Hawaii-2020-SB686-Amended

SECTION 1. The legal history of marijuana or cannabis in the United States primarily addresses the regulation of cannabis for medical use, and secondarily the use of cannabis for personal or recreational purposes. By the mid-1930s, cannabis was regulated as a drug in every state, including thirty-five states that adopted the Uniform State Narcotic Drug Act which was subsequently replaced in 1970 with the federal Uniform Controlled Substances Act, which classifies cannabis and tetrahydrocannabinol as schedule I controlled substances.

Notwithstanding the prospect of federal prosecution, several states, including Hawaii, have enacted medical cannabis laws. Chapter 329, part IX, Hawaii Revised Statutes, was enacted to create a medical use of cannabis exemption from criminal sanctions. Other jurisdictions, such as Alaska, Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington, also allow the use of cannabis for medicinal purposes. Furthermore, chapter 329D, Hawaii Revised Statutes, was enacted to establish medical cannabis dispensaries that were authorized to operate beginning in July 2016. As Hawaii expands its medical cannabis program through the use of highly regulated and monitored dispensaries, more patients are anticipated to consider medical cannabis as a viable treatment, knowing that the medicine will be regulated and tested.

In addition to medicinal cannabis laws, some states have legalized or decriminalized cannabis for personal or recreational purposes. Most places that have decriminalized cannabis have civil fines, confiscation, drug education, or drug treatment in place of incarceration or criminal charges for possession of small amounts of cannabis, or have made various cannabis offenses the lowest priority for law enforcement. The states of Alaska, California, Colorado, Connecticut, Delaware, District of Columbia, Illinois, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New York, North Carolina, Ohio, Oregon, Rhode Island, Vermont, and Washington have decriminalized cannabis in small amounts. In each of these states, cannabis users no longer face arrest or jail time for the possession or use of cannabis in an amount permitted by statute.

The legislature further finds that the legalization of cannabis for personal or recreational use is a natural, logical, and reasonable outgrowth of the current science of cannabis and attitude toward cannabis. In 2012, voters in Colorado voted to amend the state's constitution (Amendment 64) to legalize and regulate the production, possession, and distribution of cannabis for persons age twenty-one and older. Also in 2012, voters in Washington approved a proposition to legalize and regulate the production, possession, and distribution of cannabis for persons age twenty-one and older. Colorado is the first state to remove the prohibition on commercial production of cannabis for general use. Colorado realized state tax revenue of approximately $18,900,000 during the first half of 2014, and this revenue is expected to increase as sales of retail cannabis increase. Following Colorado and Washington's lead, Oregon and Alaska passed legislation to also legalize and regulate the production, possession, and distribution of cannabis for persons age twenty-one and older. Several other states have followed suit in making recreational cannabis legal.

The legislature further finds that cannabis cultivation and sales hold potential for economic development, increased tax revenues, and reduction in crime.

The purpose of this Act is to:

(1) Decriminalize and regulate small amounts of cannabis for personal use;

(2) Authorize medical cannabis dispensaries to sell non‑medical cannabis for personal use;

(3) Tax non-medical cannabis sales in the same manner as state excise taxes; and

(4) Subject income derived from non-medical cannabis sales to state income taxes.

SECTION 2. Chapter 329, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part . legalization of cannabis for personal use

§329-A Definitions. As used in this part:

"Cannabis" shall have the same meaning as in 329-121.

"Cannabis accessories" means any equipment, products, or materials of any kind that are used, intended for use, or designed for use in storing, vaporizing, or containing cannabis, or for ingesting, inhaling, or otherwise introducing cannabis into the human body.

"Cannabis products" means cannabis concentrate products and products that comprise cannabis and other ingredients intended for use or consumption and include but are not limited to edible products, ointments, and tinctures.

"Department" means the department of health.

"Dispensary" shall have the same meaning as in section 329D-1.

"Non-medical cannabis" and "non-medical cannabis products" means cannabis and cannabis products that are purchased for personal use pursuant to this part and not pursuant to part IX.

"Personal use" means an amount of cannabis not exceeding 0.5 ounces that is used for private, personal, or recreational purposes by persons age twenty-one years or older. The term personal use includes display, possession, transport, transfer, or processing of cannabis or cannabis products.

§329-B Personal use of cannabis. (a) Notwithstanding any law to the contrary, the personal use of cannabis is permitted; provided the aggregate amount is 0.5 ounces or less.

(b) Personal use of cannabis shall not be the basis for arrest, seizure, or forfeiture of assets.

(c) The possession, use, display, purchase, transfer, or transport of 0.5 ounces of cannabis or less, cannabis accessories, or cannabis paraphernalia for personal use shall be immune from criminal prosecution.

(d) The consumption of cannabis products is permitted.

(e) Assisting, advising, or abetting another person who is twenty-one years of age or older in any actions described in this section is permitted.

(f) Any ban or restriction relating to smoking tobacco or tobacco products shall also apply to smoking non-medical cannabis or non-medical cannabis products.

§329-C Regulation of cannabis; rules. (a) No later than July 1, 2020, the department shall adopt rules, pursuant to chapter 91, necessary for implementation of this part. The rules shall include:

(1) Requirements to prevent the sale or diversion of non-medical cannabis and non-medical cannabis products to persons under the age of twenty-one;

(2) Labeling requirements for non-medical cannabis and non-medical cannabis products sold or distributed by a dispensary;

(3) Health and safety regulations and standards for the manufacture of non-medical cannabis products;

(4) Restrictions on the advertising and display of cannabis and cannabis products; and

(5) Civil penalties for the failure to comply with rules adopted pursuant to this section.

(b) In order to ensure that individual privacy is protected, the department shall not require a consumer of non-medical cannabis to provide a dispensary with personal information other than government-issued identification to determine the consumer's age. A dispensary shall not be required to acquire and record personal information about consumers who purchase non-medical cannabis.

§329-D Effect on employers. This part shall not be construed to:

(1) Require an employer to permit or accommodate the use, consumption, possession, transfer, display, transport, sale, or growing of cannabis in the workplace; or

(2) Affect the ability of an employer to have policies restricting the use of cannabis by employees.

§329-E Effect on intoxicated driving laws. This part shall not be construed as a defense, exemption, or immunity from chapter 291E.

§329-F Effect on medical cannabis law. This chapter shall not be construed to affect medical use of cannabis as provided in part IX and shall not be deemed to expand the medical use of cannabis beyond the uses provided in part IX.

§329-G Effect on medical cannabis dispensary law. This chapter shall not be construed to affect the dispensing of medical cannabis as provided in chapter 329D and shall not be deemed to expand the dispensing of medical cannabis beyond the uses provided in chapter 329D.

§329-H Effect on property rights. This chapter shall not be construed to prohibit a person, employer, school, hospital, detention facility, corporation, or any other entity who occupies, owns, or controls a property from prohibiting or otherwise regulating the possession, consumption, use, display, transfer, distribution, sale, transportation, or growing of cannabis on or in that property.

§329-I Taxes. (a) All transactions involving non-medical cannabis or non-medical cannabis products shall be subject to payment of income taxes on gross receipts under chapter 235 and payment of excise taxes under chapter 237 for each transaction conducted by the dispensary; provided that there shall be an additional fifteen per cent excise tax on the sale of all non‑medical cannabis and non-medical cannabis products.

(b) Thirty per cent of revenues collected from the additional fifteen per cent excise tax pursuant to this section shall be expended to provide substance abuse prevention and education under section 329D-26, including education on the dangers of driving while under the influence of cannabis."

SECTION 3. Chapter 329D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§329D- Sale of non-medical cannabis for personal use; authorized. Beginning February 1, 2021, dispensaries shall be authorized to sell non-medical cannabis and non-medical cannabis products for personal use pursuant to chapter 329, part ."

SECTION 4. Chapter 329D, Hawaii Revised Statutes, is amended by amending its title to read as follows:

"CHAPTER 329D

[~~MEDICAL~~] CANNABIS DISPENSARY SYSTEM"

SECTION 5. Section 329D-2, Hawaii Revised Statutes, is amended to read as follows:

"§329D-2 [~~Medical cannabis~~] Cannabis dispensaries; authorized; licensure. (a) No person shall operate a [~~medical~~] cannabis dispensary unless the person has a license issued by the department pursuant to this chapter.

(b) The director of health shall grant [~~medical~~] cannabis dispensary licenses to allow dispensaries to produce, manufacture, and dispense cannabis and manufactured cannabis products pursuant to this chapter.

(c) Each [~~medical~~] cannabis dispensary license shall allow production, manufacture, and dispensing of cannabis and manufactured cannabis products only in the county for which the license is granted.

(d) The department shall issue eight dispensary licenses statewide; provided that three dispensary licenses shall be issued for the city and county of Honolulu, two dispensary licenses each shall be issued for the county of Hawaii and the county of Maui, and one dispensary license shall be issued for the county of Kauai; provided further that no dispensary license shall be issued for the county of Kalawao.

(e) No person may be granted a dispensary license in more than one county.

(f) Up to two production centers shall be allowed under each dispensary license; provided that, except as otherwise specified in subsection (k), each production center shall be limited to no more than three thousand cannabis plants. For purposes of this subsection, "plant" means a cannabis plant that is greater than twelve vertical inches in height from where the base of the stalk emerges from the growth medium to the tallest point of the plant, or greater than twelve horizontal inches in width from the end of one branch to the end of another branch; provided that multiple stalks emanating from the same root ball or root system shall be considered part of the same single plant.

(g) A dispensary licensee may establish up to two retail dispensing locations under the licensee's dispensary license, except as otherwise specified in subsection (l).

(h) Each dispensary licensee may commence dispensing medical cannabis and manufactured cannabis products to qualifying patients or primary caregivers no sooner than July 15, 2016, with approval by the department, in accordance with this chapter.

(i) Retail dispensing locations shall not be at the same location as the dispensary licensee's production centers.

(j) Notwithstanding subsection (d), the department shall determine whether, based on the qualifying patient need, additional dispensary licenses shall be offered to qualified applicants in the State after October 1, 2018; provided that the department shall make available not more than one license per five hundred qualifying patients residing in any single county; provided further that in considering whether to award a new license, the department shall consider an applicant's capability to serve and supply medical cannabis to qualified patients in a rural or underserved geographical area of a county; provided further that a "rural or underserved geographical area" shall be determined by considering the number of registered medical cannabis patients that reside within a certain zip code compared to the quantity of medical cannabis that the closest production center and retail dispensing location have the capability to provide.

(k) Notwithstanding subsection (f) to the contrary, the department may determine whether dispensary licensees shall be allowed an additional two thousand cannabis plants at each of the licensee's production centers. In no case shall a licensee be allowed more than five thousand plants at a single production center.

(l) Notwithstanding any provision of subsection (g) to the contrary, the department may determine whether dispensary licensees shall be allowed one additional retail dispensing location per licensee. In considering whether to allow additional retail dispensing locations, the department shall consider the licensee's capability to serve and supply medical cannabis to qualified patients in a rural or underserved geographical area of a county. For purposes of this subsection, a "rural or underserved geographical area" shall be determined by considering the number of registered medical cannabis patients that reside within a certain zip code compared to the quantity of medical cannabis that the closest production center and retail dispensing location have the capability to provide.

(m) Notwithstanding any other law to the contrary, a dispensary shall not be subject to the prescription requirement of section 329-38 or to the board of pharmacy licensure or regulatory requirements under chapter 461.

(n) Each dispensary licensee may commence dispensing non‑medical cannabis and manufactured non-medical cannabis products to persons for personal use no sooner than February 1, 2021, with approval by the department, in accordance with this chapter."

SECTION 6. Section 329D-7, Hawaii Revised Statutes, is amended to read as follows:

"§329D-7 [~~Medical cannabis~~] Cannabis dispensary rules. The department shall establish standards with respect to:

(1) The number of [~~medical~~] cannabis dispensaries that shall be permitted to operate in the State;

(2) A fee structure for the submission of applications and renewals of licenses to dispensaries; provided that the department shall consider the market conditions in each county in determining the license renewal fee amounts;

(3) Criteria and procedures for the consideration and selection, based on merit, of applications for licensure of dispensaries; provided that the criteria shall include but not be limited to an applicant's:

(A) Ability to operate a business;

(B) Financial stability and access to financial resources; provided that applicants for [~~medical~~] cannabis dispensary licenses shall provide documentation that demonstrates control of not less than $1,000,000 in the form of escrow accounts, letters of credit, surety bonds, bank statements, lines of credit or the equivalent to begin operating the dispensary;

(D) Capacity to meet the needs of qualifying patients and qualifying out-of-state patients;

(E) Ability to comply with criminal background check requirements developed pursuant to paragraph (8); and

(F) Ability to comply with inventory controls developed pursuant to paragraph (13);

(4) Specific requirements regarding annual audits and reports required from each production center and dispensary licensed pursuant to this chapter[;], including sales of cannabis for personal use and taxes collected pursuant to section 329-I;

(5) Procedures for announced and unannounced inspections by the department or its agents of production centers and dispensaries licensed pursuant to this chapter; provided that inspections for license renewals shall be unannounced;

(6) Security requirements for the operation of production centers and retail dispensing locations; provided that, at a minimum, the following shall be required:

(A) For production centers:

(i) Video monitoring and recording of the premises; provided that recordings shall be retained for fifty days;

(ii) Fencing that surrounds the premises and that is sufficient to reasonably deter intruders and prevent anyone outside the premises from viewing any cannabis in any form;

(iii) An alarm system; and

(iv) Other reasonable security measures to deter or prevent intruders, as deemed necessary by the department;

(B) For retail dispensing locations:

(i) Presentation of a valid government-issued photo identification and a valid identification as issued by the department pursuant to section 329-123 by a qualifying patient or caregiver, [or] section 329-123.5 by a qualifying out-of-state patient or caregiver of a qualifying out-of-state patient, or section 329-C(b) by a person purchasing cannabis for personal use, upon entering the premises;

(ii) Video monitoring and recording of the premises; provided that recordings shall be retained for fifty days;

(iii) An alarm system;

(iv) Exterior lighting; and

(v) Other reasonable security measures as deemed necessary by the department;

(7) Security requirements for the transportation of cannabis and manufactured cannabis products between production centers and retail dispensing locations and between a production center, retail dispensing location, person purchasing cannabis for personal use, qualifying patient, primary caregiver, qualifying out‑of-state patient, or caregiver of a qualifying out-of-state patient and a certified laboratory, pursuant to section 329‑122(f);

(8) Standards and criminal background checks to ensure the reputable and responsible character and fitness of all license applicants, licensees, employees, subcontractors and their employees, and prospective employees of [~~medical~~] cannabis dispensaries to operate a dispensary; provided that the standards, at a minimum, shall exclude from licensure or employment any person convicted of any felony;

(9) The training and certification of operators and employees of production centers and dispensaries;

(10) The types of manufactured cannabis products that dispensaries shall be authorized to manufacture and sell pursuant to sections 329D-9 [~~and~~], 329D-10[;], and 329D- ;

(11) Laboratory standards related to testing cannabis and manufactured cannabis products for content, contamination, and consistency;

(12) The quantities of cannabis and manufactured cannabis products that a dispensary may sell or provide to a qualifying patient, primary caregiver, qualifying out‑of-state patient, [or] caregiver of a qualifying out-of-state patient[;], or person purchasing cannabis for personal use; provided that no dispensary shall sell or provide to a qualifying patient, primary caregiver, qualifying out-of-state patient, or caregiver of a qualifying out-of-state patient any combination of cannabis and manufactured products that:

(A) During a period of fifteen consecutive days, exceeds the equivalent of four ounces of cannabis; or

(B) During a period of thirty consecutive days, exceeds the equivalent of eight ounces of cannabis;

provided further that, during a period of one day, no dispensary shall sell or provide to a person purchasing cannabis for personal use any combination of cannabis and manufactured products that exceeds 0.5 ounces;

(13) Dispensary and production center inventory controls to prevent the unauthorized diversion of cannabis or manufactured cannabis products or the distribution of cannabis or manufactured cannabis products to a qualifying patient, primary caregiver, qualifying out‑of-state patient, [or] caregiver of a qualifying out-of-state patient, or person purchasing cannabis for personal use in quantities that exceed limits established by this chapter; provided that the controls, at a minimum, shall include:

(A) A computer software tracking system as specified in section 329D-6(j) and (k); and

(B) Product packaging standards sufficient to allow law enforcement personnel to reasonably determine the contents of an unopened package;

(14) Limitation to the size or format of signs placed outside a retail dispensing location or production center; provided that the signage limitations, at a minimum, shall comply with section 329D-6(o)(2) and any applicable rules and shall not include the image of a cartoon character or other design intended to appeal to children;

(15) The disposal or destruction of unwanted or unused cannabis and manufactured cannabis products;

(16) The enforcement of the following prohibitions against:

(A) The sale or provision of cannabis or manufactured cannabis products to unauthorized persons;

(B) The sale or provision of cannabis or manufactured cannabis products to a qualifying patient, primary caregiver, qualifying out-of-state patient, [or] caregiver of a qualifying out-of-state patient, or person purchasing cannabis for personal use in quantities that exceed limits established by this chapter;

(C) Any use or consumption of cannabis or manufactured cannabis products on the premises of a retail dispensing location or production center; and

(D) The distribution of cannabis or manufactured cannabis products, for free, on the premises of a retail dispensing location or production center;

(17) The establishment of a range of penalties for violations of this chapter or rule adopted thereto; and

(18) A process to recognize and register patients who are authorized to purchase, possess, and use medical cannabis in another state, a United States territory, or the District of Columbia as qualifying out-of-state patients; provided that this registration process may commence no sooner than January 1, 2018."

SECTION 7. Section 329D-10, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The types of [~~medical~~] cannabis products that may be manufactured and distributed pursuant to this chapter shall be limited to:

(1) Capsules;

(2) Lozenges;

(3) Pills;

(4) Oils and oil extracts;

(5) Tinctures;

(6) Ointments and skin lotions;

(7) Transdermal patches;

(8) Pre-filled and sealed containers used to aerosolize and deliver cannabis orally, such as with an inhaler or nebulizer; provided that containers need not be manufactured by the licensed dispensary but shall be filled with cannabis, cannabis oils, or cannabis extracts manufactured by the licensed dispensary; shall not contain nicotine, tobacco-related products, or any other non-cannabis derived products; and shall be designed to be used with devices used to provide safe pulmonary administration of manufactured cannabis products;

(9) Devices that provide safe pulmonary administration; provided that:

(A) The heating element of the device, if any, is made of inert materials such as glass, ceramic, or stainless steel, and not of plastic or rubber;

(B) The device is distributed solely for use with single-use, pre-filled, tamper-resistant, sealed containers that do not contain nicotine or other tobacco products;

(C) The device is used to aerosolize and deliver cannabis by inhalation, such as an inhaler, medical-grade nebulizer, or other similar medical grade volitization device;

(D) There is a temperature control on the device that is regulated to prevent the combustion of cannabis oil; and

(E) The device need not be manufactured by the licensed dispensary; and

(10) Other products as specified by the department."

SECTION 8. Section 329D-11, Hawaii Revised Statutes, is amended to read as follows:

"§329D-11 Advertising and packaging. (a) The department shall establish standards regarding the advertising and packaging of cannabis and manufactured cannabis products; provided that the standards, at a minimum, shall require the use of packaging that:

(1) Is child-resistant and opaque so that the product cannot be seen from outside the packaging;

(2) Uses only black lettering on a white background with no pictures or graphics;

(3) Is clearly labeled with the phrase "For medical use only";

(4) Is clearly labeled with the phrase "Not for resale or transfer to another person";

(5) Includes instructions for use and "use by date";

(6) Contains information about the contents and potency of the product;

(7) Includes the name of the production center where cannabis in the product was produced, including the batch number and date of packaging;

(8) Includes a barcode generated by tracking software; and

(9) In the case of a manufactured cannabis product, includes a:

(A) Listing of the equivalent physical weight of the cannabis used to manufacture the amount of the product that is within the packaging, pursuant to section 329D-9(c);

(B) Clearly labeled warning stating that the product:

(i) Is a medication that contains cannabis, and is not a food; and

(ii) Should be kept away from children; and

provided that paragraph (3) shall not apply to non-medical cannabis; provided further that the required label under paragraph (9)(B)(i) shall not state that a manufactured non-medical cannabis product is a medication.

(b) Any capsule, lozenge, or pill containing cannabis or its principal psychoactive constituent tetrahydrocannabinol shall be packaged so that one dose, serving, or single wrapped item contains no more than ten milligrams of tetrahydrocannabinol; provided that no manufactured cannabis product that is sold in a pack of multiple doses, servings, or single wrapped items, nor any containers of oils, shall contain more than a total of one thousand milligrams of tetrahydrocannabinol per pack or container; provided further that no dispensary shall exceed the dispensing limits imposed by section 329D-7.

(d) For the purposes of this section, "non-medical cannabis" shall have the same meaning as in section 329-A."

SECTION 9. Section 712-1246, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows:

"(1) A person commits the offense of promoting a harmful drug in the third degree if the person knowingly possesses twenty-five or more capsules or tablets or dosage units containing one or more of the harmful drugs [~~or one or more of the marijuana concentrates, or any combination thereof~~]."

SECTION 10. Section 712-1249, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows:

"(1) A person commits the offense of promoting a detrimental drug in the third degree if the person knowingly possesses [~~any~~] over 0.5 ounces of marijuana or any Schedule V substance in any amount."

SECTION 11. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 12. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 13. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 14. This Act shall take effect upon its approval.

THE SENATE	S.B. NO.	686
THIRTIETH LEGISLATURE, 2019		S.D. 1
STATE OF HAWAII