effective state regulatory system, and a cannabis operation’s compliance with such a system, could allay the threat of federal enforcement interests. Federal prosecutors were urged under the memo to review cannabis cases on a case-by-case basis and consider whether a cannabis operation was in compliance with a strong and effective state regulatory system prior to prosecution.

The Cole memorandum was followed by a “Policy Statement Regarding Marijuana Issues in Indian Country,” referred to as the “Wilkinson memorandum.” This memorandum essentially extended the Cole memorandum to tribal lands contained within the borders of states that possess strong and effective state regulatory systems for cannabis, and that effectively comply with that regulatory system. Both the Cole and Wilkinson memoranda were rescinded by Attorney General Jeff Sessions in January 2018.

In March 2022, a coalition of nine United States senators sent a letter to then-Attorney General Merrick Garland, urging the Department of Justice to respect tribal sovereignty and cease enforcement of the Controlled Substances Act on tribal lands where cannabis activities are legalized by the tribes. The letter emphasized that tribal governments should have the right to determine their own cannabis policies without federal interference. In October 2025, Attorney General Pam Bondi testified in a Senate Judiciary Committee hearing that the federal Department of Justice would look into questions of whether tribal governments could legally transport cannabis products into state jurisdictions.

Neither the AUMA nor MAUCRSA included any language expressly authorizing recognized Indian tribes to engage in licensed cannabis activity within California. The DCC’s regulations provide that a cannabis licensee “that may fall within the scope of sovereign immunity that may be asserted by a federally recognized Indian tribe or other sovereign entity must waive any sovereign immunity defense that the applicant or licensee may have.” The DCC’s prohibition on cannabis delivery to publicly owned lands also “applies to land held in trust by the United States for a tribe or an individual tribal member unless the delivery is authorized by and consistent with applicable tribal law.”

It is generally accepted that members of a recognized Indian tribe may engage in cannabis activities on tribal land as long as this activity does not intermix with the market outside that tribal land and any involved individuals are exempted from the state’s cannabis license requirements through a claim of sovereign immunity. However, this has led to frustration among tribes that wish to engage in the state’s regulated industry without having to waive sovereign immunity, as required by the DCC’s regulations. One obstacle to this policy goal is Public Law 280, which does not allow the state’s licensing authorities to enter that tribal land to engage in civil regulatory enforcement, meaning a tribe’s compliance with MAUCRSA could not be monitored and confirmed without a waiver of sovereign immunity.

Additionally, even to the extent that members of a tribe do not themselves intend to engage in regulated cannabis activities, they remain unable to lease any part of their land for cannabis cultivation to a California licensee. Tribal land is not technically within a local government capable of authorizing the activity locally under the state’s scheme for dual-licensure. Meanwhile, tribal governments also see significant adverse impacts from the illicit cannabis market, including environmental damage and other criminal activity.

In mid-2018, the California Native American Cannabis Association (C-NACA), represented by former Lieutenant Governor Cruz Bustamante, advocated in support of AB 924 (Bonta), referred to as the Cannabis Regulatory Enforcement Act for Tribal Entities or the “CREATE Act.” The bill proposed to authorize the Governor to enter into an agreement with a tribe that would authorize commercial cannabis and hemp activity between entities located and licensed in Indian country and state licensees. The bill provided that a tribe entering into an agreement would establish a cannabis regulatory program to enforce requirements comparable to MAUCRSA.

AB 924 received considerable pushback from Administration officials serving under Governor Jerry Brown, who opposed any proposal to authorize tribal licensees to engage in commercial cannabis activity within the jurisdiction of California without a limited waiver of sovereign immunity to allow the state’s licensing authorities to conduct inspections and enforcement operations. On July 2, 2018, the bill was amended to primarily consist only of intent language, and on July 3, the Governor’s office convened a meeting comprised of representatives of the Administration, the Legislature, C-NACA, and key cannabis stakeholders. This meeting resulted in the recognition of an irreconcilable ideological divergence between the Administration and tribal leaders regarding state regulatory oversight of cross-jurisdictional cannabis activity by tribal licensees. Following the demise of AB 924, C-NACA lobbied Governor Gavin Newsom for more favorable consideration of a similar proposal, but subsequently claimed to have been “ignored” by the newly elected governor.^[1]

Several recent court decisions have further developed this policy landscape. In January 2026, a federal judge dismissed most of the claims brought by representatives of the Round Valley Indian Tribe against the California Highway Patrol and local law enforcement for conducting raids on cannabis cultivation operations on tribal land, ruling that “when the state has jurisdiction to enforce a criminal law on a reservation, inherent tribal sovereignty does not prevent state law enforcement from investigating and prosecuting those laws.”^[2] That same month, the Ninth Circuit Court of Appeals issued a ruling that held that the dormant commerce clause’s protections for interstate commerce under the United States Constitution do not apply to commercial cannabis activities because of the illegal status of that activity under federal law.^[3]

According to the Indigenous Cannabis Industry Association, approximately a quarter of all federally recognized Indian tribes are currently involved in some form of cannabis or hemp operation.^[4] However, California continues to disallow cannabis commerce between the state’s licensed cannabis market and tribal licensees without a limited waiver of sovereign immunity. This bill would authorize the DCC to certify that a tribal government imposes requirements on its licensees meet or exceed the requirements of MAUCRSA and would permit state licensees to engage in commercial cannabis activity with licensees of a certified tribe. However, the bill would not expressly allow California regulators to conduct investigation or enforcement operations against tribal licensees, invoking the same policy discussions that have long remained unresolved.

Current Related Legislation. AB 1496 (B. Rubio) would reestablish prior task force on state and local regulation of commercial cannabis activity and expands the membership of the task force to include representatives of tribal governmental entities. This bill is pending in the Senate Committee on Business, Professions, and Economic Development.

Prior Related Legislation. SB 1326 (Caballero), Chapter 396, Statutes of 2022 empowers the Governor to enter into agreements with other states that allow for interstate commerce between licensed cannabis businesses across state lines, subject to certain conditions.

AB 1710 (Wood), Chapter 123, Statutes of 2019 would have authorized the County of Del Norte to enter into an agreement with the Elk Valley Rancheria, a federally recognized Indian tribe, regarding local authorization for the tribe to engage in commercial cannabis activity, with an agreement that the tribe comply with state laws and regulations regarding cannabis. This language was replaced with contents addressing an unrelated topic.

AB 924 (Bonta) of 2018 would have required 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 tribe’s established governmental process. This bill was held on suspense in the Senate Committee on Appropriations.

AB 1096 (Bonta) of 2017 would have authorized the Governor to enter into agreements concerning medical and recreational marijuana with a federally recognized sovereign Indian tribe. This language was replaced with contents addressing an unrelated topic and the bill did not receive a hearing in the Assembly Committee on Governmental Organization.

AB 2545 (Bonta) of 2016 would have authorized the Governor to enter into agreements concerning medical cannabis with federally recognized sovereign Indian tribes. This bill was held on suspense in the Assembly Committee on Appropriations.

SB 94 (Committee on Budget and Fiscal Review), Chapter 27, Statutes of 2017 combined the AUMA and MCRSA into MAUCRSA, a unified system for the regulation of cannabis.

ARGUMENTS IN SUPPORT:

Twentynine Palms Band of Mission Indians, the sponsor of this bill, writes: “AB 2506 seeks to utilize the existing statutory safeguards for cross-jurisdictional commercial cannabis activities to implement a commonsense policy that combats the illicit underground cannabis market by creating a pathway for California’s Indian Tribes to partner with the State of California and the Department of Cannabis Control in order to enter into the State’s cannabis market.”

ARGUMENTS IN OPPOSITION:

The California Cannabis Operators Association (CaCOA) opposes this bill. CaCOA writes: “Licensed operators continue to face significant challenges, including an entrenched illicit market, high taxes, and substantial regulatory costs. At this juncture, introducing a fundamental shift in the state’s commercial framework, without fully resolving questions of regulatory parity and enforcement, risks further destabilizing an already fragile market and may inadvertently disadvantage operators who remain fully subject to the state’s existing requirements.”

POLICY ISSUE(S) FOR CONSIDERATION:

Lack of State Enforcement Authority. As with prior proposals to allow for licensees of federally recognized Indian tribes to engage in commercial cannabis activity with licensees of the DCC, this bill would not authorize California regulators to engage in oversight or enforcement activities regarding tribal licensees. Existing regulations adopted by the DCC do allow for applicants operating within a tribal jurisdiction to obtain a state license; however, they must agree to a limited waiver of sovereign immunity as a condition of that license. Otherwise, it is understood that Public Law 280 would prohibit the DCC or any other state agency from engaging in enforcement against that licensee for any noncriminal misconduct.

This bill would require the DCC to certify that a tribal government imposes requirements on tribal licensees that meet or exceed the requirements of MAUCRSA. However, the DCC would not be authorized to conduct inspections to ensure compliance with those requirements, and would be fully relying on the certified tribe to administer and enforce those requirements. As long as California’s cannabis market is intended to remain a closed-loop system, this lack of authority may be considered undesirable by the Legislature.

Threat of Federal Enforcement. Among the enumerated powers granted to the Congress by the United States Constitution is the power “to regulate Commerce … among the several States.” Commonly referred to as the “Interstate Commerce Clause,” this provision is understood to authorize the federal government to impose laws on the states regulating activities taking place across their boundaries. This includes the Controlled Substances Act; in 2005, the United States Supreme Court affirmed in Gonzales v. Raich that the cultivation of cannabis could be federally criminalized even though it took place lawfully in California under Proposition 215.

The authority of the federal government to nationally ban what may authorized at the state level is further established through the Constitution’s Supremacy Clause. This provision provides that federal law “shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any thing in the Constitution or Laws of any State to the Contrary notwithstanding.” Constitutionally speaking, the continued Schedule I status of cannabis under the Controlled Substances Act renders cultivation and sale of the plant illegal as a matter of federal law. While each memorandum has been clear that the federal government could enforce the Controlled Substances Act in states that have established legal schemes for cannabis commerce, there has generally been an understanding that these actions would not take priority. However, there remain certain policy areas within the domain of cannabis legalization that have been perceived as risking increased federal interest.

The Cole memorandum specifically enumerated certain enforcement priorities that states should take care to consider when legalizing cannabis. One of those priorities was “preventing the diversion of marijuana from states where it is legal under state law in some form to other states.” The memoranda additionally suggested that “a robust system may affirmatively address those priorities by, for example, implementing effective measures to prevent diversion of marijuana outside of the regulated system and to other states.” While Department of Justice policy expressly deprioritized enforcement against “strong and effective regulatory and enforcement systems” consisting only of intrastate cannabis commerce, the memoranda also made it clear that care should be taken to prevent cannabis from crossing state lines. The Wilkinson memorandum extended similar concepts to commerce between states and tribal entities.

When the Trump Administration rescinded the Cole and Wilkinson memoranda, the reasoning provided was to provide federal prosecutors broader authority to enforce the Controlled Substances Act in states that legalized cannabis. There was subsequently no new guidance from the Biden Administration regarding what factors the Department of Justice would consider prior to enforcement, nor has the current iteration of the Trump Department of Justice indicated its position on enforcing federal cannabis laws. However, given longstanding policy that the transport of cannabis beyond state boundaries is potential cause for antagonism with the federal government, reservations have been raised about whether it would be appropriate to authorize California cannabis licensees to engage in commercial activity with entities outside the state absent some form of federal reassurance.

In 2022, the Legislature enacted SB 1326 (Caballero), which authorized the Governor to enter into agreements with other states that allow for interstate commerce between licensed cannabis businesses across state lines. However, amendments to the bill taken in this committee provided that this authority would not take effect until federal action or guidance to allow for such commerce, or until the Attorney General issues a written opinion that such commerce would not result in significant legal risk to the state. The provisions of this bill authorizing cannabis activity between state licensees and tribal licensees would utilize some, but not all, of SB 1326’s framework for cannabis activity between state licensees and licensees of other states.

If this bill does not provide for exemptions to Public Law 280 or a requirement for a limited waiver of sovereign immunity for tribal licensees engaged in cross-jurisdictional activity, then those participating tribes are functionally similar to those foreign states who currently quality for an interstate cannabis agreement under SB 1326. The Legislature may therefore wish to be consistent in the framework for any cannabis commerce extending beyond the boundaries of California, whether it be into another state or onto tribal land. The policy rationale behind requiring some form of federal action or assurance for the provisions of SB 1326 to go into effect would then additionally apply to the agreements contemplated by this bill. The author may therefore wish to restructure this bill to add tribal licensees to the existing provisions of law established for interstate commerce, rather than replicating only a portion of those laws for purposes of commerce with tribal licensees.

AMENDMENTS:

To restructure the bill to incorporate tribal licensees into existing law providing for interstate cannabis agreements, delete the current contents of the bill and amend Chapter 25 of Division 10 of the Business and Professions Code as follows:

26300. As used in this chapter, the following definitions apply:

(a) “Agreement” means an agreement relating to commercial cannabis authorized under this chapter and entered into between this state and another state or states.

(b) “Contracting state” means a state of the United States, including a district, commonwealth, territory, or possession subject to the legislative authority of the United States, with which the Governor has entered into an agreement pursuant to this chapter.

(c) “Foreign license” means a commercial cannabis license issued under the laws of another state or an Indian tribe that has entered into an agreement pursuant to this chapter.

(d) “Indian tribe” means a federally recognized Indian tribe in this state.

(e) “State license” means a commercial cannabis license issued by a licensing authority pursuant to this division.

26301. (a) The Governor may enter into an agreement with another state or states, or an Indian tribe authorizing medicinal or adult-use commercial cannabis activity, or both, between entities licensed under the laws of the contracting state or tribal government and entities operating with a state license, provided that both of the following criteria are met:

(1) The commercial cannabis activities are lawful and subject to licensure under the laws of the contracting state or tribal government.

(2) With respect to the interstate transportation of cannabis or cannabis products, the agreement prohibits both of the following:

(A) The transportation of cannabis and cannabis products by any means other than those authorized under both the laws of the contracting state or tribal government and the regulations of the department.

(B) The transportation of cannabis and cannabis products through the jurisdiction of a state, district, commonwealth, territory, or possession of the United States that does not authorize that transportation.

(b) Notwithstanding any other law, the execution of, and compliance with the terms of, an agreement does not constitute a project for purposes of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).

26303. (a) An agreement shall require that the contracting state or tribal government impose requirements on foreign licensees with regard to cannabis and cannabis products to be sold or otherwise transferred or distributed within this state that meet or exceed the requirements applicable to state licensees, including all of the following:

(1) Enforceable public health and safety standards that are equivalent to the requirements of this division.

(2) Mandatory participation in a system administered by the state or tribal government to regulate and track the cultivation, manufacturing, distribution, transportation, sale, and destruction of cannabis and cannabis products from seed to sale.

(3) Standards for the testing of cannabis or cannabis products that meet or exceed the standards applicable to testing laboratories licensed under this division.

(4) Requirements for the packaging and labeling of cannabis and cannabis products that meet or exceed the packaging and labeling requirements established pursuant to Chapter 12 (commencing with Section 26120).

(5) Requirements for quality assurance and inspection of cannabis or cannabis products that meet or exceed the requirements applicable to cannabis or cannabis products cultivated, manufactured, or sold by state licensees.

(6) Restrictions on marketing, labeling, and advertising within this state by foreign licensees that meet or exceed the restrictions on state licensees established in Section 26063 and Chapter 15 (commencing with Section 26150).

(7) A process for the identification of adulterated or misbranded cannabis products, and the destruction of those products, using standards that meet or exceed the standards and procedures established pursuant to this division.

(b) An agreement shall require that the contracting state or tribal government impose restrictions upon advertising, marketing, labeling, or sale within the contracting state that meet or exceed the restrictions established in Section 26063.

26304. (a) An agreement shall include provisions requiring the department and the appropriate regulatory authorities of the contracting state or tribal government to address public health and welfare emergencies concerning cannabis or cannabis products that are sold or intended for sale within this state, including for the prompt recall or embargo of adulterated or misbranded cannabis or cannabis products.

(b) An agreement shall include provisions requiring the appropriate regulatory authorities of each state or tribal government to investigate instances of alleged noncompliance with the commercial cannabis regulatory programs upon request by the other state or tribal government and in accordance with mutually agreed-upon procedures. An agreement shall include provisions requiring the contracting state or tribal government to reasonably cooperate with California investigations concerning foreign licensees, and requiring the department to reasonably cooperate with investigations by the contracting state or tribal government concerning persons or entities holding state licenses.

REGISTERED SUPPORT:

Twentynine Palms Band of Mission Indians (Sponsor)

REGISTERED OPPOSITION:

California Cannabis Operators Association

Analysis Prepared by: Robert Sumner / B. & P. / (916) 319-3301

1. Nieves, Alexander. “Tribes Frustrated at Being Locked out of California Cannabis Market.” Politico, July 2019. ↑

2. Round Valley Indian Tribes v. Kendall. No. 1:25-cv-03736-RMI. United States District Court, Northern District of California, January 2026. Order granting in part and denying in part motions to dismiss. ↑

3. Peridot Tree WA, Inc. v. Washington State Liquor and Cannabis Control Board. 162 F.4th 1179. United States Court of Appeals for the Ninth Circuit, January 2026. ↑

4. Adams, Benjamin. “Map Shows One in Four Continental U.S. Tribes Work in Cannabis or Hemp.” Forbes, May 2025. ↑