Bill Text: CA SB1326 | 2021-2022 | Regular Session | Chaptered
Bill Title: Cannabis: interstate agreements.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2022-09-18 - Chaptered by Secretary of State. Chapter 396, Statutes of 2022. [SB1326 Detail]
Download: California-2021-SB1326-Chaptered.html
Senate Bill
No. 1326
CHAPTER 396
An act to amend Sections 26080 and 26190 of, and to add Chapter 25 (commencing with Section 26300) to Division 10 of, the Business and Professions Code, relating to cannabis.
[
Approved by
Governor
September 18, 2022.
Filed with
Secretary of State
September 18, 2022.
]
LEGISLATIVE COUNSEL'S DIGEST
SB 1326, Caballero.
Cannabis: interstate agreements.
The Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities. MAUCRSA specifies that its provisions shall not be construed to authorize or permit a licensee to transport or distribute, or cause to be transported or distributed, cannabis or cannabis products outside the state, unless authorized by federal law.
This bill would make an exception to the above-described prohibition and
would authorize the Governor to enter into an agreement with another state or states authorizing medicinal or adult-use commercial cannabis activity, or both, between foreign licensees, who are licensed under the laws of the other state or states, and entities operating with a state license pursuant to MAUCRSA, provided that the commercial cannabis activities are lawful and subject to licensure under the laws of the other state or states. The bill would make foreign licensees subject to the jurisdiction of this state for purposes of
actions taken for violations of state commercial cannabis laws and regulations. The bill would prohibit an entity with a commercial cannabis license issued under the laws of another state from engaging in commercial cannabis activity within the boundaries of this state without a state license, or within a local jurisdiction without a license, permit, or other authorization issued by the local jurisdiction. The bill would require the agreement to require that the other state or states impose requirements on its licensees with regard to cannabis and cannabis products to be sold or otherwise distributed within this state that meet or exceed the requirements applicable to MAUCRSA licensees, as specified. The bill would require the agreement to include provisions to address public health and welfare emergencies concerning cannabis or cannabis products that are sold or intended for sale within this state and provisions related to the investigation of licensees and of instances of alleged
noncompliance with the commercial cannabis regulatory programs, as specified. The bill would require the agreement to include provisions for collection of applicable taxes. The bill would specify that the agreement does not constitute a project for purposes of the California Environmental Quality Act. The bill would prohibit an agreement, as defined, from taking effect unless, among other things, federal law is amended to allow for, or the United States Department of Justice issues an opinion or memorandum allowing or tolerating, interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses. The bill would require the department to notify the Governor and the appropriate policy committees of the Legislature upon the occurrence of an event that would allow an agreement to take effect and to post the notification on its internet website.
Existing law, the Administrative Procedure Act, governs, among other things, the procedures
for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law.
This bill would exempt the Governor from the rulemaking procedures and requirements of the Administrative Procedure Act when entering into interstate cannabis agreements or amending interstate cannabis agreements if the Governor submits the proposed agreement or amendment to the Joint Legislative Budget Committee for review and comment, as specified, and posts the proposed agreement or amendment on the department’s internet website for public comment for 30 days.
Existing law requires the department to prepare and disseminate, as specified, an annual report relating to the department’s activities, including, among other things, the amount of funds allocated and spent by the department for cannabis licensing, enforcement, and administration, and the number of state
licenses issued, renewed, denied, suspended, and revoked.
This bill would require the department to include in that annual report a list of interstate cannabis agreements entered into, including information regarding the terms and conditions of each agreement, the activities undertaken by state agencies to implement the agreement, and the effects of the agreement on California’s cannabis industry.
This bill would provide that its provisions are severable.
AUMA authorizes the Legislature to amend the act to further the purposes and intent of the act with a 2/3 vote of the membership of both houses of the Legislature.
This bill would declare that its provisions further specified purposes and intent of the Control, Regulate and Tax Adult Use of
Marijuana Act.
Digest Key
Vote: 2/3 Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 26080 of the Business and Professions Code is amended to read:26080.
(a) Except as provided in Chapter 25 (commencing with Section 26300), this division does not authorize or permit a licensee to transport or distribute, or cause to be transported or distributed, cannabis or cannabis products outside the state.(b) A local jurisdiction shall not prevent transportation of cannabis or cannabis products on public roads by a licensee transporting cannabis or cannabis products in compliance with this division.
SEC. 2.
Section 26190 of the Business and Professions Code is amended to read:26190.
Beginning on March 1, 2023, and on or before March 1 of each year thereafter, the department shall prepare and submit to the Legislature an annual report on the department’s activities, in compliance with Section 9795 of the Government Code, and post the report on the department’s internet website. The report shall include, but not be limited to, the following information for the previous fiscal year:(a) The amount of funds allocated and spent by the department for cannabis licensing, enforcement, and administration.
(b) The number of state licenses issued, renewed, denied, suspended, and revoked, by state license category.
(c) The average time for processing state license applications, by state license category.
(d) The number of appeals from the denial of state licenses or other disciplinary actions taken by the department and the average time spent on these appeals.
(e) The number of complaints submitted by citizens or representatives of cities or counties regarding licensees, provided as both a comprehensive statewide number and by geographical region.
(f) The number and type of enforcement activities conducted by the department and by local law enforcement agencies in conjunction with the department.
(g) The number, type, and amount of penalties, fines, and other disciplinary actions taken by the department.
(h) The number of licenses on which the department imposed conditions and the categories of conditions imposed on licenses.
(i) A detailed list of the petitions for regulatory relief or rulemaking changes received by the department from licensees requesting modifications of the enforcement of rules under this division.
(j) A list of interstate cannabis agreements entered into pursuant to Chapter 25 (commencing with Section 26300), including information regarding the terms and conditions of each agreement, the activities undertaken by state agencies to implement the agreement, and the effects of the
agreement on California’s cannabis industry.
(k) (1) For the first publication of the reports, the department shall provide a joint report to the Legislature regarding the state of the cannabis market in California. This report shall identify any statutory or regulatory changes necessary to ensure that the implementation of this division does not do any of the following:
(A) Allow unreasonable restraints on competition by creation or maintenance of unlawful monopoly power.
(B) Perpetuate the presence of an illegal market for cannabis or cannabis products in the state or out of the state.
(C) Encourage underage use or adult abuse of cannabis
or cannabis products, or illegal diversion of cannabis or cannabis products out of the state.
(D) Result in an excessive concentration of licensees in a given city, county, or both.
(E) Present an unreasonable risk of minors being exposed to cannabis or cannabis products.
(F) Result in violations of any environmental protection laws.
(2) For purposes of this subdivision, “excessive concentration” means when the premises for a retail license, microbusiness license, or a license issued under Section 26070.5 is located in an area where either of the following conditions exist:
(A) The ratio of
licensees to population in a census tract or census division exceeds the ratio of licensees to population in the county in which the census tract or census division is located, unless reduction of that ratio would unduly limit the development of the legal market so as to perpetuate the illegal market for cannabis or cannabis products.
(B) The ratio of retail licenses, microbusiness licenses, or licenses under Section 26070.5 to population in the census tract, division, or jurisdiction exceeds that allowable by local ordinance adopted under Section 26200.
SEC. 3.
Chapter 25 (commencing with Section 26300) is added to Division 10 of the Business and Professions Code, to read:CHAPTER 25. Interstate Cannabis Agreements
Article 1. Definitions
26300.
As used in this chapter, the following definitions apply:(a) “Agreement” means an agreement relating to commercial cannabis authorized under this chapter and entered into between this state and another state or states.
(b) “Contracting state” means a state of the United States, including a district, commonwealth, territory, or possession subject to the legislative authority of the United States, with which the Governor has entered into an agreement pursuant to this chapter.
(c) “Foreign license” means a commercial cannabis license issued under the laws of another
state that has entered into an agreement pursuant to this chapter.
(d) “State license” means a commercial cannabis license issued by a licensing authority pursuant to this division.
Article 2. Agreements
26301.
(a) The Governor may enter into an agreement with another state or states authorizing medicinal or adult-use commercial cannabis activity, or both, between entities licensed under the laws of the contracting state and entities operating with a state license, provided that both of the following criteria are met:(1) The commercial cannabis activities are lawful and subject to licensure under the laws of the contracting state.
(2) With respect to the interstate transportation of cannabis or cannabis products, the agreement prohibits both of the following:
(A) The transportation of cannabis and cannabis products by
any means other than those authorized under both the laws of the contracting state and the regulations of the department.
(B) The transportation of cannabis and cannabis products through the jurisdiction of a state, district, commonwealth, territory, or possession of the United States that does not authorize that transportation.
(b) Notwithstanding any other law, the execution of, and compliance with the terms of, an agreement does not constitute a project for purposes of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).
26302.
(a) Notwithstanding any other law, a foreign licensee may engage in commercial cannabis activity with a state licensee and a state licensee may engage in commercial cannabis activity with a foreign licensee, subject to the requirements and limitations set forth in this chapter.(b) A foreign licensee shall not engage in commercial cannabis activity within the boundaries of this state without a state license, or engage in commercial cannabis activity within a local jurisdiction without a license, permit, or other authorization issued by the local jurisdiction.
(c) A foreign licensee shall be subject to the jurisdiction of this state for the purpose of actions taken for violation of California commercial cannabis laws and regulations.
26303.
(a) An agreement shall require that the contracting state impose requirements on foreign licensees with regard to cannabis and cannabis products to be sold or otherwise transferred or distributed within this state that meet or exceed the requirements applicable to state licensees, including all of the following:(1) Enforceable public health and safety standards that are equivalent to the requirements of this division.
(2) Mandatory participation in a system administered by the state to regulate and track the cultivation, manufacturing, distribution, transportation, sale, and destruction of cannabis and cannabis
products from seed to sale.
(3) Standards for the testing of cannabis or cannabis products that meet or exceed the standards applicable to testing laboratories licensed under this division.
(4) Requirements for the packaging and labeling of cannabis and cannabis products that meet or exceed the packaging and labeling requirements established pursuant to Chapter 12 (commencing with Section 26120).
(5) Requirements for quality assurance and inspection of cannabis or cannabis products that meet or exceed the requirements applicable to cannabis or cannabis products cultivated, manufactured, or sold by state licensees.
(6) Restrictions on marketing, labeling, and
advertising within this state by foreign licensees that meet or exceed the restrictions on state licensees established in Section 26063 and Chapter 15 (commencing with Section 26150).
(7) A process for the identification of adulterated or misbranded cannabis products, and the destruction of those products, using standards that meet or exceed the standards and procedures established pursuant to this division.
(b) An agreement shall require that the contracting state impose restrictions upon advertising, marketing, labeling, or sale within the contracting state that meet or exceed the restrictions established in Section 26063.
26304.
(a) An agreement shall include provisions requiring the department and the appropriate regulatory authorities of the contracting state to address public health and welfare emergencies concerning cannabis or cannabis products that are sold or intended for sale within this state, including for the prompt recall or embargo of adulterated or misbranded cannabis or cannabis products.(b) An agreement shall include provisions requiring the appropriate regulatory authorities of each state to investigate instances of alleged noncompliance with the commercial cannabis regulatory programs upon request by the other state and in accordance with mutually agreed-upon procedures. An
agreement shall include provisions requiring the contracting state to
reasonably cooperate with California investigations concerning foreign licensees, and requiring the department to reasonably cooperate with investigations by the contracting state concerning persons or entities holding state licenses.
26305.
An agreement shall include provisions determined by the Governor to promote the inclusion and support of individuals and communities in the cannabis industry who are linked to populations or neighborhoods that were negatively or disproportionately impacted by cannabis criminalization.26306.
An agreement shall provide for collection of all applicable taxes.26307.
The Governor is exempt from the rulemaking procedures and requirements of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) when entering into agreements or amendments to agreements, provided that prior to execution of an agreement or amendment to an agreement, the Governor shall do both of the following:(a) Submit the proposed agreement or amendment to the Joint Legislative Budget Committee for review and comment. The committee shall have 60 days to review the proposed agreement or amendment and to submit written recommendations to the Governor. The committee shall only submit a recommendation
to the Governor if a majority of the members agree to that recommendation. The Governor shall consider all recommendations submitted by the committee and may revise the proposed agreement or amendment to incorporate the recommendations. If the Governor does not incorporate any recommendation submitted by the committee, the Governor shall set forth, in writing, the reasons for not incorporating that recommendation.
(b) Post the proposed agreement or amendment on the department’s internet website for public comment for 30 days. The comments received shall be considered by the Governor.
26308.
(a) An agreement entered into pursuant to this chapter shall not take effect unless one of the following occurs:(1) Federal law is amended to allow for the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
(2) Federal law is enacted that specifically prohibits the expenditure of federal funds to prevent the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
(3) The United States Department of Justice issues an opinion or memorandum allowing
or tolerating the interstate transfer of cannabis or cannabis products between authorized commercial cannabis businesses.
(4) The Attorney General issues a written opinion, through the process established pursuant to Section 12519 of the Government Code, that state law
authorization, under an agreement pursuant to this chapter, for medicinal or adult-use commercial cannabis activity, or both, between foreign licensees and state licensees will not result in significant legal risk to the State of California under the federal Controlled Substances Act, based on review of applicable law, including federal judicial decisions and administrative actions.
(b) The department shall notify the Governor and the appropriate policy committees of the Legislature upon the occurrence of an event described in subdivision (a), and shall post the notification on the department’s internet website.
SEC. 4.
The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.SEC. 5.
The Legislature finds and declares that this act furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA) by accomplishing all of the following:(a) Preventing the illegal diversion of cannabis to other states by providing legal and regulated channels for multistate commercial cannabis activities.
(b) Reducing barriers to entry into the legal, regulated market by providing additional legal outlets for cannabis and cannabis products produced in California.
(c) Ensuring
that cannabis and cannabis products produced in other states and sold in this state meet the same testing and packaging requirements required under AUMA.
