Senate Standing Committee on Rules

Alright. The Senate Rules Committee, will come to order. Before we begin today's agenda, let's establish quorum. Please call the roll.

[Roll Call] Quorum.

Appeals Board. I'll entertain a motion. Thank you so much to our Vice Chair Grove. Can we please call the roll?

Thank you. A quorum has been established. If there are no objections, I'd like to take up first on today's agenda governor's appointments not required to appear, starting with item two c, the appointment of Frank Dammero Junior, JD as a member of the Alcoholic Beverage Control

[Roll Call] Four to zero.

Alright. That is, approved. Four to zero. The next item for governor's appointments not required to appear is item two d, Michelle Ediger, as a member of the board of Barbering and Cosmetology. Thank you.

I have a motion by Vice Chair Grove. Can we please call the roll?

[Roll Call] Four to zero.

Alright. The last item for the governor's appointments not required to appear is item two e David Galaviz as a member of the State Park and Recreation Commission. I'll entertain a motion. I have a motion by Vice Chair Grove. Can we please call the roll?

[Roll Call] Four to zero.

Alright. That item is approved for zero. Next, I'd like to take up item three, reference to bills to committees. I'll entertain a motion. I have a motion by Vice Chair Grove. Can we please call the roll?

[Roll Call] Four to zero.

Alright. Next agenda. Next on the agenda, we have item four, rule waiver request to suspend JR 61 to allow SB 1447 health to be heard in committees past the policy committee deadline. Thank you. I have, a motion by Vice Chair Grove.

Can we please call the roll?

[Roll Call] Four to zero.

Alright. That is four zero. Our final items before we turn to governor's appointees are items five through fourteen, four acknowledgments. I'll entertain a motion. So moved. Thank you to Vice Chair Grove. We have a motion. May I please call the roll?

[Roll Call] Four to zero.

Alright. That is four to zero. We will now turn to governor's appointees required to appear item one a, the appointment of Clint Clint Kellum as director of the Department of Cannabis Control. Director Kellum, you're welcome to come forward.

You'll have one to two minutes for your opening testimony to the committee. In your opening, you're welcome to introduce any guests you may have. We'll keep time and flag for you when you get close to that time. You may begin when you're ready.

Alright. Am I live?

You are live. Okay.

Thank you Madam Pro Tem and members of the committee. Clint Kellum, director of Department of Cannabis Control. I appreciate the opportunity to be here and for your consideration of my appointment.

I'm joined today by my wife Maggie and our two children, Winston and Faye, and my mom. I love you all and I appreciate your support. I also want to thank the governor for the trust placed in me. The governor's office and agency staff for their support throughout this process.

I also appreciate the time that you and your staff have taken to meet with me and consider my fit for this role. I'm also grateful to the colleagues and mentors, some of whom are here today, who have shaped my career and helped me prepare for this opportunity.

I also wanna thank the dedicated staff of the Department of Cannabis Control, who provided significant support throughout this process. I'm eighteen years into state service. I started in a budget role shortly after college.

That along with the opportunity to work alongside a strong and committed team, is what motivates me and gives my work meaning. I'm excited about the opportunity to lead the Department of Cannabis Control and to continue building a legal market that is accessible to Californians,

And while that wasn't a pre planned path, it proved to be the right one. Over time, I've come to value public service because of the direct impact our work has on the Californians.

protects consumers, youth, and the environment, and supports long term compliance. Thank you again for the opportunity and I look forward to your questions.

Alright. Senator Jones?

Great. Thank you. Thank you. Welcome. I just have, probably just some generalized questions.

Probably nothing that has a, predictable right or wrong answer at this point in time. I just wanna get your thoughts on a couple of things. So first of all, the department has an app on the website, I believe, that people can put in their address and then the department will, indicate

within a certain radius the legal dispensaries and retailers that are available for that person. And I just kinda wanna get the thought process behind that.

You know, if you go to the ABC website, which oftentimes, your department and ABC, there's, comparisons drawn because you're both regulating an an adult substance.

So ABC doesn't have a, you know, put in your address and this is the closest bar, this is the closest liquor store, whatever. I just Wanna Kinda get the thought process behind this and and why it's

there. Yeah. I appreciate the question. We we are a standard regulatory agency that wants to protect consumers' youth in the environment, but we're doing so in a really unique environment. Estimates are that only 40% of Californians consumption is actually coming from our legal market.

So there's quite a bit of consumption within the state that happens outside that market. And we have evidence that there's quite a bit of consumer confusion. There's a consumer survey that was completed in 2023, that showed individuals in banned jurisdictions.

62% of people there thought they could purchase it there legally. 23% didn't know. 88% of people wanna purchase legally. So there's this real sort of dichotomy on like, how much is happening and how much people are want to do it.

And so it's just providing that awareness to people about the legal sources to do that. We're actually in the middle of, launching our real California cannabis campaign to do more consumer awareness with that website being one of the places double check your purchasing from legal sources.

There's intoxicating hemp, there's smoke shops, there's other illicit opportunities and I think there's a fair amount that consumers don't know that they're interacting with something that's not legal and so we're just trying to make that as clear as possible for them.

And do you have any matrix or analysis on how it's working? Is or is it kind of is it still kind of in infancy stage or

Yeah. I mean, when we have money available to actually advertise, you know, the the results are obviously higher. It's about $1,000,000 a year. So it's not gonna go too far in its reach.

And but we are looking to sort of partner with our retailers and kind of try to get the word out best we can and looking for opportunities to do that in other forums as well.

And how does somebody get on onto that app?

The real California cannabis website is how they would just.

So do they ask to be on that or when you issue the license that's automatic or?

Oh, yeah. All of our licensed retailers are on there. Okay. Yeah. Great.

And then one of the things you mentioned in the answer was protecting children. So I've and these I'm just gonna show you some examples of what my staff came up with because I'm not familiar with this stuff. I have family members that probably are.

So, well, I said probably I know I have family members that are familiar. And that we're not on the floor, but thank you for your The Senate or Vice Chair of rules is harassing me.

So this is a root beer. It says not your father's root beer and it's an actually very attractive can. And this isn't a gotcha question, but but I I'm I'm intrigued to know. Take a guess at how many milligrams of THC are in this can.

A 100.

Yes, exactly a 100. That's good. And I'm told that ten milligrams, will somebody my size of weight and age would be pretty effective on me. So that's 10 times the the milligrams I should consume.

There's nothing on here as as far as a warning label that says there's 10 times, you know, the normal amount of THC, an Advil should consume.

Now, there is labeling that shows, you you know, that, suggested so this 16 ounce can has, sixteen one ounce servings or thirty two one tablespoon servings.

I think it's safe to say nobody's gonna open this up and save it for ten days, and and take one ounce a day, or whatever. Maybe 16 people might share it at a party or something like that. So where I'm going with this is, my understanding is that you have some authority regarding labeling.

This can is also a hundred milligrams.

It's only twelve ounces. So and I know there's been bills and there's been legislation and lots of talk about labeling, protecting kids. Again, no right or wrong answers. I just wanna kinda get your thoughts on where you wanna go with your department on that.

Do you need legislative support to get some of the things done that you wanna do?

But how do we protect 16 year old kids? They shouldn't be able to buy it in the first place. But if they do get a hold of it, or an adult my age, no, you should not drink this whole thing in one or even half of it or a third of it.

Right. Well, let let's let's start with the the straightaway answer. Right. We are interested in protecting youth, and that is absolutely important. And, the attractive to children labeling is an issue that the legislature is up is considering.

And we look forward to those discussions on doing a research based decision on what is or isn't attractive to children. Especially given the sort of Venn diagram both between what's attractive to adults and children. Sort of making work.

Which nowadays is all about the same.

Yeah. And I also believe that your 'Not your Father's Root Beer' is also an alcoholic drink as well.

This particular one is not alcoholic.

Yeah, I think they also have a variety of that too. So, you you see you've seen that also in alcohol as well. It's not an excuse but I'm just pointing out that this is not unique to the cannabis market.

For the record this is just water.

Yeah, and so it does have serving specified on there. So the user would have to look at that and then have, you know, some knowledge about that. There was also a bill, Senate Bill 540 that required an educational pamphlet to be at the front of all.

I have that too.

Yes. And that also on there as you'll notice will tell you about edibles and your dosing on that and not to go if you're a new user to start at five milligrams or lower. Give yourself a few hours. It's better to do less than more.

And so there are these places where we have to do education. I also think there is room that we've been talking with CDPH about parent education and having a conversation.

We talk to our children about not drinking alcohol when it's in the fridge. We would want to have that same and maybe even more important conversation if you happen to have cannabis in the fridge. But I do think there is room to tighten our rules, in our regulated space.

I think the only other thing I would say is this doesn't like, absolve us from our responsibility. But given that 60% of the consumption is happening outside the market, whatever we do here doesn't have the same lever and effect that it would.

When those are sort of usually the most egregious sort of issues at hand.

Yeah. I'm sure the illegal dispensaries are not giving out the

They're not giving out the pamphlet. They have higher amounts. They have more attractive to children packaging than us. But we we see room for improvement. We're we're committed to that and, looking forward to the engagement of the legislature.

Okay. And and you brought up the the pamphlet. I'm actually intrigued by this because it's simple. It's just a eight and a half by 11 printed, and it looks like it's printed off, private printer. Is this, tell me about this.

How do how does this get, to the dispensaries? Do they actually print it themselves and you just update it and send them the file or?

It's on our website. They are required to print it. It's one of the things we check for when we do our unannounced inspections. It's by the front register. It's required to be given to new users.

And so, it's a there's a lot of education to happen in this space and that is part of our role and so that's one of those ways of doing that.

Well, I will share with you on my staff's field trip to acquire this that, everything was done according to regulation including the brochure, that was handed out. You know, the the one thing, oh, and then one one other question, you said, in your comment,

the illegal you didn't call illegal, but the 60% market versus the 40% market. You said us. So that that kind of I mean, tell me about that. Are do you you're a regulator.

Yeah. Your your job is to make sure that these dispensaries are following the law and the regulations. Do you also kinda consider the department a promoter of the of the products?

Because you said us, and I think I have some back in my background material, I think there's some other situations where you may have alluded to promoting the the cannabis industry or the or the the cannabis product. And I'm just kinda give me some thoughts on that.

Yeah. How you approach that?

For sure. I mean, I'm definitely not promoting any more consumption. I'm promoting transferring consumption that's happening in the state from illicit sources to legal sources. So they can have the protections necessary.

And so some of that is awareness and access. Because when there isn't access or awareness, they're preyed upon with, you know, other opportunities that don't have the testing, the age gating and all of those pieces.

So it's an information sharing in relation to that, but there is no interest in the department on increasing consumption. It's just functionally getting into the protected environment that we regulate.

Okay. And I think I agree with that pretty wholeheartedly actually that the if we're going to have this in the market, and I'm not a promoter of it, and I have some serious doubts and questions about whether we should have it in the market or not.

I think that there's legitimate science, research and medical research that's coming out now that is particularly harmful to children, under the age of 25. And look, I'm not a doctor. I'm not a scientist, but I can read. And so, I'm concerned about that.

I think you've appropriately addressed the illicit versus the If we're gonna have it I guess, the rest of my thought is that if it's gonna be legal, then it should be all legal. And we should eliminate the illegal aspect of the market.

And I agree with you a 100% on that. I do appreciate your comments on the labeling. And I really want, and, you know, my colleagues up here can disagree with if they dis if they disagree with this next statement.

But I want us to be helpful to you, the legislature, to tighten this up as tight as we can make it. So children aren't getting this product. I think that's the most dangerous aspect of this product is especially kids under 18, but up to 25 also.

According to the medical sciences being done on on these on these THC products right now. So whatever we can do to be helpful to you to do that, I wanna I wanna be able to do that. I think you're certainly qualified for this job.

I will be supporting you, and just wanted to make sure that we had some understandings of, you know, where I personally and my a lot of big group of my constituents are on these particular issues. So thank you.

Appreciate it.

Thank you. We're gonna go to Vice Chair Grove.

Thank you, Madam Chair. Good afternoon. How are you? I have no props.

Okay. You know, I'm ready though. It's fine.

Who it is? I was thinking about holding up the Reese's peanut butter cup and pass it about.

That would that would be in the illicit market.

No. But I do have some questions. It's my understanding that a cannabis cultivation and illegal cannabis cultivation is outpacing the legal market. And I may be wrong.

But what are your concerns about public safety environmental damage, loss of tax revenue and what are you doing for enforcement opportunities for those?

Great question. Yeah. There there is a lot more illicit cultivation than there is legal. So I'm in the state of California. This is in 2024.

We produced 12,800,000 pounds of cannabis. 1,400,000 of that was legal. And the state consumes about 3,800,000. So the problem is California oriented and the pieces that we're controlling in relation to that, there's no silver bullet.

We have to be a strong regulatory agency doing Hallmark regulatory agency work, so we can have a strong legal market that people can trust.

We have to do illicit market work. We have a team of law enforcement folks focused on that. We're working with locals. We're working with the feds. And there's opportunities to continue to educate and grow in that space.

This goes back into, you know, legitimate access. Consumer awareness needs to be part of this discussion. And then also having a viable market for our operators that doesn't compromise trust and safety, and figuring out how to sort of balance that act.

So those are all the things that have to go well to kind of make progress on that front. I feel like we have initiatives underway to do that. But it is gonna be slow progress. I'm not gonna pretend like overnight we're gonna flip this on its head.

And then when you think about the scale, there's also incentives beyond California driving this. And while we will continue to play our role in enforcement, there are, you know, the the price of can, California cannabis in Europe.

And if somebody can put a couple of, you know, pounds in their suitcase and make its way over, make tens of thousands of dollars, that's a strong incentive with a low risk. And so it's just something we're gonna continue to put steady progress on.

Our illicit market work is gonna be intelligence led investigative work to kind of deepen, get further up into the criminal organizations that are perpetuating much of this activity. And so that's really what we're focused on.

Thank you. Thank you for that. Being from current county, there are several counties like our county that's chosen not to allow legal cannabis sales.

And, are there resources within your department that allow, assistance or support from you or your just from you or is even if it's separate and are they eligible for prop $64 or grant funding?

So so a couple of pieces. So the scale of our law enforcement team is about 75 sworn staff and about 54 are line level folks. So one less than one per county.

Most of our work in the illicit supply chain is not outdoor cultivation because CDFW has a similar amount of folks and that's typically their focus given the environmental piece in their focus.

So on that end, we have no reservations about not working with a jurisdiction that doesn't authorize cannabis. That that in no way comes into our calculus when our team is out working on things.

It is about what is the absolute most effective use of those resources, which isn't always whatever sort of bad activity that people can point out on any given day. We have to do deeper investigative work to make sure that we're being as impactful as possible.

And then I think you're also asking about the board of state and community corrections prop 64 grants. That is a statutory requirement to be eligible that you have to allow retail access.

And those grant funds are going out. The department is excited about that opportunity. It's about a $125,000,000. We've been partnering with them. They I think they got about 84 applications in under review now.

And it recently was prioritized for illicit market enforcement, so it won't be solely for that purpose. But it's a meaningful amount of money that's gonna go to our local laws enforcement community to kind of assist with this effort. And so that is a piece we're excited about.

And to the jurisdictions that don't have that, in the first, there there's multiple pieces here. We're not gonna enforce it away. And we're also not gonna just have legal options.

But having a legal option for people is the right step to then moving to the enforcement dollars, which I think is kind of the policy paradigm that's being presented there.

Thank you. That's all I have. Thank you. Thank you, sir, very much.

Thank you, Vice Chair Grove. And then we'll go to Senator Reyes.

Thank you.

I'd like to go back to this can that, Senator Jones showed you. It seems that there should be that there ought to be a law. There should be legislation that limits packaging to one serving. This is 16 servings.

And as Senator Jones has indicated, it would be hard to believe that anybody is going to take this and save it for 16 separate uses.

But I think if packaging is required to be one serving, then there would be 10 small servings of this. Do you see that as a potential solution to this sort of a 16 ounce?

I think it's on the menu of discussion items. I think this is something that I would like to bring to our cannabis advisory committee, which is made up of operators, public health people, local operators, and be able to get feedback in about what they're seeing. Because it's a continuum.

Like, I'm a parent too that worries me when I see that in a fridge by itself. But we also don't have any evidence that actual youth are ingesting legal market products with, you know, childproof resistant caps on them.

Right? And so like, how much of it is that. Right? And and putting all those pieces together, I think there were some recent industry news that we we hear that basically folks aren't interested in these lower dose beverages. So we just need to noodle through all the information.

But it certainly is one of the options on the table for consideration. I think it has to be. Right? Because that does seem sort of like naturally where you would wanna go to provide that protection.

But I think we have to do it in a holistic informed way with the best data we have available versus just like, that feels wrong. Like, let's see what information we can have to figure out what is wrong and then make an informed decision together on that.

Do you have medical doctors and scientists on this board that you're talking about?

We we do have public health doctors on on the Okay. Committee. Yes.

Very good. There are some questions about illegal dispensaries and illegal cultivation. It seems that that's the biggest problem for your department as opposed to helping those who are legally doing their work. Is that correct?

It feels like that because that is usually the face like, that's what people hear about. That is part of what we have to do. And usually, when we're talking publicly, we're doing education and information, which is our biggest lever on that topic.

But when you look at us as an institution, you know, we are about 590 actual employees. 240 of those are like our licensed compliance staff.

So they're out doing our legal kind of field work. We have about a 100 in our licensing division doing all the normal sort of application and licensing work. And then we have about 75 are related to illicit market enforcement.

So it gives you kind of the scale of our institution of how much of it resource wise is dedicated to that work. It's not sort of at the level that you're hearing it being discussed but it is on the forefront of people's minds.

Why isn't it? Why are we spending so much of the money to help those who are doing the work legally as opposed to spending the money from the department to work if 60% of what is being cultivated is illegal, why isn't the money being spent on that?

That's a good question. Yeah. I think a little bit of it's artifact of expectations. I worked as department

What's expectations?

Everyone's I think for the most part. When I was at. Okay. So I'm glad you were able to foresee like the future on this and how that would work.

I think there was an expectation that there that there would be some transition in the market, but that there would be more sort of legal consumption sooner.

And so that's what we're seeing. But also the department isn't in this by itself. Like I mentioned, we have about 75 sworn. CDFW has a similar number. We have parks as a partner.

CDTFAs involved in this work. So it's not us by ourselves. And then I mentioned the the local public safety community as well which is, you know, 600 local law enforcement agencies. And there's like a varying amounts of interest and capacity to engage in this work.

And so we're organizing. We have our unified cannabis enforcement task force, that helps unify us at the state level. And we're starting to build into that local continuum.

The board of state and community corrections fund being a cohort of agencies we're looking forward to kind of building that momentum with. We're having positive engagement with different jurisdictions, and looking for those opportunities.

So the the challenge too is we are the regulator at the state level and that is our ultimate responsibility. But there is an aspect of this that we we are sort of communicating about and leading on because that's naturally what what takes place given the sort of unique state of the

market. It absolutely concerns me. And as the Senator said, you're qualified for the job. There's no question about it. But I am concerned about what happens within the department. And, the division of duties within the department in what California needs.

Because I believe California needs less money taking care of those who are doing the work, doing the retail and the cultivation legally and more needs to be done to bring in those who are illegally cultivating, illegally selling.

So that if those are brought in to the fold, it benefits those who are working legally. Because those who are working legally have so many rules imposed upon them and taxes and what have you. It's good that they're still doing things legally.

But with all of this we're imposing on them, if we bring more that are working illegally into the legal aspect of this, then it helps with with tax base. Economically, it'll help in every way, but then the onus is not only on those who are operating legally. That is a big concern for me.

It has been from the very beginning that when we talk about cannabis, and we we whatever our opinion is on it, that that we have the majority in California working illegally.

And it seems that there should be, in my humble opinion, more emphasis on those who are working illegally to make sure they are brought in, to to either work on their ways to make sure that they become legal, which is another question.

Once you find that a particular cultivator, you find there's an illegal cultivate cultivation happening. What does your department do to to help them become legal?

So given this a couple of things. Maybe on the on the first point here of like, I think we have shared interest here and that we wanna see more of California's come consumption come from the legal market. It being a transference not an increase.

And the but the pro the actual legal market does need to have fidelity. And that is what a regulatory agency is set up and established to do.

And there are financial incentives for a legal entity unchecked to not to also sort of go to maybe things that are less ideal for consumers. So we still have to maintain that ultimately the products that our consumers receive in the legal market have that fidelity.

And that is what our team was established to do and dedicated to do. And that's why it is in the place it is.

When you talk about the illicit market and like what we do to bring folks in, we generally because of the scale and and where we've seen really more like organized crime entities being involved in this and like the everyday small business owner that's just trying to like do it outside the system.

We don't really have the resources to chase that person down. At this point, it's really sort of like we're looking at the more material issues. And so there If you

do if you do find it, if you think it's organized crime, what what are your steps then?

So it's just like a typical investigation, you know, we develop surveillance, investigate it, develop a report, develop probable cause, go serve a search warrant, see what we can find on-site. That would probably take that site down.

Does that advance our investigation further? And so it's just kind of the normal investigative work that you would do.

Do you work cooperatively then with law enforcement in the area?

Yes.

That's why I'm asking what it is that you do. So who else do you bring in?

So I would have to get back to you on the specific numbers. But I think we're in the neighborhood of like every search warrant that we serve involves another local agency at a minimum and sometimes multiple.

And in each of these instances, you're working with locals, sometimes local state and feds, multiple state agencies. So there's a lot of collaboration. But it tends to be very case specific.

And that's a function of really law enforcement and how it works in general. And so, I think last year, we'll get back to you. But order of magnitude is like, at least a 100 different agencies we worked on with on on different cases.

But I think it could be orders of magnitude higher than that. It it also depends on the sort of scale of a local entity, their ability to place any investigative resources on that too.

The comment has been made about having the legislature work with you. We want you to succeed. We want your department to succeed.

And if legislation has to be introduced, we're prepared to help in that regard. If the voters of California have approved this, we have a department, an agency that has that is set up to to work on this, and you have issues that can be resolved by legislation.

Yeah.

Do reach out to final question if I may, Madam Chair, Adam PT, is if you find an illicit grower and clearly they're using water that they shouldn't be using.

Do you then notify the water board or what do you do in that regard?

I would wanna get back to you on the specifics on the notification there. We do go and do search warrants together with the water board and protected watershed areas. We do work together with CDFW but I don't know the specific mechanisms for notification.

And so in the absence of giving you bad information I would I will respond back. But we are working with water board and CDFW and protected watersheds.

Then my final question has to do with children. Probably the most important part of this, if adults decide they want to drink this all down, that they're an adult. I hope they don't, but they're an adult. But these things are so attractive to children.

I read in some of the information about the tons that have been recovered in LA alone.

Here it is. 2,200,000 illicit cannabis packages designed to look like candy and sweets. That was in August 2024 reported in the l a times. I'm sure that's not the only time this happens. When when you do find it a manufacturer that is sometimes it's illicit.

But if you find a regulated manufacturer that is, packaging these things, making them attractive to children, what is it that you do? What does your department do to to stop them?

Are you eventually able to to take away their license if they don't change their way, so to speak? What what happens?

Right. So we have a so the we have established a team internally dedicated to package review. Because it can be quite subjective and having consistency in that review process is something we've put in place over the last eighteen months or two years.

And so we've seen our activity in relation to reviews and administrative actions increase over that period of time. That gives our field staff like, hey, I saw this. I'm gonna go contact this person that is kind of a specialist in that to help me noodle through that.

Because while that seems reasonable, it's like, does that also meet this sort of statutory or regulatory language that we have available to you take administrative action. So we have people dedicated to that work.

But we have been taking the the most clear one and depending on the level of sort of severity, especially if it's like an edible or beverage or something that's more likely for a youth to accidentally consume. That would be something where we would recall the product.

And so the the actual manufacturer has to destroy the product. There could be we've done some citations in relation to this too. I'm not aware that we've done it. It has seen enough repeat actors basically to do this.

The market wants to differentiate their products and they want to be attractive to, you know, their consumers.

In our licensed retailers, there's very few if ever youth interacting with it. Right? So it's somebody takes that and then comes home with it, which is part of where the the challenge is. So we're we've been doing that, but we've also are in the development of an AI image analyzer.

That isn't the going to be the the ultimate decision maker on what is attractive to children, but it will be available to our licensees to put their images and their packaging through to help them identify is this gonna violate, might this violate, or is this okay.

Because they are interested. It's just a capacity issue to review thousands and thousands of different labels across the state. It's just not realistic for us to do. We we don't have any dedicated people other than the people we found. Basically to kind of help on this.

So we're we hear that concern. We're we're we have a shared interest in that. And I know there's a bill moving through the legislature. I think we'll we'll find some similarities on how to make this a little bit tighter.

Thank you so much. And thank you, Madam P. T.

Thank you. Thank you, for just the information you've shared. I'm gonna start by echoing, I think, what you've heard, from a very bipartisan perspective about, the impact we're seeing with youth.

As a former school board member, I remember every time that we said something, you legalize something that's not allowed for children. It turns out you see an increase in k through 12 schools.

Right. Even though, it's not legal for children. You would see I mean, name whatever product you want. And you would see that. And so, the practice with, you know, our laws, are of course designed to protect.

But also, the practice sometimes is just different. And so we've grappled with that. So I wanna piggyback on that because just this last February 2026, the journal for the American Medical Association Health Forum put out a research, piece. And they followed over 463,000 adolescents.

And so you may be familiar with this up to the age of 25. And looking at their impact of, cannabis use. And, the impacts are actually greater than we thought, in specifically tied it to some mental health issues, for those, who are using under the age of 25.

And so I think that one of the the reasons this is coming up, I think as an importance is because we've learned so much more.

As we've legalized it, there was, you know, as we've legalized it, and also, there there is more to learn about both the illegal market and the legal market. And so I I wanna hear more on we've talked about a lot a lot about labeling.

But outside of labeling, what are the menu of options that you think should be considered given the concern, the growing concern that exists, not just from the legislature, but from the public who's bringing this forward from medical professionals who are bringing this forward as well.

Right. So I am aware of the research report I think, when it came out. And it reminded me I worked on public safety issues and sort of juvenile public safety issues and thinking about brain development not being until '25.

And it made a lot of sense to me and that you don't wanna disrupt that period of time. Earlier there was a discussion about the SB 540 pamphlet.

And in that pamphlet, it does talk about the risk of cannabis use in specifically in youth under the age of 25. And so, I think the starting point at least is in is continuing that education discussion.

And then also maybe just having a more collaborative discussion about what is the best path forward. We we could consider a prohibition. But I do think that we run a risk that when you create a prohibition, you further incent illicit market activity.

And so that's the challenge we run into, especially with the scale and the ease of that. Like, is that the best path forward? Or is there some other way? CDPH also does have money from the in the cannabis tax fund dedicated to use prevention and education.

I know they're doing some work on it and I probably couldn't articulate it well enough for you to to do it justice. But that would be something we could come back to you on with a little more information and sort of making sure that we're embedding that type of research into that work.

And I and I do think, you know, it is a it is like a California education opportunity. So we can have these conversations with our youth, with my own kids, you know, about these moments of like, it's best for you not to do this because these are the risk.

And so that's that's the vantage point I see. Again, we have our cannabis advisory committee might be a good opportunity to have that discussion with them on what they see are the right path forward there.

But but open to the dialogue because it does seem like an issue worth discussing obviously.

Do you or the cannabis advisory board think that the pamphlet is effective? If so, why?

That's a good question. I do not know whether it's infected effective. You know, we we had some beverages show up. I guess the pamphlet did show up. So I'm very happy with that, to be perfectly honest.

You know, when I tell when I hear the consumer survey stats, and then I think about just like the everyday Californian. And like, they don't know where their city or county line ends. They don't know that cannabis is banned.

They don't There's a lot of complexity in this whole market, and how we sort of share that out. And so I do I think that's a realistic, like, criticism of like, can we educate enough to make that effective?

I think is a is a good question worth answering. But I don't have an answer to you specifically. It's certainly better than nothing. I would say that. I think it's a step in the right direction.

And like I said, it's it's this balancing act of like, what can we do to make improvement and be effective and not sort of incent this happening beyond the levers we haven't in control over.

And I appreciate that something is better than nothing. And also, we're a decade in from when, almost from when our voters in California legalized it. And from your perspective or the agency's perspectives, what are the biggest takeaways in that decade?

This has been an issue from day one, as have other issues, and I'll get to licensing next. But, what are what have you you've you're the second director.

But what have you, the agency, really taken away over the last decade? I mean, what I think what I worry about is, are we gonna be here in another decade bringing up the same issues, that have not necessarily been resolved?

Or are we taking some of what we've learned to improve? So that we're not here in a decade, talking about the same things.

Yeah. I totally understand the sort of frustration or exasperation on the whole issue. I will say, you know, eight years ago, we didn't we had no legal market.

And now, we have a legal market where that's actually 40% of California's consumption that has all the protections we provided. So that's important.

I the as you well know, this was a voter approved initiative that had features in it that have that there is a state control, there's local control, there are taxes, there's complexity in that. And that complexity has made rollout more challenging.

And I think, our operators would suggest that. And so I think that's one of the pieces that we're gonna continue to make improvement and refinement on together.

And, but I do think it's just continuing to figure out like the attractive to children packaging issue also plays into not only just accidental ingestion, but we sort of look into the the the teens and what is attractive to them in the sort of vaping flower product.

And are we making some adjustments there to not make it as enticing to them to sort of reduce that issue. So I think there are, you know, policy conversations that we're gonna continue having to make that improvement.

But I also, I think not flippantly, but say, but like there is also a lot of youth that ingest alcohol before the age of 21. And sort of, we tell them not to too.

So there is probably like some aspect of this that as a society we're just gonna be navigating for a period of time.

But importantly, like sharing into that, like the risk associated with cannabis, especially in that brain development period is really important.

Thank you. As we think about the last ten years, the district, that I represent, was very early in its adoption of, cultivation. And, we learned a lot very quickly about some of the challenges between provisional annual.

And I wanted you to think a little bit about and and share, from your perspective, what that transition has looked like. It still feels like we are, operating from, a standpoint of, challenges switching from provisional, to annual licenses.

And so I'm wondering if you can speak a little bit to that. That was an issue at the beginning. We were hoping in three two to three years, we would see more transition from provisionals to annuals. And I guess I'm speaking also outside the equity licensees.

But if you can speak a little bit to that and where you see that going in terms of our efforts as a state to, as I think have some have expressed. There is an eagerness and desire to get more, to be more permanent.

Yeah. So I think that is a success story. We did start with the temporary provisional licenses for many years. And that sunseted, except for equity retailers. So between July 2021 and December 2025, we transitioned 6,500 licenses from provisional status into annual status.

We now have less than 8,000 licenses, or is about 7,900 and only about 15 of those are the equity retailers. There's so there's no other provisional licenses at this point. So either everybody has reached their full licensure status.

That means they've completed sequel local control, all the other requirements they have. And so I think that is a testament to that success.

We're just on the heels of that. We actually, internally adjusted about 35 people from our licensing division out into the field under the recognition that there's less coming through the front door. There's less of that provisional churn, and we have more field work to do.

And I'm, you know, getting indications that when when the applicants ready, the local control comes quickly and all those documentations are there. We're turning around applications quite quickly on that front.

So I think there is success and momentum. Definitely room for improvement. We have IT challenges. We have sort of like refinement and improvement that we'll continue to make. But there is there's been positive momentum in that over the last five years, I would say.

Thank you. And I feel like no one asked it in this, in this particular one. But I'm gonna ask what some of my colleagues have asked before. Why do you want this role?

Yeah. I I think I said it at the outset. I mean, I fell into public service and I've worked on it for the last eighteen years. And I just love it. I mean, I worked at Department of Finance on varied issues.

Cannabis being one of those things that I worked on shortly after Prop 64 passed and it was in my portfolio. And I was intimately involved. And then I moved away to this little financing authority called iBank. And but I came back to it and it kind of feels like finishing that story for me.

I have a great team of people, a department that's dedicated. It's new. They're they wanna help and make improvement too. And I love leading and working with people on that front. And so I'm just energized and excited.

Thank you. Alright. Seeing no additional questions, we are going to welcome members of the public. If you would like to say anything in support sorry. If you'd like to say anything in support, please feel free to come forward at this time.

Seeing none, we will, if anybody would like to are you coming in support? Okay.

And if there's someone in opposition, this is the time to also Stand. Stand.

I was waiting for others to go before me, so I apologize and then my shoe fell off. So I'm Laurie Kammerer. Then I was really delayed. So thank you, madam pro tem.

I am working with a company Mortenson Advisors, and we they're an AI company that has done a lot of research in the cannabis industry looking at the amount of cannabis or canopy growth and those who are insured for workers' compensation or with a workers' compensation policy.

They have found that out of 97,000 employees in the cannabis industry, I don't have the exact number, but very few of them are able the employers are are unable to get a policy. The banks won't take their money, the big banks.

The, workers' comp insurance carriers will not write their policy. So we've been able to look at or they have been able to look at, you know, the detailed data whereas, you know, an.

So just a reminder, you're just speaking either in support or in opposition.

I'm sorry. I thought I was gonna be able to say only. Very, very much in support in working with you and the Department of Industrial Relations to make sure these people are covered. Sorry. Thank you. I was gonna go on to Thank you.

Thank you. Alright. Anybody in opposition in the room? Please feel free to come forward. Seeing no one in opposition, we will bring it back. And if there is a motion, I will take the motion.

Nice. Yes. Senator Jones.

A couple of things that came up on the illicit market, and and maybe we kinda danced around it a little bit, not you, necessarily. But on the illicit market, a lot of that's up to law enforcement and up to statewide law enforcement. This is a governor's appointee.

Do you feel like you have a good audience with the governor when it comes time to bring if you find illicit grow, as Senator Grove mentioned, in her area, I have him in my area.

The San Diego County Sheriff's Department has an entire task force just to go after the illicit grows in the forested areas of San Diego County. I know it's across the the border, you know, and obviously the, North Coast. Can you talk to that?

I mean, like, if you're if you're bringing this up to the statewide law enforcement, what kind of interaction are you having with the administer the governor specifically and the rest of the administration's CHP? You mentioned CDFW and other other agencies.

Yeah. So the governor created the unified enforcement unified cannabis enforcement task force in 2022 and our department CDFW and Cal OES are the Chairs of that. But that includes all the other major state agencies.

We in joint operations together over the last three years, we've seized up to 1,200,000, pounds of cannabis. And so there there's ultimate support and interest in addressing these illicit market grows and retail opportunities.

It's just it's in relation to the scale of resources and we're sort of always in that prioritization front. It's like, people will point out sort of bad activity and it's like, okay, but is that the most important one to enforce against?

And that's really the paradigm that we're always having to to deal with. But there's definitely interest and doing so.

Do you have And not to share today necessarily because I won't take any more time. But do you have some notable stories that you can send us on some enforcement activities that

Yeah. Yeah. There there's a really great collaboration really that, spanned, elicit, legal Right. All the different entities last year that we did. I think it would be, really, instructive use case.

And ask for you to send that to us.

Okay. Sounds good.

I'll move I'll make the motion if it's okay with the Vice Chair.

Yes. Okay. So we have a motion, by Senator Jones. Can we please call the roll.

[Roll Call] Four to zero.

Alright. The appointment has been approved to move to the full Senate for confirmation. Congratulations.

Thank you.

All right. Our final item. We will return to governor's appointees required to appear. Item 1B, the appointment of Jennifer Osborne as director of the Department of Industrial Relations. Director Osborne, you will have one to two minutes, for your opening testimony to the committee.

In your opening, you're welcome, to introduce any guests you may have. We'll remind you of the time.

Thank you. And good afternoon. Madam pros and committee members. My name is Jennifer Osborne and I'm honored to appear before you today regarding my appointment as the director of the Department of Industrial Relations.

I'm grateful to governor Gavin Newsom for the opportunity to serve in this role. And I'm also mindful that I do not stand here alone. In the audience and watching online are friends, mentors, and colleagues who have supported me at every stage of my career.

Their guidance and generosity have shaped my path, and I'm sincerely thankful for their influence. I'm a lifelong Californian, raised in Northeast San Diego County. My father served as a city firefighter for thirty five years, and my mother worked in our local library.

I began my state career at the Department of Finance in 1998, and later served on executive roles at the Government Operations Agency, the Department of Corrections and Rehabilitation, and the Department of General Services. Across these roles, I gained valuable experience.

But two principles in particular, instilled during my time at GovOps by secretary Maribel Thatcher, continue to guide me. To challenge the notion of that's the way we've always done it and to find a way to get to.

At the Department of Industrial Relations, I bring that mindset to supporting the outstanding leaders who oversee our core programs. The Labor Commissioner's Office, Cal OSHA, the Division of Workers' Compensation, and the Division of Apprenticeship Standards.

Part of my role is to help remove barriers, navigate complex systems, and ensure that our teams have the tools they need to deliver on their mission.

That mission is carried out by a dedicated workforce of public servants, attorneys, inspectors, scientists, researchers, technologists, and administrative professionals who work every day to ensure that California's workplaces are safe, that workers are paid fairly and on

time, that those injured on the job receive appropriate care, and that Californians have access to meaningful pathways into the workforce through high quality apprenticeship programs. My commitment to this work is also perks personal.

During high school, I held a number of hourly lower wage jobs. I cash out at Taco Bell. I cleaned bathrooms at the Chico State dorms.

I sold laundry at Macy's, and I worked as a prep cook in a sandwich shop. In one of those jobs, I was injured at work and relied upon workplace protections to receive care.

Those early experiences give me firsthand understanding of how important these systems are when they work and how critical it is that they work for everyone.

These experiences underscore the importance of DIR's mission and inform my approach to this role every day. Thank you and I look forward to your questions.

Thank you. Alright. We'll bring it back to, our Members. Senator Grove.

Thank you. I deeply apologize that I was caught in, committee and it was a little bit difficult to get back our appointment. So I apologize that we didn't have an opportunity to talk beforehand.

As an employer in the state for over thirty years, I deeply respect what the DIR does. And, Christine Baker was one of my dearest friends.

Yeah. Outside of politics and the DIR, she was just incredible. She was, I think, two before you or one before you. And, I really appreciate all that you do in the resources that you provide employers. And I understand what you do as a role in in the several departments that you oversee.

I don't have an issue with workers comp. I don't have an issue with, you know, department's labor standard enforcement. I don't have an issue with any of those things.

I have an issue with the CRD because of a lot of the complaints that have come to me, not only in my district, but from around the state. So I do have several questions regarding that department and would like to ask you and focus on those questions.

And I think I sent you some information to review so that we could probably get some questions on the record. I'd really appreciate it.

So the, the questions that I have are, the formal based complaints that were Senate that have been submitted, both to the governor and the Department of Justice. Are you aware of these complaints that have been submitted?

I became aware yesterday when I received the information from your office. I am lucky that in that my, current chief deputy director formerly worked at CRT.

And so he was able to give me a little bit of background on kind of the history of those complaints and and what's happened. But but the information is relatively limited to what what was provided.

Okay. Thank you for that. So I do have a quest I do have several questions. I mean, if you can answer yes or no, that would be great. If you need to give a lengthy answer, I understand that as well, but there are several and I think the pro tem will start rolling her eyes at

me about the question number 55. Okay. Okay. So these allegations that have been made, they span over a decade and are closed and partially closed cases. Are you aware of that?

Again, on a very high level.

On a very high level. Okay. Have you personally reviewed any of these complaints? No. No.

So in the beginning, I told you that, my business has operated in the state for thirty years in, you know, in spite of this state sometimes, but I appreciate what your department does. And I think you're more of a resource to employers.

And if employers would access those resources that you offer, their lives would probably be a little bit easier in some cases, and they would not make, errors.

When I say errors, I'm just describing how I I'm not adversarial to your department is what I'm trying to say at all. But I do have questions about, being the person who's in charge of all this.

And I realize that you're only as good at your job as what is provided to you by the people that you oversee in the management leadership team that you have below you. If you are not reviewing these complaints and you don't have knowledge of what your departments

are doing, how do you expect to, you know, address the issues that are facing some employers in the state?

So certainly the, CRG case, again, was made aware of it yesterday and they obviously are a different department under a different agency. However, we at DIR do receive also complaints, from both employers and employees.

And in cases where it is where the complaint indicates that a concern about either not being treated fairly or not being treated impartially or not maybe having the work done at a a deep level that it needed to be done. We have an internal and those come to me.

Those come they they come to the department in a variety of ways, but they do also they come directly to me.

And we always refer those over to our independent audit team who will go and do kind of a deep dive and evaluate what was done. Was it appropriate?

Whether if the complaint is about maybe the complaint is from an employer about a dose inspection and they feel like they weren't given a fair shot to show kind of all the things they had done.

We have a secondary group that will go and and kind of take a look and make a recommendation.

And and we always make every effort to get back to I do, but especially make an effort to get back to everyone that that that submits a complaint up that way. And I don't know the details of how CRD operates. But

So are you so I'm under this understanding that CRD is part of your purview. Are you saying it's not?

No. They are formerly known as the Department of Fair Employment and Housing under the business consumer services and housing agency.

So they're not under the DIR. I apologize.

Oh, okay.

No. I apologize. I wasn't told that they were under the DIR, the new department under the DIR. So I apologize for that. When you said that, I thought what is she saying? So because I was informed that you were the person.

As a matter of fact, when they your name came up for interview for this, for the confirmation hearing and in the office, they were like, hey, we get to ask her all these questions on the CRD. So because we've been trying to get some answers for quite some time.

I'm happy to take it back to the, you know, the the folks at that agency have some

It's alright. I can go to labor status enforcement. I I know who they are. I can do that. I can do that.

So, let me skip over to, some other questions that I had. I was gonna focus on the CRD questions. But since you are not in that purview, I do wanna ask you, like following the 2024 POGA reforms, POGA is a huge issue.

In the state of California, labor workforce development agencies proposed new regulations in February 2026 to strengthen notice requirements and expand cure options and address the high frequency filings.

What role is the DIR, playing to ensure that these reforms translate into fewer and lower litigation cost?

And I'll give you a reason why I'm asking that question. And I'm interested also in chronic litigants and, let's just call them chronic attorney plaintiffs that are plaintiffs attorneys that are filing these cases.

Sure. So the labor commissioner and the and Cal OSHA are responsible for investigating allegations in PAGA notices.

The Labor and Workforce Development Agency set up a PAGA unit that is primarily the kind of, I would say, running the program overall. So our role is sort of a more limited aspect of that.

The labor commissioner will hold cure determination hearings in cases where an employee disputes the preliminary cure to submit determination issued by the labor and workforce development agency, PAGA unit.

Okay. The reason why I ask you that is because, I'm gonna try to pull it up really fast for you just to give you an idea. So, but I'm technology challenged, so I do apologize. There's a we never used to really track PAGA cases.

As a matter of fact, I was in the assembly when I started tracking PAGA cases. And when I went to the the agency, they were like, wow, where'd you get this information?

And so I was getting that from attorney who was picking up all the filings and all the court cases that were being filed on a daily basis regarding PAGA cases. We had over 16,000 PAGA cases documented, and the state of California did not have that.

So we started tracking them. We, incorporated an organization called Kavia. Kavia.org, kavia.org is their, website. And, when you go to their website, I'm gonna pull it up for you just to give you an example.

They track current PAGA, lawsuits. And these are these, there are, so far this year, 471 lawsuits. The average settlement is $747,000.

The average attorney payout is $352,000. So these these are what I would call mill attorneys.

They're coming up from Los Angeles, coming over to the Central Valley. And, when you look at the the lawsuits and you get these, we call them the, I don't know, the bad 10. These are the these 10 attorney firms are filing cases.

90% of the cases filed in the state of California. And if you look like this number one guy right here, you just type on it. These are all the pocket cases just filed this year. Every one of these little things. I think there's four hand or 300.

He did 300 of them. These are and I'm saying that and they're repeat files on everything. And when you look at the data and the way and it's not your fault the way the law is written that the employer is automatically responsible.

And there's not and litigation and settling these documents is cheaper far cheaper than having to go through the process. I'm just saying that pocket is a huge problem.

I know Senator Umberg knows it's a huge problem and several other individuals on the other side of the aisle know it's a huge problem. That's why the 2026 legislation regulation regarding the notice requirements and right to cures.

And because they were going after people for a paycheck stub violation because there wasn't a period or comma or one company had to pay a million dollars because they had a Wells Fargo logo,

and it didn't have accurate information on the pay stub because your employer wouldn't know your employee wouldn't know that Wells Fargo is where you cash that check with the stage coach. Right? You have to have Wells Fargo Bank or they don't get it, and that's a violation.

So all these little minor things. And so it was it is better now that it's brought under the DIR. But I guess my question to you is with all of that to say, is there anything else that we can provide you that will help you be,

better equipped to deal with these chronic litigants that employers are going to, the attorneys are going to Facebook and they're like, you know, be able, an enhanced employee.

So out of that $700,000 settlement when 302,000 went to the attorney, the enhanced employee got $50,000 and everybody else got $3.50, but it cost the employer almost $2,000,000 That's not good for California jobs. So is there anything we can offer to help you with that?

I'm happy to take the question back and provide follow-up, to the labor agency that that receives those cases. Is, you know, we again do the kind of enforcement arm and the investigation arm rather than the intake and the management.

But I'm happy to get you the appropriate data that you're looking for and and to the extent there are suggestions or areas pain points that are emerging as it sounds there may be Okay. Work through potential solutions.

Okay. So you okay. No. I appreciate that. Let me ask you one more question and then I'm sure I'll be done.

Sorry. Your background includes serving as the chief deputy director of general services and the director of administrative services in California Department of Corrections and Rehabilitations.

With the extensive experience in physical management and large scale operations, how has the experience shaped your approach in leading the DIR particularly addressing backlogs, staff challenges, and providing practical compliance assistance for employers?

Thank you for the question. So, I my background to a large extent informs a lot of what I do every day especially at DIR. I think, you know, my I don't come from a labor background but I definitely come from a state government administration background.

And I backlogs within both specifically probably the labor commissioner's office, it may be what you're referring to, are are the result of a lot of systemic things that emerged over a long period of time.

My predecessor got had a background in human resources and so she was able to kind of get some of that stuff going.

But there there have been vacancies. There have been, you know, a number of things that led to the background the I'm sorry, the backlog.

One of the things that was already a little bit underway when I started was a were class spec revisions, which is in the really ornate world of state of California human resources, taking a classification that is in place and then looking at it updating it to basically have it fit

the , kind of what the what the minimum qualifications would be for someone today.

So the so in the labor commissioner's office, there were two series of of, classifications that had not had updates in many years since the seventies or the eighties. And that was resulting in the an inability to kind of find qualified candidates.

And so what, we did working with the personnel board and CalHR was to to update those revisions. So there's, an entry level series that used to require a college degree, and a lot of people were not able to meet that.

But we had but what was we were finding where there were really good candidates, they just couldn't get in the door because of that degree requirement.

And so over time, we were able to in fact, just in November and December 2025, we received approval from the state personnel board to change those specifications.

And as a result, that now allows us to go out and cast a wider net for employees and and bring in more folks to address the vacancy issue which by, you know, was related to part of the growth of the backlog just that we didn't have the bodies to process the work.

Another thing that was causing the causing some of the backlog was our the case intake IT solution that they're using has been it's outdated and has to have a lot of customization.

And so when rather than kind of being set up for the way things come in today, we have to bring in vendors to come in and make changes to it.

And it's sort of just as as you may know, it's it's so it's not simple anymore and it and it takes it's it's hard to keep going. And so one of the things we're looking at is, with our new CIO is it is a new product that is made by the same entity.

It's still a Salesforce solution but it would but but it's meant for government and it's meant to kinda do that kind of work.

And so we're looking we're piloting that currently with the teams and we believe we can actually it's looking promising that we can actually implement that for about half the cost of what we're spending now with bringing in the customization and just sort of the kind of

crumbling under its own weight of of the old system. And so that's one of the things we're looking at. That again comes from my experience with working with for many years with CD the Department of Technology as well as DGS.

Another another thing that has contributed to backlogs in the labor commissioner's office has just been the, a shortage of people to adjudicate at the very at the tail end of the process.

And so what we have been exploring with the labor commissioner's support are whether there are other entities in state government that have capacity to maybe take that work on.

One of the one of the ones we looked at was the Office of State or Office of Administrative Hearings under the Department of General Services, which is sort of a journalist group of ALJs.

And so we're we're kind of working through the possibilities there as well as potentially some other ALJ groups within within state government and potentially on a reimbursement basis we could see if they could do some of that work to get at the backlog. So that's just those are few of the

No. Thank you very much. And the other two questions that I had was how are you gonna address the vacancy which you did in that question and are you looking for outside a l administrative lodges to help you and you said yes.

So, thank you very much for answering my questions. I appreciate it and apologize for having the misinformation in the beginning.

Thank you. Thank you. We will I'll go to Senator Jones and then Senator Reyes.

Just a a quick question. Tell me tell us about, moving from the Department of Corrections, to the Department of Industrial Relations. That's an interesting change in career path.

Yeah. And similar to kind of my other roles, there it was at at CDCR, it was over the, division of administrative services. So it was all of the it it was the fiscal part of the department, human resources, procurement, and fleet management,

and then a kind of a regulation and policy unit. And so it was very similar to and I and I and I did a shortcut through the Department of General Services on the way.

And it was It was really most similar to that, you know, just handling and and I because I had started at the Department of Finance and then moved to the GovOps agency working with all the control agencies.

The CDCR role was definitely challenging. I came before this committee about seven years ago and to be confirmed for that. And it was definitely a unique department with a lot of challenges and I think that DIR shares some of those challenges, maybe not at the scale.

But definitely, there are similarities, you know, that I think there's a lot a lot of the administrative struggles that departments have are really they're similar across the board. It's difficult to buy things quickly. It's hard to hire. It's, you know, all of those things are very common.

I think DIR's difference is that, you know, we serve many Californians directly and whereas CDCR had a more, I guess, homogeneous group of of constituents. That's not a good word for that. But so you know what I mean.

Yes.

So there are a lot of similarities is what I say. But I mean, DIR is is, you know, smaller. It's a smaller scale. There's a lot of great leaders in my department.

And what I try to do, as I said, is simply back them up, make sure that they have what they need to to complete their mission and and do it right.

And, you know, I'm not the expert in a lot of those areas, but I wanna help them get what they need from the state government to be able to be successful.

Okay. And you and you're you're obviously confident that the skill set and talents that you have now are transferable from one agency to the other. Great. Thank you.

Thank you. Senator Reyes. Thank you. I appreciate what you said at the very beginning. First, thank you for meeting with me.

I enjoyed that very much and I got to know you better and I appreciated that. I think that on my notes, before I met you, my notes were she's a fixer because it seemed like you came into departments to see what needed to be done and you worked on ways to be as neutral as possible.

Look at the lay of the land and then figure out what the what the problems were and then work to fix it for the benefit of everybody.

And I appreciated that I know there are a number of questions that were asked earlier from my colleague as an employer. Now I've been an employer also for many years, but as you as as I mentioned to you, I've also been a workers comp attorney.

So my job for over thirty years was representing injured workers. So my my question to you is, and we spoke a little about this, what who or what groups will inform your viewpoints on the importance of worker safety? Is is worker safety important?

Is proper compensation import to workers, important? Is keeping workers from being injured important? Who or what will inform you on on those?

Thank you for the question. I believe that there are multiple sources of being informed on those things. I mean, certainly within DIR, we have obviously the division of occupational self safety and health.

They are they strive to, you know, do inspections and make sure that workforces are safe. I think that's or workplaces are safe.

That's the starting point. But if we if we're able to keep the workplaces safe or as safe as possible, then on the workers' comp end of things, you you maybe don't have the same order of magnitude of of of folks moving into that.

But there will always be people getting injured, you know, through no fault of the employers or the employees.

And so having a robust system on to ensure that they are given the care that they're to which they're entitled and and which they need as well as the compensation is important. I mean, I look to all of my team members for input and and information on that as well as folks outside of DIR.

I recently went to, in during the month of March, two different sessions of a kind of a statewide workers compensation conference, which I found to be fascinating.

There were many different speakers kind of talking about trends and talking about, again, ways to solve problems and what's coming down the pipe. And so I just I put myself in a learning mode because, again, this area is not been my background.

And so I'm still learning a lot. And I think just taking all of the information in and and then working with my experts in both in the department and as well as I serve on the as an ex officio member of the SCIF Board.

And I learned a lot in those meetings too just because they're kind of operating from an issuer perspective. And so, I would just say that, of course, it's keeping employees safe is critical, but when for whatever reason they are injured,

then there needs to be a robust system to kind of catch them and and to have it work for them as well. And so I just strive to do my best to kind of be, you know, make both systems available to all employees, who are who are vulnerable in that way.

Wonderful. It didn't you said the beginning, you challenge yourself to to not not try to solve problems in the way we've always done it. Quote unquote. To work towards yes. How does it how has that model worked for you?

You know, it's

In the department.

It's a it could be a challenge. I think, in fact, every I hear sometimes I question things. I question why are we doing this this this way? Why are we, you know, even just and I don't wanna throw my HR folks under the bus a little bit, but but I said, can we do this?

And they will say, no. You know, and I said, well, are you sure? Can we let's talk to our my friend over at the state personnel board and get their take on it. I just I try to push them. I want my teams to be experts in what they do.

Like, I want my HR folks to be experts in HR because a problem might come to them that they need to solve. And they might not be able to do it the way that that that I've asked them to do it or but they might know another way to get to that same outcome.

And and if they're experts, they have kind of that, you know, in their pocket, here's three or four other options to do this.

Similar to procurement and, you know, we need a contract right away. Well, that'll never get through DGS.

And so I just challenged them to kinda push a little bit. Understanding their rules and that we have to certainly live within them. But I think that there's a way to kind of look at alternatives and maybe sometimes we make our own rules that we that we then put ourselves inside

of that kind of bureaucratic cage. And sometimes it bears an evaluation of whether those rules need to be changed especially if they're hours and they're keeping us from getting to the point that we need to be.

I'm sorry Madam PT but I've got to tell a story. Okay. The if this young bride who had was doing the Thanksgiving turkey and she cut the wings and cut the legs off, the drumsticks off and put it in and her husband says, why did you do that?

That's the way my mother did it. That's the way it's always been done. And then the next time he saw his mother-in-law says, mom, why why do you teach your daughter to do that? That's the way grandma did it. Okay. Now let's grasp grandma. She says, you dummies.

The only reason I did is because my pan was so small. The whole the whole thing didn't fit. So I had to cut pieces off. So yes, we do sometimes have to question, how think why things were always done a particular way because there may have been a reason but that reason no longer exists.

So I appreciate it when you said that I just I thought of that story. My last on a serious note was the audit that was done with CalOSHA. And there were a number of things, number of errors, some more serious than others,

that were found in that audit of Cal OSHA, which falls under your purview. What what have you done or what will you do to to fix those things because we're talking about the very organization that protects the injured workers or workers so that they don't so that they don't get injured.

Absolutely. Certainly, when I started and and I that CalOSHA, audit had it either came out the day that I was appointed or the day after. I'm not sure. And so it was, definitely a deep dive into all things CalOSHA at that time for me. They have done a number of things.

They and we as a department have done a number of of things to address the findings in that audit. One of the main ones and one of the things that was called out in the audit was a lack of policies and procedures about when to go into the field and do an inspection versus sending a letter.

Or when to or employees one of the things that was called out was employees were making making decisions moving to the next step without a clear policy rubric to follow.

And so the program has, with under the under the leadership of of Chief Lee, then, working very diligently on revisions to those policies and procedures. They are now moving into the training phase.

They're training all of their employees on every change and every policy and procedure. That's going on kind of in real time. And they will, basically, from intake to completion, the kind of the entire road map of every investigation. We're on track to have this completed by July of this year.

And then those revised policies and procedures will be posted on the department's website upon once the training courses are complete. In addition to that, the audit, referenced sort of a lack of we don't have enough. The audit said we don't have enough staff.

I'm gonna say that it's it's probably would not be possible to cover the entire state at a level necessary. Like we however and but there have been vacancy problems similar to, on the labor commissioner side that, that that Senator Grove referenced.

And so what we have done is work to, first of all, request from the legislature in the budget that's currently before you, a number of resources to address the audit findings.

One of them is to, add additional positions to the Bureau of Investigation, which is the group that more kind of quasi law enforcement group that goes out and investigates the most serious cases and the fatalities.

Where such we would double the size of that unit. In addition, we're adding we're proposing to add a centralized complaint intake unit, which would enable investigators to spend more time in the field.

Currently, the investigators we have are required to spend two days a week doing intake in the office, which keeps them up from being able to go out into the field and do investigations.

So this would hire this under this proposal, we would hire kind of lower level staff to do the intake work so that the investigators could be out, you know, on the ground in the workplaces doing responding to complaints.

And then our third BCP in this area is to to continue the work of 34 positions that we're doing that we're, working on the administration's extreme heat action plan and as well as the agricultural enforcement and outreach task force.

Which provides targeted enforcement and outreach and agricultural settings. Agricultural employees are less likely to make complaints to Cal OSHA and yet are exposed to multiple serious occupational hazards.

These resources will allow for proactive inspections and outreach to educate employees and employers about these hazards and employers about their responsibilities under the law.

We additionally are moving from a paper process to, and I think we mentioned I mentioned this in my meeting with you, to a, automated process. And we're currently on track to go live with that system by the end of the calendar year.

I think as, in my prior experience, I've learned that IT projects and state government are can be fought with with danger, in terms of just likelihood of success or not.

And I so I have made it a priority to make sure that we are paying very close attention to the vendor in this case and making sure that they're they are fulfilling their promises to us that they made under the contract.

It's it's something that I have brought in, an IT expert to help advise us on and we definitely wanna make sure that this project does not go sideways and that that we fulfill that promise both what we said to the auditor as well as to the people of California.

Wonderful. Thank you so much. Thank you, Madam Picchi.

Thank you. And piggyback on just what you were mentioning. Certainly we've seen, an increase in, need also, to monitor and think through even new policies of what might be appropriate in circumstances as you were relating mentioning this, during natural disasters.

And, agriculture workers and natural disasters is also, part of, I think, our thinking, process, of how we think through, including air quality and the longevity and not just the immediate risk, but also the sustained risk as well.

And so I'm wondering, the natural disasters, it's not just one districts, it's all throughout, has required our state to think slightly different about how we think of compliance or what compliance looks like in a moment of crisis.

If you can speak just a little bit to that.

Sure. I may have to get I can speak at a high level and may have to get back to you with details because I don't wanna give you the wrong information.

But certainly, I think one of the a natural disaster that I think pinpointed a lot of this were were the LA fires and and what was happening in mainly in the maybe not let's see. Let me back up a minute. When you say natural disasters, you mean like flooding or

All of the above. So it could be a wildfire.

It could be flooding. It could be an earthquake. It could yes.

Okay.

So certainly, it's it's an area that I believe I know that my teams are aware of. I don't know that we've gone deep into at least with kind of briefing me on all of the details.

I know we have been involved with the wildfire recovery efforts and ensuring that folks cleaning up after the wildfires are adhering to safety measures so that they're not, you know, negatively impacted by the work that they're doing.

I know CalOSHA has partnered with both some our CWOPS, which are California Workplace Outreach Project Groups and labor centers to provide additional, I think, assistance through in the form of some trainings and other efforts.

And I think it's just something that we absolutely need to kind of keep an eye on especially as the likelihood of natural calamities potentially increases with climate change.

But but I would like to, I think, take an off make an offer to get back to you on more details on that specifically if possible.

Okay. Thank you. As part of the audit, and I think it's been referenced, there's a lot of open cases. Right? We we are looking as of November 2025, there were about 86,000 open cases.

And in 2024, the average was 634 days to close a case. Under your leadership and direction, what would a more ideal case load and closing time look like or a range of sorts?

Or could you just speak just generally to what how you hope to address what seems like really big numbers?

Yes. So I would what I will say is that we're very aware that it's a high caseload. I think some of the high caseload has actually been increased by just the success that and I assume you're talking about the labor commissioner's office right in this case.

But they have been very forward leaning in outreach And and I think as a result, a lot of people are more aware of their rights than they're making and and they're filing cases.

And so not to say that we're that the backlog is not the you know, it's certainly, I think, a sign of how well the labor commissioner has been doing with outreach.

But at the same time, we do need to focus in on the on how to get the backlog down. I don't know an ideal number. I'm working currently with labor commissioner to kind of identify what's a good metric and what's a good goal so that we can kind of chunk out those like is it,

you know, is what is the number per month? But I know too that there's been a lot of not having a great data system has kind of kept us, I think, from having good visibility into the reasons behind some of the backlogs.

I know they made a huge effort to clean up some of the there's a large number of cases that where there was just additional information that needed to be closed out and and so that was included in that number.

I would love to get back to you again with like better metrics and kind of a more cohesive rubric of what's happening and what our plans are

in that in that area. Good. So we have two items to to get back to so I appreciate that. Okay. So thank you.

With that, we're going to open it up to members of the public. If there are any members of the public who we who wish to speak and support of, the appointee in front of us, please feel free to come forward. We just ask that you state your name, your affiliation, and position.

I missed that the first time, Madam ProTem. Sorry. Laurie Kammerer, here on Cameron and Company, here on behalf of OneCall, Medical Harbor Health Care, California Metals Coalition, the National Association of Women Business Owners, California chapter.

And I think I'm missing something, but I but we have a whole group of employer groups that are very much in support and look forward to working with you. Support.

Thank you.

Hi. I'm Lisa Anne Hurt-Forsythe, Vice President of Government Affairs for the American Association of Payers, Administrators, and Networks. Very much supportive, miss Osborne. I'm glad you're taking the helm. We look forward to working with you. So I'm glad you're on board.

Thank you, Madam Pro Tem and Senators. Matt Kremens here on behalf of the International Union of Operating Engineers. Wanted to be here today to express our support and look forward to working with you in your new capacity.

Hi. I'm Zlatko Theodorovic, and I'm a a long time friend of Jennifer. We were colleagues at the Department of Finance 28 years ago, and I'm here in full support of her appointment. Thank you.

Thank you.

Good afternoon. My name is Andres Posada. I'm the Director of the Labor Management Compliance Council. We're a joint labor management cooperation committee. And our main mission is to make sure that there's compliance on public works projects.

We deal with the DLC, with Cal OSHA, with workers' comp, pretty much on a daily basis. And I have to commend, director Osborne for her amazing work. And, we wanna express our full support for her. Thank you.

Are there any members of the public who are here to we to speak in opposition? Alright. Seeing none, we'll bring it back.

Thank you. Thank you, Madam Chair. I'd, make a motion to move the concrete to the full Senate floor for a vote.

Thank you so much to our Vice Chair, Grove. With that, we're gonna go ahead and call the roll.

[Roll Call]

Four to zero. The appointment has been approved to move to the full Senate floor for confirmation. Congratulations.

Thank you.

This, concludes today's public agenda. I wanna thank all the individuals that were here, participating and provided comments and feedback, and thank everybody for their cooperation.

We're going to close the public portion of this hearing to move into the closed session.