Senate Standing Committee on Business, Professions and Economic Development

Okay, we're going to call the meeting to order. Good morning, everyone. Happy Monday, Miss Mason. My daughter is wearing a Garfield I hate Monday shirt to school, but I spared you guys and didn't wear the matching one. Maybe next week, huh? The Committee has 11 bills on file today. I see that we have two authors here. We do not have any measures proposed for consent. And obviously, we don't quite have a quorum yet.

So we'll start as a Subcommitee and see if we can't hear at least one or two of these authors. So, Mister Porter, Senator Portantino, you are first up in the order. Welcome. Happy Monday.

Good morning, Madam Chair and Members. How are you doing?

Pretty good. How about you?

You know, life is good. Life is good. Would you like me to proceed?

Yes, please.

All right. Thank you. Madam Chair and Committee Members, SB 1041 will establish the Armenian Medical Graduate Physicians Assistant Training Program. It will require the board to establish a task force which will develop and recommend curriculum for a training program. The Bill will make Armenian medical school graduates who are either citizens or permanent residents of the United States and who have satisfactory completed the training program, eligible for licensure as a physician's assistant if the person also has successfully completed a written examination.

According to the AMA, by 2030, California is projected to have a shortage, get this, of 32,669 physicians. That's staggering. Furthermore, there was a significant gap in the access to culturally and linguistically appropriate healthcare services, as the demographic makeup of primary healthcare services and primary care physicians does not adequately reflect the diversity of the California population.

I can tell you from my own experience in talking to a number of physicians, I was with a group of oncologists recently, and they were talking about how they need Armenian-speaking physicians assistance just to be able to do their practice. And so we have a significant need. We also have a population that is highly educated and many of whom have completed their degree to be doctors in Armenia who have done more clinical work than is necessary to be a physician's assistant.

And so, thinking about how we've done with policy in the past, with the military, we said, if you served in the military and then you come out of the military, we're not going to make you go back to school because you've already learned and trained even far superior than what that academic class might have given you if you did it in the private sector. And so we're going to use that same model. I know your staff has been very, very helpful in crafting this.

I want to say thank you to the B and P staff and my staff, I believe we're accepting amendments and we're moving, hopefully moving it forward. So the needs there, we think this is a prudent step to get us to where we need to be. And with me, I have two primary witnesses, Arnold Torres from Noah's Children Charity and Kerekin Karazian, who is also here to testify. Did they come up here? Do you want them at the?

Sure, they come up here. It's just fine.

So you both can come up here and sit at the table.

Welcome. Thank you. Two minutes each.

Yes. My name is Arnold Torres. I'm representing Noah's Children's Charity, one of the sponsors of the legislation. And I think your Committee consultant in the analysis pointed out a very important point, that there is an act already the framework for international medical graduates to become PAs through additional training program. It just simply appears that the law has never been implemented.

So I thank the Committee for being able to identify that as a weakness in the overall effort to address, which is a very, very major problem with California. California's diversity is phenomenal. The PA Academy indicates, why should one group be selected over another. I think the framework that the legislation is laying out will accommodate anybody that actually meets and has specific needs.

But I think this legislation is a good example of what is lacking in California, and that is the ability of the medical institutions who train and provide, and produce doctors to have cultural and linguistic requirements. California no longer is just simply English speaking. Some think that's a benefit. Others think it's a real big challenge. Regardless of what it is. It's not being addressed by the current system and the infrastructure, and the problem simply gets worse. I think this is an extremely reasonable approach.

It is a work in progress thanks to the Committee, making it a much more implementable approach. We would ask for your aye vote. We would also point out that Armenians have two major areas that they come to in California. They have a huge diaspora. They're in Fresno and they're in Southern California. There are health centers that serve that population in both areas. Those health centers would be major targets for placement of these doctors.

The last thing is Yerevan State University is a University where most of these doctors have received their medical training. It is the only University in Armenia that is recognized by the International Directory of Medical Schools. So it is acknowledged by the medical board as having an extremely good program to begin with. And this is where the candidates for this program would be coming from the Committee and ask for an aye vote. Thank you.

Great. Thank you very much. Go ahead.

Madam Chair, dear Committee Members, before starting just a quick information I'm a foreign medical graduate, Armenian descendant. I graduated from Syria, came to the United States. There was linguistic problems, and I started working as the chart boy in an office just to be in the medical field. Just take chart, bring chart. Continued my education in the United States. I finished a master's and PhD in healthcare administration. I became medical auditor compliance officer.

I never stopped, but it hurt when I see other Armenian medical graduates who still cannot get over that barrier of the language of the English language, which is the third or fourth language for them sometime, and they are driving Uber. This Bill that we are discussing today addresses three major issues related to the well-being of a large number of our citizens and California residents who are of Armenian origins.

It is a fact that California has the largest Armenian immigrant population all over the world, outside of the former Soviet Union countries. The majority of these immigrants are first-generation immigrants who have huge issues related to the English language. However, in the last 30 years, this community was served majorly by Armenian foreign medical graduates who knew the ethnic language and had the option of proper communication with their patients.

So they were able to provide the needed medical service and secure the needed patient engagement and compliance with the treatment plans and forming the proper medical decision-making processes. Within the next five years, we will see a huge decline in the number of Armenian medical graduates who will still be serving our community due to the retirement of the majority of those providers, most of whom are already stretched to their maximum limits.

The new generation of Armenian U.S. medical graduates are choosing to become specialists instead of serving as primary care physicians, as gatekeepers and first point of contact for those who seek medical attention and care. Armenian medical graduates who are living in our state and communities have had tremendous difficulties in passing their USMLE exams. The majority of these foreign medical graduates are specialists and practitioners who graduated 10 to 15 years ago in their respective countries and spent their time as very respected physicians.

However, when they come to the United States as legal immigrants, they were forced to take exams designed for first or second-year students of U.S medical schools, not counting the linguistic difficulties. This forced them to either restart the journey of becoming a physician or take the path to support their families, become Uber and delivery drivers, and suddenly.

Can you give us a summary statement there?

Okay, let's restore their dignity and let's provide a way to overcome the physician shortage. The healthcare provider shortage in California, and especially for the Armenian population who cannot speak English, they cannot communicate. We need Armenian medical graduates, not from Armenia, only all over the world, who are in California legally.

Okay. Are there other people in the room, witnesses who would like to testify in support of SB 1041? If so, please come to the microphone. Now would be the time for me too testimony. So your name and organization seeing no one. Are there witnesses in opposition to SB 1041? Thank you. You two have two minutes.

Thank you. Good morning, Chair and Members. Ed Howard of Howard Advocacy on behalf of the California Association of PAs, thank you very much for allowing me to address you this morning. Briefly, for almost all of the reasons that you have heard today about California. California's diverse communities desperately in need of a broader array of culturally competent care. That's actually the reason we regretfully still strongly oppose this measure.

We would wholeheartedly support a Bill that, on the basis of analysis and study, commended to the resource-limited physician assistance board the question of who, among our very diverse communities, should be prioritized in the provision of culturally competent care through our PAs. It's one of the most important medical issues confronting the state, and we think that the PAB should, in fact, be commended with identifying ways to ease the pathway for culturally competent care, but not exclusively for one ethnic group.

Given the fact that we are such a diverse state and our needs for culturally competent care are so broad, embracing all of our communities, the source of our opposition is solely the fact that the PAB, again, limited, I think it has about nine full-time employees, Chair and Members, is restrained only to providing such culturally competent pathways for one ethnic group in our broadly diverse state. And for those reasons, we respectfully oppose the Bill.

Thank you for your testimony today. Are there others in the room in opposition of SB 1041? If so, come to the mic now. All right. Seeing no one, I'm going to bring it back to the dais to my colleagues. Are there any comments? Senator Marie Alvarado-Gil.

Thank you so much for bringing this Bill forward. I think it really underscores the need to recruit more culturally diverse healthcare professionals in our field. I know you're loving your passion for the Armenian community, and so I can't think of a better person to bring this Bill forward. I do, however, have some concerns about the balance of opposition with support. I noticed there was not support letters that were submitted for us to review, but certainly, your witnesses are compelling.

Can you help just to underline why it's important to create pathways specifically behind Armenian students, as opposed to other nationalities in an already existing international studies program?

It's a great question. Originally, I was thinking of this as a pilot program, but recognizing and working with the Committee staff that there was a framework that already existed. We are trying to make it more implementable. I mean, I don't want to do this just to talk about it. I mean, we really, at the end of the day, want to have more physician's assistants, want to have more people in healthcare. And so that's why it sort of changed. I agree.

Big picture, we should be doing this, you know, statewide, as broadly as we can. But I also know, given our budget situation, given the challenges we have right now, it's probably better to start out small to show that it works.

In this particular community, as the witnesses have testified, we do have a large group of highly educated, well-trained physicians who come to this country who cannot practice, who have education far superior of what superior, equal or better to, or more lengthy than you would have to do for other physician related professions. And so to me, it makes no sense when we have such an acute need to not try to find a way to bring those professionals into healthcare. And so let's make this successful.

Obviously, I'm terming out this year, and hopefully, somebody will, once this becomes law and sees it works, broaden it to other parts of the state. I mean, obviously, in Southern California, we have the largest Armenian population outside of the Soviet, former Soviet countries, which is highly educated and ready. Believe me, the number of people who have stopped me, who have a relative, or they themselves, as Kerekin mentioned, are driving Uber instead of helping people.

The number of physicians who have come up to me when they've heard about this and said, we desperately need more bilingual physicians assistance in Southern California. So the needs there, the quality of the individual is there. We just have to make it happen, and then we can broaden it.

Senator Archuleta.

Thank you, Senator, for bringing this forward. As you know, my district of Montebello, where the Armenian monument is and the church and the community is quite large. So we face the same obstacles and concerns that maybe Glendale, Pasadena, Burbank, and some of the other areas that you serve, and I find the same thing and working, when I saw the Bill, working with the community, they felt that it was a great opportunity to open up the doors to serve everyone.

And it may be with some obstacles, but at the same time, it may open the doors to others to participate. And I think it's a great opportunity, and it says a lot about America. It says a lot about us. So I'm going to support the Bill and move it when it's appropriate.

We don't have a quorum, obviously, but would you like to put a close on the record?

I would thank you, Madam Chair. And again, thank you to your staff and my staff and for our witnesses to put such a personal point to this. I'm staggered by that 32,000 physician shortage statistic, because when I got elected in 2006, I remember somebody talking about need for 17,000 doctors. So here we are in 2024, and we went from needing a pipeline to create 17,000 more physicians to needing 32,000. And so clearly, we have to do more to bring people into healthcare across the board.

And this Bill would take a step in that direction and respectfully ask for an aye vote when appropriate.

Thank you, Senator Portantino. We'll come back to it as soon as we have a quorum. Appreciate it.

Thank you.

All right, continuing as a Subcommittee of ourselves. Senator Newman, thanks for hanging out with us this morning.

It's like getting in off the waitlist to a Taylor Swift concert. This is awesome.

Pretty cool. Pretty cool.

Good morning.

When you are ready, sir.

Thank you, Madam Chair, and Members, thank you for the opportunity to present SB, excuse me, 1449, which would provide Southwestern Law School in Los Angeles with temporary regulatory relief as it undergoes the process of accreditation by the Western Association of Schools and Colleges, more generally referred to as WASC.

Before I begin, I'd like to thank the Chair and Committee staff for their work on this Bill and clearly accept the Committee's amendments to more narrowly tailor the exemption to Southwestern Law School while maintaining its ability to execute contracts pursuant to federal law. In 2010, the US Department of Education issued new rules that required institutions of higher education to maintain a process for receiving and processing consumer complaints.

In 2015, SB 81 authorized WASC accredited colleges and universities to contract with the Bureau for private postsecondary education for these purposes. That authorization did not, however, extend the same privilege to nonprofit law schools accredited by the American Bar Association, which, like WASC, is recognized under federal law as an institutional accreditor and whose standards require ABA accredited law schools to meet rigorous academic accounting and performance thresholds.

As a consequence of this omission, the Bureau for Private Postsecondary Education recently notified Southwestern Law School, an ABA accredited school, that in the absence of WASC accreditation, it would need to become bureau licensed in order to stay in compliance with federal law. The bureau's licensing requirements, while admirably intended in the service of protecting students interests, are in many cases in direct conflict with the more tailored and nuanced requirements of the ABA.

These conflicts can create duplicative reporting requirements that drain school resources, and in a worst case scenario, these conflicts could have the unintended effect of misrepresenting the school's overall performance and causing harm to the very same students it intends to protect. Take, for example, the bureau's treatment of Southwestern's various law degree pathways, which deliberately allow students to switch between full or part time study or between in person or fully remote attendance.

While these are all deemed by the ABA to be interchangeable pathways within a single JD program, the bureau instead treats each as their own individual degree program. So, consequently, if a southwestern law student switches between full or part time, they are considered as having dropped out of the full time program and then enrolled as a new student in the part time program. This is a seemingly innocuous change, but it actually has the problematic effect of inaccurately skewing Southwestern's graduation rates downward.

And that false metric, absent context, can deter prospective students as well as adversely affect the reputations of current and graduated southwestern law students. Another example is the bureau's requirement for student transcripts to include information not otherwise required by the ABA.

This includes mandatory disclosure of a student's dropped courses, something that other law schools do not require, which can therefore have a punitive effect as a southwestern graduate pursues postgraduate employment, putting that graduate at a competitive disadvantage to a graduate of some other ABA law school for whom no such information would be available on their transcript. Southwestern Law school has a well earned reputation, having provided Californians from all walks of life with affordable and high quality legal instruction.

Its roster of distinguished alumni include numerous Members of the Legislature, statewide constitutional officers, justice of the California Supreme Court, Members of Congress, and even Californias first African American and Latina judges. SB 1449 would provide southwestern law school with a temporary exemption as it completes the process of WASC accreditation over the next few years. With me to testify today is Darby Dickerson, President and Dean of the Southwestern Law School. I am respectfully asking for your aye vote this morning.

Thank you, Senator. Go ahead. You have two minutes.

Thank you and good morning. Southwestern was founded in 1911 in Los Angeles. We are an independent, non profit school that for 113 years has provided access to legal education to those historically excluded from or underrepresented in law schools, including women, persons of color, working, professional and caregivers. We currently have about 950 students. The majority of those are women and people of color.

In addition to our JD program, which we offer in 23 and 4 year programs, part time and full time online and residential, we offer a three plus three program with Cal State Northridge and a JD MBA dual degree program with the Drucker School at Claremont Graduate Graduate University. We have been accredited by the American Bar Association's Council for the Section of Legal Education and admissions to the bar since 1970.

In addition to that organization accrediting the first degree in law, the JD, it is also the Department of Education recognized accreditor for freestanding law schools like ourselves. For purposes of title IV and FSA, the ABA standards, as Senator Newman pointed out, are rigorous and cover a variety of issues ranging from Administration and finance to consumer protection. I urge your support of SB 1449, which would return southwestern to the status quo that existed between 2015 and a few months ago.

It would allow us to continue contracting with BPPE to review and act on complaints concerning the institution in accordance with section 600.9 of title 34 of the Code of Federal Regulation. In June 2015, the BPPE reached out to southwestern via email and indicated that we were eligible to enter into a contract with the BPPE to review and act on complaints. We promptly entered into that three year initial agreement and have executed additional three year contracts in 2018 and 2021.

In mid 2023, when we contacted BPPE about another program we were considering offering, we were then informed that the BPPE had made a mistake. Southwestern was not eligible to enter into a contract. Instead, we either had to pursue WASC accreditation or BPPE licensure. By that, I just need you to.

Give us your final wrap up there.

Certainly. We urge you to request to support this legislation. It would return us to the status quo for our students. It would allow us to bridge because we are seeking WASC accreditation. We have started that process, and it would give us an opportunity to do that when we didn't have an opportunity in mid 2023 when the BPP told us about the mistake.

Great. I assume technical support. Do you want to testify?

I don't have anything to add to that.

All right, very good. Are there others in the room wishing to testify in support of SBA 1449? Now would be the time to come forward. Okay, thank you very much. Is there anyone here in opposition of SB 1449? Please come forward. All right. Seeing no one, I'll bring it back to the dais. Colleagues, comments, questions, concerns. Okay, seeing none. Obviously, we cannot take a vote just yet, Senator Newman, but would you like to put a close on the record?

No, I appreciate your indulgence here. You're getting my witness home in time to do some other work. So grateful for that. But, you know, the amendments are very specific and takes into account this very specific situation that relates to the timeline and requirements. And then the omission, as mentioned by the dean, respectfully asking for your aye vote today.

Thank you very much. Thank you for coming up to testify. All right, we are looking for authors. All right, we'll take just a second. And if we don't have an author come through the door, we have a couple of Committee bills I could present. We'll hold for just a moment.

At this time, Madam Chair, you have two bills to present. Let's go with SB 1452. Item number 10, please.

Thank you very much. These are Committee bills. SB 1454 is the Bureau of Security and Investigative Services Sunset Extension Bill. SB 1454 addresses issues discussed during the program's sunset review hearing, in their Sunset Review reports and in the Committee's Sunset review background papers. Specifically, this Bill would extend the bureau's administrative authority over the six practice acts under its purview by four years to January 12029.

This Bill would also extend all provisions granting the bureau authority to issue a license to an alarm company or private investigator by five years to January 12030. This Bill would provide a pathway to licensure for California's federally recognized tribes.

And lastly, this Bill would exempt employees of federally recognized tribes from registration requirements under the Proprietary Security Services Act. I believe I do have a couple of witnesses here who have made their way up, Madam Vice Chair.

Thank you. The witnesses please go forward.

Thank you, Madam Chair. Charles Wright, on behalf of the San Manuel Band of Mission Indians, SB 1454 would clarify California tribes ability to obtain private security related registrations and licenses for off reservation activities, the same as for other non tribal entities. The Bureau of Security Investigative Services regulates security personnel through the Proprietary Security Services act and the Private Security act. Currently, neither act contemplates nor considers tribal entities the application process for propriety.

Private security employers private patrol operators in Baton and firearm training facilities are structured to accommodate natural persons and business entities. Only. Eligible applicants include individuals, firms, companies, partnerships, corporations, organizations and associations, but not tribes. And the exemption for governmental agencies such as cities and counties do not include tribal governments either. Because of this omission, BSIS is unable to appropriately issue a registration or license to tribal entities for security related activity off reservation or trust lands. This omission has created issues.

Many tribes are forced to conduct some operations off tribal land because there is not enough room on their reservation and trust lands. At the same time, they cannot obtain the appropriate security licensing from the state because there is literally no box for them to check on relevant applications. Tribes are sovereign governments and have rights to self governance that current applicant categories do not have. The current applicant categories do not capture the governmental nature of tribes or their rights of self governance.

Simply put, tribes do not fit into any of the current application boxes. This Bill would clarify that tribes may obtain licensing appropriate for their off reservation activity. Like other non tribal entities, we strongly support SB 1454 to modernize the business and professions code, and we encourage the Legislature to give continue to remove licensure barriers to California's 109 federally recognized tribes. Thank you, Madam Chair.

Thank you, Madam Chair. Members Trent Smith, representing the California Alarm Association, in support of the Bill. Alarm companies have had the authority to organize as limited liability corporations since 2012, the first year we passed legislation to give them this authority. At that time, the Legislature also imposed $1.0 million insurance policy to help protect consumers against any claims brought forth against an alarm company. This is the fourth extension and we strongly support it.

We would request that the Legislature continue to consider removing the sunset altogether, largely because in the last 12 years we're unaware of any lawsuits or actions that have been brought forth against an alarm company that jeopardized that $1.0 million insurance policy. In addition, our regulator, the Bureau of Security and investigative services, in their sunset report recommended removing the sunset. They see no jeopardy to consumers with the removal of that.

So again, we support the Bill in print, but look forward to working with the author and the Legislature as the Bill moves forward to possibly remove the sunset altogether. Thank you very much.

Thank you. I actually originally said, let's start with SB 1452, but we are on SB 1454. I just want to make sure we're trying to sort that out on our end at this time. Do we have any witnesses? Me too. In support. Please come forward. State your name, your title. Seeing none. Do we have any opposition lead witnesses to testify? See none. Any individuals who would like to come up and oppose the Bill? Seen none. This time I will bring it to my colleagues. Any questions? Senator Archuleta?

Thank you, Senator. My question is to your presenter. You mentioned that there'd been no lawsuits, there'd been no infractions, and certainly nothing that would offset that $1.0 million policy with the price of some of the things going up and up. Is that $1.0 million enough? Have you explored that? Are you okay with that? What are your thoughts today?

Thank you. We're fine with the $1.0 million policy. Again, over the past 12 years, we're not aware of any lawsuit that's even come close to the $1.0 million. To be honest with you, alarm companies are not sued that often and certainly not in judgments that we've know of that approach. The $1.0 million. Again, I think we're fine with the $1.0 million.

But if our regulator or someone were to come forward and suggest a larger amount, as you suggest, because of inflation, I think that's something we would consider.

Another question. Vetting of employees and past staff and so on. We just had a tremendous, tremendous loss in Los Angeles city. Quite a bit of money was stolen and taken. And of course, security was the issue. Past employees, current, the FBI and everybody is looking into what was the vetting process without entire staff. Could you give me some background on some of the vetting process that you have in the industry?

Yeah, sure. I believe in that particular. Well, I don't know all of the details. I'm familiar with the case a little bit. But when it comes into questioning some of the employees, the bureau regulates and license both alarm companies, our clients, and then private security, which is not our client.

But in either case, they do have to go through background checks that the bureau oversees, FBI background checks as well, fingerprinting, live scan, and they have to go through that review before they are issued a license, and then they have to keep that license in good standing. In other words, they can't have violations and things of that nature. So I think the bureau does a pretty good job of overseeing and doing background on all these individuals. I can't say for sure in the case you're talking about, whether they were any of those individuals or not.

Yeah. Thank you. And, Madam Chair, I'll move the Bill when appropriate.

Any other comments, questions? See none. Madam Chair, would you like to close?

Just urge an aye vote and thank you to the witnesses for being here.

Thank you. We'll hold a call until we have a quorum. Thank you. And at this time, we will be hearing SB 1452.

Yes, we are. But I am going to ask Senator Roth to present this Bill as appropriations is holding the roll for me. And then I will be right back.

Senator Roth.

Thank you, Madam Chair. This is the architecture and landscape. Architecture Sunset extension bill. The bill addresses issues discussed during the program's sunset review hearing, in the Sunset Review reports and in the Committee's sunset review background papers. Specifically, the Bill extends the California Architects Board administrative authority over the Practice act regulating architects and the Landscape Architects Technical Committee, a committee within the California Architects Board to January 1, 2029.

The bill requires an applicant for examination or licensure as a landscape architect who has a valid email address to report to the board that email address at the time of application. The bill also requires an existing landscape architect licensee who has a valid email address to report to the board their email address at the time of renewal. The bill also prohibits applicant and licensee email addresses from disclosure. I would also like to submit amendments contained in the analysis for consideration.

These amendments would apply email address reporting requirements to applicants and licensees of the California Architects Board. Adding this authority to both practice acts will standardize requirements for all applicants and licensees of the board revise email submission sections to require an update within 30 days. Make additional amendments regarding public disclosure to mirror Senate Bill 630, which granted another program with NDCA authorization to require email addresses from its applicants and licensees.

And finally, the bill revises requirements that must be met by a landscape architect whose license has lapsed for five years and must apply for a new license. Amendments will replace an inclusive list with a statement that all requirements of a new application must be met by such individual. We have a support witness here, Laura Zuniga, Executive officer of the California Architects Board for technical assistance.

Before you start, I'm assuming you will, I think there's amendments to this bill and you will be accepting those, or Madam Chair will be accepting those amendments, Thank you. Go ahead, please.

Good morning. Laura Zuniga, Executive officer for the California Architects Board here in support. Just want to thank the author, presenter and the committee staff for their work on the bill. I'm here to answer any questions. Thank you.

That was short and simple. At this time. Is there any witnesses in support? Please come forward and state your name and position. Organization and position.

Thank you. Madam Vice Chair. Jason Ikerd with Edelstein, Gilbert, Robson Smith, on behalf of the California Council of the American Society of Landscape Architects, and very briefly, since there was only one witness, just want to express their strong support for the continued operations of both CAB and the Landscape Architects Technical Committee. Landscape architects have been separately regulated in the state of California for 71 years. Having a separate professionally competent board or technical committee regulate them is extremely important.

Our client is on the front line of urban greening, reducing extreme heat, protecting the public from erosion and flooding, protecting from exposure to toxic flora. And so for all of these reasons, we think it's incredibly important and protective of public health to move forward with the existing structure of cabin LATC. So happy to support the bill today. Thank you.

Hi, my name is Ellen Brittingham. I'm here on behalf of the. Excuse me. International Interior Design Association. Just want to say that we're really looking forward to stakeholder conversations. Excuse me. With CAB. And we look forward to having those conversations as reflected in the staff report. Thank you.

Seeing no more support, is there any lead witnesses in opposition? Anyone in opposition who would like to come up? Seeing none. Colleagues coming back to you? Questions, comments? Seeing none, would you like to close?

Respectfully ask for an aye vote.

Thank you. And then we will leave this call open until we have a quorum. Thank you. All right.

Thank you for your indulgence. Thank you, Senator Roth. Give us just a minute here. And Senator Becker was in my wake. He should be here in just a couple of moments. And then we can get a quorum established and also hear his bill.

Roll Call

Great. We do have a quorum. Senator Bradford, are you ready to present, or do you need. Just a moment.

Great. We'd love to take a roll here and see if we can establish a quorum.

Okay, then I think what we'll do here is entertain a motion on the four bills that we have heard, and then we'll come back to. To Senators Bradford and Becker.

Motion. Madam Chair?

Okay, that is six to nothing for now.

You want. So let's start with SB 1041. Senator Portantino, that's a motion from Senator Archuleta. Ready? Yep.

Roll Call

Roll Call

Okay, seven to nothing. We will put that one on call as well and move on to file item 10. This time in the right order. SB 1452. Need a motion. We have a motion on this one.

We'll put that on call and move to the next, which would be file item six, SB 1449 by Newman, which is do pass to education. So moved by Senator Roth.

Move it.

Roll Call

So moved by Senator Archuleta.

Roll Call

Okay, seven again. Correct that. Okay, great. That is do pass to judicial. We'll put it on call. One more here. File item 11, SB 1454. Another Committee Bill motion is there. So moved by Senator Roth.

Roll Call

Eight to nothing. We'll put that one on call as well, and then. Senator Becker, are you. You ready? All right, we'll take you. I think Senator Bradford is getting his witnesses in order, so we will skip ahead to file item seven, SB 1206, by Senator Becker.

Thank you, Chair Ashby, and Members, I'm proud to present SB 1206. This Bill will authorize the Governor's Office of Business and Economic Development, otherwise known as GoBiz. Can you guys hear me? Okay.

Okay. Okay. To create a public private partnership for next generation solid state battery technology and manufacturing hub in the Bay Area and Sacramento Valley. California is on the forefront of global competition with China and other global powers to create the most cost effective and efficient batteries to electrify the grid and transition away from fossil fuels in vehicles and other places. The rapid growth of demand for battery creates an important opportunity for California.

We're home to one of the world's leading lithium deposits, as we've discussed a lot, as a body with the opportunity to lead the development of next generation battery technologies, California has already demonstrated the potential of a public private partnership with arches, led by some of my colleagues here, that's received now federal and private funding, which is a statewide hydrogen hub hosted by GoBiz.

Similar to how we are leading with the Arches program for hydrogen, California needs a holistic strategy for batteries that leverages its technology, leadership, lithium reserves, skilled workforce, and role as a market maker in transportation, utility and industrial electrification. This Bill will prioritize California's role in creating this and develop this public private partnership for the Bay Area and Sacramento Valley that will bring high quality, family supporting jobs to our state.

By doing so, we will position California to be competitive in future federal battery research, development and manufacturing grant applications. And with me, Michael Monaghan from the State Building Construction Trades Council will be my witness here today.

Madam Chair, thank you. Senator Becker handled the policy issues, I think, pretty clearly. I just want to touch base with the labor issues in the Bill. I represent the state building trades of 500,000 men and women in construction, and we are the sponsors of the Bill. The analysis accurate. Excuse me, the analysis and the Bill accurately depicts the added value that comes from a project labor agreement. A big piece of that, which I think gets glossed over every once in a while, is that it creates labor peace.

Welcome.

So if you have a project labor agreement, you're not going to have any stoppage at all on that project. The other thing that is of interest is that the public contract code at section 2500 specifically says that a project labor agreement cannot discriminate against non-union contractors. It's a level playing field. Plenty of history of non-union contractors participating in PLA's on the state level. We urge your aye vote.

Thank you very much. We're going to hear from others in support in the room with me, too testimony. Come on forward. Name, organization, position on the Bill.

Thank you, Madam Chair, Keith Dunn here, on behalf of the Self Help Counties Coalition, just really quickly would say that as California moves towards an EV vehicle policy, it's important that we have batteries made here in California so we have environmental protections around that construction of the battery itself, the disposal of it, and also how they're built. So with that, we would urge your. aye vote.

Thank you.

Thank you. Hi there. Megan Mekelberg here on behalf of Calstar, in support.

Thank you.

El Melizardi, on behalf of the California Labor Federation, in support.

All right. Thank you for being here. Are there witnesses in opposition to SB 1206 in the room? If so, please come forward. Go ahead. We'll give you a couple minutes.

Thank you. Good morning, Senators. Richard Markuson for the Western Electrical Contractors Association. Despite the assertion of the witness, PLAs are not a level playing field. In fact, PlAs in California specifically discriminate against non-union apprentices. As you know, these are all going to be public works projects. There is a requirement that every public works project employ apprentices approximately in the ratio of one apprentice hour for every 5 hours of journey worker. However, PLA's prohibit non-union apprentices from being employed on these taxpayer supported projects.

We would encourage the Committee to reject the measure unless it includes specific language that authorizes any state approved apprentice to be employed on these projects. We truly want the level playing field. PLA's don't give it to us. Thank you very much.

Thank you for your testimony. Thanks for being here. Anyone else here in opposition to the Bill, please feel free to come forward. Me, too. Testimony here. Seeing no one, we'll come back to the dais. Colleagues, comments. Senator Glazer?

Thank you. Senator Becker, I applaud your leadership in this space. I mean, this is what we should be doing, is getting the state to be competitive in this important area. Batteries. But I share the concerns of the witness a moment ago that here's something we're trying to do that's a positive. But your Bill creates restrictions and limitations on the marketplace, and I just don't understand why we'd want to do that.

If this is all a good thing to do, then why are we going to create these additional requirements so that's what baffles me about the Bill.

Sure, respond or wait till close or?

Up to you.

Yeah. Well, let's hear more of the discussion. But we believe this is very consistent with what the Biden Administration, the Biden-Harris Administration has put forward with the IRA. It's been revolutionary, not just in the amount of dollars for clean energy and for, to support manufacturing and bring manufacturing back to the US as a whole, but it has very specific labor standards in there. So, we actually think that having these labor standards will actually position us. Well, for these IRA dollars.

Do you think that we would be discriminated against because we didn't have that?

I think it's an advantage, I guess, is what I'm saying, and that's something that we're trying to do in general with when I talk to the Administration. And so I think it's opportunity for good jobs, but also I think it's in line with the goals.

If I could. So, you know, I don't have a problem with any entity deciding to go into a project labor agreement if that's the choice they want to make. But your Bill requires it. We just had this year long, two year long debate about skills, skilled and trained. And in the whole housing space we have a housing crisis. We know we need to deal with it. And for some it was stay locked down into not changing anything and expecting a different result.

So we've had this big debate about skilled and trained. And finally there was some consensus in the Legislature that while that's a preferable circumstance, it's not something that we should now require because it creates limitations on achieving the goals that we have. And that, of course, is here in your Bill also, that it's a requirement. Not that I am opposed to that, but that, why, if we're trying to encourage this, why do we want to, say, put roadblocks up?

Now it may, as you may suggest somehow if there's, the Biden Administration is going to put that as a requirement or, I mean, I guess it's possible that could always come into play, but we don't even, you're speculating, as I understand it, that that is something that's going to be an advantage. But for me at least, it seems like it's one step forward and another step back. That's my concern about the Bill with all the best intentions that you have.

Sure. I appreciate that, and I believe, I guess I would say you're all speculating it's a roadblock. I mean, again, we believe, and this is a new entity that we're creating. We believe it's strengthened by having that labor partnership. I think it demonstrates a strong, that really broad, strong public private partnership. So that would be my response, and I think it's also something, again, that we want to show. We want to, and imagine this may be addressed by my colleagues. So your point?

But it's been a big priority of the Legislature, I'd say over the last year and a half that as we move to this new green economy that we assure those good jobs as part of it. And we think that this will, the PLA does provide that. So we'll have more discussion and I'll close. Yeah.

Let's hear from Senator Smallwood-Cuevas.

No, I just wanted to say thank you to the author for bringing this Bill, and I think marrying these two really important elements and that is making sure that we have strong, proven labor standards, because as we are growing this amazing climate, resilient economy and launching this new sector, we want to make sure that it's a high road sector and we want to make sure that it's a place where workers are protected and have all of the benefits of health and welfare, retirement and that these are good jobs.

The other piece of the puzzle here is the equity piece, and we talk about this quite a bit, and the Legislature certainly has been a priority of the Senate. And conversation is that these federal dollars have to be a multiplier and not just in the construction space, but we need it in this new innovation that is going to come to parts of the state that really need to see communities lifted up.

And not just the business sector, but a way to reach deep into these tools around poverty. And when you have local hire, when you have disadvantaged worker, when coupled with a PLA, the evidence shows it lifts and it will lift whole zip codes in terms of where you can target these tools. And, you know, we know zip codes determine are social determinants of health. They certainly are the ways.

And so when we invest, we know we can bring our economies together in some of the poorest, most disadvantaged communities that need it the most and make sure that we're bringing in women, black workers, immigrant workers, communities that were left behind in our 20th century infrastructure build out. The marriage of PLA and community benefits agreements have proven to work. So I'm happy to move this Bill when the time is right. I'm so glad that you are prioritizing this space.

And I think the communities that will be served through this kind of policy will see a difference for generations. So thank you for this.

Thank you. Thank you for, thank you for your leadership on this and also raising up the community benefit agreements, as you mentioned, as well, to make sure that it's a diverse workforce, that it really is, that these become not just good jobs, but jobs that lift up communities. Let me just, I should have turned my witness. If you have any quick comments, and I'll close.

Senator Becker, you have others who want to speak. Before we do that, I think. Let's hear from Senator Archuleta.

Okay, sorry.

Thank you, Madam Chair. Senator Becker, I just want to congratulate you on doing this. As you know, the hydrogen is one of the issues that I'm so strongly supporting, but we're also supporting anything that helps our environment, helps labor, and makes California competitive. We talk about some of the things that some of my colleagues are always talking about, how to help the communities that need so much.

But that need is jobs and a fair shot at the next level, which we all call that medium level where you can buy a home and you can be part of the community.

And opening these doors, I think, is going to be great for our economy, great for California, and bringing labor in to realize and recognize that, you know, we're trying to make labor part of everything we do to make sure that they receive the highest amount of financial support and the technical training, because as we evolve in hydrogen and the batteries that we're going to be doing, we've got to have the workforce. And workforce development is important.

So I'm hoping as we produce these new entities, that we also look to everyone to participate in a fair and equitable way. So I wholeheartedly support the Bill and wish you a lot of luck in the future with it. Thank you. Thank you.

All right. Let me look to my colleagues to make sure there are no additional comments. I just have one comment, Senator Becker, and then we'll let you close there. It's a Bill that has a journey ahead of it. And you are, I think, from here headed to energy, and I'm going to support it today with an aye vote.

But I know you'll work hard on the Bill as it moves through each Committee and make sure that you hear each, each Committee, consultants and all of the Senators and Assembly Members who go through and, but it's off to a good start. So did you have one more, one more comment, Senator Smallwood-Cuevas? Sure.

Just raise this question, and this is a question, and that just helps clarify for me, as the Bill is written, there isn't specific guidance around how we're going to track and enforce the equity piece. Can you say a little bit about what your thoughts are on how that will work?

Yeah, I would like to see that. I have to get. Probably have to get back to you how Arches is doing it, for example, and be in conversation. But I'm happy to work with you on that as it goes forward. That's obviously important. Do you any. Is it okay to have eyewitness, any comments on that?

Briefly

Briefly. The analysis indicated that there needed to be some massaging done to the GoBiz piece, too, to get some more direction. And I'm sure we'll work with the Senator and your staff with that.

Yeah, I think that's her point, is that the Committee staff's report shows that there isn't a data. And also, I think she's asking you to consider that moving forward and make sure that you bring it back. It's important to us.

I'm happy to work with you on it.

Great.

All right. Opportunity to close there, Senator. Yeah.

I'll just say I appreciate the discussion and happy to continue conversations going forward, particularly on that piece and with other folks who have concerns. It is the first step in the journey. I will say I did confirm with my team that the federal grants do have more points to applications with labor provisions. I understand the concerns. Obviously, this has to pencil out. Otherwise we're not going to get these factories. People don't feel it. They can ultimately make money, be competitive. They're not going to be here.

So I hope that this is really about bringing everyone to the table. And I think having labor included will be, again, not just a great, good jobs, but help us be competitive in this application. So with that, I respectfully ask for an aye vote.

Roll Call

All right. I believe you do have a motion from Senator Smallwood-Cuevas is that right, Senator? Okay, then we will. Again, this is do pass to energy. We'll call the roll here. Okay.

Okay, it's five to one. We'll leave it on call. Senator Becker. All right. And then I see that we do have here Senator Bradford. Are you prepared? Senator Bradford? All right, great. Come on forward. Thanks for your patience with us today, Senator Bradford bouncing all over the place. Whenever you're ready, sir.

Thank you, Madam Chair and committee members. I'm here to present 1109, which is a competence measure that's just kind of requires the Department of Cannabis control to collect and report demographic information of cannabis licensees. I'm accepting the Committee's amendment, which makes it voluntary and not mandatory. Current law requires the department to collect the names of all individuals who hold a financial interest in economist business. However, little is known about the demographic composition of these individuals.

In recent years, the Legislature has focused on ensuring that California's cannabis market is inclusive and supportive of individuals impacted by the war on drugs, as intended by Prop 64. I authored a measure in 2018, social equity and diversity bill, the first in this nation to look at this. And unfortunately, we're still woefully short of making sure that the communities that have been impacted by the war on drugs over the last 40 years are reaping out benefits of taking advantage of this industry.

Currently, this industry is 85% white male dominated, and we should all be concerned about that. Many of these individuals who are experiencing difficulty again in entering the market continue to lack the diversity and the resources necessary. California has a responsibility to make sure that our cannabis industry is equitable for all. SB 1109 will help provide necessary transparency about the California cannabis industry, and I respectfully ask for your aye vote.

Thank you. Senator, do you have a lead witness here today in support? All right, if there's anyone in the room who is in support of SB 1109, please come forward now. Seeing no one, anyone in opposition to SB 1109, seeing no one. Bring it back to the dais. Colleagues with comments.

I just want to thank the Senator for bringing this bill. I think whenever we track and monitor, it helps us reach the goal that we want to reach, which is inclusion and inequity. And so thank you for this bill, and I'm happy to move it when the time is right.

I, too, appreciate your dogged approach to this, making sure that the laws don't just come in place and move forward without anybody following up to make sure that the promises are kept. I think that is remarkable how much attention you've given to this. And I'm honored to vote for this bill today, too.

Thank you.

You have a motion from Senator Smallwood-Cuevas, and I think this goes to Judish next, so aye get to see it one more time. Senator Bradford, we'll take the role here.

Motion is do pass the Senate Judiciary Committee. Ashby? Ashby, aye. Nguyen? Alvarado-Gil? Alvardo-Gil, aye. Archuleta? Archuleta, aye. Becker? Becker, aye. Dodd? Eggman? Glazer? Menjivar. Niello? Roth? Roth, aye. Smallwood-Cuevas? Smallwood-Cuevas, aye. Wilk?

What was that six? Nothing. We'll put it on call. Senator Bradford, thank you.

Thank you, Madam Chair.

Senator Skinner, are you prepared? Great. We will hear file item five next. Look at that. We got two in a row in order. We're doing so great. It's a record for the day. All right. SB 1306 by Senator Skinner.

One moment, chair.

No problem. When you're ready.

Thank you so much, chair and members. Allergies.

Do you need some water, Senator Skinner?

No, I'm good, even water wouldn't help.

Okay.

Anyway, these rare metals and minerals like cobalt, lithium, others, we need them for our clean energy transition. They are what we use in our batteries, what we use in so many pieces of equipment, and the technologies that give us the ability to do the clean energy transition. Now, interestingly enough, while California has a great resource of lithium within our state, most of these other rare minerals and metals come from other countries. There's a lot of exploitation involved in environmental degradation to their mining.

We've also got China increasingly controlling much of the mining of this resource, and yet we really need it. Interestingly, the amount that is currently, the amount of these metals and minerals that are currently in all of our devices, laptops, desktop computers, phones, you name it, is almost equivalent to what we need going forward. So if we can reclaim those from our existing electronics, then we go a long way towards satisfying this, to be less dependent on China, to create less environmental degradation, you name it.

And we have electronics recycling programs. I think most of you, all of your counties, if you googled it, you could find a place where you can drop off electronics. But what we don't have is, those electronics that we recycle are sent mostly to China, places in Asia where then the minerals are recovered and used within their markets. So by creating a domestic market for this, for reclaiming these materials ourselves, then we can utilize them.

Now, what I would have loved to have done in this bill was to give the direction and the mandate to our agencies to set up such a program. But given our budget constraints and the fact that we're in deficit, instead, what I did was, hey, Office of Business and Development, GO-Biz, working with Cal Recycle and DTSC. Please just study what the possibilities are here.

And hopefully, if they're looking at it, they themselves can conclude that this is something that we really need and manage to fit it into a future budget or a future program. So that's what the bill does. And allow me to have my witness and support. Jordan Wells from the National Stewardship Action Council speak.

Great. You can stand there if you want. It doesn't matter either way. Whatever you'd like.

All right. Thank you. Senator Skinner, Chair and members, I am Jordan Wells with the National Stewardship Action Council, a nonprofit organization that advocates for an equitable circular economy, and we are in strong support of SB 1306. SB 1306 follows the second principle of a circular economy, as defined by the Ellen Macarthur Foundation, which says that we must circulate products and materials at their highest value.

Rare earth elements are used in a variety of industries, including healthcare, transportation, power generation and more. What we don't know does hurt us. This includes increased costs to purchase goods and materials, harmful mining operations, including inhumane labor practices and just pure wastefulness. Expanding our capability to recycle and reuse materials allows us to better take advantage of the things we already have.

The California Legislature has passed policies to keep products containing rare earth elements out of our landfills, but we must do more to ensure they are kept in the US and not lost to international markets. Keeping rare earth elements in the United States will play a critical role to our environment, national security, energy Independence and economic growth. For these reasons, we support SB 1306 and respectfully ask for your aye vote. Thank you.

Thank you very much. Senator Skinner, do you have a second support witness?

That's it.

Okay, anyone in the room wishing to do me too testimony to support SB 1306, please come forward. All right. Anyone in opposition to SB 1306? All right, let me come back to our colleagues. Any comments from the dais? Senator Smallwood-Cuevas?

I just want to say thank the good Senator for bringing this bill forward. The study seems so simple and straightforward, but very, very necessary. And also thinking about workforce and what this could mean for future careers as we look at the green sector. Thank you for bringing us forward.

Senator Smallwood-Cuevas, you want to make a motion?

The motion is do pass to the Senate Environmental Quality Committee. Ashby? Ashby, aye. Nguyen? Nguyen, aye. Alvarado-Gill? Alvarado-Gill aye. Archuleta? Archuleta, aye. Becker? Dodd? Eggman? Glazer? Glazer, aye. Menjivar? Niello? Roth?

I'm happy to make a motion.

All right. I thought I heard one buried in there. Okay, thank you very much. That's a motion from the Senator from Los Angeles. We'll do the roll call and, hang on just a second. This is headed to. Where are we going? Environmental quality. Environmental quality. I think, next, Senator Skinner.

Roth, aye. Smallwood-Cuevas? Smallwood-Cuevas, aye. Wilk? Becker? Becker, aye.

I think that's eight to zero for now. We'll put it on call. Senator Skinner, thank you for presenting. Senator Glazer, are you ready? All right, let's take up a couple of your bills here. You want to start with file item eight, SB 1365. And then we'll go to file item nine, SB 1462. So we'll start with 1365.

Thank you, Committee. Thank you, Chair and committee members, for hearing this bill today. You know, we wrestle a lot with healthcare costs, and what happens when you look at it is that a lot of times there's these turf wars that go on that between folks who provide assistance in that space, could be scope of practice issues or other things. And so when people say, why aren't healthcare costs going down?

We know firsthand for those who have been around in this committee and in health for a while, that it's these tussles and what should be at the forefront of these tussles. And it's simple. It should be safety. Safety should be, number one, that our healthcare industry should have the patient's safety as its clear focus. And then everything else kind of is a secondary issue. These fights, scope of practice fights and the rest. And so when you look in the pharmacy space, I mean, who doesn't?

I'm not going to ask you about your own last time you were in the pharmacy, but I'd say, for me, when I go in the pharmacy, what do I see when you walk up to that counter? Oh, no, excuse me, you're waiting in a line to get up to the counter, right? Because they're so busy and they're running around trying to do all the work that they need to do. And so I know I've personally experienced that.

I know many of my constituents have experienced that challenge of why can't things be done in a more efficient way? And so the bill before you really tries to get at that issue. Pharm techs, for the most part, we have a one-to-one ratio in California. One pharmacist can only supervise one tech, pharm tech person. If you look at across the country, 31 states have a ratio of six to one or greater.

Six to one or greater can do the work in a pharmacy in a safe manner. And so that's what the bill before you attempts to deal with. When I was former chair of this committee, we had a bill to also raise the ratio that got out of this committee and then was held. I know that in the staff work that's been done, a suggestion has been put forward to make it a four-to-one ratio.

I'm happy to accept that amendment, Madam Chair, because for me, it's a progress point. We're going to hear from some witnesses in opposition that may raise the issue of safety. And I would say to you, show me an example of where it's been unsafe in any of these 31 states to have a greater pharm tech ratio than we have. And I don't think you're going to find that. So you're going to hear a lot of squabbling about somehow healthcare is in jeopardize.

But I really think that if you ask for the evidence, it's really going to be lacking. So that's the bill that's before you farm techs go under to training to count the pills out so they do it right. I'd like to see our pharmacists be able to spend their time helping counseling patients, counseling folks that come in, rather than running around counting out more pills in the container. So I'm pleased that we have some support here today.

Lindsay, is it Gullahorn? On behalf of the California Retailers Association. And a pharmacist, Nicole Gray, is here as well. We welcome you both, and thank you for your consideration of the bill today.

Great. Thank you very much. Okay, you two each get two minutes.

Can you hear me? Okay. Good morning, Madam Chair. Committee Members. Lindsey Golhorn with Capital Advocacy, here today on behalf of the California Retailers Association's Community Pharmacy Coalition. I also represent the National Association of Chain Drug Stores, and we're pleased to support SB 1365. As you heard, California's one-to-one ratio is the most restrictive in the country. 24 states have no ratio at all, including eight of the 10 states that surround California.

And the majority of other states have ratios that run from one to three to one to six. Increasing the ratio in California to one to four as SB 1365 will be amended, will allow pharmacists to bring on additional pharmacy technicians to assist with performing administrative and technical duties, and this will free up pharmacists to spend more time on clinical duties, such as performing patient consultations, doing medication, therapy, management. There is no data showing that an increase in the ratio will jeopardize patients.

Pharmacy technicians in California must adhere to strict training and certification requirements, and they must be supervised by a pharmacist. Also, increasing the ratio will not lead to more work for pharmacists and pharmacy technicians. In fact, the opposite is true, and that's why this bill is so necessary now. And while there are other personnel allowed in the pharmacy, such as clerks who can assist with cashiering and clerical duties.

The current one-to-one ratio really creates a bottleneck in the pharmacy because technicians can do things that clerks cannot, such as handling medications. I also want to note that SB 1365 is not a mandate. It's an authorization for pharmacists to supervise additional technicians. It is not a requirement. Our ratio has remained largely unchanged in California for three decades, while pharmacists' ability to provide a range of other health care services to Californians has expanded over the past decade or so.

The Board of Pharmacy actually just conducted a survey of pharmacists, and the results of that survey showed overwhelmingly that pharmacists in California believe the ratio needs to be increased in noninstitutional settings. So now is the time to update the ratio to allow pharmacists to focus more time on their clinical duties to ease workflow pressure in pharmacies and enhance access to pharmacy services for Californians. So, for these reasons, we're pleased to support SB 1365. All right, thank you.

Hi. Good morning. My name is Nicole Gray. I'm a pharmacist. I've been licensed since 2006. Excuse my voice, my allergies. I am licensed in the state of New York, and I'm also licensed in the state of California. I practiced in New York for eight years, and I've been practicing here in California for the last 10 years. I wholeheartedly support this bill. This bill would allow me to get back to practicing at the top of my scope of practice. It allows me to be more patient-centered.

It allows me to give my patients the time that they desperately need and they want from us as pharmacists, and it allows me to take that time to consult with them. It allows me to make sure they totally understand that medications that we are giving them. It also gives me time to speak with doctor's offices. That call regarding drug interactions just allows me to do that. It also provides more flexibility in the pharmacy.

If I'm off helping filling with a technician, I can't be doing the other things that I need to be doing to help my patients and to stay patient centered. And that's why I became a pharmacist, to help my patients.

Okay, thank you very much for your testimony. Now's going to be the time for me, too. So those in support of SB 1365, come forward. Tell us your name, your affiliation, and your position on the bill.

Good morning. My name is Kaitlyn Padilla. I'm a certified and licensed senior pharmacy technician at Walgreens. I support this bill to improve my day-to-day workflow, lessen the stress and improve patient care. Thank you.

Thanks for being here.

Peter Kellison, on behalf of Walgreens in support.

Trent Smith. On behalf of rite Aid pharmacies and support.

Alright, thank you very much. Are there, if you two, you can stay if you'd like, but we're going to invite lead opposition to also come to the front table if they would like. If there is lead opposition, come on forward. You will each also get two minutes.

Welcome. When you're ready.

Good morning. Good morning. Chair Ashby and Members of the Committee. My name is Fred Aziz. I am a pharmacist and I work over at UNAC, which is United Nurses Association of California Union of Healthcare Professionals. As a pharmacist of more than 15 years, I strongly oppose SB 1365 because it jeopardizes patient safety. Despite limited studies on staffing ratios, one undeniable fact still remains that California has always set the standard for safeguarding patients and healthcare workers. SB 1365 fails to uphold these vital californian principles.

Pharmacists have always been the last line of catching errors. It's the last line for crucial, last line to defense against errors and the fact it's understood and has been in existing research. And shockingly, we still have 7000 to 9000 patients that lose their lives annually in the United States due to medication errors. And that was cited also by the United National Institute of Health, where they had done a study where we've caught that distractions, where the had led to 75% of these errors.

So what were their recommendations? It was to exercise extreme caution with every single order, every single prescription. Having to supervise more technicians will eliminate that extreme caution. The proposal of adding of the increase of 600% or change in the pharmacy ratios at all, as it's going to be, it's going to be an issue for patient consultations and error prevention. Having worked in many community pharmacy settings, many of us are intimately familiar with the challenges of staffing in high pace, high stress environments.

While pharmacist technicians and clerics provide valuable support, and they really do nothing substitute for the expertise of having an additional pharmacist on staff. And despite existing laws permitting up to three technicians, $1.0 billion corporations like CV's and other pharmacies prioritize costs over safety, opting to skip out on pharmacist hires again. The law already allows to hire three technicians, but rather than hiring an extra pharmacist, companies are really pushing profits over patient safety and health in the workforce.

And we just went through a pandemic in our lifetime and our workforce was devastated. And we continue to suffer from COVID COVID's 19 destruction. As a state, we should not eliminate protections that were created for patient safety and for the pharmacists. When it comes to patient safety, there shouldn't be any compromises. SB 1365 or any change will undoubtedly imperil our loved ones, our safety, that of your family and mine. I respectfully request your no vote. Thank you.

Hello, my name is Jessica Crowley. I'm a pharmacist, a proud UFCW 770 Member, and I've worked in community pharmacy for over 14 years. I'm here to ask you all to vote no on SB 1365. While having more technicians in a pharmacy may sound like a reasonable solution to staffing issues, having to supervise additional personnel creates more distractions since attention will be shifted to overseeing their work instead of focusing on clinical decisions.

About a year ago, I was working with myself and one other technician who who was helping a patient assist with their insurance. After the patient left, we realized something was wrong. Our system, one that's used in hundreds of pharmacies in California across different companies, allows a technician or Clerk to print out a new label and put it on a bottle without requiring them to scan the bottle to verify that the correct label is being applied or without the pharmacist to confirm that the product is correct.

The technician had printed a new label for a patient's sleeping medication and placed it on a bottle for a different patient's heart medication. My patient is in their eighties and already had heart disease. This could have led to a very deadly interaction. We were fortunate enough that the patient hadn't left the store yet and were able to obtain the bottle and confirm the error without being able to get the bottle back. It would have looked as though I verified the wrong product.

In my professional opinion, I would not have been able to catch that error if I had more technicians in the pharmacy because I would have been more distracted. I'd also like to remind everyone that California became the first state to require med error reporting as of January 1 of this year, so it's difficult to assess the patient's safety in other states.

I thank you very much for your time today and ask you to support myself and over 100 UFCW pharmacists who wrote in opposition and vote no on this Bill today.

All right, thank you for your testimony. Now would be the time for me too testimony for those opposing SB 1365 year name, organization and position on the Bill.

George Soares with the California Medical Association in opposition.

Thank you.

Madam Chair. Mandy Lee on behalf of CVS health. I blanked. We are in support of the Bill. Sorry about that.

Dean Kapearle on behalf of the American Federation of State County Municipal employees in respectful opposition.

Jazzy Graywell on behalf of UFCW Western States Council, in opposition.

Elmer Lizardi on behalf of the California Labor Federation, in opposition.

Great. Thank you very much. We're going to come back to the dais and hear from colleagues. Anyone have any comments from the dais? Senator Becker and then Senator Dodd?

Yeah, I just want to. I guess I'd ask the author how he responds to the criticism on the ratio. I just want to. Well, how would you, I guess, respond, and then I'll have a comment.

Well, on the safety issue.

Yeah.

The study that I think was referenced by one of the witnesses identified pharmacists as the source of most of those errors, not pharm tech employees. So there's no connection whatsoever to that study, to the issue of whether a ratio would create any kind of patient safety issues. There is no study that I'm aware of that has raised criticism of the ratio that's six to one or greater in most states in America. So that would be my direct response to the testimony on errors.

Okay, well, I'd like to hear the rest of the discussion. One to one to one to four sounds like a big jump. It does sound like, you know, I don't like to hear when we hear when California is a huge outlier of so many states. So it feels like, you know, there might be sort of ultimately something in the middle, but I don't. I'm inclined to not stop the Bill today because it feels like there, you know, could be some room there. And I'd like to kind of hear the debate going forward. But thank you for answering that.

Yeah, I agree with Senator Baker to kind of, Becker, excuse me. Want to take the same type of approach to the Bill. I will say it's interesting. I appreciate the testimony of the CMA, but it's kind of interesting word, if I'm not mistaken. Doctors can oversee up to nine nurse practitioners. Up to eight.

Excuse me, eight nurse practitioners. And I know that we have things. Maybe they're not apples to apples, but it sure seems like it's not as cumbersome. And to my friends at UFCW, I love your employees that I go to at my pharmacy, but during COVID and after, they're just saying, hey, actually, they were just saying, it's not our fault, you know, we can't hire anybody else. And so I know there's exceptions to that, but it's.

This is something that I really believe that my constituents can benefit by. And it's called customer service. It's called when you go there, you don't have time to wait around. And I feel like that's what I did a heck of a lot of over the last few years, and employees still aren't coming back at the rate we'd like.

Okay. Senator Archuleta.

Yes. Thank you, Senator, for bringing this forward. And I appreciate the fact that you're working with the Committee and the opposition. It seems like it was, when I saw originally it was one to six, now you're one to four, and I'm assuming that you're not done with that just yet. And that's the whole thing about negotiating. So I'm not going to stop the Bill, and hopefully you'll be able to continue negotiating because that's the spirit of what we're looking for.

And workforce development, I would imagine some of these technicians that are there are one day aspiring to be pharmacists and to inspire them, to train them and get them ready as part of their educational steps. So I'm hoping the doors will open with them as well. So I'm not going to stop the Bill, and I will go ahead and concur with my, with my colleagues and move the Bill forward.

Thanks. No, I had a similar question. Are you working, to your point? Are you working with the opposition? Are you agreeing to do that? Because I am curious why, if we went from sort of from six to four, then what's the evidence on the four is my other question. But first, are you working with opposition to figure this out?

Yeah, through the chair. Absolutely. I mean, the Bill that I carried a few years ago was sponsored by the UFCW, I think raised it to three to one. So I'm trying to make progress in this space. I don't think anything's perfect. I think six to one is safe and, but I'm happy to have compromised with this Committee and we'll continue to look for ways to compromise.

We're trying to maintain safety standards, but lower costs and make it more easy for us to get prescriptions and to have people work in the area in which they're properly trained for. So when we send pharmacists to the higher education that they have to go through, it's not just to count pills, so people can do that for them and they can ensure safety and they can work to their higher level of training. And I'm happy to work with all folks.

There's a lot of scope of practice fights. There's union fights. It is an industry that's under stress, as we hear about. But I'm just trying to make progress with the Bill, and hopefully we'll have partners that can join in that if it moves forward today.

On the question of the four, was there evidence or a study that that number was, it was a request from the Committee. Okay.

I was at six to one. The Committee asked.

The Committee's recommendation was based on the fact that over 25 states are at four to one. Thank you. Okay, Senator Archuleta, did you make a motion?

I did.

All right, so that is Senator Glazer, would you like an opportunity to close if you have a motion?

A couple. Thank you. And a couple just closing points, which is that a pharmacist under the law of California can say they don't want to supervise. Okay. There's room for a pharmacist to say no. It's not comfortable for me, it doesn't work for me. So that protection is already there in current law. Secondly, as Senator Dodd alluded to, this Committee last year increased the ratio of physician assistants to eight to one, a Doctor having eight people to supervise.

So these are things we're trying to do in a smart way and a safe way. That's my focus. I know it's yours as well. And with that, respectfully asked for an aye vote.

Okay, you have a motion from Senator Archuleta. This one is do pass to appropriations from here. We'll call the roll.

This one's do pass as amended to Senate Appropriations Committee. [Roll call].

Eight to zero, we'll put it on call Senator Glazer, thank you. All right, you ready to hear your next one?

If you are.

You're on a roll. Let's go. Let's do it.

It shows you the diversity of the scope of practice of this Committee that we go from pharmacy techs to housing. We've wrestled with this housing crisis that California is facing for a number of years now. And some of the solutions focus in on local approval processes on CEQA. But when I look at the issue of why we have a housing crisis, it keeps pointing back to two things that we haven't really addressed very much. One is liability exposure for builders.

And the second is the cost of money, the cost of financing. And the bill that's before you deals with that issue of the cost of money. The focus of this bill is on condominiums. When you look at the housing crisis, and by the way, it's across North America, Canada has a serious housing crisis. But one of the factoids about Canada, they build over 30% of their housing stock that they're constructing is condominiums. And you know what that is here in California, it's only 3%. Only 3%.

This entry-level ownership opportunity for people is basically not even being produced in the state today. And a part of the challenge in that space is the cost of financing. So the bill before you provides an avenue in which we can lower the cost of financing to help developers of condominiums engage more in the construction in that space that benefits all of us. And the most important of any kind of reform in this space is to make sure that consumers are protected.

And I want to speak to that. That if you're going to create this opportunity to lower the cost of financing by utilizing deposits that people have put down on a condominium, then you want to make sure that they're protected. So this bill does those two things.

It allows, expands the use of those deposits, and at the same time it builds in some consumer protections that requires that before a developer could use those deposits, they have to post a bond or something substantially similar approved by, in this case, the Department of Real Estate to ensure that the promises that are made and using that deposit money are fulfilled. I have two people here to testify in support of the bill. David Marshall from West Bank and Spur, along with Jordan Panana Carbajal from California YIMBY, with that respectfully of your consideration today.

Thank you. All right, you two. Two minutes each. When you're ready.

Thank you. Good morning, Madam Chair, Members of the Committee. My name is Jordan Perana Carbajal, legislative advocate for California YIMBY, here to speak in support of SB 1462. California YIMBY is a statewide organization of over 80,000 neighbors dedicated to making our state an affordable place to live, work, and raise a family for all Californians. Condominiums are often entry-level homes for first-time home buyers, averaging 2.7 times less than a standard single-family home, making homeownership more affordable to working families.

As Senator Glazer mentioned, despite this, only 3% of new homes in California between 2011 and 2021 were condos. One of the main reasons condos production remains low in California is the state's limit on developers utilizing homebuyers' deposits when constructing condo projects. Under current law, any deposits over 3% made during the pre sale process when the condo is being approved and constructed must be fully refunded to the buyer if they decide to terminate the deal between the time of the deposit and the final sale.

The limited commitment from buyers also introduce additional risk for the developer and their lenders, increasing insurance and loan costs. This translates to higher cost condos and fewer affordable condos overall, SB 1462 will allow condo developers to use deposits made by buyers during the pre sale process to cover construction costs while upholding protections to ensure the buyer is refunded with the project is not completed.

To create more affordable home ownership opportunities in California, we must reduce the cost and risk for developers, such as increasing the availability of interest-free financing while still requiring strong consumer protections. And as for these reasons, I respectfully request your support for SB 1462. Thank you.

Thank you very much.

Good morning and thank you to the Committee and Madam Chair for allowing me to speak this morning. My name is David Marshall and I work for a prominent high-rise condominium developer in North America and Asia. We have many entitled projects in California as well, none of which are entitled for condos despite our preference, experience, and disposition to do so. The reason we chose not to move forward with condo is for one simple reason, it didn't underwrite. But this isn't just a housing issue.

Many of our projects are rental residential. It is simply a condo law issue to break it down. There are two distinct characteristics that this bill helps to underwrite condos that align both the developer and the buyer. These became the guidepost of this SB 1462. First this bill provides certainty a developer bonding against and using the deposit funds gives greater certainty to the buyer that their home will be built and to the developer that the funds are here to construct.

Currently, the law essentially creates a 3% option contract. Should the market go up, great. The buyer just bought the value increase for 3%. Should the market go down and the buyer can back out for 3%. Given housing prices in California, this is heavily favoring the buyer. Also, I ask the Committee to note that this bill does not provide that buyers must make their entire deposit upfront. Buyers would be able to make deposits throughout the development in order to allow buyers of different incomes.

Second, financability. As I alluded to earlier, higher pre-sales and deposits are evidence to a lender that there is a market for this condo project and thus shift less market risk on the lender's shoulders. Additionally, the bonding component of this bill provides financing for a project and oversight to protect consumers and ensure completion. The ability to bond against deposits would provide a backstop for financial market volatility where developers will always have access to cheap debt.

Given the financing costs are such a large portion of the cost to construct right now, onding higher deposits directly decrease the cost to construct and lower the price point that a developer must hit to underwrite their projects, naturally creating more affordable housing. I urge the Committee to view San Francisco or San Diego as an example of this issue, what are the types of condos being constructed? It's all ultra luxury. To put it bluntly, would you accept the more risk for less reward?

These bonds provide more certainty of the market to a developer, more certainty to a buyer that the developer will deliver and thus creates lower risk and lower prices delivered back to the buyer. Therefore, I ask the Committee to consider this as an intuitive option for developers to create for sale housing during this crisis, as communities are strongest, not only with renters, but with homeowners that stay and invest in their neighborhoods. Thank you.

All right. Thank you both for your testimony. So now, if there are others in support of SB 1462 in the room, this would be your chance for me too, opportunity to come forward to the mic.

Good morning, Madam Chair and Members. Michael Gunning, Lighthouse Public Affairs here on behalf of SPUR in support. Appreciate an aye vote, thank you.

Thank you. Anyone else in support for me too testimony? All right, then we will go to opposition. Anyone in opposition to SB 1462? If you are, if there are lead folks, they can come up to the table and we will give you two minutes each as well. And then we will. Are these the agreed-upon two leads? All right, race to the front when you're ready. Two minutes each.

Madam Chair and Members, Anna Buck, on behalf of the California Association of Realtors, representing nearly 200,000 real estate licensees in California, here in opposition to SB 1462. This bill, while well-intentioned to address the housing crisis, has the potential to financially devastate potential homeowners. SB 1462 not only eliminates the state's liquidated damages cap for new condominium development, but also enables developers to use a buyer's good faith deposit towards any cost of the project.

Effectively, SB 1462 allows developers to keep the buyer's entire deposit regardless of the percentage of the sales price. Allowing developers to use buyer funds in this way is effectively lending developers buyers' hard-earned down payment funds at 0% interest. If developers cannot afford to fund basic construction, perhaps they should not be in business. This bill requires a warning to consumers as well as a bond. However, these types of bonds don't currently exist in our market.

Having a home purchase where a buyer is warned they might not get a home they sacrifice to afford because the developer does not complete the project and may not get their money back is unprecedented. It is contrary to California's long history of consumer protection and simply wrong. You don't ask, as the analysis makes clear, regular, entry-level homebuyers to engage in speculative investments which lend money to investors interest-free. Therefore, we have to ask you for a no vote on this bill today. Thank you.

Thank you.

Thank you.

Thank you Madam Chair and Members, Anthony Helton with the California Land Title Association. While we appreciate the author's goal of seeking to enable the construction of additional housing, we're opposed to SB 1462's mechanism of utilizing purchaser deposits secured by bonds to do so, as we're concerned that such a practice will expose property buyers to elevated risks of deposit loss and expose all parties to the risk of protracted litigation.

Though the bill attempts to limit these risks through certain guardrails, we believe that those guardrails, such as performance bonds and DRE oversight, will be far more complicated than expected and will fall short in practice. Bond coverage, for example, can be conditional, meaning that if developers do not meet the contractual obligations of the bond agreement, payment on the bond can be disputed or denied.

With respect to DRE oversight, we are concerned that it will be impractical, at best for the agency to effectively determine whether whether use of purchaser deposits meets the bill's requirements. Separately, we are concerned about the ability for DRE to have sufficient staff to oversee this process. Because of the ambiguity the bill introduces into the process, we believe it will result in litigation when projects fail with escrow companies a convenient target as purchasers seek to challenge whether deposits met the requirements for release.

For this reason, we think oversight from other agencies, such as DFPI or the CDI, as we've heard discussed, would run into similar issues and that the involvement of those agencies is not a viable fix.

We appreciate the author's willingness to engage on this issue, but are uncertain at this time what amendments could be made to address these concerns and respectfully urge the Committee to hold the bill today to allow for more time to discuss this issue, given the potential for consumer harm should it move in its current form.

All right. Thank you very much for your testimony. Now me, too. In opposition, name, organization, position on the bill.

Good morning Chair and Members of the Committee, Cornelius Burke with the California Building Industry Association. We are your homebuilders first and foremost. I just want to apologize for being late, for not having a letter or being able to communicate more thoroughly with the author. Upon initial review of the Bill, we are neutral, but initial analysis, we do have some concerns. Our biggest concern is the DRE review and construction project estimates and budgets. We don't believe they have the capabilities and staffing to do so.

We have other minor concerns, but definitely like to work with the author to make sure we get the intent right of this bill and do not cause any unintended consequences. Thank you so much.

Thank you, Mr. Burke.

Madam Chair and Senators Cliff Costa today, on behalf of the California Escrow Association, in opposition, would yield my comments after CLTAs comments.

Thank you. Thank you. All right, having heard from all the folks in the room, I'm going to come back to the dias, Senator Archuleta.

Thank you, Madam Chair. Thank you Senator, for bringing this forward. All of us know that here in California we definitely need housing, but we also need protection. And I think this is what the California Association of Realtors. This is what CAR is doing, is to protect the consumer. And as was stated, that if a developer is going forward to build 40 or 50 townhouses or condominiums, there's a lot of paperwork involved.

And one is the fact that the bank should have analyzed if that developer has wherewithal, the backing financially to start the project and continue through the project as it goes forward. But one of the things that I've got to point out that the bill mentions that DRE, Department of Real Estate, is supposed to finish their paperwork within 30 days. And let's talk about that for just a second, if I may. Something is called the public report.

A public report is issued by the Department of Real Estate. Indicating everything pertaining to that project. Its location, the association fees, the distance from marketing, shopping, schools. So the consumer knows everything. Any questions that you might have pertaining to the project and its location and everything else. That public report is vital for the consumer.

Because that report, even as the life of the condominium down the road 10, 15, 20 years from now, that buyer can go right back to that public report and ask to see it again. And there's a fine of dollar 500 for the record, that if it's not transferred over public report, very important. Along those documentations, you need a budget. How that budget is going to be set up for that condominium project.

So you've got the public report, the budget, the bylaws to make sure that the project adheres to the rules and regulations by the State of California. And also the condo plan. To see exactly how it's laid out. If it were a city, it would be to overlook and see where everybody is, where the swimming pool is. So that condo plan gives you an idea as a consumer, where you're going to be, the traffic flow, even the trash pickup gives you an idea of that.

So we're talking public report, the budget, the condo plan, the association, the articles of incorporation. And these are all things that are needed and the Department of Real Estate, in conjunction with the developer, develops this to the protection of the buyer given. So let's talk about the deposit, if I may. And it is always mutually agreed that escrow is a third neutral party that receives the deposit and holds it, cannot release it unless there's an agreement between the buyer and the seller.

And this is where the escrow departments feel very skeptical because, because one may have the knowledge, the skill, the professionalism, the education, everything else that one does not. And normally, entry-level buyers we're talking about, they don't understand if that deposit is going to be used or ever returned, but they know that as long as it's in escrow and the parties come together or don't come together, they have the opportunity to receive that deposit back.

So I'm looking at something that's so very important, of course, the binding contract, but also the protection of the consumer that deposit, and it's called good faith deposit. And let me emphasize that good faith. So if both parties are acting in good faith, yes that deposit is protected in escrow under laws of regulations by the State of California not to be released. So, Senator, I have some issues with this, and if the bill goes forward, I'm hoping you could negotiate some of these things out.

But these are things that I think that we've got to get a little bit deeper in right now. We have been waiting for construction boom. We've been waiting for developers to come to the table, but if they're all going to come back, then we have to have the regulations to protect the consumer. And I think that both the banking industry and all of us have got to do that, and that's got to be our priority.

So I think I may have to hold off on this bill and to be able to take another look at it if, in fact, it does go forward. With that, Madam Chair, I thank you for my time.

Senator Becker.

Sure. Thank you. I take that seriously. My colleague who's been in the real estate business himself. How do you respond to, I do agree 100% with the goal of creating more for sale buildings, how do you respond to the questions about consumer protection?

If I can, through the Chair. It certainly has to be paramount to any change, any new law is that the buyer is protected. I think that's why the requirement in the bill is to have a bond be established so that it guarantees that their money won't be taken from them, the project won't get built. So the bond is a requirement of the bill to ensure consumer protection.

And how does this, how would your bill be similar or different to what's done in other states?

I think my witness could speak to this in terms of how they've handled it in Canada. I don't know if you have a.

Yeah, I can speak more that this is modeled after Hawaiian law. So this is very similar to what they do in Hawaii. Of course, Hawaii has much more condo development.

Got it. And have they had consumer protection issues or. How's that?

I'm not aware of any consumer protection issues.

Okay. I may have follow-up.

Senator Roth.

Thank you, Madam Chair. I do find it odd that with commercial development like this that we have to turn to, as you indicated, sir, our most vulnerable, our young people and sometimes our seniors to finance construction projects for developers. But maybe that's where we are these days, these performance bonds. First of all, as this bill moves forward, and I'm sure it probably will, Senator, I'd ask you that you take a look at how performance bonds, what they are, how they're enforced, what the issues are.

I'm wondering if the amount that you've specified in here in terms of construction cost is enough. Because when projects blow up, oftentimes it's probably going to require more than just the construction cost to satisfy those with their hands out, including, by the way, the young folks or the old folks who put money down on these units. Secondly, bonds are typically only as good as the bonding company itself and the backing of the bonding company. And I didn't.

Maybe there's something in here that I missed in terms of quality. And then, of course, when the project blows up, the developers are usually gone. So who actually makes a claim with the bonding company? Sometimes they're a little slow to pay. So we're talking about people who are probably seeking to purchase a condom because they don't have a lot of money. And we're going to turn to these purchasers and say, go collect your money from the bonding company.

So they have to go hire a lawyer, they have to go to civil court and in some cases have to sue on the performance bond in order to recover. So. And then there's this whole issue about allowing early close. I don't know how that works. I don't want to belabor the hearing, but there are probably some issues involved there having to do with insurable interest in the property, how you get insurance, what the amount of the insurance is if you hold.

If you're the purchaser, you now hold title to something. I guess that's not complete, which I don't even know why anybody would do that. But I think those details, if you move this forward, need to be looked at because I think they are, as the analysis reflects, significant and do directly impact consumer protection for, as I said, oftentimes our most vulnerable.

Chair, may I just respond? Senator Roth, thank you for your good points. A couple things. One, I'm open to the eliminating of early close. So that's something that if the bill moves forward, I'm very open to potentially removing that option. Secondly, the bill proposes that the Department of Real Estate get money from the developer to oversee the bonding process and the remedies that you've raised.

Now, there's been some concern raised as to whether that's the best Department to do it and if the bill moves forward, I think we want to continue the conversations to see whether DFPI is a better choice for that oversight or the Department of Insurance is a better oversight. So there's flexibility from this author in terms of making sure we get the right person to the right agency to do that oversight.

And one of the witnesses in opposition mentioned that there is no market for bonds like these. And that's true. If there is no market for bonds that is developed after the passage of this Bill, then there will be no bonds, there will not be any use of deposits as proposed in the Bill. It's an option. If it doesn't exist, then it can't be used.

So I think that who oversees the bond is an important question in order to make sure that the consumer is protected if there's a default or some issue that comes into play. So I'm in agreement with you. And that I think that if the bill does go forward, those are discussions that have to get resolved as it moves forward to make sure that we get the right person, the right agency in charge to make sure that consumers are protected.

Well, the letter of credit, of course, may be an even better option because I seem to require that, recall that that probably requires cash or cash equivalent, which, of course, developers probably don't want to do, but there'd be money in the bank.

But I think at the end of the day, the only reason this is on the table is because from the development community, they see this as lowering costs. If it doesn't lower costs, then there's no reason to even use that option, even if this were to become law.

Thank you. Thank you, Senator. Thank you, Madam Chair.

Thank you, Senator Archuleta.

I just want to follow up. Thank you, Madam Chair. Senator, I'm going to go ahead and work with you and move this thing forward because I do want to see it go forward because there are ways of coming together. We do need new housing. We do have to work with the consumers. And I know the California Association of Realtors are working with developers as much as possible, but you've got to protect that very fragile thing, which is that deposit.

And maybe you might look in with the Committee that only a portion of it, not the entire deposit, because to look at that insurance company, is that a surety bond? How is that going to look? And then, of course, you got to look at the escrow to make sure that they're not liable in their agreement and releasing of the funds and so on. So there's a lot of elements that still need to be worked on, but I'm hoping that you can work with it.

And so I'm going to go ahead and make sure that we go with it because I feel confident that once you come to an agreement, once you come together with California Association of Realtors, the benefits will be enormous for our economy and for our housing needs. So I wish you well and let's go ahead and work together on this thing.

Any other comments or questions, colleagues? I have one quick one. Is there a, does the bond exist right now in California? Do we even have that?

Well, the bill would allow that opportunity. And if there's no bond market created by the passage of the bill, then this option won't even be used. It can't be used because that's a requirement in the bill that you have to have a bond to ensure that you're protecting the consumers who put the deposit down.

Thank you. And at this time, seeing no other comments or questions, would you like to close?

I would just say this, Members, we know we have a dysfunctional marketplace. I mean, that's the circumstance we find ourselves in. We're nowhere in a housing crisis. We can see clearly that the condominium opportunities just don't exist in California. No one's building. So we're trying to find a place to create a little more incentive for developers to build condos, which is the entry-level ownership opportunity. Look, I didn't know about the realtor's position until Thursday night, so it was a late opposition.

I'm happy to work with them. I've always worked with them on these types of issues as we go forward. So you certainly have my commitment to that. It's hard to make a lot of progress when you just find out just before a hearing that they're in opposition. But I'm hopeful that we can work together going forward. We need to find a way to build more housing. We have to protect the consumer. I don't want to advance a bill that doesn't do that. It makes no sense.

So I appreciate your consideration of the bill today and respectfully ask your.

Senator Archuleta. Senator Glazer has already closed. Did you want to?

I just want to bring one thing up. The California Association of Realtors and DRE, the Department of Real Estate, are real concern about all the paperwork I just mentioned. So be sure that your agreements allow them the time that they need to do the vetting, not only on the prospective contractor, but the project itself.

Yes, sir.

And I think that's another element. Thank you, Madam Chair.

Thank you for your consideration today. I'm committing to working with all the opponents. If this bill moves forward, we have to find a way to make progress in this space and hopefully, in partnership with all the folks.

And like so many other bills that we've heard today, has a long journey ahead of it. This bill would go to judiciary next, so plenty of opportunity to continue working on it. Was there a motion made while I was gone? I'm sorry I missed that, Senator Becker.

All right. Thank you. Then we have a motion, and it is do pass to Judiciary. We'll call the roll.

Thank you.

[Roll Call]

Okay, that's six to one by my count. We'll leave it on call and come back to it. We have a few Members here who haven't had a chance to vote yet, so could we lift the call here and give some folks a couple of chances? Would that be all right?

[Roll Call]

Okay, that was 12 to zero. That Bill is out. Just one correction. We're going to go back to file item nine, which is glazier's SB 1402 or 62. I'm sorry, 1462. I'm going to leave the file open until the end of the hearing. Is it is. It needs one more vote to get out. So we will leave it open for him to talk to colleagues for a little bit, and then I'm just going to ask for a hold here for just 1 second.

Okay. It is 12:10. We have two bills remaining. We are going to take a break at 12:30, which means we have 20 minutes now. So we will take up Senator Weiner's pharmacy benefits Bill, which is file item one, SB 966, if you're prepared. Senator Wiener, welcome.

Is that a break through four or.

No, it's just a quick break.

Thanks.

Probably be about 15 minutes at 12:30.

Great.

Go for it when you're ready.

Thank you, Madam Chair. Madam Chair, thank you for setting the Bill and for working with us on SB 966, which will provide long overdue oversight and consumer protection standards for pharmacy benefit managers. First, I'd like to start by accepting the Committee amendments to change the regulating entity from Board of Pharmacy to Department of Insurance, in addition to the other amendments listed in the analysis. And we appreciate the Chair working with us. Colleagues.

PBMs are essentially the middle people of the pharmaceutical industry and of the healthcare industry in many ways. They negotiate drug prices and other pharmacy benefits with pharmaceutical companies on behalf of a range of clients, including large employers, health plans, and so forth. The three largest, PBMs, CVS Caremark, Express Scripts, and OptumRx, operate under the umbrellas of large health plans, and together, these three companies control approximately 80% of the PBM market and manage pharmaceutical benefits for almost 90% of people.

PBMs play an integral role in determining the types of medications and services patients receive and the prices they pay for them. Yet they remain almost entirely unregulated in the State of California. We remain far behind many other states and oversight of this area. I want to also stress that this is in many ways a bipartisan endeavor, because in Congress there is bipartisan support to begin regulating PBMs.

PBMs negotiate and buy prescription drugs in bulk from manufacturers on behalf of health plans and others, and establish formularies and pharmacy networks, and set reimbursement rates. These are decisions with massive impacts on the healthcare system and on consumers. And yet they operate in the shadows with very limited transparency and essentially no consumer protections. PBMs have used their market power to engage in several anti consumer and anti competitive practices that result in higher pricing.

For example, pocketing rebate dollars, which this Bill addresses, spread pricing and steering towards pharmacies that they own. In other words, forcing people to use the pharmacies that they own. The FTC is actually investigating PBMs for this behavior. 25 other states have instituted licensing requirements for PBMs, and 17 prohibit patient searing. Seven prohibit spread pricing. In California, we do none of these things. This Bill will require licensing under the Department of Insurance, per the amendments, and will prohibit some of these anti competitive practices. I respectfully ask for an aye vote with me today to testify is Clint Hopkins, owner of Pucci's Pharmacy here in Sacramento, and Pedro Delcole, a patient.

All right, thank you. Welcome to you both. You each have two minutes.

Good morning, Madam Chair and Committee Members. I'm Doctor Clint Hopkins, pharmacist and owner of Pucci's pharmacy. Independently owned in Sacramento since 1930. PBMs now dominate not only the pharmacy market, but also the healthcare market at large. They own health care. They own health plans, the pharmacy down the street, the switch that processes our claims, the mail order pharmacy to which they steer patients, and they dictate the contracts that underpay and force pharmacies out of business.

In recent years, PBMs have begun purchasing physician practices in clinics, too. Contracts with PBMs are not negotiable and unprecedented in any other industry. Our requests to negotiate for fair reimbursement are denied. These take it or leave at contracts force pharmacies to turn away patients that would prefer to get their medications from a pharmacist they can know and trust than from their mailbox. For the drugs we dispense.

PBMs continue to find ways to scam pharmacies and consumers using practices such effective rate such such as effective rates and spread pricing. Thanks to recent federal legislation, the PBM practice of clawbacks on Medicare claims was stopped in 2024. But now instead we are served with contracts with unsustainable rates, forcing pharmacists to again turn away patients. PBMs determine which meds are on formularies, oftentimes choosing a drug that costs the patient more. But the PBM prefers that drug because they get a larger manufacturer rebate.

This high cost, pay to play strategy has resulted in skyrocketing costs of brand name medications, making them unaffordable to many patients. I'm certain no one in this room can say that they've ever received a rebate check from a PBM. PBMs jack up prices and retain those rebates as profits. For far too long, PBMs have operated in the shadows, extracting exorbitant amounts of money from the system that they've designed. PBMs are the only entity in the healthcare cascade operating unlicensed by the state. Without licensure, PBMs will continue to run afoul, causing pharmacies to close, local jobs to be lost, and patients to lose access to healthcare in their communities. I respectfully request your aye vote on SB 966.

Thank you.

Hello, my name is Pedro Delcole. I've been a patient of Pucci's Pharmacy for about a year, but my journey to finding Pucci's was frustrating. My doctor prescribed medication for me and the only option I had to get it was through mail order. The medication never arrived, so I went back to the clinic and I was directed to go to an infusion center instead. For some reason, they didn't have my paperwork and nobody was able to help me. So I still did not get my medication.

At this point, my doctor suggested to go to Pucci's Pharmacy, which is the only pharmacy that offers this medication. So I'm happy to say that since then, I have been receiving my medication and excellent care. Unfortunately, my pharmacy is losing $177 on every dose. I don't understand how PBMs are allowed to do this. This is wrong. I am afraid that it might not be sustainable. My pharmacy might not be able to continue providing my medication at a loss in the future.

It took over a month for me to finally start getting my medicine. And I hope none of you ever feel the frustration I did. I just wanted my medicine, and I couldn't get it. As a member of the LGBTQ+ community, it is important to receive my care from someone who understands my needs. And as a Latino, I know there are many people in my community who feel as hopeless as I did, but they don't know what to do, so they wait. Or worse, they give up. Everyone deserves access to the medications they need. I urge you to support SB 966. Thank you.

Thank you. Thanks for your testimony today. Okay, others in the room in support of SB 966, please come to the mic with me to testimony.

George Soares with the California Medical Association in support.

Good afternoon, Madam Chair and Members. Alex Kahn, on behalf of the California Chronic Care Coalition, a proud co sponsor, as well as the ALS Association, in strong support.

Thank you.

Chair Members. Dean Grafilo, with Capital Advocacy here on behalf of the California Life Sciences, as well as the National Association of Drug Stores, in support of SB 966. Thank you.

Thank you.

Eric Robles, on behalf of UNAC, in support.

Thank you.

Michelle Rivas, CPHA co sponsor in support.

I'm Fred Noteworth, representing the Pharmaceutical Research and Manufacturers of America in support. Thank you.

Madam Chair and Members. Rand Martin, on behalf of the AIDS Healthcare Foundation, which operates 12 independent pharmacies across the state, in strong support. Thank you.

All right. Thank you very much. Do we have opposition? Lead opposition come on forward. You can either speak at the microphone or the table. Up to you. You will each get two minutes when you're ready.

Madam Chair and Members of the Committee, good afternoon or late morning. My name is Bill head with PCMA, the National PBM Trade Association. I would like to thank the Committee for its Analysis and recommendations and thank the author for accepting those. Those are important steps. Unfortunately, the Bill still remains very problematic, and I'll give just two examples for the sake of time. One is taking away the accreditation standards for specialty pharmacies. Those are important consumer protection requirements that are required under Medicare.

They're required under Medicaid and PBMs require them of specialty pharmacies that are affiliated with the PBMs, that they be nationally accredited by organizations like the Joint Commission and URAC. I think that's why URAC was opposed to the Bill for those. I don't see how that is a consumer protection that actually has taken away consumer protections. The other provision I'll point to is any willing pharmacy.

This provision not only says that any pharmacy can be in the network, but they don't have to accept the terms and conditions of being in the network. So not only does that dismiss the credentialing and consumer protection aspects, but it says they don't have to accept the payment either, and they can charge whatever they want for that particular drug. I don't see how that's going to help patients access drugs or get access to more affordable medications. On the contrary, it's going to increase prices.

At the end of the day, we don't want to see independent pharmacies suffer. We need them in networks. We need them particularly in rural areas. But in essence, this Bill basically allows pharmacists to dictate how health plans, how employers, how unions that are fully funded, how they manage and pay for their drug benefit. And for these reasons, we respectfully ask a no vote on SB 966.

Thank you very much. Go ahead.

Madam Chair Members. John Winger, on behalf of America's Health Insurance Plans, we're the National Trade Association for Health Plans. We've worked on this issue on both the national level and other states, so appreciate opportunity to provide our perspective. I think just from an overarching perspective, sophisticated purchasers like health plans, self insured large businesses, union trusts, public employers, they all voluntarily enter into agreements with PBMs for the sole purpose of reducing healthcare costs.

From our perspective, there's a lot of provisions in the Bill that would actually increase healthcare costs and the drug spend for our plans. Specifically on the any willing provider perspective, plans utilize networks and try to strike an appropriate balance between providing timely access to care while also being able to create a certain level of volume to its in network pharmacies, which helps drive down the costs. Blowing up those networks would dramatically increase drug costs.

From our perspective. The ban on spread pricing is also problematic for us. There's a variety of options that plans are given to pay for PBM services. The plan chooses what's the best for them. Some choose spread pricing that is often chosen by payers that want more predictability over their drug spend and want to avoid the volatility in the market when it comes to drug pricing. And then finally, I guess we are also very concerned about the accreditation standards for specialty pharmacies.

These standards are used to ensure quality for complex drugs that require special handling. They require a certain level of patient care, and so prohibiting these standards would reduce the quality of our networks. And so we're concerned with that as well. I think overall, PBMs are used to continue to contain the drug spending on our side, and so for the payers, we are opposed to the Bill.

All right, thank you very much. So other me too testimony in opposition to SB 966 in the room, please come to the mic.

Gema Gonzalez, on behalf of the California Hispanic Chambers of Commerce, opposing the Bill.

Okay.

Beth Capell, Health Access. We appreciate the amendments and think they move in the right direction, but are still in an oppose unless amended to the current version as we understand it. Thank you.

Okay, so we need to take a break here. I know my colleagues are going to have comments, and I don't want to have to cut them off. So we're going to take a break for about 15 minutes, might be 20 minutes at the most. And then we'll come back, we'll finish out this item, and we will take up the last item on our agenda. Okay, colleagues, would be a great time to. Great time to do whatever you need to do. We'll be in recess for that period of time. Okay.

I'm chair and I'm not sure, Senator, if this question's for you or for either side or maybe for PBMs. I need some clarity in what could happen. Would this prevent PBMs from negotiating for rebates on drugs?

They can negotiate on rebates, but they can't pocket the rebates. That's what it require.

Would you then potentially see an unintended consequence of PBMs, who perhaps have no incentive to do it, will no longer negotiate rebates, and then the consumer won't see?

But the consumer often is not seeing it to begin with. So if by having to not pocket the rebate, it means they no longer use the rebate system, then they'll change to a different method of compensation. And so. Yeah.

Madam Chair, can I turn that question over to opposition as well, to get that?

If you have a question for opposition-

that same question.

Go ahead.

Thank you, Senator. And yes. So currently it is always dependent or decided by the plan sponsor what to do with the rebate. They can ask for 100% pass through, or they can, say, keep a portion of it for your payment. And so that is just one model for the plan to choose how it is, is paid for. The PBM is always going to try to negotiate the best rebate on behalf of the plan sponsor.

Both CDI and DMHC concluded that the rebate system in California actually helped lower premiums because it is passed on through lower premiums and lower co pays by the health plan. And currently, roughly 95-96% of the rebate dollar does go through to the plan sponsor.

Would you continue negotiating for rebate should this Bill make it to the governor's desk and he signs it?

We would, on behalf of the. We would, of course, on behalf of the client. But I think you're taking away a tool from the plan sponsors to how they manage and pay for their drug benefit. And I think that would be the disruptive, the potential disruptive effect of it.

Senator Menjivar, if you would like, I also can have one of our folks, our sponsor, also respond to that on a more technical level because we have a disagreement with.

That's fine.

So I'll ask Rachel.

Hi. Thank you. Rachael Blucher, on behalf of the California Pharmacists Association. I think that we believe that the rebate passthrough would ensure that the consumers and the plans are getting those dollars. And our understanding is that that would not, in fact, disincentivize rebates. We have seen not a lot of transparency around how the rebates are passed through. We have seen difficulties from both employers who contract with PBMs as well as plans understanding exactly what those are.

And so this is a mechanism to ensure that there's more transparency around what those rebates are and how they're passed through.

Okay. Thank you.

But there is actually transparency. Under AB 315, PBMs are actually required.

We're going to hold off on that.

I have another question.

We'll lose the room. Go ahead.

My separate question is related to, and I know, Senator, you've been working with everybody. You took some amends and so forth. And I know that's addressed a lot of the concerns. My other question is related to a consumer then going outside of, outside of their network to be able to go to any pharmacy, and that could potentially increase the cost because they're no longer in their network.

So one of the amendments that we're accepting from the Committee, it's at the bottom of page 15, has to do with that issue about the accreditation, any willing provider. So that's.

Does that address my question? Does that.

The Bill should be amended to ensure PBMs are not forced to include pharmacies and pharmacists in a network that do not meet specified requirements when requirements are necessary?

No, I don't think that's, I don't think that's my question, Senator. And correct me if I'm reading this incorrect, if I'm reading this incorrectly, that a consumer will have the ability to choose any, be able to go to any pharmacy whatsoever and then potentially go to a pharmacy that is outside of their network, that would raise their costs.

No, there has been language amended into the Bill that would clarify that it's within the network.

So what is happening from the pharmacist side is that there's the network that is on paper, that is established by the plan, and then the PBMs are adding essentially another layer of restriction on where an individual patient should go. And so what we're saying is that we don't want to have additional restrictions outside of what the plan has required.

We, of course, appreciate that networks and the plan's ability to establish a network are a critical part of our healthcare system broadly, and we wouldn't want to disrupt that.

And so what happened, how it plays out now is that, let's say Walgreens, just to pick a pharmacy that Walgreens is in your network that you typically, and that you're then forced not to go to Walgreens, but instead only to go to the pharmacy that the PBM owns, even though Walgreens is in your network. And that's what happens now. And sometimes it's sort of by suggesting that you can't. Sometimes it's by outright telling people, but they're basically being, that's what we call steering.

They steer into their own pharmacy that they own, and that basically helps their bottom line. But it prevents you from going, for example, to your neighborhood pharmacy.

And your Bill, the intent is to ensure that the consumer has any ability to choose within their own network.

Within the network. Yes. We're not trying to break out of the network.

Madam Chair, can I-

Yeah, I think the opposition would like a shot. And just if you want clarity from staff here too, the amendment that was proposed by the Committee is actually about the accreditation piece.

And not what I'm looking at.

I'm not quite sure as to what you're saying. Go ahead, Mister Wenger.

Thank you for that. Yeah. They're two separate issues. One is the accreditation issue and then the other is the. And let me address this notion of steering. The PBM simply implements the contract it was contracted to do. So if that means going to mail order, that's what's going to be implemented. The provision in this Bill says any pharmacy can be in the network even though it's not technically in the network and doesn't have to comply with the terms or conditions. That's a separate issue from accreditation.

And that will drive up cost because any pharmacy can be distribute the drug and charge.

So you're reading it as they will be able to choose any pharmacy outside of their network.

Okay.

Correct.

I haven't.

That doesn't like you.

Yeah, no. I mean, there are certain situations where you have kind of specialty drugs where, where the preferred avenue is through the mail order, which is the PBM specialty pharmacy that was brought up. But you still have an option to go to other pharmacies at a different cost share.

And that really just continues to go around the cost, trying to drive down the cost through the balance between maintaining adequate networks, which we are regulatorily required to do, and also trying to get the best cost possible for our enrollees.

And last question, Madam Chair to the opposition. Can you walk me through what does that look like? I go see my physician, I'm prescribed xyz. Do I then come out? Do I call someone and say, hey, where can I go? Does my physician direct me to what pharmacy I can go to. Where is there an opportunity for me to be steered one way or the other?

Well, and I wouldn't call it steering. It's simply the benefit design that that enrollee has. So they get the prescription from their physician they would go to. Hopefully they're a pharmacy in network, which most are going to be in network.

And then if it's a maintenance drug, so a drug, a prescription that the person can be on for a period of time, the plan will often say, we want those maintenance drugs to be distributed via mail order, because the volume discount that the mail facility gets is much deeper than a brick and mortar pharmacy higher can get, so that savings is passed on to the payer and to the patient. So the incentive is if you get this through mail order, your copay will be significantly less.

So that's the incentive. They can still go to the other network pharmacies.

Is that information given to the consumer?

Yes.

I'm going to save money here.

Yes, exactly. And that's the incentive. It's benefiting the patient with a lower copay. They can still go to another network pharmacy that's not mail order, and get the drug. It'll be a higher copay because they're not taking advantage of the savings that the plan wants them to take advantage of.

Okay, hold on 1 second. I think the author would like to address that comment.

Yeah, I mean, they can describe that as a benefit to the consumer. What it's saying is, sure, you can go to your own pharmacy, but you're going to pay more if you do that. And so it's penalizing them for exercising that choice. I also just want to clarify one thing in terms of our intent is not to force out of network. That was, I apologize. It was not the Committee amendment. We submitted amendments which I assume are being processed along with the Committee amendments.

If for whatever reason, there's any confusion about that, that we're not. Our intent is not to force out of network.

Okay, thank you for that clarity. No further questions.

Just really. I see Senator Roth leaning forward. Should this Bill pass through here, it will go to health, and I believe that is where those amendments would be taken up. But Senator Roth, do you want to speak to that item?

Well, first, let me just say this before we, before I forget to say it, I'll be supporting the measure. It's going to come to me in health. So obviously I want to move it along and we'll get it over there and things may stay in or may come out. I don't know. But with respect to this willing pharmacy issue, I'm still confused now. I'm more confused now. I wasn't confused, I didn't think before. So a pharmacy is not in the network.

A consumer goes to the pharmacy, the pharmacy fills the prescription and asks to get paid. Not the network rate, but the rate that the pharmacy decides to charge?

That's currently written that would be. Yes, that would be the case. We haven't seen the amendment.

That was not our intent, and that's why we submitted an amendment.

Oh, I see. That's what you were talking about.

Yeah, which apparently is going to happen in health.

We'll see it there. Thank you.

In other words, we're punting to you, Senator Roth. That's all clear now for everyone. Got it. All right. Senator Archuleta.

Yes, thank you, Senator. And of course, our people here that are trying to enlighten us and educate us. But if the Bill primarily is to license and regulate, what is the fear factor? I mean, if you're doing the job, you're protecting the consumer, and we're trying to find a way to lower those prices so everyone will have a fair shot to go to their, either their local.

As a matter of fact, when I go to the dentist, there's a pharmacist downstairs and get a prescription, go downstairs, fill it out, or I can jump in a car and drive a little closer to home and fill it out there. I mean, wouldn't the regulations regulate both and to make them equitable and fair to everyone? And so I don't see what the negative is on having the PBMs licensed and regulated because there's obviously issues there.

Senator, would you address some of those things that you're really concerned about?

Yeah, I mean, what we're trying. So just sort of backing up. When PBMs were created, it was, these were smaller administrative entities to try to help health plans do certain administrative functions around the formulary and some negotiation. Over time, and particularly in the last, less than a decade. These are now massive corporations in their own right. That are, that, you know, we believe, in some instances, drive up costs and increase costs in the healthcare system and are not doing it necessarily in the interests of consumers.

And so we're asking for licensure and for some basic consumer protections in the Bill around the spread pricing and not pocketing the rebates and not forcing you to use pharmacies and preventing you from using pharmacies that are in your network. And we think this is a reasonable approach. Other states are doing different versions of this. Obviously, this is the First Committee, and this will be an ongoing conversation, including in Senator Roth's Committee. And I think this is long overdue. This is a huge market.

They should be licensed and regulated.

Thank you, Madam Chair.

Senator Eggman.

Thank you. I will also be supporting the Bill today, and if it hasn't been moved yet, I'll move it at this time just because I think it makes sense that we try to get our arms around this in a bigger way. Nobody's talked about this, and maybe somebody did before, but just also the domination of the market. I think anybody who cares about small business and neighborhood stuff should care about this. This has been one of my pet peeves for a long time.

I had 49er Pharmacy been opened 100 years. I went there all the time. They're closed now. I try to find another small one. So I find myself at CVS now. But when I was on the City Council, we went through this with trying to decrease costs, but it just takes everything away from that small person that you may know. The next thing you know, it's mail order. The next thing you know is this, and then next thing you know, it's automatic delivery.

You didn't even ask for it again, and here it comes again. So, anyway, I think. I think this is a good Bill. I think it's a good start to some of the regulations we need to put in place.

Senator Smallwood-Cuevas?

Thank you and thank the author for bringing this discussion to, to the Legislature on this issue. I mean, ultimately, our goal is to bring down drug prices for communities, and particularly communities that are disadvantaged and in need. You know, other states have, have implemented these kinds of regulations on PBMs. And I'm just curious, you know, in those scenarios, what are the impacts for consumers? What are you, what have we seen in terms of impacts for consumers in lower drug costs?

Yeah. And I think, and I want to be very clear, at no point have I said or will I say that PBMs are the only issue in our healthcare system. There's no silver bullet, but this is one piece of the puzzle. A bunch of these regulations are rather recent. But Rachael may be able to add.

Senator, it is challenging because there were preemption issues. There was a Supreme Court case that was overturned several years ago that allowed states to then take a more aggressive stance against PBMs. So they are relatively recent. And there is a wide range of methods that the states have used to attack these. Some have looked at particular practices. Some have created licensing boards. So it's hard to say exactly what the impact is directly right now, at this time.

I will say that we have seen some evidence from Medicaid plans, Medicaid plan savings, a demonstration that there are some dollars kept at the state level because of the impact of these regulations. And so that certainly is of value to those states.

And ultimately the transparency and creating an entity in California that ends up being the expert on pbms and is a regulator that can really have the appropriate level of information to do some effective regulation is really what we're aiming, and we think that it will be very effective to help level the playing field.

Thank you for that. And I agree. I think the State of California, given our size and scale and buying power, we should be able to see some of those savings as well. Thank you.

Seeing none, would you like an opportunity to close, Senator?

Respectfully ask for an aye vote, Madam Chair.

I think aye heard a motion from Senator Eggman already. This is, as we have discussed, ready to go to health, so we will call the roll.

Motion is do pass the Senate Health Committee. [Roll Call]

That's 11 to zero, we'll put it on call because I think we are still missing at least one, and we will move on.

Thank you.

File item two, the last of the day. SB 1012. Senator Wiener, are you prepared? Senator Wiener, or do you need a minute? You got it. Okay. When you're ready, sir.

Thank you very much. Madam Chair. Colleagues, I'm here to present Senate Bill 1012, which will provide regulated supervised access for people 21 and older to certain psychedelic substances under the supervision of a licensed and trained facilitator. SB 1012 is a narrower version of what the Legislature passed last year, Senate Bill 58, which was supported by a majority of the Members of this Committee. Thank you, colleagues. Which would have broadly decriminalized personal possession and use of certain psychedelics.

As you may recall, the Governor vetoed SB 58, and in his veto message called on the Legislature to send him a Bill focusing on therapeutic use of psychedelics. We immediately got to work within a matter of days, and that work ultimately resulted in SB 1012. And I apologize for my allergies, and my voice sounds a little weird.

It's very Sacramento of you.

Yes. And we worked with a broad array of stakeholders, including opponents of SB 58, who are now supporting this effort. And you will hear from one such person today. SB 1012's support coalition includes combat veterans, first responders, healthcare experts, and a coalition of parents who tragically lost children who use psychedelics and who are telling us that SB 1012 will reduce the risks of other parents suffering that unimaginable loss. SB 1012.

Under SB 1012, the state will license trained psychedelic facilitators, who will then be authorized to supervise and facilitate consumption of these psychedelics, governed by professional oversight and guidelines. People seeking the supervised use will not be able to bring their own psychedelics, nor will they be able to take the psychedelics away after the session. Rather, they will use with the facilitator, and only in that session. I do want to note and I want to thank Senator Menjivar and Senator Glazer for working with us.

And based on those conversations, I will - I'm committing to amend the Bill to limit the licensure to be a facilitator to existing mental or existing licensed health providers specifically. And I'll just list them out - to physicians, including, but not limited to, psychiatrists, psychologists, marriage and family therapists, licensed clinical social workers, nurse practitioners, physician assistants, licensed professional clinical counselors, and licensed drug and alcohol counselors. So those will be the only individuals who will be able to go and seek a license.

They'll still have to get the training and receive the license to be able to do this, but it will not go beyond that existing category of license holders. SB 1012 also contains provisions to expand education so that people know how to use psychedelics more safely. This was very important for our coalition. Public education around psychedelics is extremely important because these substances, like any powerful substance, and they are powerful, includes risks.

Both those facilitating and those using must be aware of those potential harms and how to reduce that risk. Growing science shows that these substances can change people's lives. The FDA is anticipated to approve one or more psychedelic therapy in the coming years. However, as indicated in the response to the Committee analysis by Doctor Brian Anderson, that authorization is likely to be quite limited to a limited number of providers with DEA authorization, and for a limited category of diagnoses. It will be a positive step forward.

But having that complemented with this Bill is incredibly important in terms of expanding access. This Bill is a culmination of about almost four years of work. It's been a real journey, and I think we have a very strong work product here. Obviously, as with any complicated area, there's always more work to be done. This is the first policy hearing, and I'm asking the Committee to give me the opportunity to continue to do this work. Many people are currently using psychedelics today.

They're doing so in the shadows. Since we criminalize their use. Many people are doing it in California. Many people are being forced to travel to other countries to receive this facilitation. Let's bring it out of the shadows into the sunlight and help people use psychedelics more safely in a structured setting. I respectfully ask for an aye vote. With me here today to testify are Jason Moore-Brown, a United States Army veteran with the Heroic Hearts Project, which is one of our sponsors, and Susan Sagy, the Executive Director of the California Coalition for Psychedelic Safety and Education.

Okay, so, to the two of you, I'll have two minutes each. And I assume whoever else is here for technical support if there are questions. All right, go ahead.

Madam Chair and Members of the Committee, fellow veterans, including Senators Archuleta, Menjivar, and Roth. Good afternoon. My name is Jason-Moore Brown. I'm a Member of the Veterans Mental Health Leadership Coalition and an ambassador for the Heroic Hearts project, the Bill sponsor. I am here on their behalf and on behalf of the 1.8 million veterans that comprise your constituencies.

Sorry, you forgot Senator Eggman, our fellow veteran.

I apologize. I thought I did my research. I'll work on that, but I apologize. Thank you. I'm here on behalf of the 1.8 million veterans that comprise your constituencies, asking you to vote yesterday on SB 1012. I live in Placer county with my beautiful wife and five children and my granddaughter. I served with distinction as an army officer from 2000 to 2008, deployed three times in support of the global war on terror. During that time, I successfully conducted over 300 combat missions.

Statistically, I should have been killed 15 times. I received two bronze stars for my actions in combat. General William Tecumseh Sherman said, war is hell. I realized how true that statement was during the invasion of Iraq in 2003. Honestly, it's frustrating to be sitting here before you all again with my hat in my hand, reliving my story and pleading with you all, asking for your support.

Support that will give California veterans like me a pathway to the only thing that has provided many in our community with any long lasting relief, and that's psychedelics. Sometimes we are called to be brave and do hard things. So here I sit. Here is the reality of the situation and some facts. Over 133,000 veterans have committed suicide in this country between 2001 and 2021. In 2021, veteran suicides in California accounted for over 11.5% of all of the suicides in this state.

California has the largest US veteran population in the United States. I took ayahuasca with other veterans at a Heroic Hearts retreat in Peru a year ago, and it's the only thing that has helped me find peace in the 21 years since I first experienced war. My wife was so moved by the transformation that she, dealing with her own traumas, some inflicted by me, took psilocybin in Mexico at a Heroic Hearts retreat with other veteran spouses.

She had also sought relief via different modalities, and nothing was as therapeutic as the psychedelics. If SB 1012 were enacted, my wife and I would not have had to travel outside the country to access this life saving medicine. Nothing currently available to veterans has shown the potential to decrease suicides and improve mental health like psychedelics. If there were other, better options, I wouldn't be sitting here in front of you today.

So let's please put aside politics, personal misgivings, and look at what's available in research and the other legislation that's passed in other states and at the national level and move this Bill. If you want to thank veterans for their service, you'll vote yes on SB 1012 today. Today, I challenge you all to be brave and sit here with me and my colleagues, and let's do the hard things together. On behalf of the veterans in California, we thank you for your service.

All right. Thank you for being here today. Go ahead. Two minutes.

Thank you. Good afternoon, Senators. I'm Susan Sagy, representing my family and the Coalition for Psychedelic Safety, Safety and Education. Losing my 21 year old child to distressing experience with psilocybin drives me here today to support a Bill that will create safeguards, safeguards that will provide regulated access and increased awareness of the risk of psychedelics through public education.

My child was a trapeze instructor, held a full time job, and had a future at UC Davis, and tragically passed away after using psilocybin alone. It was all captured on a video, so we know exactly what happened. The prevailing online narrative that I was seeing before and after my child's death highlighted the potential benefits of these substances without really mentioning much about the risks. I didn't think it was such a bad idea for her to try it. I am not alone.

Several of the parents in our coalition have lost children to psychedelic use, and others have children that are struggling after having adverse events. What bonds us and binds us is not just our struggles and loss, but our belief that psychedelics taken in a responsible manner, the right way, with proper screening and facilitation, can be very helpful to many people.

What also binds us is the knowledge that psychedelics are being used right now, and they're being used in an increasingly large rate, and that is not going to stop. And they're being used by the most vulnerable in our communities, people with mental health conditions, youth, young adults. When there's an increase in use, there's just going to be an increase in harms. I had a conversation with a 16 year old recently who told me that psychedelics are used and very prevalent in her high school. Amazing.

This increase in use will not stop. So we need safeguards like, one, regulated access, and two, we need public education. We need to be able to have balanced messaging about the risks of psychedelics as well as the benefits. And that balanced narrative did not exist when my child tried psilocybin. Last year our coalition opposed SB 58 because we would never support a Bill that created a marketplace or allowed for unregulated use.

So today, if you don't approve this Bill, we're just going to be where we are today. Had SB 1012 existed when my child took psilocybin, they may have been able to discuss that interest with a therapist or a counselor, and they may have been told to get a safety screening, been told to use the substances, not alone, but that would not happen without SB 1012, because a counselor or a therapist would be afraid to counsel a youth about the use of a substance that wasn't legal.

Do you have a final. Can you capture your final thought there?

Yes. We urge you to please approve SB 1012 today. To fund - It's a Bill that provides for a fund for public education about the risks of these very powerful substances and how they can be used safely, and it also provides a regulated framework for use.

Thank you for being here. Okay, we've reached the part where folks who are in support of SB 1012, but would like to offer their me too testimony, name and affiliation position on the Bill.

Thank you. Madam Chair, Anthony Molina on behalf of New Approach Advocacy, LEAP Law Enforcement Action Partnership, the Steinberg Institute, and the Sacramento Institute for Psychotherapy and Support. Thank you very much.

I'm Khurshid Khoja, Director of Policy for Veterans Exploring Treatment Solutions. We're a 501C3, and we are co sponsor of the Bill as well, and we urge you to vote yes. Thank you.

Hi, my name is Isaac Gilmore. I'm a native Californian and former Navy Seal. I'm here on behalf of HHP. I was part of Treat California last year to add out to our coalition. I both received benefit from and I've advocated for this use of these medicines across the country. And to our generation of warfighters, psychedelics means hope.

Thank you. Need folks to stick to your name and organization, please.

Good afternoon. Nara Dahlbacka, Vice Chair of the Lake County Democrats. I'm here on behalf of the Lake County Democrats, the Alameda County Democrats, the Los Angeles Democrats, Sonoma County Democrats, Monterey County Supervisor Wendy Root Askew, several Members of the Berkeley City Council. Any Positive Change, A Harm Reduction Program. Michael Bumann, founder of Red Dot, an organization that treats PTSD and first responders. Cosmovisiones Ancestrales, a community based research designing public health interventions for violence, injury and disaster prevention, and Doctor Bronner's Soaps Foundation. All in strong support of the Bill.

My name is Angela Graham. I was a firefighter for 17 years, and I have co founded the Siren Project, which provides entheogenic medicines for first responders. In support.

Thank you.

Hi there. Good afternoon. Ismail Ali, on behalf of the Multidisciplinary Association of Psychedelic Studies, in support. Thank you.

Rebecca Nieves-McGoldrick, a mom, an associate marriage and family therapist, and also on behalf of A New Path, which submitted a letter in support.

All right, thank you. That's everybody for support. All right, then we'll take opposition. If there's lead opposition, you come on forward. In fact, I'm gonna ask the folks to step down so they can come forward and have the seats. We'll just have a changing of the guard here. Two of you can stay up, have a seat. All right. And then you will also each have two minutes when you're ready. Nope. We need you to push the button first. That's better.

Great. Chair and Members, my name is Greg Burt. I'm the Vice President of the California Family Council, and we have some grave concerns about the harm this Bill will cause to our state citizens. There's no reason to doubt the sincerity of the veterans and others here today desperate for better treatment for mental health issues like PTSD.

But notice Senator Wiener didn't talk much or seriously about all the veterans and others whose conditions were only made worse by these drugs or who were rushed to the hospital with heart issues, seizures, amnesia, acute anxiety, or hallucinations, as acknowledged in the Bill analysis. A recent Stanford study said that California hospitalizations and emergency department visits related to hallucinogen use increased by more than 50% between 2016 and 2022. What do you think is going to happen if California tells the public that psychedelics are safe?

Everyone wants to help veterans who have sacrificed their lives and service to our country. We owe them a great debt of gratitude. But make sure your emotions are not being manipulated in service of Senator Weiner's grand plan to end the war on drugs, on all illegal drugs. In 2020, Senator Wiener wrote the following on his Twitter account, and I quote, to be clear, decriminalization, decriminalizing psychedelics is simply one step in ending the war on drugs. We ultimately need to decriminalize all drug use and stop putting people in prison or drug use or possession. We are working on all of this, but for now, let's get it done with psychedelics.

Do you have a - because we need you to do a final wrap thought here.

All right, well, this Bill really isn't about science. It's about skipping science. Senator Wiener doesn't want you to go through the normal scientific process our state legislators or federal legislators already set up to make sure that drugs used for the public are safe. He wants psychedelics to skip the strict scientific standards, but to do so, he needs you to create an approval system that doesn't even require a psychedelic facilitator to have medical training before trying to help a veteran struggling with PTSD or other mental health issues. For these reasons, we oppose.

All right, thank you very much. All right.

Briefly, Madam Chair, I'm Ryan Sherman with the California Narcotic Officers Association in opposition to the Bill in print, and also today representing other police officer groups in opposition, including the Riverside Sheriff's Association, California Reserve Peace Officers, California Coalition of School Safety Professionals, Deputy Sheriff Association, Monterey and Placer counties, and Police Officer Associations of Arcadia, Burbank, Claremont, Corona, Culver City, Fullerton, Murrieta, Newport Beach, Nevada, Palos Verdes, Pomona, Riverside, Santa Ana, and Upland.

I want to start off by just thanking the Senator for taking the amendments or pledging to take the amendments to limit, the facilitators and their background and their training and experience. We still have some concerns about the drug and alcohol counselors because their licensing is a little bit different. So we do have some concerns there, but we do appreciate his efforts. We also would respectfully request that ecstasy be removed from the Bill, as it was in SB 58 that passed last year.

It did not include the final version, did not include ecstasy, and we think that's still a big problem to have be dispensed by non medical personnel. It's still schedule one. Adderall is pretty common drug, and it's dispensed only by licensed medical professionals. It's a schedule two. This is schedule one, and it'll be able to be dispensed by non medical folks. So for those and other reasons, look forward to working with the author and hopefully we'll be able to gets to some kind of agreement. Thank you.

All right. Are there other folks in the room in opposition? Now would be the time to come forward. Tell us your name, organization.

Thank you, Madam Chair, if I could do concerns as noted in your analysis, Paul Yoder, on behalf of the California State Association of Psychiatrists who have had concerns, we're talking to the center on a regular basis, inviting the proponents to be at our next meeting Thursday night. We'll just keep working with him, see what we can do with this, but appreciate the amendment center. Thank you.

All right. Thank you. Any other in opposition or concern? All right, then we will come back to the dais for conversation with colleagues. You want to start out Archuleta and then Senator Eggman after that.

Thank you, Senator, again for bringing this forward. I know I've been with you on this journey, oftentimes on the opposite side. As you know, my law enforcement background, my service with the 82nd airborne, as a combat veteran, I was very, very tough on you as you started your journey. But over time, I've gotten closer and closer to you in understanding what you were trying to do - help veterans who really need it.

But I think what's really taken me over the top today is the fact that you've listed all these professionals, professionals that are here in the dais with us that are going to be part of that. And let's just for a second, it's not going to be on the streets. It's not going to be there where anyone can just buy it. It's going to be supervised by these professionals and only if they meet the criteria, because not every veteran is in need of the psychedelic drug.

There's counseling, and I think you assured me there will be steps and procedures when you finally get to that point with a professional, says, I think we need to try this in small amounts and then go from there. And we heard the testimony of a veteran that changed his life. So I think we're in the right track, and I think that this will help our veterans. In reference to our first responders, we have law enforcement officers, firefighters who experience things that are pretty equal to combat. Their lives are turned upside down. So now we're opening the doors for them, too. So for all these reasons, I'm going to support it and let's continue the research and let's continue opening the doors to bring our veterans home. Thank you and thank you for your service.

Senator Eggman.

Thank you very much. This is a big, ambitious Bill setting up three different new division aborted and oversight Committee. And so the responsibility for setting up what the criteria is for the education to become a licensed person will be established by the division, as I understand it, and then those folks will be over, will be, will be supervised by the board, which will then be. So can you talk a little bit about that and also about the issue of dispensing. I've heard about dispensing, but I don't see anything here that pertains essentially to that.

So the board will essentially be like the equivalent of the medical board or the dental board in terms of the licensure. The division will help set the actual standards and that will also include the cultivation, manufacturing. So that that's being done. And we know that that will require, we want that to have that regulatory oversight because again, as I said at the beginning, this isn't about people taking something from the street and bringing it in or taking it with them. It's a very controlled setting.

I want to, and then we, of course, want to make sure that people who are these existing licensees who then get this additional licensure are - that very clear training standards are in place and professional conduct and making sure that people who act inappropriately or violate the law are held accountable for that. I do want to just say this is the First Committee.

We know that the regulatory structure, especially as we have been communicating and reaching out to the Administration, and I imagine at some point they will have an opinion, I'm assuming, about how that should look. And so we look forward to continuing that work.

And what, and we haven't been to Appropriations yet, but what are you thinking about costs when we're talking about a budget year like this?

Yes. And I, this year I'm acutely aware. I wish I were Budget Chair during mega surplus year. But alas, you know, we will, of course, be working on cost savings for Appropriations. And I, you know, we started working right after the veto last year. You know, obviously things moved in a certain direction and that's something we're going to have to deal with and address.

And I would guess this is going to take a couple years to set up. I mean, as somebody with a license, like, I wouldn't feel comfortable getting another license because then you put your primary license at risk.

Yeah, it's a multi year implementation, and it'll - and then the training that they set up, you know, this will be a gradual ramp up for sure. Thank you.

Senator Nguyen.

Thank you, Madam Chair. I just have one question. Is there any requirement, I mean, if a medical diagnosis occurs, is it required to receive psychedelic treatment or therapy? Do we need a medical diagnosed to receive it?

A formal diagnosis. There is a process set up for evaluation. So again, these individuals will have been, have to undergo, even if they're currently a psychiatrist, they'll have to go through the training to become, to receive this license, and they will have to make an evaluation. And there's a whole process laid out in the Bill for what they have to do beforehand, what they have to do afterwards. So it's not just like I walk in and say, I want, you know, I want this. And so they get it. There's a whole process before and after, because you - after is important as well.

So formal diagnose, just like we would if we were to get any other treatments.

Not exactly the same, but there is a screening that has to happen beforehand and that's laid out in the Bill. And the Board would also have the ability to make its own rules.

Thank you. Okay, just one point here to my colleagues. We have floor session in 15 minutes, so I'm trying to gauge if you want to stop here and come back with comments. There are at least five of you with your hands still raised to speak, and I know it takes us a few minutes to get over there, and I'm not sure how many of you need to go upstairs to grab items. So just gauging across the board. Would you like to stop here? Yeah. Okay. All right, we're going to recess then, and we'll come back after session and finish out this Bill. So sorry to everyone.

Thank you, colleagues.