HB673 HD1

SECTION 1. The legislature finds that Act 241, Session Laws of Hawaii 2015, codified as chapter 329D, Hawaii Revised Statutes, established a licensing framework for a statewide system of medical cannabis dispensaries to ensure access to medical cannabis for qualifying patients. Act 230, Session Laws of Hawaii 2016, Act 41, Session Laws of Hawaii 2017, and Act 116, Session Laws of Hawaii 2018, made further amendments.

The legislature further finds that additional amendments to the law are warranted to clarify legislative intent, to ensure smooth administration of the law, to allow for adequate patient access to medical cannabis, and to resolve issues that have arisen under the current law.

The purpose of this Act is to:

(1) Allow physician assistants practicing under supervision to provide written certification for qualifying patients to improve patient access to medical cannabis;

(2) Allow licensed dispensaries to have manufacturing or processing facilities separate from their production facilities, while remaining subject to all regulations under the law;

(3) Provide a process for the voluntary or involuntary sale or transfer of a dispensary license;

(4) Allow dispensaries to operate on state and federal holidays;

(5) Allow a licensed dispensary to purchase medical cannabis or manufactured cannabis products from another licensed dispensary, with approval from the department of health, to ensure patient access to cannabis in the event of a crop failure; and

(6) Allow licensed retail dispensaries to sell edible cannabis and cannabidiol products.

SECTION 2. Section 328-1, Hawaii Revised Statutes, is amended by amending the definition of "food" to read as follows:

""Food" means:

(1) Articles used for food or drink by humans, dogs, or cats[;], except edible cannabis products;

(2) Chewing gum; or

(3) Articles used for components of any such article."

SECTION 3. Chapter 329D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§329D- Sale or transfer of dispensary license. (a) In the event of death, legal incapacity, or permanent disability of an individual dispensary licensee, the relevant entity licensee shall notify the department within thirty days of the individual licensee's inability to continue in the individual's capacity as a licensee, and shall provide to the department within another thirty days, a plan for the sale or transfer of the individual license to another individual who shall meet all the requirements under this chapter and shall have been a resident of the State for not less than five years preceding the date of transfer.

(b) In the event of a voluntary resignation by an individual licensee, termination of an individual licensee's employment with an entity licensee with or without cause, or any other permanent separation of the relationship between an individual licensee and an entity licensee, the relevant entity licensee shall submit a plan to the department for approval at least thirty days prior to any sale or transfer of the individual license to another individual who shall meet all the requirements under this chapter and shall have been a resident of the state for not less than five years preceding the date of transfer.

(c) The department may deny a request for transfer of ownership if it deems the transferee has failed to meet all the requirements of section 329D-3 for ownership."

SECTION 4. Section 329-121, Hawaii Revised Statutes, is amended by amending the definition of "physician" to read as follows:

""Physician" means a person who is licensed to practice under chapter 453 and is licensed with authority to prescribe drugs and is registered under section 329-32. "Physician" [~~does not~~] shall include a physician assistant as described in section 453-5.3."

SECTION 5. Section 329D-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read:

""Manufacturing or processing facility" means an enclosed indoor facility that meets the requirements of section 329D-6 where harvested cannabis is processed into manufactured medical cannabis products, packaged, and stored for retail sale."

SECTION 6. Section 329D-2, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) A dispensary licensee may operate:

(1) Up to two production centers [~~shall be allowed~~] under each dispensary license; and

(2) Up to two separate manufacturing or processing facilities which shall meet all requirements of any dispensary facility, but shall not be considered as production center for the purposes of the two production center limit;

provided that, except as otherwise specified in subsection (k), each production center shall be limited to no more than three thousand cannabis plants. For purposes of this subsection, "plant" means a cannabis plant that is greater than twelve vertical inches in height from where the base of the stalk emerges from the growth medium to the tallest point of the plant, or greater than twelve horizontal inches in width from the end of one branch to the end of another branch; provided that multiple stalks emanating from the same root ball or root system shall be considered part of the same single plant."

SECTION 7. Section 329D-3, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) A dispensary license shall not be sold or otherwise transferred from one person to another person[.] without approval from the department as provided in section 329D- ."

SECTION 8. Section 329D-6, Hawaii Revised Statutes, is amended to read as follows:

"§329D-6 Dispensary operations. (a) No person shall operate a dispensary, nor engage in the production, manufacture, or sale of cannabis or manufactured cannabis products, unless the person has obtained a license from the department pursuant to this chapter.

(b) No dispensary licensee, its officers, employees, or agents shall provide written certification for the use of medical cannabis or manufactured cannabis products for any person.

(d) Notwithstanding any other law to the contrary, including but not limited to sections 378-2 and 378-2.5, dispensaries:

(1) Shall deny employment to any individual who has been:

(A) Convicted of murder in any degree;

(B) Convicted of a class A or class B felony; or

(C) Convicted of a class C felony involving trafficking, distributing, or promoting a schedule I or II controlled substance other than cannabis within the last ten years; and

(2) May deny employment to any individual who has been convicted of a class C felony involving:

(A) Fraud, deceit, misrepresentation, embezzlement, or theft; or

(B) Endangering the welfare of a minor.

Employment under this chapter shall be exempt from section 378‑2(a)(1), as it relates to arrest and court record discrimination, and section 378-2.5.

(e) Retail dispensing locations shall not be open for retail sales before 8:00 a.m. or after 8:00 p.m., Hawaii-Aleutian Standard Time, Monday through Sunday. [~~Retail dispensing locations shall be closed on official state and federal holidays.~~]

(f) All dispensary facilities, including but not limited to production centers [~~and~~], retail dispensing locations, and manufacturing or processing facilities shall be enclosed indoor facilities and shall maintain twenty-four hour security measures, including but not limited to an alarm system, video monitoring and recording on the premises, and exterior lighting. A dispensary licensee who intends to utilize, as a production center, an enclosed indoor facility that includes a roof that is partially or completely transparent or translucent, as provided under section 329D-1, shall notify the department of that intention prior to altering or constructing the facility. Production centers and manufacturing or processing facilities shall remain locked at all times. Retail dispensing locations shall remain locked at all times, other than business hours as authorized by subsection (e), and shall only be opened for authorized persons.

(g) In all dispensary facilities, only the licensee, if an individual[,]; registered employees of the dispensary licensee[,]; registered employees of a subcontracted production center [or], retail dispensing location, or manufacturing or processing facility; employees of a certified laboratory for testing purposes[,]; state employees authorized by the director of health[,]; and law enforcement and other government officials acting in their official capacity shall be permitted to touch or handle any cannabis or manufactured cannabis products, except that a qualifying patient, primary caregiver, qualifying out-of-state patient, or caregiver of a qualifying out-of-state patient may receive manufactured cannabis products at a retail dispensing location following completion of a sale.

(h) A dispensary shall provide the department with the address, tax map key number, and a copy of the premises lease, if applicable, of the proposed location of a production center or manufacturing or processing facility allowed under a license for a county not later than thirty days prior to any medical cannabis or manufactured cannabis products being produced [or], manufactured, processed, packaged, or stored at that production center[.] or manufacturing or processing facility.

(i) A dispensary shall provide the department with the address, tax map key number, and a copy of the premises lease, if applicable, of the proposed location of each retail dispensing location allowed under a license not less than sixty days prior to opening for business.

(j) The department shall establish, maintain, and control a computer software tracking system that shall have real time, twenty-four-hour access to the data of all dispensaries.

(1) The computer software tracking system shall collect data relating to:

(A) The total amount of cannabis in possession of all dispensaries from either seed or immature plant state, including all plants that are derived from cuttings or cloning, until the cannabis, cannabis plants, or manufactured cannabis product is sold or destroyed pursuant to section 329D-7;

(B) The total amount of manufactured cannabis product inventory, including the equivalent physical weight of cannabis that is used to manufacture manufactured cannabis products, purchased by a qualifying patient, primary caregiver, qualifying out-of-state patient, and caregiver of a qualifying out-of-state patient from all retail dispensing locations in the State in any fifteen-day period;

(D) The transport of cannabis and manufactured cannabis products between production centers and retail dispensing locations[,] and between dispensaries as permitted by subsection (r), including tracking identification issued by the tracking system, the identity of the person transporting the cannabis or manufactured cannabis products, and the make, model, and license number of the vehicle being used for the transport; and

(E) All sales and purchases of cannabis or manufactured cannabis products undertaken pursuant to subsection (r);

(2) The procurement of the computer software tracking system established pursuant to this subsection shall be exempt from chapter 103D; provided that:

(A) The department shall publicly solicit at least three proposals for the computer software tracking system; and

(B) The selection of the computer software tracking system shall be approved by the director of the department and the chief information officer; and

(3) Notwithstanding any other provision of this subsection to the contrary, once the department has authorized a licensed dispensary to commence sales of cannabis or manufactured cannabis products, if the department's computer software tracking system is inoperable or is not functioning properly, as an alternative to requiring dispensaries to temporarily cease operations, the department may implement an alternate tracking system that will enable a qualifying patient, primary caregiver, qualifying out-of-state patient, and caregiver of a qualifying out-of-state patient to purchase cannabis or manufactured cannabis products from a licensed dispensary on a temporary basis. The department shall seek input regarding the alternate tracking system from medical cannabis licensees. The alternate tracking system may operate as follows:

(A) The department may immediately notify all licensed dispensaries that the computer software tracking system is inoperable; and

(B) Once the computer software tracking system is operational and functioning to meet the requirements of this subsection, the department may notify all licensed dispensaries, and the alternate tracking system in this subsection shall be discontinued.

(k) A dispensary licensed pursuant to this chapter shall purchase, operate, and maintain a computer software tracking system that shall:

(1) Interface with the department's computer software tracking system established pursuant to subsection (j);

(2) Allow each licensed dispensary's production center to submit to the department in real time, by automatic identification and data capture, all cannabis, cannabis plants, and manufactured cannabis product inventory in possession of that dispensary from either seed or immature plant state, including all plants that are derived from cuttings or cloning, until the cannabis or manufactured cannabis product is sold or destroyed pursuant to section 329D-7;

(3) Allow the licensed dispensary's retail dispensing location to submit to the department in real time for the total amount of cannabis and manufactured cannabis product purchased by a qualifying patient, primary caregiver, qualifying out-of-state patient, and caregiver of a qualifying out-of-state patient from the dispensary's retail dispensing locations in the State in any fifteen day period; provided that the software tracking system shall impose an automatic stopper in real time, which cannot be overridden, on any further purchases of cannabis or manufactured cannabis products, if the maximum allowable amount of cannabis has already been purchased for the applicable fifteen day period; provided further that additional purchases shall not be permitted until the next applicable period; and

(4) Allow the licensed dispensary to submit all data required by this subsection to the department and permit the department to access the data if the department's computer software tracking system is not functioning properly and sales are made pursuant to the alternate tracking system under subsection (j).

(l) No free samples of cannabis or manufactured cannabis products shall be provided at any time, and no consumption of cannabis or manufactured cannabis products shall be permitted on any dispensary premises.

(m) [A] Except as permitted pursuant to subsection (r), a dispensary shall not transport cannabis or manufactured cannabis products to another county or another island; provided that this subsection shall not apply to the transportation of cannabis or any manufactured cannabis product solely for the purposes of laboratory testing pursuant to section 329D-8, and subject to subsection (j), if no certified laboratory is located in the county or on the island where the dispensary is located; provided further that a dispensary shall only transport samples of cannabis and manufactured cannabis products for laboratory testing for purposes of this subsection in an amount and manner prescribed by the department, in rules adopted pursuant to this chapter, and with the understanding that state law and its protections do not apply outside of the jurisdictional limits of the State.

(n) [A] Except for dispensary-to-dispensary sales as provided in subsection (r), a dispensary shall be prohibited from off-premises delivery of cannabis or manufactured cannabis products to a qualifying patient, primary caregiver, qualifying out-of-state patient, or caregiver of a qualifying out-of-state patient.

(o) A dispensary shall not:

(1) Display cannabis or manufactured cannabis products in windows or in public view; or

(2) Post any signage other than a single sign no greater than one thousand six hundred square inches bearing only the business or trade name in text without any pictures or illustrations; provided that if any applicable law or ordinance restricting outdoor signage is more restrictive, that law or ordinance shall govern.

(p) No cannabis or manufactured cannabis products shall be transported to, from, or within any federal fort or arsenal, national park or forest, any other federal enclave, or any other property possessed or occupied by the federal government.

(q) A dispensary licensed pursuant to this chapter shall be prohibited from providing written certification pursuant to section 329-122 for the use of medical cannabis for any person.

(r) In the event of a crop failure of cannabis plants that could affect patient access, the department may permit a dispensary to purchase medical cannabis and manufactured cannabis products from another dispensary in an amount and manner prescribed by the department by rules adopted pursuant to this chapter and chapter 91; provided that:

(1) The purchasing dispensary shall dispose of or destroy any failed cannabis plants in accordance with standards established pursuant to section 329D-7(15);

(2) All sales and purchases of cannabis and manufactured cannabis products pursuant to this subsection shall be subject to the data collection and reporting requirements of the computer software tracking system outlined in section 329D-6(j);

(3) The purchasing dispensary documents:

(A) The failure of the cannabis crops; and

(B) The disposal or destruction of any failed product; and submits the documentation to the department;

(4) The selling dispensary is permitted by the department to transport cannabis or manufactured cannabis products to another county or another island, for the limited purpose of completing its sale to the purchasing dispensary pursuant to this subsection, in an amount and manner prescribed by the department by rules adopted pursuant to this chapter and chapter 91 and with the understanding that state law and its protections do not apply outside of the jurisdictional limits of the State; and

(5) Nothing in this subsection shall relieve any dispensary of its responsibilities and obligations under this chapter and chapter 329."

SECTION 9. Section 329D-10, Hawaii Revised Statutes, is amended to read as follows:

"§329D-10 Types of manufactured cannabis products. (a) The types of medical cannabis products that may be manufactured and distributed pursuant to this chapter shall be limited to:

(1) Capsules;

(2) Lozenges;

(3) Pills;

(4) Oils and oil extracts;

(5) Tinctures;

(6) Ointments and skin lotions;

(7) Transdermal patches;

(8) Pre-filled and sealed containers used to aerosolize and deliver cannabis orally, such as with an inhaler or nebulizer; provided that containers need not be manufactured by the licensed dispensary but shall be filled with cannabis, cannabis oils, or cannabis extracts manufactured by the licensed dispensary; shall not contain nicotine, tobacco-related products, or any other non-cannabis derived products; and shall be designed to be used with devices used to provide safe pulmonary administration of manufactured cannabis products;

(9) Devices that provide safe pulmonary administration; provided that:

(A) The heating element of the device, if any, is made of inert materials such as glass, ceramic, or stainless steel, and not of plastic or rubber;

(B) The device is distributed solely for use with single-use, pre-filled, tamper-resistant, sealed containers that do not contain nicotine or other tobacco products;

(C) The device is used to aerosolize and deliver cannabis by inhalation, such as an inhaler, medical-grade nebulizer, or other similar medical grade volitization device;

(D) There is a temperature control on the device that is regulated to prevent the combustion of cannabis oil; and

(E) The device need not be manufactured by the licensed dispensary; [~~and~~]

(10) Edible cannabis products, provided that such products shall be prepared in a commercial kitchen dedicated solely to the preparation of edible cannabis products and no other food;

(11) Cannabidiol products, including products not manufactured by the licensee provided that:

(A) Licensed dispensaries clearly label all third-party cannabidiol products to indicate that third-party products are not manufactured by the licensee;

(B) Licensed dispensaries ensure that third-party cannabidiol products meet all laboratory standards required for licensee-manufactured products; and

(C) Licensed dispensaries ensure that third-party cannabidiol products meet all other requirements of chapter 329D on potency limitation, packaging, and other requirements; and

(12) Other products as specified by the department.

(b) As used in this section[~~, "lozenge"~~]:

"Lozenge" means a small tablet manufactured in a manner to allow for the dissolving of its medicinal or therapeutic component slowly in the mouth.

"Edible cannabis products" means products intended for human consumption that are infused with any cannabinoid extracted from the cannabis plant as regulated by administrative rules of the department.

"Cannabidiol products" means any products derived from the cannabis sativa which contain cannabidiol, including cannabidiol derived from hemp as defined in the Agriculture Improvement Act of 2018, Public Law. 115-334."

SECTION 10. Section 329D-16, Hawaii Revised Statutes, is amended to read as follows:

"[[]§329D-16[]] Criminal offense; unauthorized access to production centers[.] or manufacturing or processing facilities. (a) No person shall intentionally or knowingly enter or remain upon the premises of a medical cannabis production center or manufacturing or processing facility unless the person is:

(1) An individual licensee or registered employee of the production center[;] or manufacturing or processing facility;

(2) A government employee or official acting in the person's official capacity; or

(3) Previously included on a current department-approved list provided to the department by the licensee of those persons who are allowed into that dispensary's facilities for a specific purpose for that dispensary, including but not limited to construction, maintenance, repairs, legal counsel, or investors; provided that:

(A) The person has been individually approved by the department to be included on the list;

(B) The person is at least twenty-one years of age, as verified by a valid government issued identification card;

(D) The person is escorted by an individual licensee or registered employee of the dispensary at all times while in the dispensary facility;

(E) The person is only permitted within those portions of the dispensary facility as necessary to fulfill the person's purpose for entering;

(F) The person is only permitted within the dispensary facility during the times and for the duration necessary to fulfill the person's purpose for entering;

(G) The dispensary shall keep an accurate record of each person's identity, date and times upon entering and exiting the dispensary facility, purpose for entering, and the identity of the escort; and

(H) The approved list shall be effective for one year from the date of department approval.

(b) No individual licensee or registered employee of a medical cannabis dispensary with control over or responsibility for a production center or manufacturing or processing facility shall intentionally or knowingly allow another to enter or remain upon the premises of the production center[,] or manufacturing or processing facility, unless the other is permitted to enter and remain as specified in subsection (a).

SECTION 11. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 12. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 13. This Act shall take effect on July 1, 2050.

HOUSE OF REPRESENTATIVES	H.B. NO.	673
THIRTIETH LEGISLATURE, 2019		H.D. 1
STATE OF HAWAII