26026. The commission shall have the exclusive power, in its reasonable discretion, to deny, modify, suspend, or revoke any specific cannabis license for good cause. The office shall establish the qualifications and procedures for the application, issuance, renewal, modification, suspension, and revocation of cannabis licenses provided under this Act. These procedures shall include the right to protest and appeal decisions made by the office, and permit individuals to seek relief in a superior court for the jurisdiction where the individual resides.
26027. Any regulations created and enforced by the office for licensing shall not infringe on the rights and protections set forth in this Act, including but not limited to the possession, use, and cultivation of homegrown cannabis individually or collectively.
26028. (a) Not later than July 1, 2017, the commission shall institute a rulemaking proceeding to establish the standards and requirements for the licenses necessary to carry out the intents and purposes of this Act. The regulations shall, at a minimum: establish the place and manner of commercial cultivation or sales allowed under a cannabis license; if necessary to prevent diversion, restrict the amount of total aggregate licensed canopy area in the state; and provide safety and environmental requirements.
(b) The commission shall, at a minimum, ensure that the following types of cannabis licenses are issued:
(1) Cultivation licenses to cultivate, propagate, purchase, grow, harvest, process, transport, and deliver cannabis to other licensees for commercial purposes; however, the licensee may transport and deliver only the cannabis it cultivated or propagated pursuant to its cultivation license, and the office shall establish different tiers of cultivation licenses based on the area, in square feet, of cannabis canopy, including a small-scale cultivation license tier for licensees holding no more than one-half (1/2) acre in total cultivation area.
(2) Nursery licenses to produce and transport seeds, seedlings, tissue culture, and other propagation materials; however, the licensee may transport and deliver only the seeds, seedlings, tissue culture, and other propagation materials it produced pursuant to its nursery license.
(3) Manufacturing licenses to purchase, process, manufacture, prepare, produce, package, transport, and deliver cannabis and cannabis products for commercial purposes to distribution, retail, or other
manufacturing licensees; however, the licensee may transport and deliver only the cannabis and cannabis products it manufactured pursuant to its manufacturing license, and the office shall establish
different tiers of manufacturing licenses based on the annual gross revenue of the cannabis manufacturing licensee.
(4) Distribution licenses to acquire, store, transport, and deliver cannabis and cannabis products to other licensees; however, the licensee may transport and deliver only the cannabis and cannabis products it acquired or stored pursuant to its distribution license, and the office shall establish different tiers of distribution licenses based on the annual gross revenue of the cannabis distribution licensee.
(5) Retail licenses to package, deliver, trade, and sell cannabis and cannabis products.
(6) Transporter licenses to transport cannabis and cannabis products for commercial purposes. This license shall be necessary for (i) carriers not engaged in the cultivation, propagation, manufacture, or
distribution of cannabis, or (ii) licensees transporting cannabis, cannabis products, seeds, seedlings, tissue culture, and other propagation materials cultivated, propagated, manufactured, or distributed by a third party.
(7) Testing licenses to (i) analyze and certify the safety and potency of cannabis or cannabis products; or (ii) identify ingredients, nutritional content, and/or potentially harmful contaminants in cannabis or cannabis products; however, the office shall establish rules and regulations preventing entities with any common ownership, management, or control from certifying the safety, potency, or content of cannabis or cannabis products produced by the affiliated licensees.
(8) Research and educational licenses to cultivate, process, or display, but not test, cannabis and cannabis products for scientific, educational, or informational purposes but not for commercial
production, manufacture, or sale.
(9) Provisional licenses for applicants who, for at least one year prior to the passage of this Act, have regularly cultivated, processed, manufactured, distributed, transported, sold, or tested medical cannabis in compliance with the Compassionate Use Act of 1996 (Health and Safety Code Section 11362.5), the Medical Marijuana Program Act (Health and Safety Code Sections 11326.7-11362.8), and paragraphs A
and B of Section IV of the Guidelines for Security and Non-Diversion of Marijuana Grown for Medical Use, issued by the California Department of Justice in August 2008, and any applicable local ordinance,
provided the applicant (i) is licensed, permitted, or certified by a local jurisdiction allowing the operation of a cannabis business, and (ii) submits an application for a provisional license no later than
May 1, 2017. Provisional licenses shall be valid until the commission enacts a procedure granting permanent status to provisional licensees.
(c) The commission may establish other license categories as appropriate.
(d) With the exception of persons or entities holding a testing license, the holder of any license granted under existing laws governing medical cannabis or medical cannabis products may also hold any other cannabis license available under this Act.
(e) Persons or entities holding any license granted under existing laws governing medical cannabis or medical cannabis products shall be automatically entitled to a reasonably equivalent cannabis license available under this Act, provided said licensees register with the office in a manner prescribed by the commission.
(f) All licenses created under this Act shall apply exclusively to cannabis and cannabis products cultivated, manufactured, distributed, and sold in the State of California.
26029. (a) Notwithstanding any other provisions of law, the commission may place reasonable conditions upon any cannabis license as it deems necessary, in order to further the purposes of the Act and protect the public welfare. These shall include, but are not limited to:
(1) Restrictions as to the number and types of licenses conferred upon an individual or business entity so as to promote fair competition and discourage monopolization;
(2) Restrictions on the manner and place of commercial cannabis cultivation, and limitations on cannabis cultivation area so as to prevent diversion and minimize environmental harm;
(3) Reasonable conditions on the time, manner, and place of the retail sale of cannabis and cannabis products, including controls governing on-site consumption of cannabis and cannabis products by adults,
21 years of age and older, at licensed retail facilities;
(4) Safety restrictions for retail cannabis and cannabis products including requirements for testing and labeling, safe preparation, storage, and child-proof packaging of cannabis edibles and other products;
(5) Limits on the dosage strengths of edible cannabis products available for non-medical use to prevent over-consumption; and
(6) Reasonable controls on the advertisement and packaging of cannabis and cannabis products, including restrictions to prevent promotion aimed at or attractive to minors.
(b) A violation of a condition placed upon a license shall be grounds for the suspension or revocation of such license, and the office may assess a reasonable fine to be established based on standards promulgated by the commission.
26030. (a) The office shall issue provisional licenses no later than July 1, 2017. No later than January 1, 2018, the office shall make non-provisional cannabis licenses available to eligible applicants.
(b) An application for a license, including provisional licenses, and any subsequent renewal shall be made to the office upon a form prescribed by the office and shall be accompanied by such other information as the office may require to assist in determining whether an applicant qualifies for a license. At a minimum, an applicant shall do all of the following:
(1) Provide his or her name, address, date of birth, and proof of his or her legal California residency.
(2) Provide a signed statement, under penalty of perjury, that the applicant has not been convicted of a violent felony as specified in Penal Code 1192.7(c), a felony involving fraud or deceit, or any felony that in the licensing authority’s determination would impair the applicant’s ability to appropriately operate as a licensee; or that the applicant has obtained a certificate of rehabilitation pursuant to Penal Code 4852.13 or expungement pursuant to the Penal Code.
(3) For individuals seeking to cultivate, manufacture, distribute, or sell cannabis on real property owned by a third party, notarized consent from the owner or the owner’s agent that cannabis may be cultivated, manufactured, distributed, or sold by the tenant applicant on said property.
(c) The office shall devise and implement protocols to confirm the accuracy of information in an application for a license. The office may require fingerprinting and background checks of all applicants. At the request of the office, the California Attorney General or any local agency shall provide summary criminal history information to the office as provided in Sections 11105 and 13300 of the Penal Code.
(d) The office may require an applicant to provide detailed operating procedures, in writing, for operational security, prevention of diversion, employee screening, storage of cannabis and cannabis products, personnel policies, and recordkeeping.
(e) The office may devise and implement protocols to ensure compliance with laws and regulations applicable to cannabis cultivation, including but not limited to environmental impacts, natural resource protection, water quality, water supply, hazardous materials, and pesticide use, in accordance with regulations, with the California Environmental Quality Act (Public Resources Code, Section 21000 et. seq.), the California Endangered Species Act (Fish and Game Code, Section 2800 et. seq.), lake or streambed alteration agreements (Fish & Game Code, Section 1600 et. seq.), the Clean Water Act, the Porter-Cologne Water Quality Control Act, timber production zones, wastewater discharge permits, and any permit or right necessary to divert water.
(f) If a partnership, corporation, or limited liability company holds a cannabis licensee, the licensee shall report any direct or indirect change in the ownership, management, or control of more than ten percent (10%) in that partnership, corporation, or limited liability company within sixty (60) calendar days following such change in a manner prescribed by the office.
(g) In issuing licenses, the office shall first prioritize any applicant holding a provisional license. The office shall secondarily prioritize any applicant who can satisfactorily demonstrate to the office that the applicant was in operation and in good standing with respect to the cultivation, propagation, manufacture, distribution, sale, testing, or research of cannabis and cannabis products as of July 1, 2016. The commission shall promulgate standards for the office to utilize in determining whether an applicant was in operation and in good standing as of July 1, 2016. These standards shall include, but are not limited to, demonstration that the applicant incorporated as a business entity with the California Secretary of State prior to July 1, 2016, that the applicant is registered and in good standing with the Board of Equalization, and that the applicant can demonstrate through documentation such as contracts, invoices, receipts, and/or manifests that the applicant seeking priority has been transacting with a licensed or permitted medical operator prior to the passage of this Act. This commission may amend and adopt additional criteria for the priority determination under this subsection.
26031. (a) The commission shall adopt application and renewal application fees in an amount reasonably sufficient to recoup the costs incurred by the office to process applications. Any applicant for a license shall, at the time of filing an application, submit the required application fee.
(b) The commission shall adopt license fees in an amount reasonably sufficient to recoup the cost of the administration, regulation, oversight, application processing, enactment of standards governing licensee and employee education, training, and certification, and any other costs the office deems necessary and proper to administer the licensing provisions of the Act. Upon approval of a license application, the applicant shall submit the license fee prior to being granted the license(s).
(c) Notwithstanding the foregoing, the fees established under this section shall be based upon the projected or actual annual revenues of the applicant or licensee, and it is the intent of the People in enacting this Act that said fees encourage small and midsize businesses to have access to the cannabis industry and that the cannabis industry is not dominated by large corporate interests.
(d) The commission shall require payment of the license fee on an annual basis. Upon reasonable notice, the commission may increase or decrease the licensing fees.
26032. (a) In accordance with, and subject to the exemptions in, Health and Safety Code Section 11362.768, no licensee shall operate a business for the cultivation, distribution, manufacture, sale, or testing of cannabis within six hundred (600) feet of a school.
(b) The office shall develop and implement procedures to ensure that every resident and owner of real property within five hundred (500) feet of any proposed premises or location where a cannabis licensee plans to conduct business pursuant to a cannabis license is provided reasonable notice. No license shall be issued, and no manufacture, distribution, cultivation, sale, or testing of cannabis or cannabis products may proceed, until notice has been provided for at least thirty (30) consecutive days; however, public notice shall not be required for provisional licenses or any applicant seeking to manufacture, distribute, cultivate, or test cannabis or cannabis products if the applicant can satisfactorily demonstrate to the office that it was in operation and in good standing for two consecutive years in the same location as of January 1, 2016. The commission shall promulgate standards for the office to consider in determining whether an applicant was in operation and in good standing for two consecutive years in the same location as of January 1, 2016.
26033. (a) It is the intent of the People in enacting this Act that, to the extent feasible, the commission regulate cannabis sales in a manner consistent with the regulation of alcohol sales and public use as established in Chapter 16 (commencing with Section 25600) of Division 9 of the Business and Professions Code.
(b) The commission shall develop and implement security measures to reasonably protect against the unauthorized access or diversion of cannabis from a licensed cultivator, manufacturer, distributor, transporter, tester, or seller. These measures shall include, but are not limited to:
(1) Recordkeeping provisions to ensure transparency of finances and to prevent the diversion of licensee profits to criminal enterprises.
(2) Mandatory and regular inspections and audits of licensees and licensee tracking systems to ensure that cannabis produced by a licensee is sold or otherwise disposed of, and is thereafter assessed, in
accordance with the provisions of this Act.
(3) Reasonable restrictions on licensee operations, including but not limited to the time and place of sale, time and manner of deliveries, and signage.
(4) Penalties for violations of the Act by licensees, including penalties for the sale of cannabis and cannabis products to persons under 21 years of age.
(c) Except as otherwise provided by law, all information provided to the office by licensees shall be subject to disclosure in accordance with the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code). Notwithstanding the foregoing, the office is not required to disclose any licensee information deemed proprietary or confidential business information.
(d) The office shall create and maintain a list of cannabis licensees. As soon as practicable, but no later than January 1, 2018, the office shall implement an Internet-based system to enable the public and state and local law enforcement offices to have immediate access to information necessary to verify the validity of a license issued by the office.
26034. To the extent practicable, the office shall work with relevant state agencies, departments, political subdivisions, public authorities, districts, public corporations, cities, and counties to implement the intents and purposes of this Act.
Article 7. Local Control
26035. (a) Cities and counties may restrict or prohibit the commercial cultivation, manufacture, distribution, and sale of cannabis and cannabis products; however, any prohibitions on the cultivation, manufacture, distribution, and sale of medical cannabis and medical cannabis products must be approved by a majority of voters residing in such cities or counties. No city or county may ban the delivery by licensed providers of medical cannabis to qualified patients for their personal medical use.
(b) Notwithstanding the foregoing, cities and counties shall not prohibit a person from cultivation of homegrown cannabis or from possessing, transporting, or using any cannabis or cannabis products where such activity is in compliance with this Act.
(c) Cities and counties may restrict or prohibit the use of cannabis or cannabis products in any public area. This includes the right to restrict or prohibit on-site consumption at licensed facilities open to the public.
(d) Cities and counties may adopt reasonable regulations on the location and operating hours of licensed adult use retail outlets.
Article 8. Enforcement
26036. The office is primarily responsible for enforcement of civil penalties and remedies of this division. The Attorney General and the district attorney of any county in which a violation occurs have concurrent powers and responsibilities for enforcing the criminal provisions of this Act, including the prosecution of violators engaged in the unlicensed sale, distribution, cultivation, and manufacturing of cannabis and cannabis products.
26037. Upon the sworn complaint of any person, or on its own initiative, the office shall investigate possible violations of this Act. Within thirty (30) days after receipt of a complaint under this section, the office shall notify in writing the person who made the complaint of the action, if any, that the office has taken or plans to take on the complaint, together with the reasons for such action or nonaction. If no decision has been made within thirty (30) days, the person who made the complaint shall be notified of the reasons for the delay and shall subsequently receive notification as provided above.
26038. No finding of probable cause to believe this Act has been violated shall be made by the office unless, at least twenty-one (21) days prior to the office’s consideration of the alleged violation, the office provides notice to the person or entity alleged to have violated this Act, by service of process or registered mail with return receipt requested, provided with a summary of the evidence, and informed of the right to be present in person and represented by counsel at any proceeding held for the purpose of considering whether probable cause exists for believing the person violated this division. Notice to the alleged violator shall be deemed made on the date of service or on the date the registered mail receipt is signed.
26039. When the office determines there is probable cause for believing this Act has been violated, it may hold a hearing to determine whether a violation has occurred. Notice shall be given and the hearing conducted in accordance with the Administrative Procedure Act (Chapter 5 (commencing with Section 11500), Part 1, Division 3, Title 2, Government Code). The office shall have all the powers granted by that chapter.
26040. No administrative action brought pursuant to this Article alleging a violation of any of the provisions of this Act shall be commenced more than two (2) years after the violation occurred or after the date of reasonable discovery if the occurrence could not reasonably have been discovered upon its occurrence. The service of the probable cause hearing notice, as required by Section 26039, upon the person alleged to have violated this division shall constitute the commencement of the administrative action.
26041. The office may subpoena witnesses, compel their attendance and testimony, administer oaths and affirmations, take evidence, and require by subpoena the production of any books, papers, records, or other items material to the performance of the office’s duties or exercise of its powers.
26042. (a) When the office determines on the basis of the hearing that a violation of this Act has occurred, it shall issue an order that may require the violator to do any or all of the following:
(1) Cease and desist violation of this division.
(2) File any reports, statements, or other documents or information required by this division.
(3) Pay a fine of fifty dollars ($50) per ounce of unlawful cannabis or cannabis products, and up to ten dollars ($10) per square foot of unlawful canopy area cultivated, or a monetary penalty of up to two
thousand dollars ($2,000) per day per violation to the Cannabis Safety Fund.
(4) Pay the reasonable costs incurred by the office for its investigation and prosecution of the hearing.
(5) Relinquish or suspend his or her license(s).
(b) When the office determines that no violation has occurred, it shall publish a notice so stating.
26043. Whenever the office rejects the decision of an administrative law judge made pursuant to Government Code Section 11517, the office shall state the reasons in writing for rejecting the decision.
26044. (a) Judicial review of a final decision made pursuant to this division may be had by filing a petition for a writ of mandate in accordance with Section 1094.5 of the Code of Civil Procedure. The petition shall be filed within thirty (30) calendar days of personal delivery or within sixty (60) calendar days of the mailing of the office’s decision.
(b) In an action resulting in the issuance of a writ of mandate pursuant to this section, the court may order the office to pay the petitioner’s reasonable attorney’s fees or one thousand dollars ($1,000), whichever is less.
26045. (a) Any person residing in the jurisdiction may sue for injunctive relief to enjoin violations or to compel compliance with the provisions of this Act. The court may award to a plaintiff or defendant who prevails the costs of litigation, including reasonable attorney’s fees.
(b) No criminal action alleging a violation of this Act may be filed against a person pursuant to this section if the office is prosecuting a civil action against that person for violations that flowed from the conduct alleged in the civil action.
(c) No civil action may be pursued under this section for any violations of this Act after the office has issued an order pursuant to Section 26042 against that person for the same violation.
26046. (a) In determining the amount of liability in accordance with the Act, the court may take into account the seriousness of the violation and the degree of culpability of the defendant. If a judgment is entered against the defendant or defendants in an action brought under Section 26045, the plaintiff shall receive ten percent (10%) of the amount recovered. The remaining ninety percent (90%) shall be deposited in the Cannabis Safety Fund. In a criminal action brought by the district attorney or city attorney pursuant to Section 26045, the entire amount recovered shall be paid to the general fund or treasury of the jurisdiction. In an action brought by the office, the entire amount recovered shall be paid to the Cannabis Safety Fund.
(b) No civil action alleging a violation of any provisions of this division shall be filed more than two (2) years after the violation occurred or after the date of reasonable discovery if the occurrence could not reasonably have been discovered upon its occurrence.
26047. The court may award to a plaintiff or defendant who prevails in any action authorized by this division his or her costs of litigation, including reasonable attorney’s fees. On motion of any party, a court shall require a private plaintiff to post a bond in a reasonable amount at any stage of the litigation to guarantee payment of costs.
26048. (a) In addition to any other available remedies, the commission may bring a civil action and obtain a judgment in superior court for the purpose of collecting any unpaid monetary penalties, fees, or civil penalties imposed pursuant to this division. The action may be filed as a small claims, limited civil, or unlimited civil case, depending on the jurisdictional amount. The venue for this action shall be in the county where the monetary penalties, fees, or civil penalties were imposed by the commission.
(b) A civil action brought pursuant to subdivision (a) shall be commenced within two (2) years after the date on which the monetary penalty, fee, or civil penalty was imposed.
