SB451

SECTION 1. Chapter 329D, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§329D- Cultivation facilities; authorization; licensure. (a) No person shall operate a cultivation facility unless the person has a license issued by the department pursuant to this chapter.

(b) The director of health shall grant cultivation facility licenses to allow facilities to plant, cultivate, grow, and harvest cannabis pursuant to this chapter; provided that any cultivation facility shall sell its product only to medical cannabis dispensaries licensed under this chapter.

(c) Each cultivation facility license shall allow planting, cultivating, growing, and harvesting of cannabis only in the county for which the license is granted.

(d) The department shall determine whether, based on the qualifying patient need, cultivation facility licenses shall be offered to qualified applicants in the State after December 31, 2024; provided that the department shall make available not more than one license per five hundred registered qualifying patients residing in any single county; provided further that in considering whether to award a new license, the department shall consider an applicant's capability to serve and supply medical cannabis to registered qualifying patients in a rural or underserved geographical area of a county; provided further that a "rural or underserved geographical area" shall be determined by considering the number of registered qualifying patients that reside within a certain zip code compared to the quantity of medical cannabis that the closest production center and retail dispensing location have the capability to provide.

(e) No person may be granted a cultivation facility license in more than one county.

(f) Each cultivation facility shall be limited to no more than one thousand cannabis plants. Each cultivation facility shall track the cannabis it cultivates from seed or immature plant to wholesale purchase. 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. The department may determine whether cultivation licensees shall be allowed an additional one thousand cannabis plants. In no case shall a licensee be allowed more than two thousand plants at a single production center.

(g) Not more than one cultivation facility license shall be issued for each tax map key.

(h) Notwithstanding any other law to the contrary, a cultivation facility shall not be subject to any of the regulatory requirements under chapter 141.

§329D- Cultivation facilities; license application procedure and verification; fees. (a) The department shall make a cultivation facility license application form available to the public on December 30, 2024, commencing at 8:00 a.m., Hawaii-Aleutian Standard Time.

(b) The department shall establish an open application period for each available license, the first of which shall be no later than 8:00 a.m., Hawaii-Aleutian Standard Time, on December 31, 2024, during which an application may be submitted. This submittal period shall be closed on January 15, 2025, at 4:30 p.m. The department shall publish notice of the open application period no less than thirty days prior to the start of the open application period.

(c) A nonrefundable application fee of $1,000 for each license application shall be submitted to the department by certified or cashier's check. Within seven days of approval, a cultivation facility license fee of $10,000 for each license approved shall be submitted to the department by certified or cashier's check or the department shall issue a license to the next qualified applicant.

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

(e) Immediately upon receipt of each completed application form, the department shall issue a receipt to each applicant that includes the date and time of receipt.

(f) If an applicant submits an application form in which all required information is not complete and valid, the application shall not be accepted by the department and the nonrefundable application fee shall be deposited in the medical cannabis registry and regulation special fund established pursuant to section 321-30.1.

(g) The cultivation facility license application form shall request information necessary to verify that applicants meet the required qualifications for a cultivation license pursuant to section 329D-3. Applicants shall provide a minimum of the following information:

(1) Legal name and date of birth of individual applicant;

(2) Last four digits of individual applicant's social security number;

(3) Validation code from an eCrim report for the individual applicant generated by the Hawaii criminal justice data center no earlier than December 1, 2024, at 8:00 a.m., Hawaii-Aleutian Standard Time;

(4) Street address, telephone number, fax number, and e‑mail address of the individual applicant;

(5) A tax clearance certificate issued by the department of taxation dated not more than thirty days prior to the date of the application;

(6) Name of the applying entity and any other name under which the applying entity does business, if applicable;

(7) Street address, telephone number, fax number, and e‑mail address of the applying entity;

(8) Date the applying entity was organized under the laws of the State;

(9) A certified copy of the organizing documents of the applying entity;

(10) A copy of the applying entity's bylaws;

(11) Federal employer identification number of the applying entity;

(12) Hawaii state tax identification number of applying entity;

(13) Department of commerce and consumer affairs business registration number and suffix of the applying entity;

(14) Names of all owners of the applying entity, in whole or in part, and their percentage of ownership;

(15) Date when continuous legal residence in Hawaii began for each Hawaii legal resident that owns a percentage of the applying entity;

(16) Total percentage of the applying entity that is owned by Hawaii legal residents;

(17) Designation of the county for which the cultivation license applied for and proof that the required minimum financial resources of $250,000 are met;

(18) Total dollar amount of financial resources under control of the applying entity in the form of bank statements or escrow accounts;

(19) Date from when financial resources have been continuously controlled by the applying entity;

(20) Copies of the entity's bank statements for the twelve months prior to the date of the application; and

(21) A copy of the agreement in place with an existing dispensary licensed by the State for the sale of the applying entity's product.

(h) The department shall maintain a record of the time and date that all completed application forms were submitted.

(i) The department shall process and deposit the application fee within four business days of receipt of the completed application form.

(j) If, for any reason, the application fee is not available for deposit, the application shall be deemed void and the department shall inform the applicant in writing that its application has been rejected.

(k) The department shall review and verify the information and documentation materials only of applicants whose nonrefundable application fee has been processed and deposited.

(l) The department shall verify that the information submitted in the application is true and valid and meets the requirements established in section 329D-3(b).

(m) Upon verification of the minimum requirements, the department shall place the verified application into the pool of applicants for further review and selection based on merit by the department.

(n) A cultivation facility license may be renewed annually by payment of an annual renewal fee of $10,000 and subject to verification by the department through an unannounced inspection that the individual licensee and entity licensee continue to meet all licensing requirements from the date the initial licenses were issued."

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

""Cultivation facility" or "medical cannabis cultivation facility" means an establishment that is not owned, operated, or subcontracted by a medical cannabis dispensary and is licensed by the State pursuant to this chapter to plant, cultivate, grow, or harvest cannabis."

SECTION 3. Section 46-4, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) Neither this section nor any other law, county ordinance, or rule shall prohibit the use of land for medical cannabis production centers, medical cannabis cultivation facilities, or medical cannabis dispensaries established and licensed pursuant to chapter 329D; provided that the land is otherwise zoned for agriculture, manufacturing, or retail purposes."

SECTION 4. Section 329D-2.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§329D-2.5[]] Office of medical cannabis control and regulation; established; duties. (a) There is established within the department the office of medical cannabis control and regulation, which shall report to the deputy director of health resources administration.

(b) The office of medical cannabis control and regulation shall administer the licensure and regulation of medical cannabis [~~dispensary licensure and regulation,~~] dispensaries and cultivation facilities, pursuant to this chapter, and the registration of qualifying patients and primary caregivers, pursuant to part IX of chapter 329."

SECTION 5. Section 329D-3, Hawaii Revised Statutes, is amended to read as follows:

"[[]§329D-3[]] Qualifications for licensure. (a) Each application for a dispensary license or a cultivation facility 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 less than five years preceding the date of application;

(B) Is not 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 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 less than five years immediately preceding the date the application was submitted;

(F) [~~Has~~] If applying for a dispensary license, has financial resources under its control of not less than $1,000,000 for each license applied for, plus not 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 less than ninety days immediately preceding the date the application was submitted; [~~and~~]

(G) If applying for a cultivation facility license, has financial resources under its control of not less than $250,000 for each 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 less than ninety days immediately preceding the date the application was submitted;

(H) If applying for a cultivation facility license, has an agreement with an existing dispensary, licensed by the State, to which sales of the cultivator's medical cannabis will be made and such agreement can be amended annually; and

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

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

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

"§329D-6 Dispensary and cultivation facility operations. (a) No person shall operate a dispensary[,] or cultivation facility, or 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 or cultivation facility 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 sections 378-2 and 378-2.5, dispensaries[:] and cultivation facilities:

(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.

(f) All dispensary facilities, including production centers and retail dispensing locations, shall be enclosed indoor facilities and shall maintain twenty-four hour security measures, including an alarm system, video monitoring and recording on the premises, and exterior lighting. A dispensary licensee that 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 before altering or constructing the facility. Production centers 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, 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 or cultivation facility 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 cultivation facility allowed under a license for a county not later than thirty days before any medical cannabis or manufactured cannabis products being produced or manufactured at that production center[.] or cultivation 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 no less than sixty days before 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[.] and cultivation facilities.

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

(A) The total amount of cannabis in possession of all dispensaries and cultivation facilities 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 or cultivation facilities and retail dispensing locations and as authorized 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;

(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 or cultivation facility 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 cultivation facility or 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 cultivation facility or 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 cultivation facility to submit to the department in real time for the total amount of cannabis purchased by a licensed dispensary; and

[~~(4)~~] (5) Allow the licensed dispensary or cultivation facility 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 or cultivation facility premises.

(m) Except as authorized by subsection (r), a dispensary or cultivation facility 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 dispensary shall or cultivation facility 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 or cultivation facility 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 or cultivation facility 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) The department may authorize a dispensary or cultivation facility to purchase cannabis and manufactured cannabis products from another dispensary or cultivation facility in a manner prescribed by the department by rules adopted pursuant to this chapter and chapter 91; provided that:

(1) The purchasing dispensary or cultivation facility establishes to the department's satisfaction that:

(A) The purchase is necessary to ensure that qualifying patients have continuous access to cannabis for medical use; or

(B) The cannabis and manufactured cannabis products are for medical, scientific, or other legitimate purposes approved by the State;

(2) The selling dispensary or cultivation facility may transport no more than eight hundred ounces of cannabis or manufactured cannabis products to the purchasing dispensary or cultivation facility within a thirty-day period;

(3) The cannabis and manufactured cannabis products are transported between the dispensaries or cultivation facilities for medical, scientific, or other legitimate purposes approved by the State; and

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

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

"§329D-7 Medical cannabis dispensary rules, production center, and cultivation facility 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:

(A) The submission of applications and renewals of licenses to dispensaries[;] and cultivation facilities; provided that the department shall consider the market conditions in each county in determining the license renewal fee amounts;

(B) The submission of application for each additional production center; and

(3) Criteria and procedures for the consideration and selection, based on merit, of applications for licensure of dispensaries[;] and cultivation facilities; 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 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; provided further that applicants for cultivation facility licenses shall provide documentation that demonstrates control of not less than $250,000 in the form of escrow accounts, letters of credit, surety bonds, bank statements, lines of credit or the equivalent to begin operating the cultivation facility;

(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, and cultivation facility licensed pursuant to this chapter;

(5) Procedures for announced and unannounced inspections by the department or its agents of production centers [~~and~~], dispensaries, and cultivation facilities 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[;], and cultivation facilities; provided that, at a minimum, the following shall be required:

(A) For production centers[:] and cultivation facilities:

(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 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 cultivation facilities and retail dispensing locations and between a production center, retail dispensing location, cultivation facility, 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[;], and cultivation facilities;

(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, and cultivation facility 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[;], or cultivation facility; 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[;], or cultivation facility; and

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

(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 8. Section 329D-8, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) If a dispensary or cultivation facility licensee obtains a laboratory result indicating that a sample of a batch of its cannabis or manufactured cannabis products does not meet the department's standards for patient safety, the dispensary or cultivation facility licensee, at its own expense, may have the same sample or a different sample from the same batch retested by the same laboratory or a different laboratory. If a retest at a different laboratory yields a different result, the department shall determine which result controls whether the batch may be approved for sale or whether further testing shall be required."

SECTION 9. Section 329D-11, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The department shall establish standards regarding the advertising and packaging of cannabis and manufactured cannabis products; provided that the standards, at a minimum, shall require the use of packaging that:

(1) Is child-resistant and opaque so that the product cannot be seen from outside the packaging;

(2) Uses only black lettering on a white background with no pictures or graphics;

(3) Is clearly labeled with the phrase "For medical use only";

(4) Is clearly labeled with the phrase "Not for resale or transfer to another person";

(5) Includes instructions for use and "use by date";

(6) Contains information about the contents and potency of the product;

(7) Includes the name of the production center or cultivation facility where cannabis in the product was produced, including the batch number and date of packaging;

(8) Includes a barcode generated by tracking software; and

(9) In the case of a manufactured cannabis product, includes a:

(A) Listing of the equivalent physical weight of the cannabis used to manufacture the amount of the product that is within the packaging, pursuant to section 329D-9(c);

(B) Clearly labeled warning stating that the product:

(i) Is a medication that contains cannabis, and is not a food; and

(ii) Should be kept away from children; and

SECTION 10. Section 329D-12, Hawaii Revised Statutes, is amended to read as follows:

"§329D-12 Background checks. (a) The following shall be subject to background checks conducted by the department or its designee, including but not limited to criminal history record checks in accordance with section 846‑2.7:

(1) Each applicant and licensee for a medical cannabis dispensary or cultivation facility license, including the individual applicant and all officers, directors, members of a limited liability corporation; shareholders with at least twenty-five per cent or more ownership interest in a corporation; and managers of an entity applicant;

(2) Each employee of a medical cannabis dispensary;

(3) Each employee of a subcontracted production center [or], retail dispensing location[;], or cultivation facility;

(4) All officers, directors, members of a limited liability corporation; and shareholders with at least twenty-five per cent or more ownership interest in a corporate owner of a subcontracted production center [or], retail dispensing location[;], or cultivation facility; and

(5) Any person permitted to enter and remain in a dispensary facility pursuant to section 329D‑15(a)(4) or 329D-16(a)(3).

The person undergoing the background check shall provide written consent and all applicable processing fees to the department or its designee to conduct the background checks.

(b) This section shall not apply to:

(1) A qualifying patient, primary caregiver, qualifying out-of-state patient, or caregiver of a qualifying out-of-state patient who enters or remains on the premises of a retail dispensing location for the purpose of a transaction conducted pursuant to sections 329D-6 and 329D-13; or

(2) Government officials and employees acting in an official capacity and employees of a certified laboratory who enter or remain on the premises of a retail dispensing location [or], production center, or cultivation facility for any purpose authorized by this chapter."

SECTION 11. Section 329D-16, Hawaii Revised Statutes, is amended to read as follows:

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

(1) An individual licensee or registered employee of the production center[;] or cultivation 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~~] dispensary or cultivation facility's premises 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 or facility at all times while [~~in the dispensary facility;~~] on the premises;

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

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

(G) The dispensary or cultivation facility shall keep an accurate record of each person's identity, date and times upon entering and exiting the dispensary or cultivation 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 shall intentionally or knowingly allow another to enter or remain upon the premises of the production center, unless the other is permitted to enter and remain as specified in subsection (a).

(c) No individual licensee or registered employee of a cultivation facility with control over or responsibility for the facility shall intentionally or knowingly allow another to enter or remain upon the premises of the facility, unless the other is permitted to enter and remain as specified in subsection (a).

[~~(c)~~] (d) Unauthorized access to a production center or cultivation facility is a class C felony."

SECTION 12. Section 329D-17, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) A person commits the offense of promoting medical cannabis or medical cannabis products to a minor if the person intentionally or knowingly distributes any amount of cannabis or manufactured cannabis products that came from a dispensary [or], production center, or cultivation facility to a minor who is not a registered qualifying patient or a registered qualifying out-of-state patient under eighteen years of age."

SECTION 13. Section 329D-18, Hawaii Revised Statutes, is amended to read as follows:

"[[]§329D-18[]] Diversion from dispensary [or], production center[;], or cultivation facility; penalties. (a) A person commits diversion from a dispensary [or], production center, or cultivation facility if the person is a licensee, operator, or employee of a dispensary [or], production center, or cultivation facility and intentionally or knowingly diverts to the person's own use or other unauthorized or illegal use, or takes, makes away with, or secretes, with intent to divert to the person's own use or other unauthorized or illegal use, any medical cannabis, manufactured cannabis product, or cannabis concentrate under the person's possession, care, or custody as a licensee, operator, or employee of a medical cannabis dispensary [or], production center, or cultivation facility licensed by the department.

(b) Any person who violates this section shall be guilty of a class C felony."

SECTION 14. Section 329D-20, Hawaii Revised Statutes, is amended to read as follows:

"[[]§329D-20[]] Law enforcement access to dispensary, [~~and~~] production center, and cultivation facility records. Notwithstanding any other law, the department shall disclose information, documents, and other records regarding medical cannabis dispensaries [~~and~~], production centers, and cultivation facilities, upon request, to any state, federal, or county agency engaged in the criminal investigation or prosecution of violations of applicable state, county, or federal laws or regulations related to the operations or activities of a medical cannabis dispensary[.], production center, or cultivation facility."

SECTION 15. Section 329D-22, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Medical cannabis production centers [~~and~~], dispensaries, and cultivation facilities shall comply with all county zoning ordinances, rules, or regulations; provided that:

(1) A medical cannabis production center or cultivation facility shall be permitted in any area in which agricultural production is permitted except as provided within this chapter; and

(2) No medical cannabis production center [~~and~~], dispensary, or cultivation facility shall be permitted within seven hundred fifty feet of the real property comprising a playground or school."

SECTION 16. Section 329D-23, Hawaii Revised Statutes, is amended to read as follows:

"§329D-23 Annual inspections, audits, and reports. (a) Each medical cannabis production center [~~and~~], dispensary, and cultivation facility licensed pursuant to this part shall:

(1) Be subject to an annual announced inspection and unlimited unannounced inspections of its operations by the department; provided that inspections for license renewals shall be unannounced;

(2) Submit reports on at least a quarterly basis, or as otherwise required, and in the format specified by the department; and

(3) Annually cause an independent financial audit, at the [~~dispensary~~] licensee's own expense, to be conducted of the cultivation facility, dispensary, its production center, and retail dispensing locations and shall submit the audit's findings to the department.

(b) The department shall report annually to the governor and the legislature on the establishment and regulation of medical cannabis production centers [~~and~~], dispensaries, and cultivation facilities, including but not limited to the number and location of production centers and dispensaries and cultivation facilities licensed, the total licensing fees collected, the total amount of taxes collected from production centers [~~and~~], dispensaries, and cultivation facilities and any licensing violations determined by the department."

SECTION 17. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 18. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	451
THIRTY-SECOND LEGISLATURE, 2023
STATE OF HAWAII