HB583 HD2

SECTION 1. The legislature finds that the regulated statewide dispensary system for medical cannabis was signed into law on July 14, 2015, as Act 241, Session Laws of Hawaii 2015, to ensure safe and legal access to medical cannabis for qualifying patients. Since that time, the experience of the program indicates that improvements to the law will help to fulfill its original intent by clarifying provisions and implementing reasonable modifications to support patient access.

The purpose of this Act is to amend the medical cannabis dispensary law by making conforming amendments that better serve the needs and protect the safety of the State's seriously ill patients by:

(1) Clarifying the process for the voluntary or involuntary sale or transfer of a dispensary license; removing the exclusion from dispensary employment for felony convictions; and repealing certain restrictions on medical cannabis dispensary siting; and

(2) Including primary caregivers, qualifying out-of-state patients, and caregivers of a qualifying out-of-state patient as individuals able to access medical cannabis retail dispensing locations.

SECTION 2. Section 329D-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Restricted access area" means a designated and secure area or areas within a retail dispensing location where medical cannabis and manufactured cannabis products are dispensed or made available for retail sale to a qualifying patient, primary caregiver, qualifying out-of-state patient, or caregiver of a qualifying out-of-state patient."

SECTION 3. Section 329D-3, Hawaii Revised Statutes, is amended to read as follows:

"[[]§329D-3[]] Qualifications for licensure. (a) Each application for a dispensary license shall include both an individual applicant and an applying entity.

(b) The application shall be submitted to the department and shall include supporting documentation to establish the following:

(1) That the individual applicant:

(A) Has been a legal resident of the State for [~~not~~] no less than five years preceding the date of application;

(B) Is [~~not~~] no less than twenty-one years of age; and

(2) That the applying entity:

(A) Has been organized under the laws of the State;

(B) Has a Hawaii tax identification number;

(D) Has a federal employer identification number;

(E) Is [~~not~~] no less than fifty-one per cent held by Hawaii legal residents or entities wholly controlled by Hawaii legal residents who have been Hawaii legal residents for [~~not~~] no less than five years immediately preceding the date the application was submitted;

(F) Has financial resources under its control of [~~not~~] no less than $1,000,000 for each license applied for, plus [~~not~~] no less than $100,000 for each retail dispensing location allowed under the license applied for, in the form of bank statements or escrow accounts, and that the financial resources have been under the control of the applying entity for [~~not~~] no less than ninety days immediately preceding the date the application was submitted; and

(G) Is composed of principals or members, each of whom has no felony convictions.

[~~(c) A dispensary license shall not be sold or otherwise transferred from one person to another person.~~]"

SECTION 4. Section 329D-7, Hawaii Revised Statutes, is amended to read as follows:

"§329D-7 Medical cannabis dispensary rules. The department shall establish standards with respect to:

(1) The number of medical cannabis dispensaries that shall be permitted to operate in the State;

(2) A fee structure for the submission of applications and renewals of licenses to dispensaries; provided that the department shall consider the market conditions in each county in determining the license renewal fee amounts;

(3) Criteria and procedures for the consideration and selection, based on merit, of applications for licensure of dispensaries; provided that the criteria shall include but not be limited to an applicant's:

(A) Ability to operate a business;

(B) Financial stability and access to financial resources; provided that applicants for medical cannabis dispensary licenses shall provide documentation that demonstrates control of [~~not~~] no less than $1,000,000 in the form of escrow accounts, letters of credit, surety bonds, bank statements, lines of credit, or the equivalent to begin operating the dispensary;

(D) Capacity to meet the needs of qualifying patients and qualifying out-of-state patients;

(E) Ability to comply with criminal background check requirements developed pursuant to paragraph (8); and

(F) Ability to comply with inventory controls developed pursuant to paragraph (13);

(4) Specific requirements regarding annual audits and reports required from each production center and dispensary licensed pursuant to this chapter;

(5) Procedures for announced and unannounced inspections by the department or its agents of production centers and dispensaries licensed pursuant to this chapter; provided that inspections for license renewals shall be unannounced;

(6) Security requirements for the operation of production centers and retail dispensing locations; provided that, at a minimum, the following shall be required:

(A) For production centers:

(i) Video monitoring and recording of the premises; provided that recordings shall be retained for fifty days;

(ii) Fencing that surrounds the premises and that is sufficient to reasonably deter intruders and prevent anyone outside the premises from viewing any cannabis in any form;

(iii) An alarm system; and

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

(B) For restricted access areas of retail dispensing locations:

(i) Presentation of a valid government-issued photo identification and a valid identification as issued by the department pursuant to section 329-123 by a qualifying patient or caregiver, or section 329-123.5 by a qualifying out-of-state patient or caregiver of a qualifying out-of-state patient, upon entering the premises;

(ii) Video monitoring and recording of the premises; provided that recordings shall be retained for fifty days;

(iii) An alarm system;

(iv) Exterior lighting; and

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

(7) Security requirements for the transportation of cannabis and manufactured cannabis products between production centers and retail dispensing locations and between a production center, retail dispensing location, qualifying patient, primary caregiver, qualifying out-of-state patient, or caregiver of a qualifying out-of-state patient and a certified laboratory, pursuant to section 329‑122(f);

(8) Standards and criminal background checks to ensure the reputable and responsible character and fitness of all license applicants, licensees, employees, subcontractors and their employees, and prospective employees of medical cannabis dispensaries to operate a dispensary; provided that the standards, at a minimum, shall exclude from licensure [~~or employment~~] any person convicted of any felony;

(9) The training and certification of operators and employees of production centers and dispensaries;

(10) The types of manufactured cannabis products that dispensaries shall be authorized to manufacture and sell pursuant to sections 329D-9 and 329D-10;

(11) Laboratory standards related to testing cannabis and manufactured cannabis products for content, contamination, and consistency;

(12) The quantities of cannabis and manufactured cannabis products that a dispensary may sell or provide to a qualifying patient, primary caregiver, qualifying out-of-state patient, or caregiver of a qualifying out-of-state patient; provided that no dispensary shall sell or provide to a qualifying patient, primary caregiver, qualifying out-of-state patient, or caregiver of a qualifying out-of-state patient any combination of cannabis and manufactured products that:

(A) During a period of fifteen consecutive days, exceeds the equivalent of four ounces of cannabis; or

(B) During a period of thirty consecutive days, exceeds the equivalent of eight ounces of cannabis;

(13) Dispensary and production center inventory controls to prevent the unauthorized diversion of cannabis or manufactured cannabis products or the distribution 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 in quantities that exceed limits established by this chapter; provided that the controls, at a minimum, shall include:

(A) A computer software tracking system as specified in section 329D-6(j) and (k); and

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

(14) Limitation to the size or format of signs placed outside a retail dispensing location or production center; provided that the signage limitations, at a minimum, shall comply with section 329D-6(o)(2) and shall not include the image of a cartoon character or other design intended to appeal to children;

(15) The disposal or destruction of unwanted or unused cannabis and manufactured cannabis products;

(16) The enforcement of the following prohibitions against:

(A) The sale or provision of cannabis or manufactured cannabis products to unauthorized persons;

(B) The sale or provision 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 in quantities that exceed limits established by this chapter;

(C) Any use or consumption of cannabis or manufactured cannabis products on the premises of a retail dispensing location or production center; and

(D) The distribution of cannabis or manufactured cannabis products, for free, on the premises of a retail dispensing location or production center;

(17) The establishment of a range of penalties for violations of this chapter or rule adopted thereto; and

(18) A process to recognize and register patients who are authorized to purchase, possess, and use medical cannabis in another state, a United States territory, or the District of Columbia as qualifying out-of-state patients; provided that this registration process may commence no sooner than January 1, 2018."

SECTION 5. Section 329D-15, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) No person shall intentionally or knowingly enter or remain [~~upon~~] within the [~~premises~~] restricted access area of a medical cannabis retail dispensing location unless the individual is:

(1) An individual licensee or registered employee of the dispensary;

(2) A qualifying patient, primary caregiver, qualifying out-of-state patient, or caregiver of a qualifying out-of-state patient;

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

(4) 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, providers of paratransit or other assistive services required by a qualifying patient, primary caregiver, qualifying out‑of‑state patient, or caregiver of a qualifying out‑of‑state patient to access a retail dispensary location, 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 first and last name, 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 the department approval."

SECTION 6. Section 329D-21, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Any person who violates any of the provisions of this chapter or the rules adopted pursuant thereto shall be fined [~~not~~] no less than $100 nor more than $1,000 for each [~~violation.~~] separate offense; provided that each day of each violation shall constitute a separate offense."

SECTION 7. Section 329D-22, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) As used in this section:

"Playground" means any public outdoor facility, including any parking lot appurtenant thereto, that is intended for recreation, with any portion thereof containing three or more separate apparatus intended for the recreation of children, including but not limited to sliding boards, swing sets, and teeterboards.

["Public housing project or complex" means a housing project directly controlled, owned, developed, or managed by the Hawaii public housing authority pursuant to the federal or state low-rent public housing program.]

"School" means any public or private preschool, kindergarten, elementary, intermediate, middle, secondary, or high school."

HOUSE OF REPRESENTATIVES	H.B. NO.	583
THIRTIETH LEGISLATURE, 2019		H.D. 2
STATE OF HAWAII