A09507 Summary:

COSPNSRDinowitz, Hevesi, Lupardo, Blake, Zebrowski, Skartados, Ortiz, Brindisi, McDonald, Seawright
MLTSPNSRCeretto, Sepulveda
Amd §§3364 & 3365, Pub Health L
Relates to permitting registered organizations to sell, deliver, distribute or receive medical marihuana to or from another registered organization.
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A09507 Actions:

03/10/2016referred to health
04/14/2016advanced to third reading cal.517
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A09507 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
SPONSOR: Gottfried (MS)
  TITLE OF BILL: An act to amend the public health law, in relation to organizations registered to sell, deliver, distribute or dispense medical marihuana   PURPOSE: To allow registered organizations to contract for facilities, equipment, or services; and repeal the requirement that registered organizations be vertically integrated.   SUMMARY OF SPECIFIC PROVISIONS: Section 1: Amends subdivisions 4, 6, and 13 and adds new subdivisions 14 and 15 to section 3364 of Public Health Law. Allows a registered organ- ization to contract with persons or entities to provide facilities, equipment, or services related to the registered organization's func- tions or activities. All laws applicable to the registered organization shall apply to the contractor. Allows a registered organization to sell, deliver, distribute, or receive medical marihuana to or from another registered organization. Section 2: Amends Subdivisions 1, 3, 8 and 9 of section 3365 of Public Health Law to remove references capping the number of registered organ- izations at five and dispensaries per organization at four. Section 3: Effective date.   JUSTIFICATION: The Department of Health has authorized just five registered organiza- tions (ROs), with four dispensaries each, to provide medical marihuana. Nor are the registered organizations allowed to contract out any part of the production and distribution processes. They must own every part of the operation from growing to dispensing, a system of mandatory vertical integration that the State would normally discourage. Almost every element of the manufacturing/retailing economy operates through compa- nies that are not vertically integrated and includes contracting out segments of operations. This places significant burdens on the RO business model. For example, ROs produce medical marihuana in one location and distributes it else- where to be dispensed, but cannot simply ship its product with a shipper (no matter how secure) like any other manufacturer. Instead, the RO must own the delivery trucks itself and directly employ the drivers. This bill allows the RO to contract out some of its functions while ensuring that all laws applicable to the RO apply to the contractors as well. The bill removes both the limit on the numbers of ROs and dispensaries and the requirement that ROs be vertically integrated. In order to allow non-integration, the bill allows a registered organ- ization to sell, deliver, distribute, or receive medical marihuana to or from another registered organization. There are many strains of medical marihuana targeting different diseases and age groups. A patient in a rural area may be certified for a particular strain only to discover that no dispensary in the region carries it. Allowing ROs to sell, deliver, or distribute to, or receive medical marihuana from other ROs will help get critically important medicine to patients who would other- wise struggle with long-distance travel and geographic disparities. This bill is a significant step towards expanding patient access by ensuring adequate supply and statewide availability of medical marihua- na.   PRIOR LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: Immediately.
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A09507 Text:

                STATE OF NEW YORK
                   IN ASSEMBLY
                                     March 10, 2016
        Introduced  by  M.  of  A.  GOTTFRIED, DINOWITZ, HEVESI, LUPARDO, BLAKE,
          ZEBROWSKI, SKARTADOS, ORTIZ, BRINDISI -- Multi-Sponsored by --  M.  of
          A.  CERETTO,  SEPULVEDA  -- read once and referred to the Committee on
        AN ACT to amend the public health  law,  in  relation  to  organizations
          registered to sell, deliver, distribute or dispense medical marihuana

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. Subdivisions 4, 6 and 13 of  section  3364  of  the  public
     2  health  law, as added by chapter 90 of the laws of 2014, are amended and
     3  two new subdivisions 14 and 15 are added to read as follows:
     4    4. (a) A registered organization may lawfully, in  good  faith,  sell,
     5  deliver, distribute or dispense medical marihuana to a certified patient
     6  or designated caregiver upon presentation to the registered organization
     7  of  a  valid  registry identification card for that certified patient or
     8  designated caregiver. When presented with  the  registry  identification
     9  card, the registered organization shall provide to the certified patient
    10  or designated caregiver a receipt, which shall state: the name, address,
    11  and  registry  identification number of the registered organization; the
    12  name and registry identification number of the certified patient and the
    13  designated caregiver (if any); the date  the  marihuana  was  sold;  any
    14  recommendation or limitation by the practitioner as to the form or forms
    15  of  medical  marihuana or dosage for the certified patient; and the form
    16  and the quantity of medical marihuana sold. The registered  organization
    17  shall  retain a copy of the registry identification card and the receipt
    18  for six years.
    19    (b) The [proprietor of a] registered organization shall file or  cause
    20  to  be  filed any receipt and certification information with the depart-
    21  ment by electronic means on a real time basis as the commissioner  shall
    22  require by regulation. When filing receipt and certification information
    23  electronically  pursuant to this paragraph, the proprietor of the regis-
    24  tered  organization  shall  dispose  of  any   electronically   recorded
    25  prescription  information  in  such  manner as the commissioner shall by
    26  regulation require.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 9507                             2
     1    6. When a registered  organization  sells,  delivers,  distributes  or
     2  dispenses  medical  marihuana to a certified patient or designated care-
     3  giver, it shall provide to that individual a safety insert,  which  will
     4  be  developed  and  approved by the commissioner and include, but not be
     5  limited to, information on:
     6    (a) methods for administering medical marihuana in individual doses,
     7    (b) any potential dangers stemming from the use of medical marihuana,
     8    (c) how to recognize what may be problematic usage of medical marihua-
     9  na  and  obtain appropriate services or treatment for problematic usage,
    10  and
    11    (d)  other  information  as  determined   by   the   commissioner   in
    12  regulations.
    13    13.  The  commissioner  is  authorized to make [rules and] regulations
    14  restricting the advertising and marketing of  medical  marihuana,  which
    15  shall  be consistent with the federal regulations governing prescription
    16  drug advertising and marketing.
    17    14. A registered organization may contract with a person or entity  to
    18  provide facilities, equipment or services that are part of or incidental
    19  to  the  registered  organization's  functions  or activities under this
    20  section. All laws and regulations applicable to the registered organiza-
    21  tion shall apply to the contract. The registered organization and  other
    22  parties  to  the  contract shall each be responsible and accountable for
    23  compliance with such  laws  and  regulations  under  the  contract.  The
    24  commissioner may make regulations consistent with this title relating to
    25  contracts and parties to contracts under this subdivision.
    26    15.  A  registered  organization  may  lawfully,  in good faith, sell,
    27  deliver, or distribute medical marihuana to  a  registered  organization
    28  and  may  acquire  medical  marihuana from a registered organization, in
    29  accordance with the registration of both registered organizations.
    30    § 2. Subdivisions 1, 3, 8 and 9 of section 3365 of the  public  health
    31  law,  as added by chapter 90 of the laws of 2014, are amended to read as
    32  follows:
    33    1. Application for initial registration. (a) An applicant  for  regis-
    34  tration  as a registered organization under section thirty-three hundred
    35  sixty-four of this title shall include such information prepared in such
    36  manner and detail as the commissioner may  require,  including  but  not
    37  limited to:
    38    (i) a description of the activities in which it intends to engage as a
    39  registered organization;
    40    (ii) that the applicant:
    41    (A) is of good moral character;
    42    (B)  possesses or has the right to use sufficient land, buildings, and
    43  other premises (which shall be specified in the application) and  equip-
    44  ment  to  properly  carry on the activity or activities described in the
    45  application, or in the alternative posts a bond of  not  less  than  two
    46  million dollars;
    47    (C)  is  able  to  maintain  effective security and control to prevent
    48  diversion, abuse, and other illegal conduct relating to the marihuana;
    49    (D) is able to comply with all applicable state laws  and  regulations
    50  relating  to  the  activities  in  which  it intends to engage under the
    51  registration;
    52    (iii) that the applicant has entered into a labor peace agreement with
    53  a bona-fide labor organization that is actively engaged in  representing
    54  or attempting to represent the applicant's employees. The maintenance of
    55  such  a  labor peace agreement shall be an ongoing material condition of
    56  certification.

        A. 9507                             3

     1    (iv) the applicant's status under subdivision one of  section  thirty-
     2  three hundred sixty-four of this title; and
     3    (v)  the  application  shall  include  the name, residence address and
     4  title of each of the officers and directors and the name  and  residence
     5  address  of any person or entity that is a member of the applicant. Each
     6  such person, if an individual, or lawful representative if a legal enti-
     7  ty, shall submit an affidavit with the application setting forth:
     8    (A) any position of management or ownership during the  preceding  ten
     9  years  of  a  ten  per centum or greater interest in any other business,
    10  located in or outside this state, manufacturing or distributing drugs;
    11    (B) whether such person or any such business has been convicted  of  a
    12  felony  or  had  a  registration  or license suspended or revoked in any
    13  administrative or judicial proceeding; and
    14    (C) such other information as the commissioner may reasonably require.
    15    3. Granting of registration. (a) The commissioner shall grant a regis-
    16  tration or amendment to a registration under this section if he  or  she
    17  is satisfied that:
    18    (i)  the  applicant will be able to maintain effective control against
    19  diversion of marihuana;
    20    (ii) the applicant will be able to comply with  all  applicable  state
    21  laws;
    22    (iii)  the  applicant  and its officers are ready, willing and able to
    23  properly carry on the manufacturing or distributing activity for which a
    24  registration is sought;
    25    (iv) the applicant possesses or has the right to use sufficient  land,
    26  buildings  and equipment to properly carry on the activity or activities
    27  described in the application;
    28    (v) it is in the public interest that such  registration  be  granted;
    29  the commissioner may consider whether the number of registered organiza-
    30  tions  in  an area will be adequate or excessive to reasonably serve the
    31  area;
    32    (vi) the applicant and its managing officers are of good moral charac-
    33  ter;
    34    (vii) the applicant has entered into a labor peace  agreement  with  a
    35  bona-fide labor organization that is actively engaged in representing or
    36  attempting to represent the applicant's employees; and
    37    (viii)  the  applicant satisfies any other conditions as determined by
    38  the commissioner.
    39    (b) If the commissioner is not satisfied that the applicant should  be
    40  issued  a  registration, he or she shall notify the applicant in writing
    41  of those factors upon which further evidence is required. Within  thirty
    42  days of the receipt of such notification, the applicant may submit addi-
    43  tional material to the commissioner or demand a hearing, or both.
    44    (c)  The  fee for a registration under this section shall be a reason-
    45  able amount determined  by  the  department  in  regulations;  provided,
    46  however,  if  the  registration  is issued for a period greater than two
    47  years the fee shall be increased, pro rata, for each additional month of
    48  validity.
    49    (d) Registrations issued under this section shall  be  effective  only
    50  for the registered organization and shall specify:
    51    (i) the name and address of the registered organization;
    52    (ii)  which  activities  of a registered organization are permitted by
    53  the registration;
    54    (iii) the land, buildings and facilities that  may  be  used  for  the
    55  permitted activities of the registered organization; and

        A. 9507                             4
     1    (iv)  such  other  information  as  the  commissioner shall reasonably
     2  provide to assure compliance with this title.
     3    (e)  Upon application of a registered organization, a registration may
     4  be amended to allow the registered organization to relocate  within  the
     5  state  or  to add or delete permitted registered organization activities
     6  or facilities. The fee for such amendment shall  be  two  hundred  fifty
     7  dollars.
     8    8.  The  department  shall  begin issuing registrations for registered
     9  organizations as soon as practicable after the [certifications]  certif-
    10  ication  required  by  section thirty-three hundred sixty-nine-b of this
    11  title [are] is given.
    12    9. The commissioner shall register  [no  more  than  five]  registered
    13  organizations [that manufacture medical marihuana with no more than four
    14  dispensing  sites wholly owned and operated by such registered organiza-
    15  tion] and facilities to promote reasonable access to  medical  marihuana
    16  in  the interest of certified patients and the public.  The commissioner
    17  shall ensure that [such] registered organizations and  dispensing  sites
    18  are  geographically  distributed  across the state and shall not require
    19  that dispensing sites be owned or operated by the  registered  organiza-
    20  tion  licensed  to  manufacture  medical  marihuana. [The commission may
    21  register additional registered organizations.]
    22    § 3. This act shall take effect immediately; provided that the  amend-
    23  ments  to  title 5-a of article 33 of the public health law made by this
    24  act shall not affect the expiration and repeal of such title  and  shall
    25  expire and be deemed repealed therewith.
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