IN THE SUPREME COURT

FOR THE STATE OF COLORADO 101 W. Colfax Ave., Suite 800 Denver, Colorado 80202

IN RE: MEDICAL MARIJUANA LEGISLATION

Attorney for Petitioners:

Name: Andrew B. Reid

Address: Springer and Steinberg, P.C. 1600 Broadway, Suite 1200 Denver, Colorado 80202 Phone Number: (303) 861-2800

FAX Number: (303) 832-7116

E-mail: areid@springer-and-steinberg.com Atty. Reg. No.: 25116

~ COURT USE ONLY ~

Case Number:

PETITION FOR RULE TO SHOW CAUSE

-APPENDIX-

APPENDIX 1-

COLORADO CONSTITUTION

(relevant provisions)

C.R.S. Const. Art. XVIII,

§ 14. Medical use of marijuana for persons suffering from debilitating medical conditions

(1) As used in this section, these terms are defined as follows:

(a) "Debilitating medical condition" means:

(1) Cancer, glaucoma, positive status for human immunodeficiency virus, or acquired immune deficiency syndrome, or treatment for such conditions;

(II) A chronic or debilitating disease or medical condition, or treatment for such conditions, which produces, for a specific patient, one or more of the following, and for which, in the professional opinion of the patient's physician, such condition or conditions reasonably may be alleviated by the medical use of marijuana: cachexia; severe pain; severe nausea; seizures, including those that are characteristic of epilepsy; or persistent muscle spasms, including those that are characteristic of multiple sclerosis; or

(III) Any other medical condition, or treatment for such condition, approved by the state health agency, pursuant to its rule making authority or its approval of any petition submitted by a patient or physician as provided in this section.

(b) "Medical use" means the acquisition, possession, production, use, or transportation of marijuana or paraphernalia related to the administration of such marijuana to address the symptoms or effects of a patient's debilitating medical condition, which may be authorized only after a diagnosis of the patient's debilitating medical condition by a physician or physicians, as provided by this section.

( c) "Parent" means a custodial mother or father of a patient under the age of eighteen years, any person having custody of a patient under the age of eighteen years, or any person serving as a legal guardian for a patient under the age of eighteen years.

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(d) "Patient" means a person who has a debilitating medical condition.

(e) "Physician" means a doctor of medicine who maintains, in good standing, a license to practice medicine issued by the state of Colorado.

(0 "Primary care-giver" means a person, other than the patient and the patient's physician, who is eighteen years of age or older and has significant responsibility for managing the well-being of a patient who has a debilitating medical condition.

(g) "Registry identification card" means that document, issued by the state health agency, which identifies a patient authorized to engage in the medical use of marijuana and such patient's primary caregiver, if any has been designated.

(h) "State health agency" means that public health related entity of state government designated by the governor to establish and maintain a confidential registry of patients authorized to engage in the medical use of marijuana and enact rules to administer this program.

(i) "Usable form of marijuana" means the seeds, leaves, buds, and flowers of the plant (genus) cannabis, and any mixture or preparation thereof, which are appropriate for medical use as provided in this section, but excludes the plant's stalks, stems, and roots.

U) "Written documentation" means a statement signed by a patient's physician or copies of the patient's pertinent medical records.

(2) (a) Except as otherwise provided in subsections (5), (6),

and (8) of this section, a patient or primary care-giver charged with a violation of the state's criminal laws related to the patient's medical use of marijuana will be deemed to' have established an affirmative defense to such allegation where:

(I) The patient was previously diagnosed by a physician as having a debilitating medical condition;

(II) The patient was advised by his or her

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physician, in the context of a bona fide physician-patient relationship, that the patient might benefit from the medical use of marijuana in connection with a debilitating medical condition; and

(III) The patient and his or her primary care-giver were collectively in possession of amounts of marijuana only as permitted under this section.

This affirmative defense shall not exclude the assertion of any other defense where a patient or primary care-giver is charged with a violation of state law related to the patient's medical use of marijuana.

(b) Effective June 1, 1999, it shall be an exception from the state's criminal laws for any patient or primary care-giver in lawful possession of a registry identification card to engage or assist in the medical use of marijuana, except as otherwise provided in subsections (5) and (8) of this section.

(c) It shall be an exception from the state's criminal laws for any physician to:

(I) Advise a patient whom the physician has diagnosed as having a debilitating medical condition, about the risks and benefits of medical use of marijuana or that he or she might benefit from the medical use of marijuana, provided that such advice is based upon the physician's contemporaneous assessment of the patient's medical history and current medical condition and a bona fide physician-patient relationship; or

(II) Provide a patient with written documentation, based upon the physician's contemporaneous assessment of the patient's medical history and current medical condition and a bona fide physicianpatient relationship, stating that the patient has a debilitating medical condition and might benefit from the medical use of marijuana.

No physician shall be denied any rights or privileges for the acts authorized by this subsection.

(d) Notwithstanding the foregoing provisions, no person, including a patient or primary care-giver, shall be entitled to the protection of this section for his or her acquisition, possession, manufacture,

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production, use, sale, distribution, dispensing, or transportation of marijuana for any use other than medical use.

(e) Any property interest that is possessed, owned, or used in connection with the medical use of marijuana or acts incidental to such use, shall not be harmed, neglected, injured, or destroyed while in the possession of state or local law enforcement officials where such property has been seized in connection with the claimed medical use of marijuana. Any such property interest shall not be forfeited under any provision of state law providing for the forfeiture of property other than as a sentence imposed after conviction of a criminal offense or entry of a plea of guilty to such offense. Marijuana and paraphernalia seized by state or local law enforcement officials from a patient or primary care-giver in connection with the claimed medical use of marijuana shall be returned immediately upon the determination of the district attorney or his or her designee that the patient or primary care-giver is entitled to the protection contained in this section as may be evidenced, for example, by a decision not to prosecute, the dismissal of charges, or acquittal.

(3) The state health agency shall create and maintain a confidential registry of patients who have applied for and are entitled to receive a registry identification card according to the criteria set forth in this subsection, effective June 1, 1999.

(a) No person shall be permitted to gain access to any information about patients in the state health agency's confidential registry, or any information otherwise maintained by the state health agency about physicians and primary care-givers, except for authorized employees of the state health agency in the course of their official duties and authorized employees of state or local law enforcement agencies which have stopped or arrested a person who claims to be engaged in the medical use of marijuana and in possession of a registry identification card or its functional equivalent, pursuant to paragraph (e) of this subsection (3). Authorized employees of state or local law enforcement agencies shall be granted access to the information contained within the state health agency's confidential registry only for the purpose of verifying that an individual who has presented a registry identification card to a state or local law enforcement official is lawfully in possession of such card.

(b) In order to be placed on the state's confidential

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registry for the medical use of marijuana, a patient must reside in Colorado and submit the completed application form adopted by the state health agency, including the following information, to the state health agency:

(I) The original or a copy of written documentation stating that the patient has been diagnosed with a debilitating medical condition and the physician's conclusion that the patient might benefit from the medical use of marijuana;

(II) The name, address, date of birth, and social security number of the patient;

(III) The name, address, and telephone number of the patient's physician; and

(IV) The name and address of the patient's primary care-giver, if one is designated at the time of application.

(c) Within thirty days of receiving the information referred to in subparagraphs (3)(b)(I)-(IV), the state health agency shall verify medical information contained in the patient's written documentation. The agency shall notify the applicant that his or her application for a registry identification card has been denied if the agency's review of such documentation discloses that: the information required pursuant to paragraph (3)(b) of this section has not been provided or has been falsified; the documentation fails to state that the patient has a debilitating medical condition specified in this section or by state health agency rule; or the physician does not have a license to practice medicine issued by the state of Colorado. Otherwise, not more than five days after verifying such information, the state health agency shall issue one serially numbered registry identification card to the patient, stating:

(I) The patient's name, address, date of birth, and

social security number;

(II) That the patient's name has been certified to the state health agency as a person who has a debilitating medical condition, whereby the patient may address such condition with the medical use of marijuana;

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(III) The date of issuance of the registry identification card and the date of expiration of such card, which shall be one year from the date of issuance; and

(IV) The name and address of the patient's primary care-giver, if any is designated at the time of application.

(d) Except for patients applying pursuant to subsection (6) of this section, where the state health agency, within thirty-five days of receipt of an application, fails to issue a registry identification card or fails to issue verbal or written notice of denial of such application, the patient's application for such card will be deemed to have been approved. Receipt shall be deemed to have occurred upon delivery to the state health agency, or deposit in the United States mails. Notwithstanding the foregoing, no application shall be deemed received prior to June 1, 1999. A patient who is questioned by any state or local law enforcement official about his or her medical use of marijuana shall provide a copy of the application submitted to the state health agency, including the written documentation and proof of the date of mailing or other transmission of the written documentation for delivery to the state health agency, which shall be accorded the same legal effect as a registry identification card, until such time as the patient receives notice that the application has been denied.

(e) A patient whose application has been denied by the state health agency may not reapply during the six months following the date of the denial and may not use an application for a registry identification card as provided in paragraph (3)(d) of this section. The denial of a registry identification card shall be considered a final agency action. Only the patient whose application has been denied shall have standing to contest the agency action.

(f) When there has been a change in the name, address, physician, or primary care-giver of a patient who has qualified for a registry identification card, that patient must notify the state health agency of any such change within ten days. A patient who has not designated a primary care-giver at the time of application to the state health agency may do so in writing at any time during the effective period of the registry identification card, and the primary care-giver may act in this capacity after such designation. To maintain an effective registry identification card, a patient must annually resubmit, at least thirty days prior to the expiration date stated

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on the registry identification card, updated written documentation to the state health agency, as well as the name and address of the patient's primary caregiver, if any is designated at such time.

(g) Authorized employees of state or local law enforcement agencies shall immediately notify the state health agency when any person in possession of a registry identification card has been determined by a court of law to have willfully violated the provisions of this section or its implementing legislation, or has pled guilty to such offense.

(h) A patient who no longer has a debilitating medical condition shall return his or her registry identification card to the state health agency within twenty-four hours of receiving such diagnosis by his or her physician.

(i) The state health agency may determine and levy reasonable fees to pay for any direct or indirect administrative costs associated with its role in this program.

(4) (a) A patient may engage in the medical use of

marijuana, with no more marijuana than is medically necessary to address a debilitating medical condition. A patient's medical use of marijuana, within the following limits, is lawful:

(J) No more than two ounces of a usable form of

marijuana; and

(II) No more than six marijuana plants, with three or fewer being mature, flowering plants that are producing a usable form of marijuana.

(b) For quantities of marijuana in excess of these amounts, a patient or his or her primary care-giver may raise as an affirmative defense to charges of violation of state law that such greater amounts were medically necessary to address the patient's debilitating medical condition.

(5) (a) No patient shall:

(J) Engage in the medical use of marijuana in a

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way that endangers the health or well-being of any person; or

(II) Engage in the medical use of marijuana in plain view of, or in a place open to, the general public.

(b) In addition to any other penalties provided by law, the state health agency shall revoke for a period of one year the registry identification card of any patient found to have willfully violated the provisions of this section or the implementing legislation adopted by the general assembly.

(6) Notwithstanding paragraphs (2)(a) and (3)(d) of this section, no patient under eighteen years of age shall engage in the medical use of marijuana unless:

(a) Two physicians have diagnosed the patient as having a debilitating medical condition;

(b) One of the physicians referred to in paragraph (6)(a) has explained the possible risks and benefits of medical use of marijuana to the patient and each of the patient's parents residing in Colorado;

(c) The physicians referred to in paragraph (6)(b) has provided the patient with the written documentation, specified in subparagraph (3)(b)(I);

(d) Each of the patient's parents residing in Colorado consent in writing to the state health agency to permit the patient to engage in the medical use of marijuana;

(e) A parent residing in Colorado consents in writing to serve as a patient's primary care-giver;

(f) A parent serving as a primary care-giver completes and submits an application for a registry identification card as provided in subparagraph (3 )(b) of this section and the written consents referred to in paragraph (6)(d) to the state health agency;

(g) The state health agency approves the patient's application and transmits the patient's registry identification card to the

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parent designated as a primary care-giver;

(h) The patient and primary care-giver collectively possess amounts of marijuana no greater than those specified in subparagraph (4)(a)(I) and (II); and

(i) The primary care-giver controls the acquisition of such marijuana and the dosage and frequency of its use by the patient.

(7) Not later than March 1, 1999, the governor shall designate, by executive order, the state health agency as defined in paragraph (l)(g) of this section.

(8) Not later than April 30, 1999, the General Assembly shall define such terms and enact such legislation as may be necessary for implementation of this section, as well as determine and enact criminal penalties for:

(a) Fraudulent representation of a medical condition by a patient to a physician, state health agency, or state or local law enforcement official for the purpose of falsely obtaining a registry identification card or avoiding arrest and prosecution;

(b) Fraudulent use or theft of any person's registry identification card to acquire, possess, produce, use, sell, distribute, or transport marijuana, including but not limited to cards that are required to be returned where patients are no longer diagnosed as having a debilitating medical condition;

(c) Fraudulent production or counterfeiting of, or tampering with, one or more registry identification cards; or

(d) Breach of confidentiality of information provided to or by the state health agency.

(9) Not later than June 1, 1999, the state health agency shall develop and make available to residents of Colorado an application form for persons seeking to be listed on the confidential registry of patients. By such date, the state health agency shall also enact rules of administration, including but not limited to rules governing the establishment and

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confidentiality of the registry, the verification of medical information, the issuance and form of registry identification cards, communications with law enforcement officials about registry identification cards that have been suspended where a patient is no longer diagnosed as having a debilitating medical condition, and the manner in which the agency may consider adding debilitating medical conditions to the list provided in this section. Beginning June 1, 1999, the state health agency shall accept physician or patient initiated petitions to add debilitating medical conditions to the list provided in this section and, after such hearing as the state health agency deems appropriate, shall approve or deny such petitions within one hundred eighty days of submission. The decision to approve or deny a petition shall be considered a final agency action.

(10) (a) No governmental, private, or any other health insurance provider shall be required to be liable for any claim for reimbursement for the medical use of marijuana.

(b) Nothing in this section shall require any employer to accommodate the medical use of marijuana in any work place.

(11) Unless otherwise provided by this section, all provisions of this section shall become effective upon official declaration of the vote hereon by proclamation of the governor, pursuant to article V, section (1)(4), and shall apply to acts or offenses committed on or after that date.

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APPENDIX 2-

MEDICAL MARIJUANA LEGISLATION

COLORADO REVISED STATUTES:

§ 12-43.3-101. Short title

This article shall be known and may be cited as the "Colorado Medical Marijuana Code".

§ 12-43.3-102. Legislative declaration

(1) The general assembly hereby declares that this article shall be deemed an exercise of the police powers of the state for the protection of the economic and social welfare and the health, peace, and morals of the people of this state.

(2) The general assembly further declares that it is unlawful under state law to cultivate, manufacture, distribute, or sell medical marijuana, except in compliance with the terms, conditions, limitations, and restrictions in section 14 of article XVIII of the state constitution and this article or when acting as a primary caregiver in compliance with the terms, conditions, limitations, and restrictions of section 25-1.5-106, C.R.S.

§ 12-43.3-103. Applicability

(1) (a) On July 1,2010, a person who is operating an

established, locally approved business for the purpose of cultivation, manufacture, or sale of medical marijuana or medical marijuana-infused products or a person who has applied to a local government to operate a locally approved business for the purpose of cultivation, manufacture, or sale of medical marijuana or medical marijuana-infused products which is subsequently granted may continue to operate that business in accordance with any applicable state or local laws. "Established", as used in this paragraph (a), shall mean owning or leasing a space with a storefront and remitting sales taxes in a timely manner on retail sales of the business as required pursuant to 39-26-105, C.R.S., as well as any applicable local sales taxes.

(b) To continue operating a business or operation as described in paragraph (a) of this subsection (1), the owner shall, on or before August 1, 2010, complete forms as provided by the department of revenue and shall pay a fee, which shall be credited to the medical marijuana

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license cash fund established pursuant to section 12-43.3-501. The purpose

of the fee shall be to pay for the direct and indirect costs of the state

licensing authority and the development of application procedures and rules necessary to implement this article. Payment of the fee and completion of

the form shall not create a local or state license or a present or future entitlement to receive a license. An owner issued a local license after August· 1,2010, shall complete the forms and pay the fee pursuant to this paragraph (b) within thirty days of issuance of the local license. In addition to any criminal penalties for selling without a license, it shall be unlawful to continue operating a business or operation without filing the forms and paying the fee as described in this subsection (b), and any violation of this section shall be prima-facie evidence of unsatisfactory character, record, and reputation for any future application for license under this article.

(c) A county, city and county, or municipality shall provide to the state licensing authority, upon request, a list that includes the name and location of each local center or operation licensed in said county, city and county, or municipality so that the state licensing authority can identify any center or operation operating unlawfully.

(2) (a) Prior to July 1,2011, a county, city and county, or

municipality may adopt and enforce a resolution or ordinance licensing, regulating, or prohibiting the cultivation or sale of medical marijuana. In a county, city and county, or municipality where such an ordinance or resolution has been adopted, a person who is not registered as a patient or primary caregiver pursuant to section 25-1.5-106, C.R.S., and who is cultivating or selling medical marijuana shall not be entitled to an affirmative defense to a criminal prosecution as provided for in section 14 of article XVIII of the state constitution unless the person is in compliance with the applicable county or municipal law .

(b) On or before September 1,2010, a business or operation shall certify that it is cultivating at least seventy percent of the medical marijuana necessary for its operation.

(c) On and after July 1,2011, all businesses for the purpose of cultivation, manufacture, or sale of medical marijuana or medical marijuana-infused products, as defined in this article, shall be subject to the terms and conditions of this article and any rules promulgated pursuant to this article.

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§ 12-43.3-104. Definitions

As used in this article, unless the context otherwise requires:

(1) "Good cause", for purposes of refusing or denying a license renewal, reinstatement, or initial license issuance, means:

(a) The licensee or applicant has violated, does not meet, or has failed to comply with any of the terms, conditions, or provisions of this article, any rules promulgated pursuant to this article, or any supplemental local law , rules, or regulations;

(b) The licensee or applicant has failed to comply with any special terms or conditions that were placed on its license pursuant to an order of the state or local licensing authority;

( c) The licensed premises have been operated in a manner that adversely affects the public health or welfare or the safety of the immediate neighborhood in which the establishment is located.

(2) "License" means to grant a license or registration pursuant to this article.

(3) "Licensed premises" means the premises specified in an application for a license under this article, which are owned or in possession of the licensee and within which the licensee is authorized to cultivate, manufacture, distribute, or sell medical marijuana in accordance with the provisions of this article.

(4) "Licensee" means a person licensed or registered pursuant to this article.

(5) "Local licensing authority" means an authority designated by municipal or county charter, municipal ordinance, or county resolution.

(6) "Location" means a particular parcel of land that may be identified by an address or other descriptive means.

(7) "Medical marijuana" means marijuana that is grown and

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sold pursuant to the provisions of this article and for a purpose authorized by section 14 of article XVIII of the state constitution.

(8) "Medical marijuana center" means a person licensed pursuant to this article to operate a business as described in section 12-43.3- 402 that sells medical marijuana to registered patients or primary caregivers as defined in section 14 of article XVIII of the state constitution, but is not a

. .

pnmary caregiver.

(9) "Medical marijuana-infused product" means a product infused with medical marijuana that is intended for use or consumption other than by smoking, including but not limited to edible products, ointments,

and tinctures. These products, when manufactured or sold by a licensed medical marijuana center or a medical marijuana-infused product manufacturer, shall not be considered a food or drug for the purposes of the "Colorado Food and Drug Act", part 4 of article 5 of title 25, C.R.S.

(10) "Medical marijuana-infused products manufacturer" means a person licensed pursuant to this article to operate a business as described in section 12-43.3-404.

(11) "Optional premises" means the premises specified in an application for a medical marijuana center license with related growing facilities in Colorado for which the licensee is authorized to grow and cultivate marijuana for a purpose authorized by section 14 of article XVIII of the state constitution.

(12) "Optional premises cultivation operation" means a person licensed pursuant to this article to operate a business as described in section 12-43.3-403.

(13) "Person" means a natural person, partnership, association, company, corporation, limited liability company, or organization, or a manager, agent, owner, director, servant, officer, or employee thereof.

(14) "Premises" means a distinct and definite location, which may include a building, a part of a building, a room, or any other definite contiguous area.

(15) "School" means a public or private preschool or a public or

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private elementary, middle, junior high, or high school.

(16) "State licensing authority" means the authority created for the purpose of regulating and controlling the licensing of the cultivation, manufacture, distribution, and sale of medical marijuana in this state, pursuant to section 12-43.3-201.

§ 12-43.3-105. Limited access areas

Subject to the provisions of 12-43.3-701, a limited access area shall be a building, room, or other contiguous area upon the licensed premises where medical marijuana is grown, cultivated, stored, weighed, displayed, packaged, sold, or possessed for sale, under control of the licensee, with limited access to only those persons licensed by the state licensing authority. All areas of ingress or egress to limited access areas shall be clearly identified as such by a sign as designated by the state licensing authority.

§ 12-43.3-106. Local option

The operation of this article shall be statewide unless a municipality, county, city, or city and county, by either a majority of the registered electors of the municipality, county, city, or city and county voting at a regular election or special election called in accordance with the "Colorado Municipal Election Code of 1965", article 10 of title 31, C.R.S., or the "Uniform Election Code of 1992", articles 1 to 13 of title 1, C.R.S., as applicable, or a majority of the members of the governing board for the municipality, county, city, or city and county, vote to prohibit the operation of medical marijuana centers, optional premises cultivation operations, and medical marijuana-infused products manufacturers' licenses.

§ 12-43.3-201. State licensing authority--creation--repeal

(1) For the purpose of regulating and controlling the licensing of the cultivation, manufacture, distribution, and sale of medical marijuana in this state, there is hereby created the state licensing authority, which shall be the executive director of the department of revenue or the deputy director of the department of revenue if the executive director so designates.

(2) The executive director of the department of revenue shall be the chief administrative officer of the state licensing authority and may

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employ, pursuant to section 13 of article XII of the state constitution, such officers and employees as may be determined to be necessary, which officers and employees shall be part of the department of revenue. The state licensing authority shall, at its discretion, based upon workload, employ no more than one full time equivalent employee for each ten medical marijuana centers licensed by or making application with the authority. No moneys. shall be appropriated to the state licensing authority from the general fund for the operation of this article, nor shall the state licensing authority expend any general fund moneys for the operation of this article.

(3) (a) During fiscal year 2010-2011, the state licensing

authority shall consider employment of temporary or contract staff to conduct background investigations. The additional cost of the background investigations shall not exceed five hundred thousand dollars.

(b) On July 1, 2010, the department of public health and environment shall loan to the state licensing authority, created in 12-43.3- 201, a sum not to exceed one million dollars from the medical marijuana cash fund created in 25-1.5-106. The state licensing authority shall pay back the one million dollar loan to the department of public health and environment no later than December 31,2010.

§ 12-43.3-202. Powers and duties of state licensing authority-repeal

(1) The state licensing authority shall:

(a) Grant or refuse state licenses for the cultivation, manufacture, distribution, and sale of medical marijuana as provided by law; suspend, fine, restrict, or revoke such licenses upon a violation of this

article, or a rule promulgated pursuant to this article; and impose any penalty authorized by this article or any rule promulgated pursuant to this article. The state licensing authority may take any action with respect to a registration pursuant to this article as it may with respect to a license pursuant to this article, in accordance with the procedures established pursuant to this article.

(b) (I) Promulgate such rules and such special rulings

and findings as necessary for the proper regulation and control of the cultivation, manufacture, distribution, and sale of medical marijuana and for

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the enforcement of this article. A county, municipality, or city and county that has adopted a temporary moratorium regarding the subject matter of this article shall be specifically authorized to extend the moratorium until the effective date of the rules adopted by the department of revenue in accordance with this article.

(II) (A) The state licensing authority shall conduct a public review hearing with the department of public health and environment by September 1, 2010, to receive public input on any emergency rules adopted by the state licensing authority and be provided with an update from the industry, caregivers, patients, and other stakeholders regarding the industry's current status. The state licensing authority shall provide at least five business days' notice prior to the hearing.

(B) This subparagraph (II) is repealed,

effective July 1, 2011.

(c) Hear and determine at a public hearing any appeals of a state license denial and any complaints against a licensee and administer oaths and issue subpoenas to require the presence of persons and the production of papers, books, and records necessary to the determination of any hearing so held, all in accordance with article 4 of title 24, C.R.S. The state licensing authority may, at its discretion, delegate to the department of revenue hearing officers the authority to conduct licensing, disciplinary, and rulemaking hearings under section 24-4-105, C.R.S. When conducting such hearings, the hearing officers shall be employees of the state licensing authority under the direction and supervision of the executive director and the state licensing authority.

(d) Maintain the confidentiality of reports obtained from a licensee showing the sales volume or quantity of medical marijuana sold or any other records that are exempt from public inspection pursuant to state law;

(e) Develop such forms, licenses, identification cards, and applications as are necessary or convenient in the discretion of the state licensing authority for the administration of this article or any of the rules promulgated under this article;

(f) Prepare and transmit annually, in the form and manner

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prescribed by the heads of the principal departments pursuant to section 24- 1-136, C.R.S., a report accounting to the governor for the efficient discharge of all responsibilities assigned by law or directive to the state licensing authority; and

(g) In recognition of the potential medicinal value of medical marijuana, make a request by January 1, 2012, to the federal drug enforcement administration to consider rescheduling, for pharmaceutical purposes, medical marijuana from a schedule I controlled substance to a schedule II controlled substance.

(2) (a) Rules promulgated pursuant to paragraph (b) of

subsection (1) of this section may include, but need not be limited to, the following subjects:

(I) Compliance with, enforcement of, or violation of any provision of this article, or any rule issued pursuant to this article, including procedures and grounds for denying, suspending, fining, restricting, or revoking a state license issued pursuant to this article;

(II) Specifications of duties of officers and employees of the state licensing authority;

(III) Instructions for local licensing authorities and law enforcement officers;

(IV) Requirements for inspections, investigations, searches, seizures, and such additional activities as may become necessary from time to time;

(V) Creation of a range of penalties for use by the

state licensing authority;

(VI) Prohibition of misrepresentation and unfair

practices;

(VII) Control of informational and product displays on licensed premises;

(VIII) Development of individual identification

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cards for owners, officers, managers, contractors, employees, and other support staff of entities licensed pursuant to this article, including a fingerprint-based criminal history record check as may be required by the state licensing authority prior to issuing a card;

(IX) Identification of state licensees and their owners, officers, managers, and employees;

(X) Security requirements for any premises licensed pursuant to this article, including, at a minimum, lighting, physical security, video, alarm requirements, and other minimum procedures for internal control as deemed necessary by the state licensing authority to properly administer and enforce the provisions of this article, including reporting requirements for changes, alterations, or modifications to the prermses;

(XI) Regulation of the storage of, warehouses for, and transportation of medical marijuana;

(XII) Sanitary requirements for medical marijuana centers, including but not limited to sanitary requirements for the preparation of medical marijuana-infused products;

(XIII) The specification of acceptable forms of picture identification that a medical marijuana center may accept when verifying a sale;

(XIV) Labeling standards;

(XV) Records to be kept by licensees and the required availability of the records;

(XVI) State licensing procedures, including procedures for renewals, reinstatements, initial licenses, and the payment of licensing fees;

(XVII) The reporting and transmittal of monthly sales tax payments by medical marijuana centers;

(XVIII) Authorization for the department of

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revenue to have access to licensing information to ensure sales and income tax payment and the effective administration of this article;

(XIX) Authorization for the department of revenue to issue administrative citations and procedures for issuing, appealing and creating a citation violation list and schedule of penalties; and

(XX) Such other matters as are necessary for the fair, impartial, stringent, and comprehensive administration of this article.

(b) Nothing in this article shall be construed as delegating to the state licensing authority the power to fix prices for medical marijuana.

(c) Nothing in this article shall be construed to limit a law enforcement agency's ability to investigate unlawful activity in relation to a medical marijuana center, optional premises cultivation operation, or medical marijuana-infused products manufacturer. A law enforcement agency shall have the authority to run a Colorado crime information center criminal history record check of a primary caregiver, licensee, or employee of a licensee during an investigation of unlawful activity related to medical marijuana.

§ 12-43.3-301. Local licensing authority--applications--licenses

(1) A local licensing authority may issue only the following medical marijuana licenses upon payment of the fee and compliance with all local licensing requirements to be determined by the local licensing authority:

(a) A medical marijuana center license;

(b) An optional premises cultivation license;

(c) A medical marijuana-infused products manufacturing

license.

(2) (a) A local licensing authority shall not issue a local

license within a municipality, city and county, or the unincorporated portion of a county unless the governing body of the municipality or city and county has adopted an ordinance, or the governing body of the county has adopted a

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resolution, containing specific standards for license issuance, or if no such ordinance or resolution is adopted prior to July 1,2011, then a local licensing authority shall consider the minimum licensing requirements of this part 3 when issuing a license.

(b) In addition to all other standards applicable to the issuance of licenses under this article, the local governing body may adopt additional standards for the issuance of medical marijuana center, optional premises cultivation, or medical marijuana-infused products manufacturer licenses consistent with the intent of this article that may include, but need not be, limited to:

(I) Distance restrictions between premises for which local licenses are issued;

(II) Reasonable restrictions on the size of an applicant's licensed premises; and

(III) Any other requirements necessary to ensure the control of the premises and the ease of enforcement of the terms and conditions of the license.

(3) An application for a license specified in subsection (1) of this section shall be filed with the appropriate local licensing authority on forms provided by the state licensing authority and shall contain such information as the state licensing authority may require and any forms as the local licensing authority may require. Each application shall be verified by the oath or affirmation of the persons prescribed by the state licensing authority.

(4) An applicant shall file at the time of application for a local license plan~ and specifications for the interior of the building if the building to be occupied is in existence at the time. If the building is not in existence, the applicant shall file a plot plan and a detailed sketch for the interior and submit an architect's drawing of the building to be constructed. In its discretion, the local or state licensing authority may impose additional requirements necessary for the approval of the application.

§ 12-43.3-302. Public hearing notice--posting and publication

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(l) Upon receipt of an application for a local license, except an application for renewal or for transfer of ownership, a local licensing authority may schedule a public hearing upon the application to be held not less than thirty days after the date of the application. If the local licensing authority schedules a hearing for a medical marijuana center application, it shall post and publish public notice thereof not less than ten days prior to the hearing. The local licensing authority shall give public notice by the posting of a sign in a conspicuous place on the medical marijuana center premises for which application has been made and by publication in a newspaper of general circulation in the county in which the medical marijuana center premises are located.

(2) Public notice given by posting shall include a sign of suitable material, not less than twenty-two inches wide and twenty-six inches high, composed of letters not less than one inch in height and stating the type of license applied for, the date of the application, the date of the hearing, the name and address of the applicant, and such other information as may be required to fully apprise the public of the nature of the application. The sign shall contain the names and addresses of the officers, directors, or manager of the facility to be licensed.

(3) Public notice given by publication shall contain the same information as that required for signs.

(4) If the building in which medical marijuana is to be sold is in existence at the time of the application, a sign posted as required in subsections (1) and (2) of this section shall be placed so as to be conspicuous and plainly visible to the general public. If the building is not constructed at the time of the application, the applicant shall post a sign at the premises upon which the building is to be constructed in such a manner that the notice shall be conspicuous and plainly visible to the general public.

(5) (a) A local licensing authority, or a license applicant with

local licensing authority approval, may request that the state licensing authority conduct a concurrent review of a new license application prior to the local licensing authority's final approval of the license application. Local licensing authorities who permit a concurrent review will continue to independently review the applicant's license application.

(b) When conducting a concurrent application review, the

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state licensing authority may advise the local licensing authority of any items that it finds that could result in the denial of the license application. Upon correction of the noted discrepancies if the correction is permitted by the state licensing authority, the state licensing authority shall notify the local licensing authority of its conditional approval of the license application subject to the final approval by the local licensing authority. The state licensing authority shall then issue the applicant's state license upon receiving evidence of final approval by the local licensing authority.

(c) All applications submitted for concurrent review shall be accompanied by all applicable state license and application fees. Any applications that are later denied or withdrawn may allow for a refund of license fees only. All application fees provided by an applicant shall be retained by the respective licensing authority.

§ 12-43.3-303. Results of investigation--decision of authorities

(1) Not less than five days prior to the date of the public hearing authorized in section 12-43.3-302, the local licensing authority shall make known its findings, based on its investigation, in writing to the applicant and other parties of interest. The local licensing authority has authority to refuse to issue a license provided for in this section for good cause, subject to judicial review.

(2) Before entering a decision approving or denying the application for a local license, the local licensing authority may consider, except where this article specifically provides otherwise, the facts and evidence adduced as a result of its investigation, as well as any other facts pertinent to the type of license for which application has been made, including the number, type, and availability of medical marijuana outlets located in or near the premises under consideration, and any other pertinent matters affecting the qualifications of the applicant for the conduct of the type of business proposed.

(3) Within thirty days after the public hearing or completion of the application investigation, a local licensing authority shall issue its decision approving or denying an application for local licensure. The decision shall be in writing and shall state the reasons for the decision. The local licensing authority shall send a copy of the decision by certified mail to the applicant at the address shown in the application.

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(4) After approval of an application, a local licensing authority shall not issue a local license until the building in which the business to be conducted is ready for occupancy with such furniture, fixtures, and equipment in place as are necessary to comply with the applicable provisions of this article, and then only after the local licensing authority has inspected the premises to determine that the applicant has complied with the architect's drawing and the plot plan and detailed sketch for the interior of the building submitted with the application.

(5) After approval of an application for local licensure, the local licensing authority shall notify the state licensing authority of such approval, who shall investigate and either approve or disapprove the application for state licensure.

§ 12-43.3-304. Medical marijuana license bond

(1) Before the state licensing authority issues a state license to an applicant, the applicant shall procure and file with the state licensing authority evidence of a good and sufficient bond in the amount of five thousand dollars with corporate surety thereon duly licensed to do business with the state, approved as to form by the attorney general of the state, and conditioned that the applicant shall report and pay all sales and use taxes due to the state, or for which the state is the collector or collecting agent, in a timely manner, as provided in law.

(2) A corporate surety shall not be required to make payments to the state claiming under such bond until a final determination of failure to pay taxes due to the state has been made by the state licensing authority or a court of competent jurisdiction.

(3) All bonds required pursuant to this section shall be renewed at such time as the bondholder's license is renewed. The renewal may be accomplished through a continuation certificate issued by the surety.

§ 12-43.3-305. State licensing authority--application and issuance procedures

(1) Applications for a state license under the provisions of this article shall be made to the state licensing authority on forms prepared and

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furnished by the state licensing authority and shall set forth such information as the state licensing authority may require to enable the state licensing authority to determine whether a state license should be granted. The information shall include the name and address of the applicant, the names and addresses of the officers, directors, or managers, and all other information deemed necessary by the state licensing authority. Each application shall be verified by the oath or affirmation of such person or persons as the state licensing authority may prescribe.

(2) The state licensing authority shall not issue a state license pursuant to this section until the local licensing authority has approved the application for a local license and issued a local license as provided for in sections 12-43.3-301 to 12-43.3-303.

(3) Nothing in this article shall preempt or otherwise impair the power of a local government to enact ordinances or resolutions concerning matters authorized to local governments.

§ 12-43.3-306. Denial of application

(I) The state licensing authority shall deny a state license if the premises on which the applicant proposes to conduct its business do not meet the requirements of this article or for reasons set forth in section 12- 43.3-104(1)(c) or 12-43.3-305.

(2) If the state licensing authority denies a state license pursuant to subsection (1) of this section, the applicant shall be entitled to a hearing pursuant to article 4 of title 24, C.R.S. The state licensing authority shall provide written notice of the grounds for denial of the state license to the applicant and to the local licensing authority at least fifteen days prior to the hearing.

§ 12-43.3-307. Persons prohibited as licensees

(I) (a) A license provided by this article shall not be issued

to or held by:

(I) A person until the annual fee therefore has been

paid;

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(II) A person whos€ criminal history indicates that he or she is not of good moral character;

(III) A corporation, if the criminal history of any of its officers, directors, or stockholders indicates that the officer, director, or stockholder is not of good moral character;

(IV) A licensed physician making patient

recommendations;

(V) A person employing, assisted by, or financed in whole or in part by any other person whose criminal history indicates he or she is not of good character and reputation satisfactory to the respective licensing authority;

(VI) A person under twenty-one years of age;

(VII) A person licensed pursuant to this article who, during a period of licensure, or who, at the time of application, has failed to:

(A) Provide a surety bond or file any tax

return with a taxing agency;

(B) Pay any taxes, interest, or penalties due;

(C) Pay any judgments due to a government

agency;

(D) Stay out of default on a government-

issued student loan.

(E) Pay child support; or

(F) Remedy an outstanding delinquency for taxes owed, an outstanding delinquency for judgments owed to a government agency, or an outstanding delinquency for child support.

(VIII) A person who has discharged a sentence in the five years immediately preceding the application date for a conviction of

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a felony or a person who at any time has been convicted of a felony pursuant to any state or federal law regarding the possession, distribution, or use of a controlled substance.

(IX) A person who employs another person at a medical marijuana facility who has not passed a criminal history record check;

(X) A sheriff, deputy sheriff, police officer, or prosecuting officer, or an officer or employee of the state licensing authority or a local licensing authority;

(XI) A person whose authority to be a primary caregiver as defined in section 25-1.5-106(2) has been revoked by the state health agency;

(XII) A person for a license for a location that is currently licensed as a retail food establishment or wholesale food registrant; or

(XIII) A person who has not been a resident of Colorado for at least two years prior to the date of the person's application; except that for a person who submits an application for licensure pursuant to this article by December 15,2010, this requirement shall not apply to that person if the person was a resident of the state of Colorado on December 15, 2009.

(2) (a) In investigating the qualifications of an applicant or a

licensee, the state licensing authority may have access to criminal history record information furnished by a criminal justice agency subject to any restrictions imposed by such agency. In the event the state licensing authority considers the applicant's criminal history record, the state licensing authority shall also consider any information provided by the applicant regarding such criminal history record, including but not limited to evidence of rehabilitation, character references, and educational achievements, especially those items pertaining to the period of time between the applicant's last criminal conviction and the consideration of the application for a state license.

(b) As used in paragraph (a) of this subsection (2),

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"criminal justice agency" means any federal, state, or municipal court or any governmental agency or subunit of such agency that administers criminal justice pursuant to a statute or executive order and that allocates a substantial part of its annual budget to the administration of criminal justice.

(c) At the time of filing an application for issuance or renewal of a state medical marijuana center license, medical marijuanainfused product manufacturer license, or optional premises cultivation license, an applicant shall submit a set of his or her fingerprints and file personal history information concerning the applicant's qualifications for a state license on forms prepared by the state licensing authority. The state licensing authority shall submit the fingerprints to the Colorado bureau of investigation for the purpose of conducting fingerprint-based criminal history record checks. The Colorado bureau of investigation shall forward the fingerprints to the federal bureau of investigation for the purpose of conducting fingerprint-based criminal history record checks. The state licensing authority may acquire a name-based criminal history record check for an applicant or a license holder who has twice submitted to a fingerprintbased criminal history record check and whose fingerprints are unclassifiable. An applicant who has previously submitted fingerprints for state licensing purposes may request that the fingerprints on file be used. The state licensing authority shall use the information resulting from the fingerprint-based criminal history record check to investigate and determine whether an applicant is qualified to hold a state license pursuant to this article. The state licensing authority may verify any of the information an applicant is required to submit.

§ 12-43.3-308. Restrictions for applications for new licenses

(1) The state or a local licensing authority shall not receive or act upon an application for the issuance of a state or local license pursuant to this article:

(a) If the application for a state or local license concerns a particular location that is the same as or within one thousand feet of a location for which, within the two years immediately preceding the date of the application, the state or a local licensing authority denied an application for the same class of license due to the nature of the use or other concern related to the location;

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(b) Until it is established that the applicant is, or will be, entitled to possession of the premises for which application is made under a lease, rental agreement, or other arrangement for possession of the premises or by virtue of ownership of the premises;

(c) For a location in an area where the cultivation, manufacture, and sale of medical marijuana as contemplated is not permitted under the applicable zoning laws of the municipality, city and county, or county;

(d) (I) If the building in which medical marijuana is to

be sold is located within one thousand feet of a school, an alcohol or drug treatment facility, or the principal campus of a college, university, or seminary, or a residential child care facility. The provisions of this section shall not affect the renewal or re-issuance of a license once granted or apply to licensed premises located or to be located on land owned by a municipality, nor shall the provisions of this section apply to an existing licensed premises on land owned by the state, or apply to a license in effect and actively doing business before said principal campus was constructed. The local licensing authority of a city and county, by rule or regulation, the governing body of a municipality, by ordinance, and the governing body of a county, by resolution, may vary the distance restrictions imposed by this subparagraph (I) for a license or may eliminate one or more types of schools, campuses, or facilities from the application of a distance restriction established by or pursuant to this subparagraph (I).

(II) The distances referred to in this paragraph (d) are to be computed by direct measurement from the nearest property line of the land used for a school or campus to the nearest portion of the building in which medical marijuana is to be sold, using a route of direct pedestrian access.

(III) In addition to the requirements of section 12- 43.3-303(2), the local licensing authority shall consider the evidence and make a specific finding of fact as to whether the building in which the medical marijuana is to be sold is located within any distance restrictions established by or pursuant to this paragraph (d).

§ 12-43.3-309. Transfer of ownership

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(1) A state or local license granted under the provisions of this article shall not be transferable except as provided in this section, but this section shall not prevent a change of location as provided in section 12-43.3- 310(13).

(2) For a transfer of ownership, a license holder shall apply to the state and local licensing authorities on fonns prepared and furnished by the state licensing authority. In determining whether to permit a transfer of ownership, the state and local licensing authorities shall consider only the requirements of this article, any rules promulgated by the state licensing authority, and any other local restrictions. The local licensing authority may hold a hearing on the application for transfer of ownership. The local licensing authority shall not hold a hearing pursuant to this subsection (2) until the local licensing authority has posted a notice of hearing in the manner described in section 12-43.3-302(2) on the licensed medical marijuana center premises for a period of ten days and has provided notice of the hearing to the applicant at least ten days prior to the hearing. Any transfer of ownership hearing by the state licensing authority shall be held in compliance with the requirements specified in section 12-43.3-302.

§ 12-43.3-310. Licensing in general

(1) This article authorizes a county, municipality, or city and county to prohibit the operation of medical marijuana centers, optional premises cultivation operations, and medical marijuana-infused products manufacturers' licenses and to enact reasonable regulations or other restrictions applicable to medical marijuana centers, optional premises cultivation licenses, and medical marijuana-infused products manufacturers' licenses based on local government zoning, health, safety, and public welfare laws for the distribution of medical marijuana that are more restrictive than this article.

(2) A medical marijuana center, optional premises cultivation operation, or medical marijuana-infused products manufacturer may not operate until it has been licensed by the local licensing authority and the state licensing authority pursuant to this article. In connection with a license, the applicant shall provide a complete and accurate list of all owners, officers, and employees who work at, manage, own, or are otherwise associated with the operation and shall provide a complete and accurate application as required by the state licensing authority.

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(3) A medical marijuana center, optional premises cultivation operation, or medical marijuana-infused products manufacturer shall notify the state licensing authority in writing within ten days after an owner, officer, or employee ceases to work at, manage, own, or otherwise be associated with the operation. The owner, officer, or employee shall surrender his or her identification card to the state licensing authority on or before the date of the notification.

(4) A medical marijuana center, optional premises cultivation operation, or medical marijuana-infused products manufacturer shall notify the state licensing authority in writing of the name, address, and date of birth of an owner, officer, manager, or employee before the new owner, officer, or employee begins working at, managing, owning, or being associated with the operation. The owner, officer, manager, or employee shall pass a fingerprint-based criminal history record check as required by the state licensing authority and obtain the required identification prior to being associated with, managing, owning, or working at the operation.

(5) A medical marijuana center, optional premises cultivation operation, or medical marijuana-infused products manufacturer shall not acquire, possess, cultivate, deliver, transfer, transport, supply, or dispense marijuana for any purpose except to assist patients, as defined by section 14(1) of article XVIII of the state constitution.

(6) All owners, officers, managers, and employees of a medical marijuana center, optional premises cultivation operation, or medical marijuana-infused products manufacturer shall be residents of Colorado. A local licensing authority shall not issue a license provided for in this article until that share of the license application fee due to the state has been received by the department of revenue. All licenses granted pursuant to this article shall be valid for a period not to exceed two years from the date of issuance unless revoked or suspended pursuant to this article or the rules promulgated pursuant to this article.

(7) Before granting a local or state license, the respective licensing authority may consider, except where this article specifically provides otherwise, the requirements of this article and any rules promulgated pursuant to this article, and all other reasonable restrictions that are or may be placed upon the licensee by the licensing authority. With

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respect to a second or additional license for the same licensee or the same owner of another licensed business pursuant to this article, each licensing authority shall consider the effect on competition of granting or denying the additional licenses to such licensee and shall not approve an application for a second or additional license that would have the effect of restraining competition.

(8) (a) Each license issued under this article is separate and

distinct. It is unlawful for a person to exercise any of the privileges granted under a license other than the license that the person holds or for a licensee to allow any other person to exercise the privileges granted under the licensee's license. A separate license shall be required for each specific business or business entity and each geographical location.

(b) At all times, a licensee shall possess and maintain possession of the premises or optional premises for which the license is issued by ownership, lease, rental, or other arrangement for possession of the premises.

(9) (a) The licenses provided pursuant to this article shall

specify the date of issuance, the period of licensure, the name of the licensee, and the premises or optional premises licensed. The licensee shall conspicuously place the license at all times on the licensed premises or optional premises.

(b) A local licensing authority shall not transfer location of or renew a license to sell medical marijuana until the applicant for the license produces a license issued and granted by the state licensing authority covering the whole period for which a license or license renewal is sought.

(10) In computing any period of time prescribed by this article, the day of the act, event, or default from which the designated period of time begins to run shall not be included. Saturdays, Sundays, and legal holidays shall be counted as any other day.

(11) A licensee shall report each transfer or change of financial interest in the license to the state and local licensing authorities, thirty days prior to any transfer or change pursuant to section 12-43.3-309. A report shall be required for transfers of capital stock of any corporation regardless of size.

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(12) Each licensee shall manage the licensed premises himself or herself or employ a separate and distinct manager on the premises and shall report the name of the manager to the state and local licensing authorities. the licensee shall report any change in manager to the state and local licensing authorities thirty days prior to the change pursuant to section 12-43.3-309.

(13) (a) A licensee may move his or her permanent location to any other place in the same municipality or city and county for which the license was originally granted, or in the same county if the license was granted for a place outside the corporate limits of a municipality or city and county, but it shall be unlawful to cultivate, manufacture, distribute or sell medical marijuana at any such place until permission to do so is granted by the state and local licensing authorities provided for in this article.

(b) In permitting a change of location, the state and local licensing authorities shall consider all reasonable restrictions that are or may be placed upon the new location by the governing board or local licensing authority of the municipality, city and county, or county and any such change in location shall be in accordance with all requirements of this article and rules promulgated pursuant to this article.

(14) The location of an optional premises cultivation operation as described in section 12-43.3-403 shall be a confidential record and shall be exempt from the Colorado open records act. State and local licensing authorities shall keep the location of an optional premises cultivation operation confidential and shall redact the location from all public records. Notwithstanding any provision of law to the contrary, a state or local licensing agency may share information regarding the location of an optional premises cultivation operation with a peace officer or a law enforcement agency.

§ 12-43.3-311. License renewal

(1) Ninety days prior to the expiration date of an existing license, the state licensing authority shall notify the licensee of the

expiration date by first class mail at the licensee's address of record with the state licensing authority. A licensee shall apply for the renewal of an existing license to the local licensing authority not less than forty-five days and to the

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state licensing authority not less than thirty days prior to the date of expiration. A local licensing authority shall not accept an application for renewal of a license after the date of expiration, except as provided in subsection (2) of this section. The state licensing authority may extend the expiration date of the license and accept a late application for renewal of a license provided that the applicant has filed a timely renewal application with the local licensing authority. All renewals filed with the local licensing authority and subsequently approved by the local licensing authority shall next be processed by the state licensing authority. The state or the local licensing authority, in its discretion, subject to the requirements of this subsection (1) and subsection (2) of this section and based upon reasonable grounds, may waive the forty-five-day or thirty-day time requirements set forth in this subsection (1). The local licensing authority may hold a hearing on the application for renewal only if the licensee has had complaints filed against it, has a history of violations, or there are allegations against the licensee that would constitute good cause. The local licensing authority shall not hold a renewal hearing provided for by this subsection (1) for a medical marijuana center until it has posted a notice of hearing on the licensed medical marijuana center premises in the manner described in section 12- 43.3-302(2) for a period of ten days and provided notice to the applicant at least ten days prior to the hearing. The local licensing authority may refuse to renew any license for good cause, subject to judicial review.

(2) (a) Notwithstanding the provisions of subsection (1) of

this section, a licensee whose license has been expired for not more than ninety days may file a late renewal application upon the payment of a nonrefundable late application fee of five hundred dollars to the local licensing authority. A licensee who files a late renewal application and pays the requisite fees may continue to operate until both the state and local licensing authorities have taken final action to approve or deny the licensee's late renewal application unless the state or local licensing authority summarily suspends the license pursuant to article 4 of title 24, C.R.S., this article, and rules promulgated pursuant to this article.

(b) The state and local licensing authorities may not accept a late renewal application more than ninety days after the expiration of a licensee's permanent annual license. A licensee whose permanent annual license has been expired for more than ninety days shall not cultivate, manufacture, distribute, or sell any medical marijuana until all required licenses have been obtained.

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(c) Notwithstanding the amount specified for the late application fee in paragraph (a) of this subsection (2), the state licensing authority by rule or as otherwise provided by law may reduce the amount of the fee if necessary pursuant to section 24-75-402(3), C.R.S., by reducing the uncommitted reserves of the fund to which all or any portion of the fee is credited. After the uncommitted reserves of the fund are sufficiently reduced, the state licensing authority by rule or as otherwise provided by law may increase the amount of the fee as provided in section 24-75-402(4), C.R.S.

12-43.3-312. Inactive licenses

The state or local licensing authority, in its discretion, may revoke or elect not to renew any license if it determines that the licensed premises have been inactive, without good cause, for at least one year.

§ 12-43.3-313. Unlawful financial assistance

(1) The state licensing authority, by rule and regulation, shall require a complete disclosure of all persons having a direct or indirect financial interest, and the extent of such interest, in each license issued under this article.

(2) A person shall not have an unreported financial interest in a license pursuant to this article unless that person has undergone a fingerprint-based criminal history record check as provided for by the state licensing authority in its rules; except that this subsection (2) shall not apply to banks, savings and loan associations, or industrial banks supervised and regulated by an agency of the state or federal government, or to FHAapproved mortgagees, or to stockholders, directors, or officers thereof.

(3) This section is intended to prohibit and prevent the control of the outlets for the sale of medical marijuana by a person or party other than the persons licensed pursuant to the provisions of this article.

§ 12-43.3-401. Classes of licenses

(1) For the purpose of regulating the cultivation, manufacture, distribution, and sale of medical marijuana, the state licensing authority in its

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discretion, upon application in the prescribed form made to it, may issue and grant to the applicant a license from any of the following classes, subject to the provisions and restrictions provided by this article:

(a) Medical marijuana center license;

(b) Optional premises cultivation license;

(c) Medical marijuana-infused products manufacturing

license; and

(d) Occupational licenses and registrations for owners, managers, operators, employees, contractors, and other support staff employed by, working in, or having access to restricted areas of the licensed premises, as determined by the state licensing authority. The state licensing authority may take any action with respect to a registration pursuant to this article as it may with respect to a license pursuant to this article, in accordance with the procedures established pursuant to this article.

(2) All persons licensed pursuant to this article shall collect sales tax on all sales made pursuant to the licensing activities.

(3) A state chartered bank or a credit union may loan money to any person licensed pursuant to this article for the operation of a licensed business.

§ 12-43.3-402. Medical marijuana center license

(1) A medical marijuana center license shall be issued only to a person selling medical marijuana pursuant to the terms and conditions of this article.

(2) (a) Notwithstanding the provisions of this section, a

medical marijuana center licensee may also sell medical marijuana-infused products that are prepackaged and labeled so as to clearly indicate all of the following:

(1) That the product contains medical marijuana;

(II) That the product is manufactured without any

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regulatory oversight for health, safety, or efficacy; and

(III) That there may be health risks associated with the consumption or use of the product.

(b) A medical marijuana licensee may contract with a medical marijuana-infused products manufacturing licensee for the manufacture of medical marijuana-infused products upon a medical marijuana-infused products manufacturing licensee's licensed premises.

(3) Every person selling medical marijuana as provided for in this article shall sell only medical marijuana grown in its medical marijuana optional premises licensed pursuant to this article. The provisions of this subsection (3) shall not apply to medical marijuana-infused products.

(4) Notwithstanding the requirements of subsection (3) of this section to the contrary, a medical marijuana licensee may purchase not more than thirty percent of its total on-hand inventory of medical marijuana from another licensed medical marijuana center in Colorado. A medical marijuana center may sell no more than thirty percent of its total on-hand inventory to another Colorado licensed medical marijuana licensee.

(5) Prior to initiating a sale, the employee of the medical marijuana center making the sale shall verify that the purchaser has a valid registration card issued pursuant to section 25-1.5-106, C.R.S., and a valid picture identification card that matches the name on the registration card.

(6) A licensed medical marijuana center may provide a small amount of its medical marijuana for testing to a laboratory that is licensed pursuant to the occupational licensing rules promulgated pursuant to section 12-43.3-202(2)(a)(IV).

(7) All medical marijuana sold at a licensed medical marijuana center shall be labeled with a list of all chemical additives, including but not limited to nonorganic pesticides, herbicides, and fertilizers, that were used in the cultivation and the production of the medical marijuana.

(8) A licensed medical marijuana center shall comply with all provisions of article 34 of title 24, C.R.S., as the provisions relate to persons with disabilities.

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§ 12-43.3-403. Optional premises cultivation license

An optional premises cultivation license may be issued only to a person licensed pursuant to section 12-43.3-402(1) or 12-43.3-404(1) who grows and cultivates medical marijuana at an additional Colorado licensed premises contiguous or not contiguous with the licensed premises of the person's medical marijuana center license or the person's medical marijuanainfused products manufacturing license.

§ 12-43.3-404. Medical marijuana-infused products manufacturing license.

(1) A medical marijuana-infused products manufacturing license may be issued to a person who manufactures medical marijuanainfused products, pursuant to the terms and conditions of this article.

(2) Medical marijuana-infused products shall be prepared on a licensed premises that is used exclusively for the manufacture and preparation of medical marijuana-infused products and using equipment that is used exclusively for the manufacture and preparation of medical marijuana- infused products.

(3) A medical marijuana-infused products licensee shall have a written agreement or contract with a medical marijuana center licensee, which contract shall at a minimum set forth the total amount of medical marijuana obtained from a medical marijuana center licensee to be used in the manufacturing process, and the total amount of medical marijuanainfused products to be manufactured from the medical marijuana obtained from the medical marijuana center. A medical marijuana-infused products licensee shall not use medical marijuana from more than five different medical marijuana centers in the production of one medical marijuanainfused product. The medical marijuana-infused products manufacturing licensee may sell its products to any licensed medical marijuana center.

(4) All licensed premises on which medical marijuana-infused products are manufactured shall meet the sanitary standards for medical marijuana- infused product preparation promulgated pursuant to section 12- 43.3-202(2)(a)(XII).

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(5) The medical marijuana-infused product shall be sealed and conspicuously labeled in compliance with this article and any rules promulgated pursuant to this article.

(6) Medical marijuana-infused products may not be consumed on a premises licensed pursuant to this article.

(7) Notwithstanding any other provision of state law, sales of medical marijuana-infused products shall not be exempt from state or local sales tax.

(8) A medical marijuana-infused products licensee that has an optional premises cultivation license shall not sell any of the medical marijuana that it cultivates.

§ 12-43.3-501. Medical marijuana license cash fund

(1) All moneys collected by the state licensing authority pursuant to this article shall be transmitted to the state treasurer, who shall credit the same to the medical marijuana license cash fund, which fund is hereby created and referred to in this section as the "fund". The moneys in the fund shall be subject to annual appropriation by the general assembly to the department of revenue for the direct and indirect costs associated with implementing this article. Any moneys in the fund not expended for the purpose of this article may be invested by the state treasurer as provided by law. All interest and income derived from the investment and deposit of moneys in the fund shall be credited to the fund. Any unexpended and unencumbered moneys remaining in the fund at the end of a fiscal year shall remain in the fund and shall not be credited or transferred to the general fund or another fund.

(2) The executive director of the department of revenue by rule or as otherwise provided by law may reduce the amount of one or more of the fees if necessary pursuant to section 24-75-402(3), C.R.S., to reduce the uncommitted reserves of the fund to which all or any portion of one or more of the fees is credited. After the uncommitted reserves of the fund are sufficiently reduced, the executive director by rule or as otherwise provided by law may increase the amount of one or more of the fees as provided in section 24-75-402(4), C.R.S.

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(3) (a) The state licensing authority shall establish fees for

processing the following types of applications, licenses, notices, or reports required to be submitted to the state licensing authority:

(I) Applications for licenses listed in section 12- 43.3-401 and rules promulgated pursuant to that section;

(II) Applications to change location pursuant to section 12-43.3-310 and rules promulgated pursuant to that section;

(III) Applications for transfer of ownership pursuant to section 12-43.3-310 and rules promulgated pursuant to that section;

(IV) License renewal and expired license renewal applications pursuant to section 12-43.3-311; and

(V) Licenses as listed in section 12-43.3-401.

(b) The amounts of such fees, when added to the other fees transferred to the fund pursuant to this section shall reflect the actual direct and indirect costs of the state licensing authority in the administration and enforcement of this article so that the fees avoid exceeding the statutory limit on uncommitted reserves in administrative agency cash funds as set forth in section 24-75-402(3), C.R.S.

(c) The state licensing authority may charge applicants licensed under this article a fee for the cost of each fingerprint analysis and background investigation undertaken to qualify new officers, directors, managers, or employees.

(d) At least annually, the state licensing authority shall review the amounts of the fees and, if necessary, adjust the amounts to reflect the direct and indirect costs of the state licensing authority.

(4) Except as provided in subsection (5) of this section, the state licensing authority shall establish a basic fee that shall be paid at the time of service of any subpoena upon the state licensing authority, plus a fee for meals and a fee for mileage at the rate prescribed for state officers and employees in section 24-9-104, C.R.S., for each mile actually and

31

necessarily traveled in going to and returning from the place named in the subpoena. If the person named in the subpoena is required to attend the place named in the subpoena for more than one day, there shall be paid, in advance, a sum to be established by the state licensing authority for each day of attendance to cover the expenses of the person named in the subpoena.

(5) The subpoena fee established pursuant to subsection (4) of this section shall not be applicable to any federal, state or local governmental agency.

§ 12-43.3-502. Fees--allocation

(1) Except as otherwise provided, all fees and fines provided for by this article shall be paid to the department of revenue, which shall transmit the fees to the state treasurer. The state treasurer shall credit the fees to the medical marijuana license cash fund created in section 12-43.3-501.

(2) The expenditures of the state licensing authority shall be paid out of appropriations from medical marijuana license cash fund created in section 12-43.3-501.

§ 12-43.3-503. Local license fees

(1) Each application for a local license provided for in this article filed with a local licensing authority shall be accompanied by an application fee in an amount determined by the local licensing authority.

(2) License fees as determined by the local licensing authority shall be paid to the treasurer of the municipality, city and county, or county where the licensed premises is located in advance of the approval, denial, or renewal of the license.

§ 12-43.3-601. Suspension--revocation--fines

(1) In addition to any other sanctions prescribed by this article or rules promulgated pursuant to this article, the state licensing authority or a local licensing authority has the power, on its own motion or on complaint, after investigation and opportunity for a public hearing at which the licensee shall be afforded an opportunity to be heard, to suspend or revoke a license issued by the respective authority for a violation by the licensee or by any of

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the agents or employees of the licensee of the provisions of this article, or any of the rules promulgated pursuant to this article, or of any of the terms, conditions, or provisions of the license issued by the state or local licensing authority. The state licensing authority or a local licensing authority has the power to administer oaths and issue subpoenas to require the presence of persons and the production of papers, books, and records necessary to the determination of a hearing that the state or local licensing authority is authorized to conduct.

(2) The state or local licensing authority shall provide notice of suspension, revocation, fine, or other sanction, as well as the required notice of the hearing pursuant to subsection (1) of this section, by mailing the same in writing to the licensee at the address contained in the license. Except in the case of a summary suspension, a suspension shall not be for a longer period than six months. If a license is suspended or revoked, a part of the fees paid therefore shall not be returned to the licensee. Any license or permit may be summarily suspended by the issuing licensing authority without notice pending any prosecution, investigation, or public hearing pursuant to the terms of section 24-4-104(4), C.R.S. Nothing in this section shall prevent the summary suspension of a license pursuant to section 24-4- 104(4), C.R.S. Each patient registered with a medical marijuana center that has had its license summarily suspended may immediately transfer his or her primary center to another licensed medical marijuana center.

(3) (a) Whenever a decision of the state licensing authority

or a local licensing authority suspending a license for fourteen days or less becomes final, the licensee may, before the operative date of the suspension, petition for permission to pay a fine in lieu of having the license suspended for all or part of the suspension period. Upon the receipt of the petition, the state or local licensing authority may, in its sole discretion, stay the proposed suspension and cause any investigation to be made which it deems desirable and may, in its sole discretion, grant the petition if the state or local licensing authority is satisfied that:

(1) The public welfare and morals would not be impaired by permitting the licensee to operate during the period set for suspension and that the payment of the fine will achieve the desired disciplinary purposes;

(II) The books and records of the licensee are kept

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in such a manner that the loss of sales that the licensee would have suffered had the suspension gone into effect can be determined with reasonable accuracy; and

(III) The licensee has not had his or her license suspended or revoked, nor had any suspension stayed by payment of a fine, during the two years immediately preceding the date of the motion or complaint that resulted in a final decision to suspend the license or permit.

(b) The fine accepted shall be not less than five hundred dollars nor more than one hundred thousand dollars.

(c) Payment of a fine pursuant to the provisions of this subsection (3) shall be in the form of cash or in the form of a certified check or cashier's check made payable to the state or local licensing authority, whichever is appropriate.

(4) Upon payment of the fine pursuant to subsection (3) of this section, the state or local licensing authority shall enter its further order permanently staying the imposition of the suspension. If the fine is paid to a local licensing authority, the governing body of the authority shall cause the moneys to be paid into the general fund of the local licensing authority. Fines paid to the state licensing authority pursuant to subsection (3) of this section shall be transmitted to the state treasurer who shall credit the same to the medical marijuana license cash fund created in section 12-43.3-501.

(5) In connection with a petition pursuant to subsection (3) of this section, the authority of the state or local licensing authority is limited to the granting of such stays as are necessary for the authority to complete its investigation and make its findings and, if the authority makes such findings, to the granting of an order permanently staying the imposition of the entire suspension or that portion of the suspension not otherwise conditionally stayed.

(6) If the state or local licensing authority does not make the findings required in paragraph (a) of subsection (3) of this section and does not order the suspension permanently stayed, the suspension shall go into effect on the operative date finally set by the state or local licensing authority.

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(7) Each local licensing authority shall report all actions taken to impose fines, suspensions, and revocations to the state licensing authority in a manner required by the state licensing authority. No later than January 15 of each year, the state licensing authority shall compile a report of the preceding year's actions in which fines, suspensions, or revocations were imposed by local licensing authorities and by the state licensing authority. The state licensing authority shall file one copy of the report with the chief clerk of the house of representatives, one copy with the secretary of the senate, and six copies in the joint legislative library.

§ 12-43.3-701. Inspection procedures

(1) Each licensee shall keep a complete set of all records necessary to show fully the business transactions of the licensee, all of which shall be open at all times during business hours for the inspection and examination of the state licensing authority or its duly authorized representatives. The state licensing authority may require any licensee to furnish such information as it considers necessary for the proper administration of this article and may require an audit to be made of the books of account and records on such occasions as it may consider necessary by an auditor to be selected by the state licensing authority who shall likewise have access to all books and records of the licensee, and the expense thereof shall be paid by the licensee.

(2) The licensed premises, including any places of storage where medical marijuana is grown, stored, cultivated, sold, or dispensed, shall be subject to inspection by the state or local licensing authorities and their investigators, during all business hours and other times of apparent activity, for the purpose of inspection or investigation. For examination of any inventory or books and records required to be kept by the licensees, access shall be required during business hours. Where any part of the licensed premises consists of a locked area, upon demand to the licensee, such area shall be made available for inspection without delay, and, upon request by authorized representatives of the state or local licensing authority, the licensee shall open the area for inspection.

(3) Each licensee shall retain all books and records necessary to show fully the business transactions of the licensee for a period of the current tax year and the three immediately prior tax years.

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§ 12-43.3-801. Judicial review

Decisions by the state licensing authority or a local licensing authority shall be subject to judicial review pursuant to section 24-4-106, C.R.S.

§ 12-43.3-901. Unlawful acts--exceptions

(1) Except as otherwise provided in this article, it is unlawful for a person:

(a) To consume medical marijuana in a licensed medical marijuana center, and it shall be unlawful for a medical marijuana licensee to allow medical marijuana to be consumed upon its licensed premises;

(b) With knowledge, to permit or fail to prevent the use of his or her registry identification by any other person for the unlawful purchasing of medical marijuana; or

(c) To continue operating a business for the purpose of cultivation, manufacture, or sale of medical marijuana or medical marijuanainfused products without filing the forms and paying the fee as described in section 12-43.3-103(l)(b).

(d) To continue operating a business for the purpose of cultivation, manufacture, or sale of medical marijuana or medical marijuanainfused products without satisfying the conditions of section 12-43.3- 103(2)(b).

(2) It is unlawful for a person to buy, sell, transfer, give away, or acquire medical marijuana except as allowed pursuant to this article.

(3) It is unlawful for a person licensed pursuant to this article:

(a) To be within a limited-access area unless the person's license badge is displayed as required by this article, except as provided in section 12-43.3-701;

(b) To fail to designate areas of ingress and egress for limited-access areas and post signs in conspicuous locations as required by this article;

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(c) To fail to report a transfer required by section 12-

43.3-310(11); or

(d) To fail to report the name of or a change in managers as required by section 12-43.3-310(12).

(4) It is unlawful for any person licensed to sell medical marijuana pursuant to this article:

(a) To display any signs that are inconsistent with local laws or regulations;

(b) To use advertising material that is misleading, deceptive, or false, or that is designed to appeal to minors;

(c) To provide public premises, or any portion thereof, for the purpose of consumption of medical marijuana in any form;

(d) (1) To sell medical marijuana to a person not

licensed pursuant to this article or to a person not able to produce a valid patient registry identification card. Notwithstanding any provision in this subparagraph (1) to the contrary, a person under twenty-one years of age shall not be employed to sell or dispense medical marijuana at a medical marijuana center or grow or cultivate medical marijuana at an optional premises cultivation operation.

(II) If a licensee or a licensee's employee has reasonable cause to believe that a person is exhibiting a fraudulent patient registry identification card in an attempt to obtain medical marijuana, the licensee or employee shall be authorized to confiscate the fraudulent patient registry identification card, if possible, and shall, within seventy-two hours after the confiscation, tum it over to the state health department or local law enforcement agency. The failure to confiscate the fraudulent patient registry identification card or to tum it over to the state health department or a state or local law enforcement agency within seventy-two hours after the confiscation shall not constitute a criminal offense.

(e) To possess more than six medical marijuana plants and two ounces of medical marijuana for each patient who has registered the

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center as his or her primary center pursuant to section 2S-l.S-106(6)(f), C.R.S.; except that a medical marijuana center may have an amount that exceeds the six-plant and two-ounce product per patient limit if the center sells to patients that are authorized to have more than six plants and two ounces of product. In the case of a patient authorized to exceed the six-plant and two-ounce limit, the center shall obtain documentation from the patient's physician that the patient needs more than six plants and two ounces of product.

(f) To offer for sale or solicit an order for medical marijuana in person except within the licensed premises;

(g) To have in possession or upon the licensed premises any medical marijuana, the sale of which is not permitted by the license;

(h) To buy medical marijuana from a person not licensed to sell as provided by this article;

(i) To sell medical marijuana except in the permanent location specifically designated in the license for sale;

U) To have on the licensed premises any medical marijuana or marijuana paraphernalia that shows evidence of the medical marijuana having been consumed or partially consumed;

(k) To require a medical marijuana center or medical marijuana center with an optional premises cultivation license to make delivery to any premises other than the specific licensed premises where the medical marijuana is to be sold; or

(1) To sell, serve, or distribute medical marijuana at any time other than between the hours of 8:00 a.m. and 7:00 p.m. Monday through Sunday.

(rn) To violate the provisions of section 6-2-103 or 6-2-

lOS, C.R.S.

(S) Except as provided in sections 12-43.3-402(4), 12-43.3-403, and 12-43.3-404, it is unlawful for a medical marijuana center, medical marijuana-infused products manufacturing operation with an optional

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premises cultivation license, or medical marijuana center with an optional premises cultivation license to sell, deliver, or cause to be delivered to a licensee any medical marijuana not grown upon its licensed premises, or for a licensee or medical marijuana center with an optional premises cultivation license or medical marijuana-infused products manufacturing operation with an optional premises cultivation license to sell, possess, or permit sale of medical marijuana not grown upon its licensed premises. A violation of the provisions of this subsection (5) by a licensee shall be grounds for the immediate revocation of the license granted under this article.

(6) It shall be unlawful for a physician who makes patient referrals to a licensed medical marijuana center to receive anything of value from the medical marijuana center licensee or its agents, servants, officers, or owners or anyone financially interested in the licensee, and it shall be unlawful for a licensee licensed pursuant to this article to offer anything of value to a physician for making patient referrals to the licensed medical marijuana center.

(7) A person who commits any acts that are unlawful pursuant to this section commits a class 2 misdemeanor and shall be punished as provided in section 18-1.3-501, C.R.S.; except for violations that would also constitute a violation of title 18, C.R.S., which violation shall be charged and prosecuted pursuant to title 18, C.R.S.

§ 12-43.3-1001. Sunset review--article repeal

(1) This article is repealed, effective July 1, 2015.

(2) Prior to the repeal of this article, the department of regulatory agencies shall conduct a sunset review as described in section 24-

34-104(8), C.R.S. .

§ 25-1-1202. Index of statutory sections regarding medical record confidentiality and health information

(1) Statutory provisions concerning policies, procedures, and references to the release, sharing, and use of medical records and health information include the following:

(a) Section 10-16-1003, C.R.S., concerning use of

39

information by health care cooperatives;

(b) Section 8-43-404, C.R.S., concerning examinations by a physician or chiropractor for the purposes of workers' compensation;

(c) Section 8-43-501, C.R.S., concerning utilization review related to workers' compensation;

(d) Section 8-73-108, C.R.S., concerning the award of benefits for unemployment compensation benefits;

(e) Section 10-3-1104.7, C.R.S., concerning the confidentiality and use of genetic testing information;

(0 Section 10-16-113, C.R.S., concerning the procedures related to the denial of health benefits by an insurer;

(g) Section 10-16-113.5, C.R.S., concerning the use of independent external review when health benefits have been denied;

(h) Section 10-16-423, C.R.S., concerning the confidentiality of medical information in the custody of a health maintenance organization;

(i) Section 12-32-108.3, C.R.S., concerning disciplinary actions against podiatrists;

U) Section 12-33-126, C.R.S., concerning disciplinary actions against chiropractors;

(k) Section 12-35-129, C.R.S., concerning disciplinary actions against dentists and dental hygienists;

(1) Section 12-36-118, C.R.S., concerning disciplinary actions against physicians;

(m) Section 12-36-135(1), C.R.S., concerning reporting requirements for physicians pertaining to certain injuries;

(n) Section 12-36.5-104, C.R.S., concerning professional

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review committees for physicians;

(0) Section 12-36.5-104.4, C.R.S., concerning hospital professional review committees;

(p) Section 12-37.5-104, C.R.S., concerning reporting requirements by physicians related to abortions for minors;

(q) Section 12-38-116.5, C.R.S., concerning disciplinary proceedings against a practical nurse, a professional nurse, or a psychiatric technician;

(r) Section 12-43-218, C.R.S., concerning the disclosure of confidential communications by a mental health professional;

(s) Section 12-43-224(4), C.R.S., concerning disciplinary proceedings against a mental health professional;

(t) Section 13-21-110, C.R.S., concerning confidentiality of information, data, reports, or records of a utilization review committee of a hospital or other health care facility;

(u) Section 13-21-117, C.R.S., concerning civil liability of a mental health professional, mental health hospital, community mental health center, or clinic related to a duty to warn or protect;

(v) Sections 13-22-101 to 13-22-106, C.R.S., concerning the age of competence for certain medical procedures;

(w) Section 13-64-502, C.R.S., concerning civil liability related to genetic counseling and screening and prenatal care, or arising from or during the course of labor and delivery, or the period of postnatal care in a health institution;

(x) Section 13-80-103.7, C.R.S., concerning a limited. waiver of medical information in civil actions related to sexual assault or sexual offenses against a child;

(y) Section 13-90-107(1)(d), C.R.S., concerning when a physician, surgeon, or registered professional nurse may testify related to the

41

care and treatment of a person;

(z) Section 14-10-124, C.R.S., concerning the best interests of a child for the purposes of a separation or dissolution of marnage;

(aa) Section 14-10-127, C.R.S., concerning the allocation of parental responsibilities with respect to a child;

(bb) Section 17-27.1-101(4), C.R.S., concerning nongovernmental facilities for offenders and the waiver of confidential information;

(cc) Section 18-3-203(1)(f.5), C.R.S., concerning assault in the second degree and the availability of medical testing for certain circumstances;

(dd) Section 18-4-412, C.R.S., concerning theft of medical records or medical information;

(ee) Sections 18-6-101 to 18-6-104 C.R.S., concerning a justified medical termination of pregnancy;

(ff) Section 18-18-503, C.R.S., concerning cooperative agreements to control substance abuse;

(gg) Section 19-3-304, C.R.S., concerning persons required to report child abuse or neglect;

(hh) Section 19-3-305, C.R.S., concerning postmortem investigation related to the death of a child;

(ii) Section 19-3-306, C.R.S., concerning evidence of abuse or neglect of a child;

Uj) Section 19-5-103(2), C.R.S., concerning relinquishment of rights concerning a child;

(kk) Section 19-5-305, C.R.S., concerning access to

adoption records;

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(11) Section 22-1-123(5), C.R.S., concerning the protection of student data;

(mm) Sections 22-32-109.1(6) and 22-32-109.3(2), C.R.S., concerning specific powers and duties of the state board of education;

(nn) Section 22-64-216, C.R.S., concerning confidentiality of records maintained by school district retirement plans;

(00) Section 24-51-213, C.R.S., concerning confidentiality of records maintained by the public employees' retirement association;

(pp) Section 24-72-204(3), C.R.S., concerning public records not open to public inspection;

(qq) Section 25-1-122, concerning reporting of certain diseases and conditions for investigation of epidemic and communicable diseases, morbidity and mortality, cancer in connection with the statewide cancer registry, environmental and chronic diseases, sexually transmitted infections, tuberculosis, and rabies and mammal bites by the department of public health and environment;

(rr) Section 25-1-124(2), concerning health care facilities and reporting requirements;

(ss) Sections 27-81-110 and 27-81-113, C.R.S., concerning the treatment of intoxicated persons;

(tt) Section 25-1-801, concerning patient records in the care of a health care facility;

(uu) Section 25-1-802, concerning patient records in the care of individual health care providers;

(vv) Sections 27-82-106 and 27-82-109, C.R.S., concerning the treatment of drug abusers;

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(vv.5) Section 25-1.5-106, concerning the medical manjuana program;

(ww) Section 25-2-120, concerning reports of electroconvulsive treatment;

(xx) Section 25-3-109, concerning quality management functions of health care facilities licensed by the department of public health and environment;

(yy) Section 25-3.5-501, concerning records maintained by ambulance services and emergency medical technicians;

(zz) Section 25-3.5-704(2)(d) and (2)(f), concerning the designation of emergency medical facilities and the statewide trauma. system;

(aaa) Section 25-4-402(4), concerning the reporting of sexually transmitted infections;

(bbb) Section 25-4-1003, concerning newborn screening programs and genetic counseling;

(ccc) Sections 25-4-1402 to 25-4-1407, concerning reporting and investigation of the human immunodeficiency virus;

(ddd) Section 25-4-1705, concerning immunization

information;

(eee) Section 25-4-1905, concerning records collected related to Gulf War syndrome;

(fff) Section 25-32-106, concerning the release of medical information to a poison control service provider;

(ggg) Section 26-3.1-102(2), C.R.S., concerning reporting requirements related to at-risk adults;

(hhh) Section 26-11.5-108, C.R.S., concerning the longterm ombudsman program and access to medical records;

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(iii) Section 27-65-103(2), C.R.S., concerning voluntary applications for mental health services;

Ujj) Sections 27-65-121(2) and 27-65-122, C.R.S., concerning records related to mental health services for minor children;

(kkk) Section 30-10-606(6), C.R.S., concerning postmortem investigations and records;

(111) Section 35-9-109, C.R.S., concerning confidentiality of information released to the commissioner of agriculture related to human exposure to pesticide applications; and

(mmm) Section 42-2-112, C.R.S., concerning information supplied to the department of revenue for the purpose of renewing or obtaining a license to operate a motor vehicle.

§ 25-1.5-106. Medical marijuana program--powers and duties of state health agency--medical review board--repeal

(1) Legislative declaration.

(a) The general assembly hereby declares that it is necessary to implement rules to ensure that patients suffering from legitimate debilitating medical conditions are able to safely gain access to medical marijuana and to ensure that these patients:

(I) Are not subject to criminal prosecution for their use of medical marijuana in accordance with section 14 of article XVIII of the state constitution, this section, and the rules of the state health agency; and

(II) Are able to establish an affirmative defense to their use of medical marijuana in accordance with section 14 of article XVIII of the state constitution, this section, and the rules of the state health agency.

(b) The general assembly hereby declares that it is necessary to implement rules to prevent persons who do not suffer from legitimate debilitating medical conditions from using section 14 of article

45

XVIII of the state constitution as a means to sell, acquire, possess, produce, use, or transport marijuana in violation of state and federal laws.

(2) Definitions. In addition to the definitions set forth in section 1,4(1) of article XVIII of the state constitution, as used in this section, unless the context otherwise requires:

(a) "Bona fide physician-patient relationship", for purposes of the medical marijuana program, means:

(I) A physician and a patient have a treatment or counseling relationship, in the course of which the physician has completed a full assessment of the patient's medical history and current medical condition, including an appropriate personal physical examination;

(II) The physician has consulted with the patient with respect to the patient's debilitating medical condition before the patient applies for a registry identification card; and

(III) The physician is available to or offers to provide follow-up care and treatment to the patient, including but not limited to patient examinations, to determine the efficacy of the use of medical marijuana as a treatment of the patient's debilitating medical condition.

(b) "Executive director" means the executive director of the state health agency.

(c) "In good standing", with respect to a physician's

license, means:

(I) The physician holds a doctor of medicine or doctor of osteopathic medicine degree from an accredited medical school;

(II) The physician holds a valid, unrestricted license to practice medicine in Colorado; and

(III) The physician has a valid and unrestricted United States department of justice federal drug enforcement administration controlled substances registration.

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(d) "Medical marijuana program" means the program established by section 14 of article XVIII of the state constitution and this section.

(e) "Registry identification card" means the nontransferable confidential registry identification card issued by the state health agency to patients and primary caregivers pursuant to this section.

(f) "State health agency" means the public health related entity of state government designated by the governor by executive order pursuant to section 14 of article XVIII of the state constitution.

(g) "primary caregiver" means a natural person, other than the patient or the patient's physician, who is eighteen years of age or older and has significant responsibility for managing the well-being of a patient who has a debilitating medical condition.

(3) Rule-making.

(a) The state health agency shall, pursuant to section 14 of article XVIII of the state constitution, promulgate rules of administration concerning the implementation of the medical marijuana program that specifically govern the following:

(I) The establishment and maintenance of a confidential registry of patients who have applied for and are entitled to receive a registry identification card. The confidential registry of patients may be used to determine whether a physician should be referred to the Colorado board of medical examiners for a suspected violation of section 14 of article XVIII of the state constitution, paragraph (a), (b), or (c) of subsection (4) of this section, or the rules promulgated by the state health agency pursuant to this subsection (3).

(II) The development by the state health agency of an application form and the process for making the form available to residents of this state seeking to be listed on the confidential registry of patients who are entitled to receive a registry identification card;

(III) The verification by the state health agency of medical information concerning patients who have applied for a registry

47

identification card or for renewal of a registry identification card;

(IV) The development by the state health agency of a form that constitutes "written documentation" as defined and used in section 14 of article XVIII of the state constitution, which form a physician shall use when making a medical marijuana recommendation for a patient;

(V) The conditions for issuance and renewal, and the form, of the registry identification cards issued to patients, including but not limited to standards for ensuring that the state health agency issues a registry identification card to a patient only if he or she has a bona fide physician-patient relationship with a physician in good standing and licensed to practice medicine in the state of Colorado;

(VI) Communications with law enforcement officials about registry identification cards that have been suspended when a patient is no longer diagnosed as having a debilitating medical condition;

(VII) The manner in which the state health agency may consider adding debilitating medical conditions to the list of debilitating medical conditions contained in section 14 of article XVIII of the state constitution; and

(VIII) A waiver process to allow a homebound patient who is on the registry to have a primary caregiver transport the patient's medical marijuana from a licensed medical marijuana center to the patient.

(b) The state health agency may promulgate rules regarding the following:

(I) What constitutes "significant responsibility for managing the well-being of a patient"; except that the act of supplying medical marijuana or marijuana paraphernalia, by itself, is insufficient to constitute "significant responsibility for managing the well-being of a patient";

(II) The development of a form for a primary caregiver to use in applying to the registry, which form shall require, at a minimum, that the applicant provide his or her full name, home address, date

48

of birth, and an attestation that the applicant has a significant responsibility for managing the well-being of the patient for whom he or she is designated as the primary caregiver and that he or she understands and will abide by section 14 of article XVIII of the state constitution, this section, and the rules promulgated by the state health agency pursuant to this section;

(III) The development of a form that constitutes "written documentation", as defined and used in section 14 of article XVIII of the state constitution, which form a physician shall use when making a medical marijuana recommendation for a patient; and

(IV) The grounds and procedure for a patient to change his or her designated primary caregiver.

(c) (I) The state health agency shall conduct a public

review hearing with the department of revenue by September I, 20 I 0, to receive public input on any emergency rules adopted by the state health agency and be provided with an update from the industry, caregivers, patients, and other stakeholders regarding the industry's current status. The state health agency shall provide at least five business days' notice prior to the hearing.

(II) This paragraph (c) is repealed, effective July I,

2011.

(4) Physicians. A physician who certifies a debilitating medical condition for an applicant to the medical marijuana program shall comply with all of the following requirements:

(a) The physician shall have a valid, unrestricted Colorado license to practice medicine, which license is in good standing.

(b) After a physician, who has a bona fide physicianpatient relationship with the patient applying for the medical marijuana program, determines, for the purposes of making a recommendation, that the patient has a debilitating medical condition and that the patient may benefit from the use of medical marijuana, the physician shall certify to the state health agency that the patient has a debilitating medical condition and that the patient may benefit from the use of medical marijuana. If the physician certifies that the patient would benefit from the use of medical marijuana

49

based on a chronic or debilitating disease or medical condition, the physician shall specify the chronic or debilitating disease or medical condition and, if known, the cause or source of the chronic or debilitating disease or medical condition.

(c) The physician shall maintain a record-keeping system for all patients for whom the physician has recommended the medical use of marijuana, and, pursuant to an investigation initiated pursuant to section 12- 36-118, C.R.S., the physician shall produce such medical records to the Colorado state board of medical examiners after redacting any patient or primary caregiver identifying information.

(d) A physician shall not:

(I) Accept, solicit, or offer any form of pecuniary remuneration from or to a primary caregiver, distributor, or any other provider of medical marijuana;

(II) Offer a discount or any other thing of value to a patient who uses or agrees to use a particular primary caregiver, distributor, or other provider of medical marijuana to procure medical marijuana;

(III) Examine a patient for purposes of diagnosing a debilitating medical condition at a location where medical marijuana is sold or distributed; or

(IV) Hold an economic interest in an enterprise that provides or distributes medical marijuana if the physician certifies the debilitating medical condition of a patient for participation in the medical marijuana program.

(5) Enforcement.

(a) If the state health agency has reasonable cause to believe that a physician has violated section 14 of article XVIII of the state constitution, paragraph (a), (b), or (c) of subsection (4) of this section, or the rules promulgated by the state health agency pursuant to subsection (2) of this section, the state health agency may refer the matter to the state board of medical examiners created in section 12-36-103, C.R.S., for an investigation

50

and determination.

(b) If the state health agency has reasonable cause to believe that a physician has violated paragraph (d) of subsection (4 )of this section, the state health agency shall conduct a hearing pursuant to section 24-4-104, C.R.S., to determine whether a violation has occurred.

(c) Upon a finding of unprofessional conduct pursuant to section 12-36-117(l)(mm), C.R.S., by the state board of medical examiners or a finding of a violation of paragraph (d) of subsection (4) of this section by the state health agency, the state health agency shall restrict a physician's authority to recommend the use of medical marijuana, which restrictions may include the revocation or suspension of a physician's privilege to recommend medical marijuana. The restriction shall be in addition to any sanction imposed by the state board of medical examiners.

(d) When the state health agency has objective and reasonable grounds to believe and finds, upon a full investigation, that a physician has deliberately and willfully violated section 14 of article XVIII of the state constitution or this section and that the public health, safety, or welfare imperatively requires emergency action, and the state health agency incorporates those findings into an order, the state health agency may summarily suspend the physician's authority to recommend the use of medical marijuana pending the proceedings set forth in paragraphs (a) and (b) of this subsection (5). A hearing on the order of summary suspension shall be held no later than thirty days after the issuance of the order of summary suspension, unless a longer time is agreed to by the parties, and an initial decision in accordance with section 24-4-105(14), C.R.S., shall be rendered no later than thirty days after the conclusion of the hearing concerning the order of summary suspension.

(6) Renewal of patient identification card upon criminal conviction. Any patient who is convicted of a criminal offense under article 18 of title 18, C.R.S., sentenced or ordered by a court to drug or substance abuse treatment, or sentenced to the division of youth corrections, shall be subject to immediate renewal of his or her patient registry identification card, and the patient shall apply for the renewal based upon a recommendation from a physician with whom the patient has a bona fide physician-patient relationship.

51

(7) A parent who submits a medical marijuana registry application for his or her child shall have his or her signature notarized on the application.

(8) Notwithstanding any other requirements to the contrary, notice issued by the state health agency for a rulemaking hearing pursuant to section 24-4-103, C.R.S., for rules concerning the medical marijuana program shall be sufficient if the state health agency provides the notice no later than forty-five days in advance of the rulemaking hearing in at least one publication in a newspaper of general distribution in the state and posts the notice on the state health agency's web site; except that emergency rules pursuant to section 24-4-103(6), C.R.S., shall not require advance notice.

(9) Primary caregivers.

(a) A primary caregiver may not delegate to any other person his or her authority to provide medical marijuana to a patient nor may a primary caregiver engage others to assist in providing medical marijuana to a patient.

(b) Two or more primary caregivers shall not join together for the purpose of cultivating medical marijuana.

(c) Only a medical marijuana center with an optional premises cultivation license, a medical marijuana-infused products manufacturing operation with an optional premises cultivation license, or a primary caregiver for his or her patients or a patient for himself or herself may cultivate or provide marijuana and only for medical use.

(d) A primary caregiver shall provide to a law enforcement agency, upon inquiry, the registry identification card number of each of his or her patients. The state health agency shall maintain a registry of this information and make it available twenty-four hours per day and seven days a week to law enforcement for verification purposes. Upon inquiry by a law enforcement officer as to an individual's status as a patient or primary caregiver, the state health agency shall check the registry. If the individual is not registered as a patient or primary caregiver, the state health agency may provide that response to law enforcement. If the person is a registered patient or primary caregiver, the state health agency may not release information unless consistent with section 14 of article XVIII of the

52

state constitution. The state health agency may promulgate rules to provide for the efficient administration of this paragraph (d).

(10) Patient--primary caregiver relationship.

(a) A person shall be listed as a primary caregiver for no more than five patients on the medical marijuana program registry at any given time; except that the state health agency may allow a primary caregiver to serve more than five patients in exceptional circumstances. In determining whether exceptional circumstances exist, the state health agency may consider the proximity of medical marijuana centers to the patient. A primary caregiver shall maintain a list of his or her patients including the registry identification card number of each patient at all times.

(b) A patient shall have only one primary caregiver at

any given time.

(c) A patient who has designated a primary caregiver for himself or herself may not be designated as a primary caregiver for another patient.

(d) A primary caregiver may not charge a patient more than the cost of cultivating or purchasing the medical marijuana, but may charge for caregiver services.

(e) (I) The state health agency shall maintain a secure

and confidential registry of available primary caregivers for those patients who are unable to secure the services of a primary caregiver.

(II) An existing primary caregiver may indicate at the time of registration whether he or she would be willing to handle additional patients and waive confidentiality to allow release of his or her contact information to physicians or registered patients only.

(III) An individual who is not registered but is willing to provide primary caregiving services may submit his or her contact information to be placed on the primary caregiver registry.

(IV) A patient-primary caregiver arrangement secured pursuant to this paragraph (e) shall be strictly between the patient

53

and the potential primary caregiver. The state health agency, by providing the information required by this paragraph (e), shall not endorse or vouch for

. .

a pnmary caregiver.

(V) The state health agency may make an exception, based on a request from a patient, to paragraph (a) of this subsection (10) limiting primary caregivers to five patients. If the state health agency makes an exception to the limit, the state health agency shall note the exception on the primary caregiver's record in the registry.

(f) At the time a patient applies for inclusion on the confidential registry, the patient shall indicate whether the patient intends to cultivate his or her own medical marijuana, both cultivate his or her own medical marijuana and obtain it from either a primary caregiver or licensed medical marijuana center, or intends to obtain it from either a primary caregiver or a licensed medical marijuana center. If the patient elects to use a licensed medical marijuana center, the patient shall register the primary center he or she intends to use.

(11) Registry identification card required--denial-revocation-- renewal.

(a) To be considered in compliance with the provisions of section 14 of article XVIII of the state constitution, this section, and the rules of the state health agency, a patient or primary caregiver shall have his or her registry identification card in his or her possession at all times that he or she is in possession of any form of medical marijuana and produce the same upon request of a law enforcement officer to demonstrate that the patient or primary caregiver is not in violation of the law; except that, if more than thirty-five days have passed since the date the patient or primary caregiver filed his or her medical marijuana program application and the state health agency has not yet issued or denied a registry identification card, a copy of the patient's or primary caregiver's application along with proof of the date of submission shall be in the patient's or primary caregiver's possession at all times that he or she is in possession of any form of medical marijuana until the state health agency issues or denies the registry identification card. A person who violates section 14 of article XVIII of the state constitution, this section, or the rules promulgated by the state health agency may be subject to criminal prosecution for violations of section 18-18-406, C.R.S.

54

(b) The state health agency may deny a patient's or primary caregiver's application for a registry identification card or revoke the card if the state health agency, in accordance with article 4 of title 24, C.R.S., determines that the physician who diagnosed the patient's debilitating medical condition, the patient, or the primary caregiver violated section 14 of article XVIII of the state constitution, this section, or the rules promulgated by the state health agency pursuant to this section; except that, when a physician's violation is the basis for adverse action, the state health agency may only deny or revoke a patient's application or registry identification card when the physician's violation is related to the issuance of a medical marijuana recommendation.

(c) A patient or primary caregiver registry identification card shall be valid for one year and shall contain a unique identification number. It shall be the responsibility of the patient or primary caregiver to apply to renew his or her registry identification card prior to the date on which the card expires. The state health agency shall develop a form for a patient or primary caregiver to use in renewing his or her registry identification card.

(d) If the state health agency grants a patient a waiver to allow a primary caregiver to transport the patient's medical marijuana from a medical marijuana center to the patient, the state health agency shall designate the waiver on the patient's registry identification card.

(e) A homebound patient who receives a waiver from the state health agency to allow a primary caregiver to transport the patient's medical marijuana to the patient from a medical marijuana center shall provide the primary caregiver with the patient's registry identification card, which the primary caregiver shall carry when the primary caregiver is transporting the medical marijuana. A medical marijuana center may provide the medical marijuana to the primary caregiver for transport to the patient if the primary caregiver produces the patient's registry identification card.

(12) Use of medical marijuana. (a) The use of medical marijuana is allowed under state law to the extent that it is carried out in accordance with the provisions of section 14 of article XVIII of the state constitution, this section, and the rules of the state health agency.

(b) A patient or primary caregiver shall not:

55

(I) Engage in the medical use of marijuana in a way that endangers the health and well-being of a person;

(II) Engage in the medical use of marijuana in plain view of or in a place open to the general public;

(III) Undertake any task while under the influence of medical marijuana, when doing so would constitute negligence or professional malpractice;

(IV) Possess medical marijuana or otherwise engage in the use of medical marijuana in or on the grounds of a school or in a school bus;

(V) Engage in the use of medical marijuana while:

(A) In a correctional facility or a community

corrections facility;

(B) Subject to a sentence to incarceration; or

(C) In a vehicle, aircraft, or motorboat;

(VI) Operate, navigate, or be in actual physical control of any vehicle, aircraft, or motorboat while under the influence of medical marijuana; or

(VII) Use medical marijuana if the person does not have a debilitating medical condition as diagnosed by the person's physician in the course of a bona fide physician-patient relationship and for which the physician has recommended the use of medical marijuana.

(c) A person shall not establish a business to permit patients to congregate and smoke or otherwise consume medical marijuana.

(13) Limit on cultivation of medical marijuana. Only registered patients, licensed primary caregivers, medical marijuana-infused products manufacturing operations with an optional premises cultivation license, and licensed medical marijuana centers with optional premises

56

cultivation licenses may cultivate medical marijuana.

(14) Affirmative defense. If a patient or primary caregiver raises an affirmative defense as provided in section 14(4)(b) of article XVIII of the state constitution, the patient's physician shall certify the specific amounts in excess of two ounces that are necessary to address the patient's debilitating medical condition and why such amounts are necessary. A patient who asserts this affirmative defense shall waive confidentiality privileges related to the condition or conditions that were the basis for the recommendation. If a patient, primary caregiver, or physician raises an exception to the state criminal laws as provided in section 14(2)(b) or (c) of article XVIII of the state constitution, the patient, primary caregiver or physician waives the confidentiality of his or her records related to the condition or conditions that were the basis for the recommendation maintained by the state health agency for the medical marijuana program. Upon request of a law enforcement agency for such records, the state health agency shall only provide records pertaining to the individual raising the exception, and shall redact all other patient, primary caregiver, or physician identifying information.

(15) (a) Except as provided in paragraph (b) of this subsection (15), the state health agency shall establish a basic fee that shall be paid at the time of service of any subpoena upon the state health agency, plus a fee for meals and a fee for mileage at the rate prescribed for state officers and employees in section 24-9-104, C.R.S., for each mile actually and necessarily traveled in going to and returning from the place named in the subpoena. If the person named in the subpoena is required to attend the place named in the subpoena for more than one day, there shall be paid, in advance, a sum to be established by the state health agency for each day of attendance to cover the expenses of the person named in the SUbpoena.

(b) The subpoena fee established pursuant to paragraph (a) of this subsection (15) shall not be applicable to any federal, state, or local governmental agency.

(16) Fees--repeal.

(a) The state health agency may collect fees from patients who, pursuant to section 14 of article XVIII of the state constitution, apply to the medical marijuana program for a registry identification card for the

57

purpose of offsetting the state health agency's direct and indirect costs of administering the program. The amount of the fees shall be set by rule of the state health agency. The state health agency shall also promulgate rules that allow a patient to claim indigence as it relates to paying the fee approved pursuant to this subsection (16). The rules shall establish the standard for indigence, the process the state health agency shall use to determine whether a patient who claims indigence meets the standard for indigence, and the process for granting a waiver if the state health agency determines that the patient meets the standard for indigence. The amount of the fees set pursuant to this section shall reflect the actual direct and indirect costs of the state licensing authority in the administration and enforcement of this article so that the fees avoid exceeding the statutory limit on uncommitted reserves in administrative agency cash funds as set forth in section 24-75-402(3), C.R.S. All fees collected by the state health agency through the medical marijuana program shall be transferred to the state treasurer who shall credit the same to the medical marijuana program cash fund, which fund is hereby created.

(b) (I) The fees collected pursuant to paragraph (a) of

this subsection (16) may be used for the direct and indirect costs to the state board of medical examiners associated with investigating and prosecuting up to five of the referrals of physicians received per year from the state health agency in relation to the medical marijuana program.

(II) This paragraph (b) is repealed, effective July 1,

2012.

(17) Cash fund -- repeal.

(a) The medical marijuana program cash fund shall be subject to annual appropriation by the general assembly to the state health agency for the purpose of establishing, operating, and maintaining the medical marijuana program. All moneys credited to the medical marijuana program cash fund and all interest derived from the deposit of such moneys that are not expended during the fiscal year shall be retained in the fund for future use and shall not be credited or transferred to the general fund or any other fund.

(b) Deleted by Laws 2010, Ch. 355, § 2, eff. July 1,2010.

(b.5) Notwithstanding any provision of paragraph (a) of

58

this subsection (17) to the contrary, on June 30, 2011, the state treasurer shall deduct three million dollars from the medical marijuana program cash fund and transfer such sum to the general fund.

(c) (I) The state health agency shall transfer from the

medical marijuana program cash fund to the department of regulatory agencies for allocation to the state board of medical examiners moneys to cover the direct and indirect costs associated with investigating and prosecuting up to five of the referrals of physicians received per year from the state health agency in relation to the medical marijuana program.

(II) This paragraph (c) is repealed, effective July 1,

2012.

(18) This section is repealed, effective July 1,2019.

59

APPENDIX 3-

COLORADO MEDICAL MARIJUANA REGISTRY STATISTICS

Colorado The Official Stale Web PorIai

Colorado Department of Public Health

and Environment

The Colorado Medical Marijuana Registry

Statistics

Medical Marijuana Registry Program Update

(as of June 30,2010)

In the November 2000 general election, Coloradoans passed Amendment 20, and the Colorado Department of Public Health and Environment (CDPHE) was tasked with implementing and administering the Medical Marijuana Registry program. In March of 2001 , the State of Colorado Board of Health approved the Rules and Regulations pertaining to the administration of the program, and on June 1 st, 2001, the Registry began accepting and processing applications for Registry Identification cards.

Statistics of the registry include:

• 99,559 new patient applications have been received to date since the registry began operating in

June 2001. One three hundred (300) applications have been denied, 68 cards have been revoked, 513 patients have died, and 3,201 cards have expired, bringing the total number of patients who currently possess valid Registry ID cards to 95,477.

• Seventy-one percent of approved applicants are male.

• The average age of all patients is 40. Currently twenty-four patients are minors (under the age of

18).

• Fifty-eight percent of patients reside in the Denver-metro and area (Adams, Arapahoe, Boulder,

Broomfield, Denver, Douglas & Jefferson counties), with the remainder of patients found in counties throughout Colorado.

• Patients on the Registry represent all the debilitating conditions covered under Amendment 20.

Severe pain accounts for 94% of all reported conditions; muscle spasms account for the secondmost reported condition at 24%. Note that percentages do not add up to 100 percent because some patients have more than one condition.

• Sixty-six percent of patients have designated a primary care-giver (someone who has significant

responsibility for managing the care of a patient with a debilitation medical condition).

• More than 1,100 different physicians have signed for patients in Colorado.

Please see the tables below for a complete listing of all statistical information.

As of October 27, 2008 all applications, renewal and changes to the Registry must be submitted via mail and include a legible photo copy of the patient's Colorado Identification. Faxes and em ails are not accepted.

No general funds have been designated for this program. The Colorado Constitution authorizes CDPHE to collect fees to cover the costs of administering the program. Currently the fee is $90, and is evaluated annually by CDPHE. The fee was lowered from $110 on June 1, 2007.

2

Table I: County Information

I County I Number of Patients I Percent of Patients
IAdams I 7,084 I 7%
IAlamosa I 181 I <1%
I Arapahoe I 8,696 I 9%
I Archuleta I 272 I <1%
I Baca I 54 I <1%
IBent I 28 I <1%
I Boulder I 9,165 I 10%
I Broomfield I 950 I 1%
I Chaffee I 383 I <1%
I Cheyenne I 17 I <1%
I Clear Creek I 372 I <1%
I Conejos I 61 I <1%
I Costilla I 79 I <1%
I Crowley I 53 I <1%
I Custer I 57 <1%
I Delta I 545 1%
I Denver I 14,421 15%
I Dolores I 56 <1%
I Douglas I 3,262 3%
I Eagle I 1,343 1%
lEI Paso I 9,000 9%
I Elbert I 324 <1%
I Fremont I 741 I 1%
I Garfield I 1,529 I 2%
I Gilpin I 343 I <1%
I Grand I 376 I <1%
I Gunnison I 425 I <1%
I Hinsdale I 16 I <1%
I Huertano I 135 <1%
I Jackson I 12 <1%
I Jefferson I 11,374 12%
I Kiowa I 4 <1%
IKit Carson I 40 <1%
ILa Plata I 1,156 1%
I Lake I 263 <1%
I Larimer I 7,536 8% 3

ILasAnimas I 169 I <1%
I Lincoln I 27 I <1%
ILogan I 166 I <1%
IMesa I 2,583 I 3%
I Mineral I 9 I <1%
I Moffat I 142 I <1%
I Montezuma I 408 I <1%
I Montrose I 606 I 1%
I Morgan I 163 I <1%
I Otero 144 I <1%
I Ouray 107 I <1%
I Park 745 I 1%
I Phillips 29 I <1%
Pitkin 690 I 1%
Prowers 56 I <1%
Pueblo 1,674 I 2%
Rio Blanco 48 I <1%
Rio Grande 108 I <1%
Routt I 706 I 1%
I Saguache I 152 I <1%
ISan Juan I 16 I <1%
Isan Miguel I 445 I <1%
I Sedgwick I 16 I <1%
ISummit I 1,298 I 1%
I Teller I 711 I 1%
I Washington I 42 I <1%
IWeid I 3,815 I 4%
IYuma I 49 I <1% * Indicates fewer than three patients In each category

4

Table II: Conditions

I Reported Condition I Number of Patients I Percent of Patients
Reporting Condition Reporting Condition**
Cachexia I 1,166 I 1%
Cancer I 1,873 I 2%
Glaucoma I 818 I 1%
HIV/AIDS I 499 I 1%
Muscle Spasms I 23,338 I 24%
Seizures I 1,386 I 1%
Severe Pain I 89,970 I 94%
Severe Nausea I 12,525 I 13%
.. **Does not add to 100% as some patients report usmq medical manjuana for more than one debilitating medical condition.

Sex

Table III: User Characteristics

,-------------------1

Percent on Registry

Average Age**

Female

29%

42

Male

71%

39

** The overall average age of all patients is 40 years old.

Medical Marijuana Registry

4300 Cherry Creek Drive South (HSVRD-MMP-A1). Denver, CO 80246-1530

medical.marijuana@state.co.us

© 2010 State of Colorado, Denver, CO

5

APPENDIX 4-

MEDICAL MARIJUANA COLLECTIVES LITIG.

2

Defendants.

1-

3

4

5

6

7

8

FILED

Superior ConrtofCalifomia CQunty of Los Angeles

DEC 1 0 2010 rrc"

JohnA-9=ke, Executive Officerl Clerk

By 7:JJ.JiLM£In-.· ~ Deputy

M. CERVANTES

9

SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES

10

11

12 MEDICAL MARDUANA COLLECTIVES LITIG.

AMERICANS FOR SAFE ACCESS, et al., )

13 )

Plaintiffs, )

) ) ) ) )

~

) ) )

14

15

VS.

CITY OF LOS ANGELES, a municipal corporation, et al.,

16

17

18

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21

Case No.: BC433942 ORDERG~NGINPARTAND DENYING IN PART PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

I. Introduction

22

23

On January 26, 2010, the City of Los Angeles ("the City") enacted a law governing medical

24 marijuana collectives, Ordinance No. 181069 ("the Ordinance"). Pursuant to the Ordinance, the City 25

has taken a number of steps calculated to limit the number of medical marijuana collectives

26

("collectives").

27

28

- 1 -

ORDER GRANTING IN PART AND DENTING IN PART PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

22 1 According to the case homepage website, the following collectives have joined in the motion for a preliminary injunction:

Holistic Cannabis Collective; Trinity Holistic Caregivers, Inc.; Galaxy Caregivers Group, LLC.; Green Leaf

23 CollectivelMarijuana Collective; 420 Collective; Valley Holistic Caregivers, Inc.; Nama! Ways Always; Herbal Remedies Caregivers, Inc.; Starbudz; 420 Caregivers, LLC; Exclusive Caregivers of California, Inc.; Buddha Bar Collective; The Shop

24 at Greenbush; Jeg Inc. Wilshire medical Marijuana Collective; Healers on Third, Inc., Healers on 3rd Medical Marijuana Collective; Green Joy Inc., Medical Cannabis Dispensary; Compassionate Caregivers of San Pedro; Medical Wellness

25 Center, Inc., A Medical Marijuana Collective; The Hills Caregivers, A Medical Marijuana Collective; Sunset Junction Organic Medicine Medical Marijuana Collective; West Valley Caregivers; American Sobriety Inc., Green Hills Collective;

26 Herbal Medicine Care, Inc.; Nature's Wonder Caregivers Group, Inc.; 420 Highway Pharmacy, Inc.; Colorado Pain Relief, Inc.; Infinity Medical Alliancem, Inc.; Natural Solutions Patient Care, Inc.; Greenthumb Medicinal Clinic, Inc.; The

27 Hollywood Collective; Harmony House Collective, Inc.; Natural Choice Healing Center, Inc.; House of Kush, Inc.; Kush Komer N; Herbology, Inc.; Cancare Collective, Inc.; Cannamerchant, Inc.; Downtown Natural Caregivers; God's Gift; L.A.

28 Area Herbal Delivery, Inc.; Mid City Cannabis Club, Inc.; New Era Caregivers; Safe Life Caregivers; Kush Komer V, Inc.; Exclusive Caregivers of California.

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Plaintiffs are collectives and, in one case, patient members of a collective.' Their lawsuits

against the City raise a number of constitutional and procedural challenges and ask for injunctive relief

that would block the city from enforcing the Ordinance. The court has heard several oral arguments in

these actions and now makes the following rulings.

In the background of this controversy are two state measures and an earlier, but now defunct,

interim control ordinance that the City adopted. In 1996, California voters approved Proposition 215,

The Compassionate Use Act ("eUA"), which legalized the use of marijuana for medical purposes and

allowed people to grow or possess marijuana based on the recommendation of a licensed physician.

Thereafter, the state legislature enacted The Medical Marijuana Protection Act (MMP A). In 2007, the

City of Los Angeles passed an interim control ordinance ("the ICO") designed to prevent new medical

marijuana dispensaries from opening.

A time line of pertinent events may be helpful:

• 1996-California passes Proposition 215, (the CUA) (Cal. Health and Safety Code § 11362.5).

Prop. 215 provided, for the first time, the right for seriously ill Californians to use marijuana for medical purposes when recommended by a physician.

• 2003-California passes Senate Bill 420, (the M"MP A) (Cal. Health and Safety Code § 11362.775). The MMPA permitted, for the first time, qualified patients and caregivers of qualified patients to collectively cultivate marijuana for medical purposes with freedom from prosecution.

-2-

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

25 Z Government Code § 65858(a) and (b) provides that interim ordinances lose effect within 4S days of adoption unless a

legislative body extends the interim ordinance pursuant to the terms of Government Code § 65090. Plaintiffs argue that

26 the ICO expired on September 15, 2007. Defendant does not contest this allegation or otherwise argue that the ICO was extended pursuant to Government Code § 65090.

27 3 420 Collective was issued a tax registration certificate on August 30, 2008 (Motion 3,d Ex. 3); 420 Caregivers was _issued a

tax registration certificate on May 6, 2009 (Motion, 2nd Ex. 3); Green Horizon was issued a tax registration certificate on

28 Match 20,2009 (Motion, 4th Ex. 2); and Organic Healing Center was issued a tax registration certificate on July 7,2009

(Motion, 5th Ex. 2). .

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. --.i,.,·

II. Summary of Rulings:

• 2006-City Council Member Dennis Zine makes a motion to the LOs Angeles City Council basically bringing to the council's attention the increased number of collectives in Los Angeles and their effect on crime and safety in the city.

• August 1, 2007-Los Angeles adopts Ordinance No. 181027 (the ICO). The ICO permitted all collectives that existed prior to August 1, 2007, and that submitted a series of documents to the City Clerk's Office by November 13,2007, to continue operation.

• September 15,2007-. The ICO loses effect by operation oflaw and expires''.

• November 13,2007-. -The deadline for submitting documents to the City Clerk's Office pursuant to the ICO passes. Plaintiffs admit that none of them submitted the required documents.

• August 2008-The Attorney General issues "Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use," hereinafter "Guidelines."

• 2008 to 2009-Plaintiffs begin operation of collectives in the City of Los Angeles".

• January 26,201 O-The Ordinance is passed. Among other things, the Ordinance limits the operation of collectives in the City of Los Angeles to only those that had registered by Novembe 13, 2007, pursuant to the defunct ICO.-

e May 3, 20lO-The mayor signs the Ordinance into law after approving a finalized fee schedule.

• May 4, 2010- The City sends letters to many collectives telling them to shut down immediately or risk facing criminal and civil prosecution.

• June 7, 2010-The Ordinance becomes effective. Only collectives that were registered pursuant to the ICO may begin submitting applications for continued operation to the City Clerk's Office-all others must terminate operations.

• June 14, 2010-Last day for collectives which were registered pursuant to the ICO to submit their applications for continued operation as required by the Ordinance.

Two portions of the Ordinance are pre-empted by state law. The Ordinance violates the equal

protection clauses of the state and federal constitutions. The Ordinance violates the due process clause

of the Constitution of the State of California. The Ordinance violates Plaintiffs' informational privacy

rights under the Constitution of the State of California as to their general contact information.

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

·.:::..~:-...,...._ .. _ .. ----- ... -.,==--=.":~--=~-- .......... -..,.".. .... .,..;.----. ._._..:....

2

ORDER GRANTING IN PART AND DENYlN"G IN PART PLAINTIFFS' MOTION FOR A

. PRELlMINARY INJUNCTION

ill. Discussion:

CCP § 526 specifies a number of instances in which a court may grant a preliminary injunction,

3

Two are relevant to this motion:

4

1) When it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief, or any part thereof, consists in restraining the commission or continuance ofthe act complained of, either fora limited period or perpetually.

2) When it appears by the complaint or affidavits that the commission or continuance of some act during the litigation would produce waste, or great or irreparable injury, to a party to the action.

The issuance of a preliminary injunction requires the court to weigh two· factors: the likelihood the moving party will prevail on the merits and the relative interim harm to the parties from the issuance or non-issuance of the injunction. Hunt v. Superior Court (1999) 21 Ca1.4th 984,999. "The trial court's deterrrrination must he guided by a 'mix' of the potential-merit and interim-harm factors; the greater the plaintiff's showing on one, the less must be shown on the other to support an injunction." Butt v. State 0 California (1992) 4 CaL4th 668, 678.

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A. PLAINTIFFS' LIKELmOOD OF SUCCESS ON THE MERITS:

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The bulk of this order is devoted to the likelihood of Plaintiffs , success on the merits of their

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constitutional claims. The relative interim harm to the parties is addressed below in Section II(B).

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1. The CUA and the M:MP A do not preempt the bulk of the Ordinance:

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Article XI Section 7 ofthe California Constitution controls preemption: "a city may make and

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enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict

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with the general laws." Plaintiffs claim that the CUA and the MMP A (both state laws) preempt the

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Ordinance (a local law enacted by the City of Los Angeles.)

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There are three main types of preemption. "A conflict exists if the local legislation 'duplicates,

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contradicts, or enters an area fully occupied by general law, either expressly or by legislative

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implication. '" (Citation.) Action Apartment Assn., Inc. v. City ofSanta Monica (2007) 41 Ca1.4th 1232, -4-

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27 1242. The burden in establishing preemption of a local ordinance by state law is on the party claiming preemption. Big Creek Lumber Co. v, County of Santa Cruz (2006) 38 Ca1.4tb 1139,.1149.

In City of Claremont v. Kruse (2009) 177 Cal.App.s'" 1153, the court discussed when

preemption occurs based on an area of the law being "fully occupied:"

[Ljocal legislation enters art area that is "fully occupied" by general law when the Legislature has expressly manifested its intent to "fully occupy" the area [citation}, or when it has impliedly done so in light of one of the following indicia of intent: "(1) the subject matter has been so fully and completely covered by general law as to clearly. indicate that it has become exclusively a matter of state concern; (2) the subject matter has been partially covered by general law couched in such terms as to indicate clearly that a paramount state concern will not tolerate further or additional local action; or (3) the subject matter has been partially covered by general law, and the subj ect is of such a nature that the adverse effect of a local ordinance on the transient citizens of the state outweighs the possible benefit to the" locality [citations].' [Citation.]"

Kruse, supra, 177 CaLApp.4th at 1169 (emphasis added.) In other words, preemption by full occupation

of the field can be express or implicit. Here, neither has occurred.

The CUA does not provide for the collective cultivation and distribution of medical marijuana.

People v. Urziceanu (2005) 132 Cal.App.4th 747, 758. Instead, the CUA encourages state and federal

governments to implement a plan to provide for the safe and affordable distribution of medical

marijuana to those patients who need it. Health and Safety Code § 11362.5(b)(1)(C). Meanwhile the

:MMP A contemplates the formation and operation of medicinal marijuana collectives that would receive

reimbursement for marijuana and for services in connection with providing medical marijuana. (See

Urziceanu, supra, at 785, "[The J\1l'v1PA] represents a dramatic change in the prohibitions on the use,

distribution, and cultivation of marijuana for persons who are qualified patients or primary caregivers

and fits the defense defendant attempted to present at trial. Its specific itemization of the marijuana sale

law indicates it contemplates the formation and operation of medicinal marijuana cooperatives that

would receive reimbursement for marijuana and the services provided in conjunction with the provision

28 of that marijuana. Contrary to the People's argument, this law did abrogate the limits expressed in the

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ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

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ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

cases ... which took a restrictive view of the activities allowed by the Compassionate Use Act"

(emphasis added.); Guidelines, § ICC) "the MMP[A] also defines certain terms .... and recognizes a

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qualified right to collective cultivation of medical marijuana;" See also, Guidelines § 4(A)(2) and §

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(4)(B-C).)

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In neither the CUA nor the 1v.1MP A did the legislature express its intent to occupy the field of

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medical marijuana legislation. If anything, the statutes display a contrary intent. The CUA expressly 7·

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says it does not supersede laws that protect individual and public safety. The MMP A supplem~ted the CVA because the eVA did not discuss how qualified individuals could obtain and legally use medical marijuana. See e.g., Health and Safety Code § 11362.775; Urziceanu, supra, at 785.4 The MMPA also

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lacks any express indication that it fully governs the area of medical marijuana. Medical marijuana

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collectives are conspicuously absent from the language in the history of the J.\.1MP A. Moreover, the

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MMP A contains the following language, at section 11362.93: "Nothing in article shall prevent a city or

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other local governing body from adopting and enforcing laws consistent with this article." Kruse, supra,

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177 Cal.App.d" at 1175

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In Kruse, the Court of Appeal held that a moratorium on medical marijuana dispensaries was not

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impliedly or expressly preempted by the eVA or the I\.1MP A. The court noted that the CVA's

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provisions do not address zoning or business licensing decisions, nor does its plain language prohibit a

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city from enforcing zoning and business licensing requirements. Moreover, the eUA does not authorize

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the establishment and operation of a medical marijuana collective and does not prohibit local

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governments from regulating them.

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4 Health and Safety Code § 11362.775 provides: "Qualified patients, persons with valid identification cards, and the

26 designated primary caregivers of qualified patients and persons with identification cards, who associate within the State of California in order collectively or cooperatively to cultivate marijuana for medical purposes, shall not solely on the basis of

27 that fact be subj ect to state criminal sanctions under Section 11357 [possession of marijuana], 11358 [cultivation

of marijuana], 11359 [possession for sale], 11360 [transportation), 11366 [maintaining a place for the sale, giving away or

28 use of marijuana), 11366.5 [making available premises for the manufacture, storage or distribution of controlled substances], or 11570 [abatement of nuisance created by premises used for manufacture, storage or distribution of controlled substance]."

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ORDER GRANTING IN PART AND DENYING IN PART PLAlNTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

In both the CUA and the M1\.1P A, the legislature never expressed its intent to occupy the field of

medical marijuana legislation. Indeed, the CUA was supplemented by the J\.1JVIP A because the CUA

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failed to discuss how qualified individuals could come into possession of and legally use medical

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marijuana.

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Tuming to implied preemption, the legislature has not sufficiently indicated its intent to fully

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occupy the field with either law. The eVA merely carved out immunities to criminal prosecution. As

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noted above, the eVA did not even contemplate how one could legally grow or possess medical

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marijuana. The M¥P A, while more comprehensive. also falls short. Plaintiffs seem to recognize this in

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their reply when they state, "the MMP A show[ s] a legislative intent to decriminalize the use of

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properties for medical marijuana activities," (Reply, 4:3-4.) This limited scope-focusing on the

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criminal consequences possibly associated with a particular use of a property--does not deal with issues

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like (1) who must be involved in the cultivation, (2) whether cultivation must occur at the collective, and

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(3) whether money in exchange for medical marijuana is acceptable. Because the MJvIP A fails to

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address these concerns, the court cannot clearly infer that the legislature intended to reserve medical

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marijuana as a matter solely of state concern. The Guidelines specifically contemplated by the MMP A also indicate that the MMP A was not intended to occupy the field.' Again, as referenced above, the MMP A specifically permits local laws to regulate the area. Kruse, supra, 177 Ca1.App.4th at 1175.

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Plaintiffs argue that many of the restrictions set out in the Ordinance (e.g., audits, pre-inspection,

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maintenance of records, and warrantless searches) contradict the MMP A because they attempt to define

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what a lawful "collective" is. The problem with this argument is that the Plaintiffs assume that the

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MMP A adequately defines what a "collective" is. The argument fails because the 11:MP A does not

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define a valid "collective." Some material on what constitutes a lawful collective comes from the

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28 5 Health and Safety Code § 11362.81 (d) states "[TJhe Attorney General shall develop and adopt appropriate guidelines to ensure the security and nondiversion of marijuana grown for medical use by patients qualified under the [CU A ]."

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Guidelines and the cases, but not nearly enough to support a preemption argument. If anything, local

entities ate encouraged to make attempts to regulate, and presumably define, medical marijuana

cooperatives.

In two areas, however, Plaintiffs have a high likelihood of success on the merits of their

preemption claim. We turn to them now.

1. The criminal penalties set out in the Ordinance are preempted:

The criminal sanctions portion, at section 45.19.6.9, provides, in pertinent part, that ''Each and

every violation (of the ordinance) shall constitute a separate violation and shall be subject to all remedi

and enforcement measures authorized by Section 11.00 of this Code." Section 11.00's remedies include

fines and imprisonment. 6

"Local legislation 'is "contradictory" to general law when it is inimical thereto.' (Citation.) A

local ordinance is preempted by a state statute only to the extent that the two conflict." Action Apartment Assn., supra, 41 Cal.4th 1232, 1242-43. "Local Laws contradict state laws if they 'prohibit

what the statute commands or command what it prohibits.'" Sherman-Williams v. City of Los Angeles

(1993) 4 Ca1.4th 893, 902.

The criminal sanctions portion of the Ordinance contradicts the MMP A. Support for this

conclusion comes from Qualified Patients Assn. v. City of Anaheim (2010) 187 Ca1.App.4th 734:

The trial court apparently did not consider whether the MMP A's provisions that are distinct from the CUA, including sections 11362.765 and 11362.775, preempt the city's ordinance. The court in People ex rel. Lungren v. Peron (1997) 59 Cal.AppAth 1383, 1390, held that the "general availability of injunctive relief under [s ]ection 11570 against buildings and drug houses used to sell controlled substances is not affected by" the CVA. The Legislature subsequently enacted the MMP A. Sections 11362.765 and 11362.775 of the MMP A immunize operators of medical marijuana dispensaries-provided they are

6 "Section 11.02.080 provides the penalty for violation of the code: "Violation of Division 1 of Title 11 is punishable by a fine 27 of not more than $500.00, or by imprisonment in the County Jail for not more than six months, or by both such fine and imprisonment Each day during any portion of which any violation of any provision of this Division 1 is committed,

28 continued or permitted makes such violation ofa separate offense. (Ord. 7583 Part 1 § 110, 1959.)"

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ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

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ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR A PRELIMlNARY INJUNCTION

qualified patients, possess valid medical marijuana identification cards, or are primary caregivers-from prosecution under state nuisance abatement law (§ 11570) "solely on the basis" that they use any "building or place ... for the purpose of unlawfully selling, serving, storing, keeping, manufacturing, or giving away any controlled substance .... " Sections 11362.765 and 11362.775 also provide qualifying persons immunity from nonfederal criminal sanctions imposed "solely on the basis" of "openfing] or maintain[ing] any place for the purpose of unlawfully selling, giving away, or using any controlled substance ... " (§ 11366) or for "rent[ing], leas[ing], or mak[ing] available for use ~ .. [a] building, room, space, or enclosure for the purpose of unlawfully manufacturing, storing, or distributing any controlled substance ... " (§ 11366 .5).

Whether the 1'v.1:MPA bars local governments from using nuisance abatement law and penal legislation to prohibit the use of'property for medical marijuana purposes remains to be determined. Unlike in Ross, where the Supreme Court observed that "[tjhe operative provisions of the [eUA] do not speak to employment law" (42 CaL 4th at p. 928), the MMP A explicitly touches on land use law by proscribing in sections 11362.765 and 11362.775 the application of sections 11570, 11366, and 11366.5 to uses of property involving medical marijuana. Here, viewing the allegations of the complaint most favorably to the plaintiffs, as is required on demurrer, it appears incongruous atfirst glance to conclude a city may criminalize as a misdemeanor a particular use of property the state expressly has exemptedfrom "criminal liability" in sections 11362 ,765 and 11362.775. Put another way, it seems odd the Legislature would disagree with federal policymakers about including medical marijuana in penal and drug house abatement legislation (compare 21 U.S.C. §§ 812 & 856 with §§ 11362.765 & 11362.775), but intend that local legislators could side with their federal-instead of state-counterparts in prohibiting and criminalizing property uses "solely on the basis" of medical marijuana activities. (§§ 11362.765 & 11362.775.) After all, local entities are creatures of the state, not the federal government.

Qualified Patients Assn., supra, 187 Cal.App.a'" at 753-54.

As Qualified Patients Assn. suggests, there is a statutory and logical contradiction between the

Ordinance and the MMP A. The M1vfP A prohibits criminal sanctions for collective cultivation if one

uses land for that sole purpose, while the Ordinance criminally sanctions that same conduct. There is no

readily apparent way to reconcile these two contradictory laws. The criminal sanctions language from

the IV1MP A controls.

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The City argues that People v, Mentcb (2008) 45 Ca1.4th 275, controls. Mentch only provides

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guidance on who is immune from criminal prosecution under the MMP A and the CUA and in what

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ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

scenarios someone is immune, not what uses of property are permitted under the 1!fMP A and the CUA.

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This is clear from the language of the opinion:

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Here, this. means Mentch, to the extent he assisted in administering, or advised or counseled in the administration or cultivation of, medical marijuana, could not be charged with cultivation or possession for sale "on that sole basis." (§ 11362.765, subd. (a).) It does not mean Mentch could not be charged with cultivation or possession for sale on any basis; to the extent he went beyond the immunized range of conduct, i.e., . administration, advice; and counseling, he would, once again, subject himself to the full force of the crimhiallaw. As it is undisputed Mentch did much more than administer, advise, and counsel, the [Ml\1P A] provides him no defense, and the trial court did not err in failing to instruct on it

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Mentch, supra, 45 CaI.4th at 292. Mentch explains what the "solely on the basis" language from

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Qualified Patients Assn. and the ~ A means. For instance, someone selling medical marijuana for a

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profit would not be immunized under the MJ\..1P A, nor would someone providing medical marijuana to

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another if that person does not qualify as a "primary caregiver" as defined in Mentch; however, this is

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the limit of the opinion. The cases before this court reach beyond the facts and the holding of Mentch.

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Plaintiffs ate allegedly collectively cultivating medical marijuana as permitted by the :MMP A. The

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Ordinance stands to criminalize that otherwise immunized conduct, because Plaintiffs are not one of the

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seventy collectives permitted to continue operating. Mentch does not control under these facts. The

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criminal sanctions language from the Ordinance must be stricken because it commands what the state

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law prohibits: criminal prosecution for collective cultivation of medical marijuana.

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2. The Sunset Provision is preempted:

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Section 45.19.6.10 of the Ordinance provides that its provisions shall sunset two years after the

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effective date "and all collectives shall cease operation immediately, unless the City Council adopts an

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ordinance to extend these provisions."

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This section of the Ordinance will prevent collectives even though the MMP A permits their

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existence (put another way, it will "prohibit what the statute commands." Sherman-Williams, supra, 4

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ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

CalAth at 902.) While the Ordinance prohibits all but seventy collectives to continue operating, it still

pennitscollectives to operate. On this point, there is no clear contradiction. But a blanket ban on all

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collectives in the City of Los Angeles, as the sunset provision purports to do, goes too far and

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contradicts the MMP A. The court recognizes the possibility that the City will adopt an alternative

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ordinance to permit collectives to operate within its borders, a fact that arguably makes this point too

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uncertain and perhaps not ripe for a ruling. Nevertheless, the court believes it is preferable to decide this

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issue now, while the City has the luxury of time to rework the Ordinance, as opposed to waiting two

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years and creating another round of litigation.

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2. Th'e Ordinan"ce deprives certain Plaintiffs of equal protection of the laws:

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The Ordinance caps the maximum number of collectives at seventy, to be distributed about the

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City. § 45.19.6.2 (B). To become one of those seventy, the Ordinance requires collectives to file a

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"registration form." (Ordinance § 45.19.6.2 (A).) The only collectives eligible to file this form are those

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that, among other things, registered pursuant to the leO on or before November 13, 2007. (Id. at §

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45~19.6.2(B)(2).) IIi other words, the medical marijuana collectives that did not register under the leO

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may not register now.

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The relief requested by many of the Plaintiffs (who a1legedIyhave operated lawfully and without

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complaints from neighbors) is not to continue operating, but to be given the chance to continue

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operating by submitting an application and registering in accordance with the Ordinance. The question

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becomes whether the classification of collectives into those that registered under the ICO and those that

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did not denies Plaintiffs the equal protection of the laws;

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Both the federal and state constitutions guarantee equal protection of the laws to all persons.

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People v, Hofsheier (2006) 37 Cal.4th 1185, 1199. "The first prerequisite to a meritorious claim is a

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ORDER GRANTING IN PART AND DENYING IN PART PLAJNTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

showing that the state has adopted a classification that affects two or more similarly situated groups in

an unequal manner." ld. at 1199. "The equal protection clause requires more of a state law than

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nondiscriminatory application within the class it establishes. (Citation.) It also imposes a requirement

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of some rationality in the nature of the class singled out." ld. "When a showing is made that two

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similarly situated groups ~e treated disparately, the court must then determine whether the government

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has a sufficient reason for distinguishing between them." G.G. Doe v. California Dept. of Justice (2009) 173 Cal.App.e" 1095, 1111. "In resolving equal protection issues, the United States Supreme Court has

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used three levels of analysis. Distinctions in statutes that involve suspect Classifications or touch upon

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fundamental interests are subject to strict scrutiny, and can be sustained only if they are necessary to

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achieve a compelling state interest. Classifications based on gender are subject to an intermediate level

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of review. But most legislation is tested only to determine if the challenged classification bears a rational

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relationship to a legitimate state purpose." Hofsheier, supra, at 1200.

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Here, the City's statutory scheme treats two similarly situated groups differently. The rational

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basis test applies, because the ordinance does not create a suspect classification and does not touch upon

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a fundamental interest. Under the rational basis test, ""a statutory classification that neither proceeds

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along suspect lines nor infringes fundamental constitutional rights must be upheld against an equal

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protection challenge if there is any reasonably conceivable state offacts that could provide a rational

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basis for the classification. (Citations.) Where there are 'plausible reasons' for [the classification] 'our

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inquiry is at an end.?" Hofsheier, supra, at 1200-01, Citing Kasler v. Lockyer (2000) 23 Ca1.4th 472,

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481 -:-482. "The party raising an equal protection challenge has the burden of establishing

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unconstitutionality." G.G. Doe, supra, 173 Cal.AppAth at 1111. The classification "must be reasonable,

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not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the

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obj ect of the legislation, so that all persons s:imilarly circumstanced shall be treated alike." F.S. Royster

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Guano Co. v. Commonwealth of Virginia, 253 U.S. 412, 415 (1920). Put simply, the City cannot

legislate different treatment on the basis of criteria that is wholly unrelated to the purpose of the

ordinance. Reed v Reed, 404 U.S. 71, 75 (1971).

At first blush, the City's legislation of different treatment is based on criteria related to the

Ordinance's purpose, which is public safety. Collectives that registered under the leO and have

remained in operation since November 2007 have a "track record." The rationale is that because the

pre-ICO collectives followed the City's laws and filed their docunients by November 13, 2007, they ate

more likely to abide by the City's laws moving forward. Compliance with the City's laws will further

the public safety and welfare goals of the Ordinance. The classification appears "reasonable, not

arbitrary," and rests upon "some ground of difference having a fair and substantial relation to the object

of the legislation, so that all persons similarly circumstanced shall be treated alike." F.S. Royster Guano

Co., supra, at 415.

Plaintiffs cannot success~lly argue that the Ordinance unfairly favors existing, or older,

collectives over newer ones. In Martinet v. Department 0/ Fish and Game (1988) 203 Cal.App.3d 791,

the court summarized similar distinctions under the equal protection analysis:

An economic regulation creating classifications with some reasonable basis does not result in denial of equal protection simply because the classifications are mathematically imprecise or because their application results in some inequality. Ferrante v. Fish & Game Commission (1946) 29 Cal.2d 365,372. A law which favors existing businesses over new ones will be upheld if there is any reasonable and substantial justification for the distinction. Del Mar Canning Co. v. Payne (1946) 29 CaL2d 380,382. The person challenging such a classification has the burden of proving it is arbitrary and without reasonable foundation. Ferrante, supra, 29 Ca1.2d at p. 372. "[If] any state of facts reasonably can be conceived that would sustain it, the existence of that state of facts at the time the law was enacted must be assumed." (Ibid.)

Martinet, supra, 203 Cal.App.3d at 794. One of the clearest examples of such a distinction, which was

upheld by the United States Supreme Court, appears in City of New Orleans v. Dukes 427 U.S. 297

(1976). The City of New Orleans sharply limited the number of street and pushcart vendors in their

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French Quarter "as a means 'to preserve the appearance and custom valued by the Quarter's residents

and attractive to tourists.'" Dukes, supra, at 304. The Supreme Court found that:

The legitimacy of that obj ective is obvious. The City Council plainly could further that objective by making the reasoned judgment that street peddlers and hawkers tend to interfere with the charm and beauty of a historic area and disturb tourists and disrupt their enjoyment of that charm and beauty, and that such vendors in the Vieux Carre, the heart of the city's tourist industry, might thus have a deleterious effect on the economy of the city. They therefore determined that to ensure the economic vitality of that area, such businesses should be substantially curtailed in the Vieux Carre, if not totally banned.

Dukes, supra, at 304-05. In 1972, the City of New Orleans banned most of the peddlers and hawkers,

but adopted a "grandfather provision" that allowed peddlers who had registered before January 1972 to

stay in existence:

It is suggested that the" grandfather provision," allowing the continued operation of some vendors was a totally arbitrary and irrational method of achieving the city's purpose. But rather than proceeding by the immediate and absolute abolition of all pushcart food vendors, the city could rationally choose initially to eliminate vendors of more recent vintage. This gradual approach to the problem is not constitutionally impermissible. The governing constitutional principle was stated in Katzenbach v, Morgan 384 U.S. 641, 657(1966): "[W]e are guided by the familiar principles that a 'statute is not invalid under the Constitution because it might have gone farther than it did,' (Citation,) that a legislature need not 'strike at all evils at the same time: (Citation,) and that 'reform may take one step at a time, addressing itself to -the phase of the problem which seems most acute to the legislative mind," (Citation.) ...

The city could reasonably decide that newer businesses were less likely to have built up substantial reliance interests in continued operation in the Vieux Carre and that the two vendors who qualified under the "grandfather clause" -- both of whom had operated in the area for over 20 years rather than only eight -- had themselves become part of the distinctive character and charm that distinguishes the Vieux Carre. We cannot say that these judgments so lack rationality that they constitute a constitutionally impermissible denial of equal protection.

Dukes, supra, at 305.

Legislatures may implement their program step by step, (Citation,) in such economic areas, adopting regulations that only partially ameliorate a perceived evil and deferring complete elimination of the evil to future regulations. (Citation.) ill short, the judiciary may not sit as a superlegislature to judge the wisdom or desirability oflegislative policy determinations made in areas that neither affect fundamental rights nor proceed along

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ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR A .

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suspect lines, (Citation;) in the local economic sphere, it is only the invidious discrimination, the wholly arbitrary act, which cannot stand consistently with the Fourteenth Amendment. (Citation.)

DUkes, supra, at 303-04.

If the facts here matched Dukes, there would be no equal protection violation. What complicates

the instant case is that on September 15,2007, almost sixty days before the November 13 deadline, the

ICO expired by operation oflaw. The natural result of the ICO's expiration would be to remove any

reason and incentive for collectives to file documents with the City Clerk's Office as required by the

ICO so as to demonstrate a "willingness" to follow the City's laws. A collective that existed and was

entirely law-abiding before November 13, 2007, may have decided not to register because, quite simply,

there was no longer any need to. Now thanks to that choice, which was quite logical at the time, the

collective would find itself unable to continue in business. The court does not see how this result serves

the purpose of the Ordinance. The Ordinance's use of the November 13, 2007 deadline loses any

relation to the Ordinance's stated purpose of enhancing public safety, because the leO was invalid

before the deadline came. There was no longer any reason to comply. A collective that procrastinated

and delayed filing only to learn that the law had been invalidated does not make it less likely to comply

with the City's laws moving forward. The collective's "track record" is no worse than those collectives

that filed early. The United States Supreme Court discussed the type of connection between a law's

purpose and the classification necessary to satisfy the equal protection clause:

[E]ven in the ordinary equal protection case calling for the most deferential of standards, we insist on knowing the relation between the classification adopted and the object to be attained, The search for the link between classification and objective gives substance to the Equal Protection Clause; it provides guidance and discipline for the legislature, which is entitled to know what sorts oflaws it can pass; and it marks the limits of our own authority. In the ordinary case, a law will be sustained if it can be said to advance a legitimate government interest, even if the law seems unwise or works to the disadvantage of a particular group, or if the rationale for it seems tenuous.

Romer v Evans 517 U.S. 620, 632 (1996).

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The record indicates that an increase in the number of collectives has been linked to increased

crime, which is inimical to the health, safety and welfare of residents of Los Angeles. As·articulated in

the preamble/ a goal of the ordinance was to limit the number of collectives in order to protect the

citizenry. This is laudable and necessary. Crime, including violent crime, has followed the opening of

certain medical marijuana collectives in this community. Nevertheless, the focus of judicial inquiry

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should be on the correspondence between the classification and the legislative goals (People v. Valdez

(2009) 174 Cal.AppAth 1528, 1531), not on the classification's overall effect on those goals. The

classification should serve the ordinance's purpose thanks to more than happenstance. The connection

between classification and legislative goals as seen in Dukes, supra, constitutes a good example of a

proper link. Other cases include the following:

• In Martinet, supra, 203 Cal.App.3d at 795, the court upheld a law limiting shark and swordfish permits to fishermen with a certain amount of experience, in order to protect against overfishing. The court focused on the reliance of the more experienced fisherman on the continued availability of fishing for their livelihood ..

• In Bradley v. Public Utilities Com. 289 U.S. 92, 97 (1933), the United States Supreme Court upheld a state order, which denied a common carrier a certificate to use state highway, as a valid exercise of the police power in order to promote safety by reducing highway congestion. The court stated that a "classification based on priority of authorized operation has a natural and obvious relation to the purpose of the regulation." Id. at 97.

However, in Del Mar Canning Co. v. Payne (1946) 29 Ca1.2d 380, a law denied permits to fish

reduction plants that were not housed in separate buildings. ld. at 381-82. The purpose of the law was

to make it easier for inspectors to determine whether the facilities in a building consisted of one or

multiple fish reduction plants. Id. at 383. The law contained an exception for plants that had been

issued permits in the prior year. Jd. at 382. Our Supreme Court found the classification of whether

plants were/were not allowed was not rationally based because the year in which the plant had last

27 7 E.g., "WHEREAS, there have been recent reports from the Los Angeles Police Department and the media of an increase in and escalation of violent crime at the location of medical marijuana dispensaries in the City of Los Angeles, and the

28 California Police Chiefs Association has compiled an extensive report detailing the negative secondary effects associated with medical marijuana dispensaries; ... "

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ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

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ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

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building. ld. at 384.

received a permit would not make it easier for inspectors to determine the number of plants in any given

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In the case at bar, the only difference between those collectives that registered by November 13, 2007, and the others is the (idle, as it turned out) act of submitting various paperwork to the City Clerk's Office. The justification for using that date as a bright line was compromised, if not confounded, by the fact that it was unnecessary to register. The requirement had ceased almost two months earlier, and no one could have anticipated that compliance with a dead statute would be necessary in order to continue as a collective three years later. Like the classification in Del Mar Canning Co., there is no rational relationship between the classification and the purpose of the Ordinance. Therefore, the court finds the use of the November 13, 2007 deadline arbitrary and capricious such that it violates the equal protection clauses of the constitutions of the United States and the State of California. Had the Ordinance done

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nothing more than give a calendar date before which collectives were "grandfathered," the Ordinance probably would have been in line with cases like Dukes, supra. Amending the Ordinance accordingly would most likely be the easiest way ~o avoid another equal protection challenge. At a subsequent hearing, should there be a question about when a collective opened, those that filed documents in connection with the expired rco would still be able to use that fact as evidence, for the file-stamped papers would be relevant as to when a collective was operating. Conversely, ifby November 13, 2007, the management of a collective was unaware that the leO had expired yet failed to register with the City Clerk's Office, that fact would be probative evidence with respect to a collective's willingness to follow the laws. However, for the reasons stated, compliance with the expired ordinance cannot become the sine qua non of the right to continue operating.

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3. The Ordinance violates the procedural due process rights of certain Plaintiffs:

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Plaintiffs argue that by preventing them from operating their collectives, the City has deprived

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them oftheir vested property light without the opportunity of a neutral hearing. Plaintiffs argue that

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section 45.19.6.7 deprives them of their vested property right without due process of law.

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25 8 The facts of Ryan are admittedly different from the case at bar. An Australian student sought to transfer to a US high schoo (''REV'), and later to attend and play football for the University of Colorado. Ryan, supra, at 1 053-54. The plaintiff tried to

26 play football for RBV in preparation for later attending the University of Colorado. He applied for eligibility as required to the California Interscholastic Federation ("CIF."). Id. His application was denied and he appealed his denial to the CIF. His

27 appeal was denied. Plaintiff then petitioned the courts for administrative mandamus. Trial court awarded Ryan his requested relief; but the Court of Appeal reversed, holding among other things, that plaintiff had failed to identify the requisite

28 statutorily conferred benefit or interest of which he had been deprived. (fd at 1072.) Therefore, be had no due process protections afforded by the California Constitution in a review bearing.

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It is undisputed that Plaintiffs were denied any hearing prior to being forced to shut down their

businesses. The letter from the City dated May 4, 2010, simply stated that Plaintiffs were in violation of the Ordinance by "not registerling] with the City Clerk prior to November 13, 2007." (Motion, 2nd Ex.

9.) The letter goes ori to state that Plaintiffs "must therefore immediately cease [their] operations." Id.

Therefore, if due process rights are triggered, then a violation has occurred because the City provided no

opportunity for the collectives to be heard at a meaningful time and in a meaningful matter.

Ryan v. California Interscholastic Federation, (2001) 94 Cal.App.4th 1048, controls the due

process issue here. The Ryan court held that in order to enjoy procedural due process protection, the

plaintiff must have a statutorily conferred benefit. Ryan, supra, 94 Cal.App.4th at 1071.8 This is an

important distinction from what is required under the U.S. Constitution in order to state a claim for due

process protection. Ryan (cited at length below) summarized how due process protection is triggered by

statutorily conferred benefits:

Our state due process constitutional analysis differs from that conducted pursuant to the federal due process clause in that the claimant need not establish a property or liberty interest as a prerequisite to invoking due process protection. People v. Ramirez (1979) 25 Cal.3d 260, 263-264; Smith v. Board of Medical Quality Assurance (1988) 202 Cal.App.3d 316, 327, focused rather on an individual's due process liberty interest to be free from arbitrary adjudicative procedures (People v. Ramirez, supra, 25 Ca1.3d at 263, 268), procedural due process under the California Constitution is ''much more inclusive" and protects a broader range of interests than under the federal Constitution (San Jose Police Officers Assn. v. City of San Jose (1988) 199 Cal.App.3d 1471, 1478 superseded by statute as stated in Knapp v. City of Gardena (1990) 221 Cal.App.3d 344, 347-348; (Citation.) According to out Supreme Court, it ''has expanded upon the federal analytical base by focusing on the administrative process itself" (Saleeby v. State Bar (1985) 39 Ca1.3d 547,564.) In People v. Ramirez, supra, 25 Ca1.3d at pages 263-264, our Supreme Court held that application of the due process clauses of the California Constitution

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR A PRELIMINARY INTIJNCTION

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"must be determined in the context of the individual's due process liberty interest in freedom from arbitrary adjudicative procedures. Thus, when a person is deprived of a statutorily conferred benefit, due process analysis must start not with a judicial attempt to decide whether the statute has created an 'entitlement' that can be defined as 'liberty' or 'property, ' but with an assessment of what procedural protections are constitutionally required in light of the governmental and private interests at stake;" (Accord, In re Jackson (1987) 43 Cal.3d 501, 510; Hernandez v. Department of Motor Vehicles (1981) 30 Ca1.3d 70, 81, n. 12.) The Ramirez court instructed the state colirts to '''evaluate the extent to which procedural protections can be tailored to promote more accurate and reliable administrative decisions in light of the governmental and private interests at stake' rather than relying 'on whether or not the state limits administrative coritrol over a statutory benefit or deprivation by the occurrence of specified conditions .... ' " (Saleeby v. State Bar, supra, 39 Cal.3d at 564-565, quoting People v. Ramirez, supra, 25 Cal.3d at 267.) The Ramirez court further held that "the due process safeguards required for protection of an individual's statutory interests must be analyzed in the context of the principle that freedom from arbitrary adjudicative procedures is a substantive element of one's liberty. [Citation.] This approach presumes that when an individual is subjected to deprivatory governmental action, he always has a due process liberty interest both in fair and unprejudicial decision-making and in being treated with respect and dignity." (Id. at 268.)

Although under the state due process analysis an aggrieved party need not establish a protected property interest, the claimant must nevertheless identify a statutorily conferred benefit or interest of which he or she has been deprived to trigger procedural due process under the California Constitution and the Ramirez analysis of what procedure is due. (People v. Ramirez, supra, 25 CaL3d at 264,266,268; Schultz v. Regents of University of California, supra, 160 Cal.App.Sd at 786; see also In re Jackson, supra, 43 Ca1.3d at 510, n. 8; Nichols v. County of Santa Clara (1990) 223 Cal.App.3d 1236, 1246; San Jose Police Officers Assn. v. City of San Jose, supra, 199 Cal.App.3d at 1479.) The "requirement of a statutorily conferred benefit limits the universe of potential due

process claims: presumably not every citizen adversely affected by governmental action can assert due process rights; identification of a statutory benefit subject to deprivation is a prerequisite." (Schultz v. Regents of University of California, supra, 160 CaLApp.3d at 786.)

Ryan, supra, 94 Cal.AppAth at 1069-71 (emphasis added.)

The City argues that Plaintiffs have no statutorily conferred benefit to operate a collective. The

court considers the CVA and the MMP A together and finds that the State of California authorized

certain people to operate collectives. The CVA provided, for the first time, the right for seriously ill

Californians to use marijuana for medical purposes when recommended by a physician. The M11P A

permitted, for the first time, qualified patients and caregivers of qualified patients to collectively

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ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

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cultivate marijuana for medical purposes with freedom from prosecution." Regardless of whether the City of Los Angeles conferred a ri~t to operate a specific type of business within its borders,'? the State

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In reaching this conclusion, the court hastens to add that the City has the "power to govern - the

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of California permits collective cultivation by statute. In the absence of machinery for a neutral hearing,

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the Ordinance removes rights conferred by state law as found in the Health and Safety Code. To do that,

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Ryan requires some procedural due process. Here there was none. I I Therefore, the Ordinance denies

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without due process of the law the statutorily conferred right to operate a collective. To this extent, the

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Ordinance is unconstitutional. 12

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inherent reserved power ... to subject individual rights (including rights conferred by the CUA and the

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MMP A) to reasonable regulation for the general welfare." (See e.g. > Witkin, Summary of California

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Law, 10th edition, Constitutional Law §§ 976, 977, 978 and cases cited therein.) The record in the

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actions before this court displays a serious threat to the public welfare caused by the bourgeoning

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number of medical marijuana collectives in our community. The City has a duty to address the problem

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of drug dealers and recreational users who are attempting to hijack California's medical marijuana

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19 9 The express intent of the Legislature in adopting the:MPMA was to: "(1) Clarify the scope of the application of the [CUA] and facilitate the prompt identification of qualified patients and their designated primary caregivers in order to avoid

20 unnecessary arrest and prosecution of these individuals and provide needed guidance to law enforcement officers. (2) Promote uniform and consistent application of the [CUA] among the counties within the state. (3) Enhance the access of

21 patients and caregivers to medical marijuana through collective, cooperative cultivation projects." (emphasis added). Health & Safety Code § 11362.775 provides: «Qualified patients, persons with valid identification cards, and the designated primary

22 caregivers of qualified patients and persons with identification cards, who associate within the State of California in order collectively or cooperatively to cultivate marijuana for medical purposes, shall not solely on the basis of that fact be subject

23 to state criminal sanctions. _ ."

10 Permits can sometimes trigger due process protection. The parties argued at length about whether Plaintiffs were required

24 to obtain a permit in order to operate a collective within the city. Plaintiffs obtained no permits and no permits existed for operating collectives within the city. While permits are one way of triggering due process protection, statutorily conferred

25 rights also nigger due process protection under Ryan.

11 The Legislature cannot cut off all remedy. Unless it leaves a reasonably efficient remedy, the right itself (here, to operate a

26 medical marijuana collective) is affected, and the statute will be held invalid as an impairment of a substantive right. Lane v. Wilson (2939) 307 U.S. 268; Coleman v. Superior Court (1933) 135 CA. 74, 76

27 12 Plaintiff also puts forth an interesting argument by citing to County of Butte v. Superior Court, (2009) 175 CaLApp.4th 729, 731-32. See Reply to Defendant's Supp. Memo, 4:20-5: 16. This argument is less convincing because the court dealt with an

28 individual patient's due process rights relative to a criminal investigation. That case only went as far as to hold that patients have a statutory benefit which is protected under the Constitution-not coIlectives, who are the Plaintiffs in this action.

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ORDER GRANTING IN PART AND DENYING IN PART PLAJNTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

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legislation for their own benefit. Failure to do will not only endanger the citizens as a whole, but will

negatively impact the ability of legitimate patients to obtain the medical marijuana they need. But in

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discharging its powers and duties under the police power, the City must not lose sight of the fact that the

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People of the state of California have conferred on qualified patients the right to obtain marijuana for

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medical purposes. No local subdivision should be allowed to curtail that right wholesale or regulate it

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out of existence.

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The judicial branch is not the legislature, and this court will not endeavor to usurp the function 0

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the Los Angeles City Council. Having said that, the court wishes to note several issues the City should

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consider in its salutary attempt to regulate marijuana collectives. Most troubling are the complaints that

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the police have raided collectives where, allegedly, no laws have been broken. From the outside looking

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in, it can be hard, sometimes impossible, for an officer to determine whether a criminal offense has

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occurred when a person enters a collective and, minutes later, leaves with marijuana. The City takes the

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position that this scenario constitutes an illegal sale. This conclusion is based oli undercover activity:

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according to the record, an officer enters a collective, shows a physician's recommendation; signs

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whatever documentation is required to join the collective, and then pays money for medical marijuana.

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P1aintiffs contend that patients may obtain medical marijuana in this fashion so long as they have a valid

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doctor's recommendation and join the collective. The law is unclear in this regard, with the result that

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the police face an extraordinarily difficult enforcement challenge. Underlying the controversy is the fact

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that what constitutes a medical marijuana collective remains a matter for debate.

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As provided for under the rvil'vfP A, 13 the Attorney General promulgated guidelines, which among

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other things discuss how collectives should conduct their business. In attempting to determine what

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constitutes a collective, one must consider the Guidelines, which were quoted with approval in People v.

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28 13 Health and Safety Code § 11362.81 (d) requires the Attorney General to adopt "guidelines to ensure the security and nondiversion of marijuana grown for medical use."

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Hochanadel (2009) 176 Cal.App.4th 997.14 The Guidelines provide some instruction to law enforcement

as to whether activities comply with the CUA and MJV1P A. In this regard, the Guidelines specifically address "Storefront Dispensaries." (Guidelines, supra, at p. 11, boldface omitted.) The· Attorney °

General is of the opinion that while "dispensaries, as such, are not recognized under the law," "a

properly organized and operated collective or cooperative that dispenses medical marijuana through a

14 Besides those listed in the main text of this order, the AG's Guidelines also include the following as outlined in Hochanadel, supra, 176 Cal.App.d'" at 1010-11:

"Further, the A.G. Guidelines provide a definition of "cooperatives" and "collectives." A cooperative "must file articles of incorporation with the state and conduct its business for the mutual benefit of its members. [Citation.] No business may call itself a 'cooperative' (or 'co-op') unless it is properly organized and registered. as such a corporation under the Corporations or Food and Agriculture Code. [Citation.] Cooperative corporations are 'democratically controlled and are not organized to make a profit for themselves, as such, or for their members, as such, but primarily for their members as patrons.' [Citation.]" (A.G. Guidelines, Supra, at p. 8.) Further, "[ c ]ooperatives must follow strict rules on organization, articles, elections, and distribution of earnings, and must report individual transactions from individual members each year." (Ibid.)

A collective is "'a business, farm, etc., jointly owned and operated by the members of a group.' [Citation.]" (A.G. Guidelines, supra, at p. 8.) Thus, "a collective should be an organizationthat merely facilitates the collaborative efforts of patient and caregiver members--including the allocation of costs and revenues." (Ibid.) Further, the A.G. Guidelines opine, "The collective should not purchase marijuana from, or sell to, non-members; instead, it should only provide a means for facilitating or coordinating transactions between members." (Ibid.)

The A.G. Guidelines further provide guidelines for the lawful operation of cooperatives and collectives. They must be nonprofit operations. (A.G. Guidelines, supra, at p. 9.) They may "acquire marijuana only from their constituent members, because only marijuana grown by a qualified patient or his or her primary caregiver may lawfully be transported by, or distributed to, other members of a collective or cooperative ... Nothing allows marijuana to be purchased from outside the collective or cooperative for distribution to its members. Instead, the cycle should be a closed-circuit ofmarljuana cultivation and consumption with no purchases or sales to or from non-members. To help prevent diversion of medical marijuana to non-medical markets, collectives and cooperatives should document each member's contribution of labor, resources, or money to the enterprise. They should also track and record the source of their marijuana." (Id. at p. 10, italics added.)

Distnbution and sales to nonmembers is prohibited: "State law allows primary caregivers to be reimbursed for certain services (including marijuana cultivation), but nothing allows individuals or groups to sell or distribute marijuana to non-members. Accordingly, a collective or cooperative may not distribute medical marijuana to any person who is not a member in good standing of the organization. A dispensing collective or cooperative may credit its members for marijuana they provide to the collective, which it may then allocate to other members. [Citation.] Members also may reimburse the collective or cooperative for marijuana that has been allocated to them. Any monetary reimbursement that members provide to the collective or cooperative should only be an amount necessary to cover overhead costs and operating expenses." (A.G. Guidelines, supra, at p. 10.)

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ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR A PRELIMJNARY INJUNCTION

storefront may be lawful under California law, but ... dispensaries that do not substantially comply with

the guidelines [covering collectives and cooperatives] are likely operating outside the protections of [the

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CVA] and the :rv.t:MP[A], and ... the individuals operating such entities may be subject to arrest and

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criminal prosecution under California law. For example, dispensaries that merely require patients to

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complete a form summarily designating the business owner as their primary caregiver-and then

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offering marijuana in exchange for cash 'donations '-are likely unlawful." (Guidelines, supra, at p. 11,

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italics added.)" While the Attorney General's views do not bind this court, they are entitled to considerable weight. Hochanadel, supra, 176 Cal.App.4th at 1011. The court concludes that under

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proper conditions, as set out in the cases and the Guidelines, a storefront dispensary can be a legitimate

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medical marijuana collective. The Guidelines also suggest that under proper circumstances, an

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exchange of money for medical marijuana is allowed. (E.g.," ... cooperatives should document each

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member's contribution of labor, resources, or money to the enterprise." ld., at p. 10.)

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4. The Ordinanc'e violates members' rights to privacy in their general contact information; certain of Plaintiffs' privacy arg'uments are moot; others are unpersuasive:

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Article I Section 1 of the California Constitution guarantees the people of the State of California,

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among other things, the right of privacy. Defendant argues that Plaintiffs lack standing to assert privacy

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claims. It is therefore important to consider the threshold question: who or what can claim the

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protections of the right to privacy?

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The general rule is that the right of privacy is limited to "people" and does not apply to

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corporations. Roberts v. Gulf Oil Corp. (1983) 147 Cal.App.3d 770, 791. However, the inquiry changes

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when a corporation is asserting the rights of its members:

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Although corporations have a lesser right to privacy than human beings and are not entitled to claim a right to privacy in tenns of a :fundamental right, some right to privacy exists. Privacy rights accorded artificial entities are not stagnant, but depend on the

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