Bill Text: CA SB1503 | 2023-2024 | Regular Session | Introduced
Bill Title: Cannabis: workers and license requirements.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-02-29 - Referred to Coms. on B., P. & E. D. and L., P.E. & R. [SB1503 Detail]
Download: California-2023-SB1503-Introduced.html
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Senate Bill
No. 1503
| Introduced by Senator Archuleta |
February 16, 2024 |
An act to amend Section 26051.5 of, and to add Sections 26051.5 and 26053.5 to, the Business and Professions Code, and to add Sections 203.3 and 2775.5 to the Labor Code, relating to cannabis, and declaring the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 1503, as introduced, Archuleta.
Cannabis: workers and license requirements.
(1) Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act of 2016 (AUMA), an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances.
Existing law, the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities. Under MAUCRSA, the Department of Cannabis Control has sole authority to license and regulate commercial cannabis activity. MAUCRSA authorizes the department to issue state licenses only to qualified applicants.
MAUCRSA
imposes various requirements on an applicant for a license, including, among other things, requiring an applicant to submit a notarized statement that the applicant will enter into, or demonstrate that it has already entered into, and will abide by the terms of a labor peace agreement, as specified. Existing law imposes the notarized-statement requirement on an applicant with 20 or more employees and, commencing July 1, 2024, on an applicant with 10 or more employees and prohibits the department from renewing a license, on or after July 1, 2024, unless the licensee submits a notarized statement that the licensee has entered into and will abide by the terms of a labor peace agreement.
This bill, for purposes of these provisions, would determine the number of employees of an applicant or licensee by reference to the applicant or licensee’s federal employer identification number, individual tax identification number, or social security number, as specified. The bill
would require an applicant to provide that information.
Existing law requires the Contractors State License Board to require, as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance in the applicant’s or licensee’s business name, as specified.
This bill similarly would require the Department of Cannabis Control to require, as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance in the applicant’s or licensee’s business name. The bill would require the department and the Division of Labor
Standards Enforcement to enforce this requirement pursuant to their existing enforcement authorities. The bill would impose this requirement on licensees or applicants with 10 or more employees on or before July 1, 2024, and for all other licensees or applicants on or before December 31, 2024.
This bill would require a licensee that employs 10 or more workers to provide to the department, by a specified date, the total number of full- and part-time employees, temporary workers, and independent contractors who provide services to the licensee, as described, and the specific employer identification number applicable to each of those workers.
(2) Existing law, as established in the case of Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under
wage orders issued by the Industrial Welfare Commission. Existing law provides that for specified unemployment insurance and employment purposes, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates otherwise, as described.
This bill would apply the law established in the Dynamex case and the provision described above to a worker who performs services for a licensee under MAUCRSA or for a person or entity who is required to obtain such a license, as specified.
(3) Existing law requires an employee to furnish, semimonthly or at the time of each payment of wages, either as a detachable part of the check, draft, or voucher paying the employee’s wages, to their employee an accurate itemized statement in writing showing, among other things, gross wages earned. Existing law imposes related requirements on
the keeping, inspection, and request for itemized statement records, and sets forth remedies and penalties for noncompliance. Existing law also requires employers to provide to each employee a written notice containing certain information regarding their wages and employer information.
This bill would require an employer licensed under MAUCRSA to comply with the above-described requirements.
(4) This bill would declare that it is to take effect immediately as an urgency statute.
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 26051.5 of the Business and Professions Code is amended to read:26051.5.
(a) An applicant for a state license issued pursuant to this division to conduct commercial cannabis activity, as defined in Section 26001, shall do all of the following:(1) Except as provided in subparagraph (G), require that each owner electronically submit to the Department of Justice fingerprint images and related information required by the Department of Justice for the purpose of obtaining information as to the existence and content of a record of state or federal convictions and state and federal arrests, and also information as to the existence and content of a record of state or federal convictions and arrests for which the Department of Justice establishes that the person is free on bail or on their own recognizance pending trial or appeal.
(A) Notwithstanding any other law, the department may obtain criminal history information from the Department of Justice and the Federal Bureau of Investigation for an applicant for any state license under this division, including any license established by a licensing authority, as defined in Section 26001, by regulation pursuant to subdivision (b) of Section 26012.
(B) When received, the Department of Justice shall transmit fingerprint images and related information received pursuant to this section to the Federal Bureau of Investigation for the purpose of obtaining a federal criminal history records check. The Department of Justice shall review the information returned from the Federal Bureau of Investigation and compile and disseminate a response to the licensing authority.
(C) The Department of Justice shall
provide a response to the licensing authority pursuant to paragraph (1) of subdivision (p) of Section 11105 of the Penal Code.
(D) The licensing authority shall request from the Department of Justice subsequent notification service, as provided pursuant to Section 11105.2 of the Penal Code, for applicants.
(E) The Department of Justice shall charge the applicant a fee sufficient to cover the reasonable cost of processing the requests described in this paragraph.
(F) Notwithstanding any other law, a licensing authority may request and receive from a local or state agency certified records of all arrests and convictions, certified records regarding probation, and any and all other related documentation needed to complete an applicant or licensee investigation. A local or state agency may provide those records to a
licensing authority upon request.
(G) If an owner has previously submitted fingerprint images and related information required by the Department of Justice pursuant to this paragraph in connection with a valid state license issued by a licensing authority, both of the following apply:
(i) The owner shall not be required to submit additional fingerprint images and related information pursuant to this paragraph in connection with a subsequent application for a state license.
(ii) The department shall not consider the owner’s criminal history information obtained from the fingerprint images and related information that were previously submitted pursuant to this paragraph when considering whether to issue a subsequent state license.
(2) Provide evidence of
the legal right to occupy and use the proposed location and provide a statement from the landowner of real property or that landowner’s agent where the commercial cannabis activity will occur, as proof to demonstrate the landowner has acknowledged and consented to permit commercial cannabis activities to be conducted on the property by the tenant applicant.
(3) Provide evidence that the proposed location is in compliance with subdivision (b) of Section 26054.
(4) Provide a statement, signed by the applicant under penalty of perjury, that the information provided is complete, true, and accurate.
(5) (A) (i) For an applicant with 20 or more employees, or an applicant with 10 or more employees that submits an application on or after July 1, 2024, provide a notarized statement
that the applicant will enter into, or demonstrate that it has already entered into, and will abide by the terms of a labor peace agreement. On and after July 1, 2024, the department shall not renew a license for a licensee with 10 or more employees unless the licensee provides a statement that the licensee has already entered into and will abide by the terms of a labor peace agreement.
(ii) For an applicant with 10 or more employees but less than 20 employees that has not yet entered into a labor peace agreement, provide a notarized statement as a part of its application indicating that the applicant will enter into and abide by the terms of a labor peace agreement within 60 days of employing its 20th employee, or on or before July 1, 2024, whichever is earlier.
(iii) For an applicant with less than 10 employees that has not yet entered into a labor peace agreement, provide a
notarized statement as a part of its application indicating that the applicant will enter into and abide by the terms of a labor peace agreement within 60 days of employing its 10th employee or on or before July 1, 2024, whichever is later.
(iv) For purposes of this paragraph, the number of employees of an applicant or licensee shall be determined by reference to the following:
(I) If the applicant or licensee is a partnership, the name and federal employer identification number of the partnership.
(II) If the applicant or licensee is not a partnership, the applicant’s or licensee’s individual tax identification number or social security number.
(iv)Nothing in this paragraph shall be construed to
(v) This paragraph does not limit the authority of the department to revoke or suspend a license for a violation of this paragraph.
(B) Compliance with the terms of an applicable labor peace agreement is a condition of licensure. A licensee seeking renewal of any license shall attest to the department that it remains in compliance with the terms of any applicable labor peace agreement.
(C) Any labor organization, or any current or former employee of the relevant licensee, may report to the department that a licensee has failed to provide a truthful attestation of compliance with subparagraph (B).
(i) The reporting party shall provide documentation, in a form and manner required by the department, to substantiate their allegation before the department considers it. The department shall collaborate with such agencies as it deems relevant to evaluate the report.
(ii) If the department substantiates the validity of a report made pursuant to this subparagraph, the department may suspend, revoke, place on probation with terms and conditions, or otherwise discipline the license and fine the licensee.
(D) (i) Any labor
organization, or any current or former employee of the relevant licensee, may file a complaint with the Agricultural Labor Relations Board that an organization with which a licensee has entered into a labor peace agreement is not a bona fide labor organization.
(ii) The Agricultural Labor Relations Board shall consider all relevant evidence provided or obtained in rendering a decision on whether the entity is a bona fide labor organization and issue a report with its findings no later than ninety (90) days from receiving the complaint.
(iii) If the Agricultural Labor Relations Board determines that the entity is not a bona fide labor organization, the labor peace agreement shall be null and void. The department shall promptly notify all licensees that have signed labor peace agreements with the entity that the entity was found not to be a bona fide labor organization and offer
those licensees a reasonable time period, not to exceed 180 days, to enter into a labor peace agreement with a bona fide labor organization. Failure to enter into a labor peace agreement with a bona fide labor organization after that reasonable time period shall be a violation of this section.
(E) For the purposes of this paragraph, all of the following shall apply:
(i) “Employee” does not include a supervisor.
(ii) “Labor organization” means any organization of any kind, or any agency or employee representation committee or plan, in which employees participate and which exists, in whole or in part, for the purpose of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work for employees.
(iii) “Supervisor” means an individual having authority, in the interest of the applicant, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibility to direct them or to adjust their grievances, or effectively to recommend such action, if, in connection with the foregoing, the exercise of that authority is not of a merely routine or clerical nature, but requires the use of independent judgment.
(6) Provide the applicant’s valid seller’s permit number issued pursuant to Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code or indicate that the applicant is currently applying for a seller’s permit.
(7) (A) If the applicant is a partnership, provide the partnership’s
federal employer identification number.
(B) If the applicant is not a partnership, provide the applicant’s individual tax identification number or social security number.
(7)
(8) Provide any other information required by the department.
(8)
(9) For an applicant seeking a cultivation license, provide a statement declaring the applicant is an “agricultural employer,” as defined in the Alatorre-Zenovich-Dunlap-Berman Agricultural Labor Relations Act of 1975 (Part 3.5 (commencing with Section 1140) of Division 2 of
the Labor Code), to the extent not prohibited by law.
(9)
(10) Pay all applicable fees required for licensure by the department.
(10)
(11) Provide proof of a bond to cover the costs of destruction of cannabis or cannabis products if necessitated by a violation of licensing requirements.
(11)
(12) (A) Provide a statement, upon initial application and application for renewal, that the applicant employs, or will employ within one year of receiving or renewing a license, one supervisor and one employee who have successfully completed a Cal-OSHA 30-hour general industry outreach course offered by a training provider that is authorized by an OSHA Training Institute Education Center to provide the course. This paragraph shall not be construed to alter or amend existing requirements for employers to provide occupational safety and health training to employees.
(B) An applicant with only one employee shall not be subject to subparagraph (A).
(C) For purposes of this paragraph “employee”
has the same meaning as provided in subparagraph (B) of paragraph (5) and “supervisor” has the same meaning as provided in subparagraph (C) of paragraph (5).
(b) An applicant shall also include in the application a detailed description of the applicant’s operating procedures for all of the following, as required by the department:
(1) Cultivation.
(2) Extraction and infusion methods.
(3) The transportation process.
(4) Inventory procedures.
(5) Quality control procedures.
(6) Security protocols.
(7) For applicants seeking licensure to cultivate, the source or sources of water the applicant will use for cultivation, as provided in subdivisions (a) to (c), inclusive, of Section 26060.1. For purposes of this paragraph, “cultivation” as used in Section 26060.1 shall have the same meaning as defined in Section 26001. The department shall consult with the State Water Resources Control Board and the Department of Fish and Wildlife in the implementation of this paragraph.
(c) The applicant shall also provide a complete detailed diagram of the proposed premises wherein the license privileges will be exercised, with sufficient particularity to enable ready determination of the bounds of the premises, showing all boundaries, dimensions, entrances and exits, interior partitions, walls, rooms, and common or shared entryways, and include a brief statement or description of the principal activity to be conducted therein, and, for
licenses permitting cultivation, measurements of the planned canopy, including aggregate square footage and individual square footage of separate cultivation areas, if any, roads, water crossings, points of diversion, water storage, and all other facilities and infrastructure related to the cultivation.
(d) Provide a complete list of every person with a financial interest in the person applying for the license as required by the department. For purposes of this subdivision, “persons with a financial interest” does not include persons whose only interest in a licensee is an interest in a diversified mutual fund, blind trust, or similar instrument.
SEC. 2.
Section 26051.7 is added to the Business and Professions Code, to read:26051.7.
(a) The department shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license that the applicant or licensee have on file at all times a current and valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance in the applicant’s or licensee’s business name.(1) A Certificate of Workers’ Compensation Insurance shall be issued and filed, electronically, or otherwise, by an insurer licensed to write workers’ compensation insurance in this state.
(2) A Certification of Self-Insurance shall be issued and filed by the Director of Industrial Relations.
(3) If reciprocity conditions exist, as specified in Section 3600.5 of the Labor Code, the department shall require the information necessary to ensure compliance with this section.
(b) (1) A licensee with 10 or more employees shall provide proof of coverage pursuant to this section no later than July 1, 2024, or the date of renewal for their license, whichever is earlier.
(2) A licensee with less than 10 employees shall provide proof of coverage pursuant to this section no later than December 31, 2024, or the date of renewal for their license, whichever is earlier.
(3) For purposes of this subdivision, the number of employees of an applicant or licensee shall be determined by reference to the following:
(A) If the applicant or licensee is a partnership, the name and federal employer identification number of the partnership.
(B) If the applicant or licensee is not a partnership, the applicant’s or licensee’s individual tax identification number or social security number.
(c) The department shall take all actions necessary, as set forth in Chapter 3 (commencing with Section 26030) to ensure compliance with this section. The Division of Labor Standards Enforcement shall enforce this section in the same manner as provided for by Chapter 4 (commencing with Section 79) of Division 1 of the Labor Code.
SEC. 3.
Section 26053.5 is added to the Business and Professions Code, to read:26053.5.
Notwithstanding any law, no later than July 1, 2025, or by the date the licensee is required to renew their license under this division, whichever is earlier, a licensee that employs 10 or more workers shall provide to the department the following:(a) The total number of full- and part-time employees, temporary workers, and independent contractors who provide services to the licensee for purposes of this division.
(b) The specific employer identification number applicable to each worker identified under paragraph (1).
SEC. 4.
Section 203.3 is added to the Labor Code, to read:203.3.
An employer licensed under Division 10 (commencing with Section 26000) of the Business and Professions Code, or who is required to obtain such a license, shall comply with Sections 226 and 2810.5 for each employee.SEC. 5.
Section 2775.5 is added to the Labor Code, to read:2775.5.
(a) Notwithstanding any law, Section 2275 and the holding in Dynamex apply to a worker performing services for a licensee under Division 10 (commencing with Section 26000) of the Business and Professions Code, or who is performing such services for a person or entity who is required to obtain such a license.(b) To the maximum extent permitted by law, this section applies retroactively to existing claims and actions relating to work performed by a worker on and after January 1, 2024.
(c) For purposes of this code and the Unemployment Insurance Code, subdivision (a) is a supplement to the existing provisions of this chapter and is not intended to alter the definitions of employee
and independent contractor.
SEC. 6.
The Legislature finds and declares that this act furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act.SEC. 7.
This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:In order to ensure employer compliance with wage and hour and other labor laws protecting workers in the cannabis industry, to prevent billions of dollars of tax avoidance, and to ensure that thousands of employees in the cannabis industry are protected against wage theft by underpayment of wages misclassification as independent contractors, and are covered by workers’ compensation insurance, it is necessary for this act to take effect immediately.
