2018 California Public Agency Laws – Part III - Cannabis, LAFCO Law and a Round Up of Other New Laws Impacting Public Agencies

Best Best & Krieger LLP

Best Best & Krieger LLP

The California Legislature was busy in 2017, which means plenty of laws passed in Sacramento that will impact public agencies. In this three-part series, Best Best & Krieger LLP gives a comprehensive summary of the new laws that have specific importance to your work. We hope that you will contact us for further information or with any questions about these bills. All laws went into effect Jan. 1, unless otherwise noted.
SB 94 – Cannabis: single regulatory scheme. Created a single regulatory scheme that addresses both medicinal and recreational cannabis. Under this consolidated licensing system, the same types of licenses will now be available for both commercial medicinal and commercial adult-use activity. It permits vertical integration by license holders that was previously prohibited, allowing a person to hold licenses in more than two separate licensing categories, provided that licensed premises remain “separate and distinct” from one another. Anyone operating in compliance with local law on or before Jan. 1, 2018 can continue operating until their state applications are processed, so long as they applied by July 2, 2018, operated in compliance with all local and state requirements other than possessing a state license, and their continuing operations are the same activities for which the applicants are seeking licensure. The governing Bureau within the California Department of Consumer Affairs is now the Bureau of Cannabis Control, and it will no longer regulate industrial hemp. The definition of “owner” now includes:

  • Anyone with an aggregate ownership interest of 20 percent or more in the applicant, unless the interest is solely a security, lien or encumbrance,
  • The chief executive officer of a nonprofit or other entity,
  • A member of the board of directors for a nonprofit, or
  • An individual participating in the direction, control or management of the applicant.

Effective Jan. 1, 2018, the cannabis excise tax will be 15 percent of the average market price, instead of 15 percent of the average gross receipts. Sections 26000, 26001, 26010 - 26014, 26030 - 26034, 26038, 26040, 26043 - 26047, 26050 - 26058, 26060 - 26104, 26106 - 26200, 26202 - 26231.2 of the Business and Professions Code; sections 1602 and 1617 of the Fish and Game Code; sections 37104, 54036, and 81010 of the Food and Agricultural Code; sections 11006.5, 11014.5, 11018 - 11018.5, 11032, 11054, 11357, 11358 - 11361.5, 11362.1 - 11362.45, 11362.7, 11362.71, 11362.715, 11362.765, 11362.768, 11362.77 - 11362.81, 11362.83, 11362.85, 11362.9, 11364.5, 11470, 11478, 11479, 11479.2, 11480, 11485, 11532, 11553, and 109925 of the Health and Safety Code; sections 34010 - 34016, 34018, 34019, and 34021.5 of the Revenue and Taxation Code; sections 2429.7 and 23222 of the Vehicle Code; sections 1831, 1847, and 13276 of the Water Code, relating to cannabis.
AB 133 – Cannabis: various regulations. Removed the requirement that different commercial license types of cannabis businesses maintain “separate and distinct” premises, meaning that now a single physical location can hold multiple state licenses, subject to applicable ordinances. It amended the definition of “delivery” to remove the requirement that use of a technology platform by a retailer must be owned and controlled by the retailer. It removed the word “physical” from the requirement that licensees maintain a “physical copy” of customers’ delivery requests, opening the door for use of electronic methods. It removed the restriction that medicinal cannabis manufacturers only manufacture products for sale by medicinal retailers. Sections 26001, 26040, 26053, 26055, 26060.1, 26069, 26070, 26090, 26104, 26130, 26140, and 26227.9 of the Business and Professions Code; sections 11553 and 11553.5 of the Government Code; section 11357 of the Health and Safety Code; sections 34010 - 34012.5 and 55044 of the Revenue and Taxation Code, relating to cannabis.
SB 798 – Cannabis: healing arts. Makes “repeated acts of clearly excessive recommending of cannabis to patients for medical purposes, or repeated acts of recommending cannabis to patients for medical purposes without a good faith prior examination of the patient and a medical reason for the recommendation” the fourth priority for investigation and prosecution of physicians and surgeons and doctors of podiatric medicine by the Medical Board of California and the California Board of Podiatric Medicine. A person licensed in good standing “to practice medicine or osteopathy issued by the Medical Board of California, the California Board of Podiatric Medicine or the Osteopathic Medical Board of California shall not recommend medical cannabis to a patient, unless that person is the patient’s attending physician.” Sections 2220.05 and 2525.2 of the Business and Professions Code, relating to healing arts.
AB 1516 – Cannabis: no criminal sanctions. For one year after the “Bureau of Medical Cannabis Regulation posts a notice on its website that the licensing authorities have commenced issuing licenses pursuant to the Medical Cannabis Regulation and Safety Act,” qualified patients, persons with valid identification cards, and the caregivers of each, who associate within California “in order collectively or cooperatively to cultivate cannabis for medical purposes, shall not solely on the basis of that fact be subject to state criminal sanctions.” Section 11362.775 of the Health and Safety Code, relating to cannabis.
AB 1159 — Cannabis: legal services. Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure enacted by the approval of Proposition 64 at the Nov. 8, 2016 statewide general election, authorizes the consumption of nonmedical marijuana, also known as adult-use cannabis, by persons over 21 years of age and establishes a system for the licensure and regulation of certain commercial nonmedical marijuana activities. Existing law grants a lawyer’s client a privilege to refuse to disclose, and to prevent another from disclosing, a confidential communication between the client and lawyer, as defined, if the privilege is claimed by the holder of the privilege, a person who is authorized to claim the privilege by the holder, or the person who was the lawyer at the time of the confidential communication, as specified. Existing law excepts communications from the privilege if the services of the lawyer were sought or obtained to enable or aid anyone to commit, or plan to commit, a crime or fraud. This bill provides that the above exception does not apply to legal services rendered in compliance with state or local laws on medicinal cannabis or adult-use cannabis and that confidential communications provided for the purpose of rendering those services are confidential communications. Section 1550.5 to the Civil Code, relating to cannabis.
AB 1725 — Local agency formation. This measure makes several changes to the LAFCO statutes that govern local government organization and reorganization. Most notably, this measure revises the definition of “contiguous” to mean “territory that abuts or shares a common boundary with territory within a local agency,” and “authorizes a local agency formation commission to establish a schedule of fees and schedule of service charges for proceedings taken pursuant to the act.” Sections 56031, 56131.5, 56383, and 56658 of the Government Code, relating to local government.
SB 448 — Local government: organization: districts. Existing law requires the officer of each local agency, who has charge of the financial records of the local agency, to furnish to the controller a report of all the financial transactions of the local agency during the preceding fiscal year within seven months after the close of each fiscal year. It also requires a report of an audit of a special district’s accounts and records made by a certified public accountant or public accountant to be filed with the controller and the county auditor of the county in which the special district is located within 12 months of the end of the fiscal year or years under examination. This bill requires special districts to file audit reports with the controller and special districts, defined by another specified provision, to file those audit reports with the controller and with the LAFCO of either the county in which the special district is located or, if the special district is located in two or more counties, with each LAFCO within each county in which the district is located. The bill requires the controller to publish on the controller’s website a comprehensive list of special districts on or before July 1, 2019, and to annually update that list. This bill requires the controller to create a list of special districts that are inactive. The bill also requires the controller to publish this list and to notify a LAFCO in the county or counties in which the special district is located if the controller has included the special district in this list. The LAFCO is required to initiate proceedings for the dissolution of any special district that is an inactive district and to dissolve those districts. For these purposes the term “inactive district” is defined. Sections 26909, 56073.1 and 56375, sections 12463.4, 56042 and article 6, commencing with section 56879 the Government Code, relating to local government.
AB 556 — County ordinances: violations: fines. This measure increases the maximum amount of a fine for a violation of a county’s event permit requirement, as defined, to $150 for a first violation, $700 for a second occurrence of the same violation by the same owner or operator within three years, and $2,500 for each additional occurrence of the same violation by the same owner or operator within three years. Section 25132 and 53069.4 of the Government Code, relating to local government.
AB 660 — Public Agencies; unlawful interference. This measure expands the crime of trespass on a public agency and makes it an infraction, punishable by a fine of up to $400, to intentionally interfere with any lawful business carried on by the employees of a public agency that is open to the public. Specifically, it prohibits knowingly making a material misrepresentation of law to those attempting to transact business, and refusing to leave. Section 602.1 of the Penal Code, relating to crime.
AB 1034 — Government interruption of communications. This measure implements various statutes related to governing government interruption of communications service, including but not limited to, establishing an opportunity for post-interruption judicial review, a clarification of the role of the Office of Emergency Services in the process, the addition of exceptions to court authorization requirements to minimize unnecessary burdens on law enforcement and the courts, and the addition of procedural language from existing law pertaining to wiretapping, to provide clarity and additional detail on how to apply for a court order authorizing the interruption of communications. Article 7 (commencing with section 11470) to chapter 3 of title 1 of part 4 of the Penal Code, and sections 7907 and 7908 of the Public Utilities Code, relating to criminal procedure.
AB 1418 — City prosecutions. This measure clarifies that city prosecutors have the same authority, privileges and protections as prosecuting city attorneys, particularly in regard to the prosecution of misdemeanors. Sections 373a, 1424 and 11105 of the Penal Code and sections 1807.5, 1808.4 and 1810.5 of the Vehicle Code, relating to city prosecutors.
AB 1728 — Health care districts: board of directors. Each health care district has a board of directors with specific duties and powers respecting the creation, administration and maintenance of the district, including purchasing, receiving, having, taking, holding, leasing, using and enjoying property. This bill requires the board of directors to adopt an annual budget in a public meeting, on or before Sept. 1 of each year, that conforms to generally accepted accounting and budgeting procedures for special districts, establish and maintain a website that lists contact information for the district, and adopt annual policies for providing assistance or grant funding, if the district provides assistance or grants. Section 32139 to the Health and Safety Code, relating to health care districts.
SB 205 -— Local Government Omnibus Act of 2017. Among many other clean up items, this measure replaces the requirement for consultation with “the city attorney or county counsel” with “legal counsel for the entity,” to allow special districts to consult with their agency’s legal counsel for purposes of completing sexual harassment prevention training consultations.
SB 314 — Massage therapy: certification: credit hours. This measure requires the California Massage Therapy Council, pursuant to its policies and procedures, to accept hours earned by an applicant for certification as a massage therapist, if those hours were completed before July 1, 2016 and were earned from a school providing education in the state that was unapproved, as defined, by the council after July 1, 2016, based solely on the fact that the National Certification Board for Therapeutic Massage and Bodywork took denial or disciplinary action against the school. Section 4604 of the Business and Professions Code, relating to health care districts.
Previously in BB&K’s New California Public Agency Laws Series:

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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