SB1494 - 541R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2803, Arizona Revised Statutes, is amended to read:

START_STATUTE36-2803. Rulemaking; notice

A. The department shall adopt rules:

1. Governing the manner in which the department considers petitions from the public to add debilitating medical conditions or treatments to the list of debilitating medical conditions set forth in section 36‑2801, paragraph 3, including public notice of, and an opportunity to comment in a public hearing on, petitions.

2. Establishing the form and content of registration and renewal applications submitted under this chapter.

3. Governing the manner in which the department considers applications for and renewals of registry identification cards.

4. Governing nonprofit medical marijuana dispensaries, for the purpose of protecting TO PROTECT against diversion and theft without imposing an undue burden on nonprofit medical marijuana dispensaries or compromising the confidentiality of cardholders, including:

(a) The manner in which the department considers applications for and renewals of registration certificates.

(b) Minimum oversight requirements for nonprofit medical marijuana dispensaries.

(d) Minimum security requirements for nonprofit medical marijuana dispensaries, including requirements for protection of TO PROTECT each registered nonprofit medical marijuana dispensary location by a fully operational security alarm system.

(e) Procedures for suspending or revoking the registration certificate of nonprofit medical marijuana dispensaries that violate this chapter or the rules adopted pursuant to this section.

5. Establishing application and renewal fees for registry identification cards, and nonprofit medical marijuana dispensary registration certificates and independent third‑party laboratory CERTIFICATES, according to the following:

(a) The total amount of all fees shall generate revenues may not exceed an amount that is sufficient to implement and administer this chapter, except that fee revenue may be offset or supplemented by private donations.

(b) Nonprofit medical marijuana dispensary application fees may not exceed $5,000.

(d) Independent third‑party laboratory application fees may not exceed $5,000.

(e) Independent third‑party laboratory renewal fees may not exceed $1,000.

(d) (f) The total amount of revenue generated from nonprofit medical marijuana dispensary application and renewal fees, and registry identification card fees for nonprofit medical marijuana dispensary agents shall be and independent third‑party laboratory fees may not exceed an amount sufficient to implement and administer the nonprofit medical marijuana dispensary provisions of this chapter, including the verification system, except that the fee revenue may be offset or supplemented by private donations.

(e) (g) The department may establish a sliding scale of patient application and renewal fees based on a qualifying patient's household income.

(f) (h) The department may consider private donations under section 36‑2817 to reduce application and renewal fees.

B. The department shall adopt rules that require each nonprofit medical marijuana dispensary to display in a conspicuous location a sign that warns pregnant women about the potential dangers to fetuses caused by smoking or ingesting marijuana while pregnant or to infants while breastfeeding and the risk of being reported to the department of child safety during pregnancy or at the birth of the child by persons who are required to report. The rules shall include the specific warning language that must be included on the sign. The cost and display of the sign required by rule shall be borne by the nonprofit medical marijuana dispensary. The rules shall also require each certifying physician to attest that the physician has provided information to each qualifying female patient that warns about the potential dangers to fetuses caused by smoking or ingesting marijuana while pregnant or to infants while breastfeeding and the risk of being reported to the department of child safety during pregnancy or at the birth of the child by persons who are required to report.

C. The department is authorized to adopt the rules set forth in subsections A and B of this section and shall adopt those rules pursuant to title 41, chapter 6.

D. The department shall post prominently on its public website a warning about the potential dangers to fetuses caused by smoking or ingesting marijuana while pregnant or to infants while breastfeeding and the risk of being reported to the department of child safety during pregnancy or at the birth of the child by persons who are required to report.

E. The department shall adopt rules for testing marijuana for medical use from nonprofit medical marijuana dispensaries before selling or dispensing marijuana to cardholders to determine unsafe levels of microbial contamination, pesticides, herbicides, fungicides, growth regulators and residual solvents and confirming the potency of the marijuana to be dispensed beginning June 1, 2020. The rules shall:

1. Include process requirements for collecting, storing and testing samples of marijuana for medical use.

2. Establish potency standards with the standard variance allowance.

3. Establish remediation requirements for nonprofit medical marijuana dispensaries if testing identifies unsafe levels of microbial contamination, pesticides, herbicides, fungicides, growth regulators or residual solvents in the marijuana. Remediation may include destroying contaminated medical marijuana products, imposing fines and suspending or revoking a dispensary's license.

4. Establish standards for reporting test results to the department and the designated caregiver or nonprofit medical marijuana dispensary that cultivates the marijuana. The department shall make the test results available to the general public.

F. The department shall adopt rules to certify independent third‑party laboratories that analyze marijuana cultivated for medical use. The department shall establish certification fees for laboratories pursuant to subsection A of this section. in order to be certified as an independent third‑party laboratory that is allowed to test marijuana for medical use pursuant to this chapter, An independent third‑party laboratory:

1. Must meet criteria established by the department.

2. May not have any familial or financial relationship with or interest in a nonprofit medical marijuana dispensary or related medical marijuana business entity or management company, or any familial or financial relationship with a designated caregiver for which the laboratory is testing marijuana for medical use in this state.

3. Must have a quality assurance program and standards.

4. Must have an adequate chain of custody and sample requirement policies.

5. Must have an adequate records retention process to preserve records.

6. Must establish procedures to ensure that results are accurate, precise and scientifically valid before reporting the results.

G. The department is responsible for proficiency testing and remediating problems with independent third‑party laboratories that are certified and regulated pursuant to this chapter. Remediation may include imposing fines and suspending or revoking a laboratory's certification. END_STATUTE

Sec. 2. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2806, Arizona Revised Statutes, is amended to read:

START_STATUTE36-2806. Registered nonprofit medical marijuana dispensaries; requirements; rules; inspections; testing

A. A registered nonprofit medical marijuana dispensary shall be operated on a not-for-profit basis. The bylaws of a registered nonprofit medical marijuana dispensary shall contain such provisions relative to the disposition of revenues and receipts to establish and maintain its nonprofit character. A registered nonprofit medical marijuana dispensary need not be recognized as tax-exempt by the internal revenue service and is not required to incorporate pursuant to title 10, chapter 19, article 1.

B. The operating documents of a registered nonprofit medical marijuana dispensary shall include procedures for the oversight of the registered nonprofit medical marijuana dispensary and procedures to ensure accurate recordkeeping.

C. A registered nonprofit medical marijuana dispensary shall have a single secure entrance and shall implement appropriate security measures to deter and prevent the theft of marijuana and unauthorized entrance into areas containing marijuana.

D. A registered nonprofit medical marijuana dispensary is prohibited from acquiring, possessing, cultivating, manufacturing, delivering, transferring, transporting, supplying or dispensing marijuana for any purpose except to assist registered qualifying patients with the medical use of marijuana directly or through the registered qualifying patients' designated caregivers.

E. All cultivation of marijuana must take place in an enclosed, locked facility at a physical address provided to the department during the registration process, which that can only be accessed only by registered nonprofit medical marijuana dispensary agents associated in the registry with the nonprofit medical marijuana dispensary.

F. A registered nonprofit medical marijuana dispensary may acquire usable marijuana or marijuana plants from a registered qualifying patient or a registered designated caregiver only if the registered qualifying patient or registered designated caregiver receives no compensation for the marijuana.

G. A nonprofit medical marijuana dispensary shall not permit allow any person to consume marijuana on the property of a the nonprofit medical marijuana dispensary.

H. Registered nonprofit medical marijuana dispensaries are subject to reasonable inspection by the department. The department shall give reasonable notice of an inspection under this subsection.

I. Beginning June 1, 2020, registered nonprofit medical marijuana dispensaries are subject to product testing by certified independent third‑party laboratories pursuant to this chapter and rules adopted pursuant to this chapter.

J. Notwithstanding title 13, chapter 34, an employee of the department or an employee of any certified independent third-party LABORATORY may not be charged with or prosecuted for possession of any amount of marijuana that is cultivated for medical use and that the employee is using as a sample for testing as required by this chapter and the rules adopted pursuant to this chapter. END_STATUTE

Sec. 3. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 36-2816, Arizona Revised Statutes, is amended to read:

START_STATUTE36-2816. Violations; civil penalty; classification

A. A registered qualifying patient may not directly, or through his the patient's designated caregiver, obtain more than two-and-one-half two and one‑half ounces of marijuana from registered nonprofit medical marijuana dispensaries in any fourteen-day period.

B. A registered nonprofit medical marijuana dispensary or agent may not dispense, deliver or otherwise transfer marijuana to a person other than:

1. Another registered nonprofit medical marijuana dispensary. ,

2. A registered qualifying patient. or

3. A registered qualifying patient's registered designated caregiver.

4. A certified independent third‑party laboratory for purposes prescribed in sections 36‑2803 and 36‑2806 and department rule.

C. A registered nonprofit medical marijuana dispensary may not acquire usable marijuana or mature marijuana plants from any person other than another registered nonprofit medical marijuana dispensary, a registered qualifying patient or a registered designated caregiver. A knowing violation of this subsection is a class 2 felony.

D. It is a class 1 misdemeanor for any person, including an employee or official of the department or another state agency or local government, to breach the confidentiality of information obtained pursuant to this chapter.

E. Making false statements to a law enforcement official about any fact or circumstance relating to the medical use of marijuana to avoid arrest or prosecution is subject to a civil penalty of not more than five hundred dollars $500, which shall be in addition to any other penalties that may apply for making a false statement or for the use of marijuana other than use undertaken pursuant to this chapter. END_STATUTE

Sec. 4. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, title 36, chapter 28.1, Arizona Revised Statutes, is amended by adding sections 36-2820 and 36-2821, to read:

START_STATUTE36-2820. Marijuana laboratory testing reference library

A. The department shall develop and maintain a marijuana laboratory testing reference library. The department shall require a certified laboratory to provide materials for the reference library, except that a certified laboratory is not required to provide testing protocols.

B. The reference library must contain a collection of methodologies for marijuana testing in the areas of potency, homogeneity, contaminants and solvents consistent with the laboratory requirements adopted by the department in rule.

C. The department may include in the reference library standard sample attainment procedures and standards related to sample preparation for laboratory analysis.

D. The department may spend the necessary monies from the medical marijuana fund established by section 36‑2817 to develop and implement the medical marijuana testing reference library.

E. On or before January 1, 2021, the department shall make reference library materials, including the methodologies, publicly available and may continuously update the reference library as new materials become available. END_STATUTE

START_STATUTE36-2821. Medical marijuana testing advisory council; membership; duties; council termination

A. The director shall establish a medical marijuana testing advisory council to assist and make recommendations to the director regarding administering and implementing this chapter. The director or the director's designee shall be member of the advisory council and shall appoint eleven members to the council, including:

1. The president or executive director of a statewide association representing the marijuana dispensaries, or the person's designee.

2. The president or executive director of a statewide cannabis testing association, or the person's designee.

3. The president or executive director of a medical marijuana trade association that does not primarily consist of dispensaries or cannabis laboratory testing facility owners, or the person's designee.

4. A board member of an Arizona‑based medical marijuana dispensary that is focused primarily on cultivation.

5. A board member of a medical marijuana dispensary that is focused on concentrate.

6. A board member of an Arizona‑based medical marijuana dispensary that is focused primarily on edible manufacturing by units.

7. An owner of an Arizona‑based cannabis testing laboratory.

8. A laboratory scientist who holds a doctorate or who has at least three years of experience in cannabis laboratory testing.

9. A person with a finance background who is a certified public accountant and who has at least three years of experience in finance and the medical marijuana industry.

10. A registered qualifying patient.

11. A resident of this state who is a veteran of the United States Armed services.

B. The medical marijuana testing advisory council shall:

1. Make recommendations and consult with the director regarding testing marijuana for medical use as required by this chapter.

2. Advise the director regarding expenditures from the medical marijuana fund.

3. Provide additional assistance as the director deems necessary.

C. Members of the advisory council are not eligible to receive compensation but are eligible for reimbursement of expenses pursuant to title 38, chapter 4, article 2.

D. The council established by this section ends on July 1, 2027 pursuant to section 41-3103.END_STATUTE

Sec. 5. Requirements for enactment; two-thirds vote

Pursuant to article IX, section 22, Constitution of Arizona, this act is effective only on the affirmative vote of at least two-thirds of the members of each house of the legislature and is effective immediately on the signature of the governor or, if the governor vetoes this act, on the subsequent affirmative vote of at least three-fourths of the members of each house of the legislature.

Sec. 6. Requirements for enactment; three-fourths vote

Pursuant to article IV, part 1, section 1, Constitution of Arizona, sections 36‑2803, 36-2806 and 36‑2816, Arizona Revised Statutes, as amended by this act, and sections 36‑2820 and 36‑2821, Arizona Revised Statutes, as added by this act, are effective only on the affirmative vote of at least three‑fourths of the members of each house of the legislature.