PART I

SECTION 1. The legislature finds that Hawaii's medical use of marijuana law was enacted on June 14, 2000, as Act 228, Session Laws of Hawaii 2000, to provide medical relief for seriously ill individuals in the State. While the current law recognizes the beneficial use of marijuana in treating or alleviating pain or other symptoms associated with certain debilitating illnesses, it is silent on how patients can obtain medical marijuana if they or their caregivers are unable to grow their own supply of medical marijuana. The legislature further finds that many of the State's nearly thirteen thousand qualifying patients lack the ability to grow their own supply of medical marijuana due to a number of factors, including disability and limited space to grow medical marijuana. As a result, a regulated statewide dispensary system for medical marijuana is urgently needed by qualifying patients in the State.

Accordingly, the purpose of this Act is to establish a regulated statewide dispensary system for medical marijuana to ensure safe and legal access to medical marijuana for qualifying patients.

PART II

SECTION 2. Chapter 321, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . MEDICAL MARIJUANA DISPENSARY SYSTEM

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

"Department" means the department of health.

"Manufacture" means the production, preparation, propagation, compounding, conversion, or processing of a substance containing marijuana or its principal psychoactive constituent tetrahydrocannabinol, either directly or indirectly, by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis, and includes any packaging or repackaging of the substance or labeling or relabeling of its container; provided that "manufacture" shall not include the preparation or compounding of marijuana or tetrahydrocannabinol by a qualifying patient or primary caregiver for the qualifying patient's use.

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

"Medical marijuana dispensary" or "dispensary" means an establishment operated by an organization or business licensed by the State pursuant to this part.

"Medical marijuana production center" or "production center" means a farm or facility operated by an organization or business licensed by the State pursuant to this part where marijuana or marijuana products are cultivated, processed, or packaged with the limited and express intent that the marijuana or marijuana products be supplied to medical marijuana dispensaries or other medical marijuana production centers, pursuant to this part and to section 329-122.

"Person" means an individual, firm, corporation, partnership, association, or any form of business or legal entity.

"Primary caregiver" shall have the same meaning as in section 329-121.

"Qualifying patient" shall have the same meaning as in section 329-121.

§321-B Medical marijuana dispensaries; licensure; fees; inspection. (a) This section applies to the distribution of marijuana for medical use, as defined in section 329-121.

(b) No person shall act as a dispensary unless the person has obtained a license from the department pursuant to this part.

(c) The department shall adopt rules, in accordance with chapter 91, to provide for the licensure and standards for dispensaries in this State.

(d) The director of health shall grant medical marijuana dispensary licenses to allow dispensaries registered under this section to acquire, possess, cultivate, manufacture, deliver, transfer, transport, supply, or dispense marijuana, or related supplies and educational materials, to registered qualifying patients.

(e) At least dispensaries shall be licensed in each county; provided that a dispensary shall not be required in the county of Kalawao; provided further that there shall be:

(1) Up to dispensaries in the city and county of Honolulu;

(2) Up to dispensaries in Hawaii county;

(3) Up to dispensaries in Maui county; and

(4) Up to dispensaries in Kauai county.

(f) Each dispensary licensed pursuant to this section shall:

(1) Be a health care provider incorporated in the State for at least years before the date of application;

(2) Be a legal entity formed under the laws of the State;

(3) Not be a legal entity formed under the laws of any other state;

(4) Not be an insurance company or mutual benefit society, nor directly owned or controlled by an insurance company or mutual benefit society; and

(5) Have obtained a Hawaii general excise tax license pursuant to section 237-9.

(g) The director of health shall approve an application for a dispensary license if the application meets all dispensary licensing requirements and criteria pursuant to this section and, if approved, shall issue the license to the dispensary within days of receiving the application. The director shall issue dispensary licenses in the order in which applications are received.

(h) Dispensaries licensed pursuant to this section shall be open for business and have medical marijuana for sale to patients no later than days from the date of license approval.

(i) The department of health shall commence accepting applications for the dispensary license that is applicable to each county beginning on the effective date of this Act.

(j) A single dispensary may be granted a dispensary license in more than counties if the dispensary meets all licensing requirements.

(k) At least per cent of the interests in a dispensary shall be held at all times by Hawaii residents who have documented Hawaii residency for at least years immediately preceding the date of the license application. No more than per cent of the interests in a dispensary shall be held at any time by individuals who do not have documented Hawaii residency for at least years immediately preceding the date of the license application.

(l) Each individual who holds per cent or more interest in a dispensary shall:

(1) Be a principal officer or board member of the dispensary;

(2) Have been a Hawaii resident for at least years immediately preceding the date of the license application;

(3) Be a legal resident of the State;

(4) Maintain a full-time residence in the State; and

(5) Not have been convicted of a felony anywhere in the United States within years immediately preceding the date of the license application.

(m) Each person seeking licensure as a dispensary shall submit an application that includes the following:

(1) The name of at least principal officer or board member of the dispensary; provided that the name of each individual who is required to be a principal officer and board member of the dispensary pursuant to subsection (l) shall be included, if applicable;

(2) Documentation that demonstrates that the dispensary controls at least $ for each license and at least $ for each dispensing location allowed under the license or licenses applied for in the form of escrow accounts, letters of credit, surety bonds, bank statements, lines of credit, or the equivalent, to begin operating the dispensary;

(3) Documentation that demonstrates that the dispensary has controlled at least $ for at least days prior to the date the license application was submitted;

(4) Documentation that demonstrates the capacity of the dispensary to conduct chemical and pharmaceutical analysis of medical marijuana to ensure quality, consistency, purity, and potency of medication for at least days prior to the date the license application was submitted;

(5) A fee of $ ; provided that:

(A) The applicant shall submit the fee in the form of checks in the amount of $ ;

(B) If the application is unsuccessful, the department shall retain the fee of $ , and destroy the remaining checks for $ ; and

(6) Documentation that demonstrates that the dispensary is a legal entity formed under the laws of the State; and

(7) A general excise tax license number.

(n) All dispensary licenses shall expire on , and may be renewed by application submitted beginning on .

(o) The department shall establish and collect an annual renewal fee of $ from a medical marijuana dispensary; provided that the amount of the renewal fee shall be subject to review and revision by the department; provided further that the renewal fee shall be sufficient to cover the department's expenses in carrying out this part.

(p) All fees collected pursuant to this section shall be deposited in the medical marijuana registry and regulation special fund pursuant to section 321-30.1.

(q) Notwithstanding any other law to the contrary, no dispensary shall employ a person convicted of a felony anywhere in the United States within years immediately preceding the date of the license application.

§321-C Medical marijuana production centers; licensure; fees; inspection. (a) No person may act as a medical marijuana production center unless the person has obtained a license from the department pursuant to this part.

(b) The department shall adopt rules, in accordance with chapter 91, to provide for the licensure and standards for medical marijuana production centers in this State.

(c) Medical marijuana production centers shall distribute marijuana only to dispensaries or other production centers licensed pursuant to this part. Medical marijuana production centers shall not distribute marijuana directly to qualifying patients or primary caregivers.

§321-D Manufacturing of medical marijuana products. (a) Any medical marijuana dispensary or production center licensed by the department pursuant to this part shall be permitted to manufacture medical marijuana; provided that the dispensary or production center shall also obtain any other state or county permits or licenses that may be necessary for a particular manufacturing activity.

(b) The department shall establish standards regarding the manufacture of medical marijuana products; provided that any area within a dispensary or production center where marijuana will be manufactured into an edible form shall comply with the food safety code, chapter 11-50, Hawaii Administrative Rules.

§321-E Types of medical marijuana products. (a) The department shall adopt rules regarding the type of medical marijuana products that may be manufactured and distributed pursuant to this part; provided that no candy products containing medical marijuana shall be permitted; provided further that nothing in this section shall be construed as prohibiting the manufacture and distribution of lozenges.

(b) As used in this section, "lozenges" means a small tablet manufactured in a manner to allow for the dissolving of its medicinal or therapeutic component slowly in the mouth.

§321-F Advertising and packaging. (a) The department shall establish standards regarding the advertising and packaging of medical marijuana 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) Is clearly labeled with the phrase "For medicinal use only"; and

(3) Contains information about the contents and potency of the product.

(b) Any lozenge, capsule, or pill containing medical marijuana or its principal psychoactive constituent tetrahydrocannabinol shall be packaged so that one dose, serving, or single wrapped item contains no more than milligrams of tetrahydrocannabinol.

§321-G Medical marijuana production center and dispensary rules. The department shall adopt rules pursuant to chapter 91 for the purpose of this part and with respect to:

(1) A fee structure for the submission of applications and renewal of licenses to operate production centers or dispensaries;

(2) Any specific requirements regarding annual audits and reports pertaining to each production center and dispensary that is licensed pursuant to this part;

(3) Security requirements for the operation of production centers and dispensaries; provided that the requirements, at a minimum, shall require:

(A) For productions centers:

(i) Video monitoring and recording of the premises;

(ii) Fencing that surrounds the premises and that is sufficient to reasonably deter intruders and prevent anyone outside the premises from viewing any area where marijuana is cultivated, processed, or stored;

(iii) An alarm system; and

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

(B) For dispensaries:

(i) Presentation of valid identification as issued by the department pursuant to section 329-123, by a qualifying patient or primary caregiver, upon entering the premises;

(ii) Video monitoring and recording of the premises;

(iii) An alarm system;

(iv) Exterior lighting; and

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

(4) Standards and criminal backgrounds checks for operators and employees of production centers and dispensaries; provided that the standards, at a minimum, shall exclude from licensure or employment any person convicted of any felony pursuant to section 321-B(q); provided further that the department may adopt rules exempting from this paragraph a person who was convicted of a felony that was specifically related to marijuana, if the conviction was at least years prior to the licensure or employment;

(5) The training and certification of operators and employees of production centers and dispensaries; provided that the department shall establish a training or certification program for dispensary employees;

(6) The types of medical marijuana products that production centers and dispensaries shall be authorized to grow, manufacture, sell, or provide;

(7) Standards and methodologies related to testing medical marijuana products for content, contamination, and consistency;

(8) Dispensary and production center inventory controls to prevent the unauthorized diversion of marijuana; provided that the controls, at a minimum, shall include:

(A) A computer software tracking system that will allow the department to track all medical marijuana and medical marijuana product inventory from either seed or immature plant state until the marijuana or marijuana product is sold to a customer or destroyed; and

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

(9) The enforcement of prohibitions against the sale of provision of medical marijuana products to unauthorized persons;

(10) Any limitations to the size or format of any signs placed outside a dispensary or production center; provided that no sign shall include the image of a cartoon character or other design intended to appeal to children; and

(11) Penalties for violations of this part or rules adopted thereunder.

§321-H Medical marijuana zoning. Medical marijuana production centers and dispensaries shall comply with all county zoning ordinances, rules, or regulations; provided that:

(1) A medical marijuana production center shall be permitted in any area in which agricultural production is permitted except as provided within this part;

(2) A medical marijuana dispensary shall be permitted in any area in which a pharmacy is permitted; and

(3) No medical marijuana production center or dispensary shall be permitted within feet of the real property comprising a public school as defined in section 302A-101.

§321-I Annual inspections, audits, and reports. (a) Each medical marijuana production center and dispensary licensed pursuant to this part shall:

(1) Be subject to an annual announced inspection and unannounced inspections of its operations by the department; and

(2) Annually cause an independent financial audit, at the production center or dispensary operator's own expense, to be conducted of the production center or dispensary and shall submit the audit's findings to the department.

(b) The department shall report annually to the governor and the legislature on the establishment and regulation of medical marijuana production centers and dispensaries, including but not limited to:

(1) The number and location of production centers and dispensaries licensed;

(2) The total licensing fees collected; and

(3) Any licensing violations determined by the department.

§321-J Cultivation of medical marijuana by qualifying patients and primary caregivers. Nothing in this part shall be construed as prohibiting a qualifying patient or primary caregiver from cultivating or possessing an adequate supply of medical marijuana pursuant to part IX of chapter 329.

§321-K Coordination among state and federal agencies. (a) The department shall initiate ongoing dialogue among relevant state and federal agencies to identify processes and policies that ensure the privacy of medical marijuana patients and the compliance of patients, caregivers, producers, and dispensaries with state laws and regulations related to medical marijuana.

(b) The entirety of this part, and all actions and activities provided for and allowed for by this part, shall be deemed the implementation of a state law that authorizes the use, distribution, and possession of medical marijuana under section 538 of the Consolidated and Further Continuing Appropriations Act of 2015.

§321-L County ordinance restriction; preemption. (a) No county shall enact any ordinances or laws regulating dispensaries, the cultivation of marijuana by medical marijuana production centers, or the location of dispensaries and production centers. No county shall regulate dispensaries or production centers other than as provided in this part and shall not prohibit the cultivation, processing, transportation, infusion, preparation, possession, dispensing, sale, and use of medical marijuana.

(b) This part is an express preemption of the concurrent exercise by county governments on the regulation and licensing of dispensaries, production centers, and the operation of dispensaries and production centers, all such powers being exclusively reserved to and exercised under this part by the State. The State hereby expresses an intent to fill the field of the regulation of medical marijuana and the dispensing and production thereof, and all county laws or ordinances in conflict with and having the effect of interfering with the State's intent to fill the field are expressly preempted."

PART III

SECTION 3. Section 46-4, Hawaii Revised Statutes, is amended to read as follows:

"§46-4 County zoning. (a) This section and any ordinance, rule, or regulation adopted in accordance with this section shall apply to lands not contained within the forest reserve boundaries as established on January 31, 1957, or as subsequently amended.

Zoning in all counties shall be accomplished within the framework of a long-range, comprehensive general plan prepared or being prepared to guide the overall future development of the county. Zoning shall be one of the tools available to the county to put the general plan into effect in an orderly manner. Zoning in the counties of Hawaii, Maui, and Kauai means the establishment of districts of such number, shape, and area, and the adoption of regulations for each district to carry out the purposes of this section. In establishing or regulating the districts, full consideration shall be given to all available data as to soil classification and physical use capabilities of the land to allow and encourage the most beneficial use of the land consonant with good zoning practices. The zoning power granted herein shall be exercised by ordinance which may relate to:

(1) The areas within which agriculture, forestry, industry, trade, and business may be conducted;

(2) The areas in which residential uses may be regulated or prohibited;

(3) The areas bordering natural watercourses, channels, and streams, in which trades or industries, filling or dumping, erection of structures, and the location of buildings may be prohibited or restricted;

(4) The areas in which particular uses may be subjected to special restrictions;

(5) The location of buildings and structures designed for specific uses and designation of uses for which buildings and structures may not be used or altered;

(6) The location, height, bulk, number of stories, and size of buildings and other structures;

(7) The location of roads, schools, and recreation areas;

(8) Building setback lines and future street lines;

(9) The density and distribution of population;

(10) The percentage of a lot that may be occupied, size of yards, courts, and other open spaces;

(11) Minimum and maximum lot sizes; and

(12) Other regulations the boards or city council find necessary and proper to permit and encourage the orderly development of land resources within their jurisdictions.

The council of any county shall prescribe rules, regulations, and administrative procedures and provide personnel it finds necessary to enforce this section and any ordinance enacted in accordance with this section. The ordinances may be enforced by appropriate fines and penalties, civil or criminal, or by court order at the suit of the county or the owner or owners of real estate directly affected by the ordinances.

Any civil fine or penalty provided by ordinance under this section may be imposed by the district court, or by the zoning agency after an opportunity for a hearing pursuant to chapter 91. The proceeding shall not be a prerequisite for any injunctive relief ordered by the circuit court.

Nothing in this section shall invalidate any zoning ordinance or regulation adopted by any county or other agency of government pursuant to the statutes in effect prior to July 1, 1957.

The powers granted herein shall be liberally construed in favor of the county exercising them, and in such a manner as to promote the orderly development of each county or city and county in accordance with a long-range, comprehensive general plan to ensure the greatest benefit for the State as a whole. This section shall not be construed to limit or repeal any powers of any county to achieve these ends through zoning and building regulations, except insofar as forest and water reserve zones are concerned and as provided in subsections (c) and (d).

Neither this section nor any ordinance enacted pursuant to this section shall prohibit the continued lawful use of any building or premises for any trade, industrial, residential, agricultural, or other purpose for which the building or premises is used at the time this section or the ordinance takes effect; provided that a zoning ordinance may provide for elimination of nonconforming uses as the uses are discontinued, or for the amortization or phasing out of nonconforming uses or signs over a reasonable period of time in commercial, industrial, resort, and apartment zoned areas only. In no event shall such amortization or phasing out of nonconforming uses apply to any existing building or premises used for residential (single-family or duplex) or agricultural uses. Nothing in this section shall affect or impair the powers and duties of the director of transportation as set forth in chapter 262.

(b) Any final order of a zoning agency established under this section may be appealed to the circuit court of the circuit in which the land in question is found. The appeal shall be in accordance with the Hawaii rules of civil procedure.

(c) Each county may adopt reasonable standards to allow the construction of two single-family dwelling units on any lot where a residential dwelling unit is permitted.

(d) Neither this section nor any other law, county ordinance, or rule shall prohibit group living in facilities with eight or fewer residents for purposes or functions that are licensed, certified, registered, or monitored by the State; provided that a resident manager or a resident supervisor and the resident manager's or resident supervisor's family shall not be included in this resident count. These group living facilities shall meet all applicable county requirements not inconsistent with the intent of this subsection, including but not limited to building height, setback, maximum lot coverage, parking, and floor area requirements.

(e) Neither this section nor any other law, county ordinance, or rule shall prohibit the use of land for employee housing and community buildings in plantation community subdivisions as defined in section 205-4.5(a)(12); in addition, no zoning ordinance shall provide for the elimination, amortization, or phasing out of plantation community subdivisions as a nonconforming use.

(f) Neither this section nor any other law, county ordinance, or rule shall prohibit the use of land for medical marijuana production centers or dispensaries established and licensed pursuant to part of chapter 321."

PART IV

SECTION 4. Section 321-30.1, Hawaii Revised Statutes, is amended to read as follows:

"[[]§321-30.1[]] Medical marijuana registry and regulation special fund; established. (a) There is established within the state treasury the medical marijuana registry and regulation special fund. The fund shall be expended at the discretion of the director of health:

(1) To establish and regulate a system of medical marijuana production centers and dispensaries in the State;

[~~(1)~~] (2) To offset the cost of the processing and issuance of patient registry identification certificates and primary caregiver registration certificates;

[~~(2)~~] (3) To fund positions authorized by the legislature;

[~~(3)~~] (4) To establish and manage a secure and confidential database; and

[~~(4)~~] (5) For any other expenditure necessary, as authorized by the legislature, to implement [a] medical marijuana registry [~~program.~~] and regulation programs.

(b) The fund shall consist of all moneys derived from fees collected pursuant to subsection (c)[~~. All~~] and sections 321-B and 321-C. There is established within the medical marijuana registry and regulation special fund:

(1) A medical marijuana registry program subaccount, into which shall be deposited all fees collected pursuant to subsection (c) [~~shall be deposited into the medical marijuana registry special fund.~~]; and

(2) A medical marijuana dispensary program subaccount, into which shall be deposited all fees collected pursuant to sections 321-B and 321-C.

(c) The department, upon completion of the transfer of the medical use of marijuana program, shall charge a medical marijuana registration fee of no more than $35."

PART V

SECTION 5. Chapter 329, Hawaii Revised Statutes, is amended by adding a new section to part IX to be appropriately designated and to read as follows:

"§329- Protections afforded to an owner or qualified employee of a licensed production center or dispensary. (a) An owner or employee of a medical marijuana production center or a medical marijuana dispensary licensed under section 321-B or 321-C may assert the medical production or medical distribution of marijuana as an affirmative defense to any prosecution involving marijuana under this part or chapter 712; provided that the owner or employee strictly complied with the requirements of chapter 321, part .

(b) An owner or employee of a licensed medical marijuana production center or licensed medical marijuana dispensary not complying with the permitted scope of the medical production or medical distribution of marijuana shall not be afforded the protections against searches and seizures pertaining to the misapplication of the medical production or medical distribution of marijuana.

(c) No person shall be subject to arrest or prosecution for merely being in the presence or vicinity of a medical marijuana production center or medical marijuana dispensary licensed and operating under chapter 321, part ."

SECTION 6. Section 329-122, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) The authorization for the medical use of marijuana in this section shall not apply to:

(1) The medical use of marijuana that endangers the health or well-being of another person;

(2) The medical use of marijuana:

(A) In a school bus, public bus, or any moving vehicle;

(B) In the workplace of one's employment;

(D) At any public park, public beach, public recreation center, recreation or youth center; or

(E) [~~Other~~] At any other place open to the public; provided that a qualifying patient, parent, primary caregiver, or an owner or employee of a medical marijuana production center or dispensary licensed under sections 321-B and 321-C shall not be prohibited from transporting medical marijuana in any public place; and

(3) The use of marijuana by a qualifying patient, parent, or primary caregiver for purposes other than medical use permitted by this part."

PART VI

SECTION 7. Section 329-123, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Physicians who issue written certifications shall provide, in each written certification, the name, address, patient identification number, and other identifying information of the qualifying patient. The department of health shall require, in rules adopted pursuant to chapter 91, that all written certifications comply with a designated form completed by or on behalf of a qualifying patient. The form shall require information from the applicant, primary caregiver, and [~~primary care~~] physician as specifically required or permitted by this chapter. The form shall require the address of the location where the marijuana is grown and shall appear on the registry card issued by the department of health. [~~The certifying physician shall be required to be the qualifying patient's primary care physician.~~] All current active medical marijuana permits shall be honored through their expiration date."

PART VII

SECTION 8. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2015-2016 and the same sum or so much thereof as may be necessary for fiscal year 2016-2017 to be deposited into the medical marijuana registry and regulation special fund established pursuant to section 321-30.1, Hawaii Revised Statutes.

SECTION 9. There is appropriated out of the medical marijuana registry and regulation special fund the sum of $ or so much thereof as may be necessary for fiscal year 2015-2016 and the same sum or so much thereof as may be necessary for fiscal year 2016-2017 to carry out the purposes of this Act, including the hiring of full-time equivalent ( FTE) positions to carry out the purposes of the medical marijuana dispensary program established pursuant to this Act.

The sums appropriated shall be expended by the department of health for the purposes of this Act.

SECTION 10. Not later than , the department of health shall establish and commence a repayment plan and schedule to repay to the general fund, the sums deposited into the medical marijuana registry and regulation special fund established pursuant to section 321-30.1, Hawaii Revised Statutes. The department of health shall only use moneys from the medical marijuana registry and regulation special fund to repay the general fund. The repayment schedule shall not extend beyond June 30, .

PART VIII

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. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

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

SECTION 14. This Act shall take effect on July 1, 2050, and shall be repealed on ; provided that sections 46-4, 321-30.1, 329-122(c), and 329-123(a), Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day prior to the effective date of this Act.

THE SENATE	S.B. NO.	1302
TWENTY-EIGHTH LEGISLATURE, 2015		S.D. 1
STATE OF HAWAII