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<ns0:Id>20250AB__253798AMD</ns0:Id>
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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-20</ns0:ActionDate>
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<ns0:ActionText>AMENDED_ASSEMBLY</ns0:ActionText>
<ns0:ActionDate>2026-03-19</ns0:ActionDate>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Chen</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Chen</ns0:Name>
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<ns0:Title>An act to amend Sections 26031 and 26190 of, and to add Section 26039.7 to, the Business and Professions Code, relating to cannabis. </ns0:Title>
<ns0:RelatingClause>cannabis</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Cannabis Enforcement Accountability and Public Health Prioritization Act of 2026.</ns0:Subject>
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<html:p>Existing law, the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities. Existing law gives the Department of Cannabis Control the power, duty, purpose, responsibility, and jurisdiction to regulate commercial cannabis activity in the state.
Existing law authorizes the department to take disciplinary actions against a licensee, as provided. Existing law requires the department to prepare and disseminate, as specified, an annual report relating to the department’s activities, including, among other things, the amount of funds allocated and spent by the department for cannabis licensing, enforcement, and administration, and the number of state licenses issued, renewed, denied, suspended, and revoked.</html:p>
<html:p>This bill, the Cannabis Enforcement Accountability and Public Health Prioritization Act of 2026, would require the department to prioritize its enforcement of MAUCRSA in a manner consistent with a risk-based enforcement framework that focuses on material threats
while applying less intensive and less punitive measures on minor technical or administrative violations by licensees, as specified. The bill would define “material threats” as conduct, practices, or conditions that create a reasonably foreseeable risk of significant harm to public health, public safety, environmental protection, workplace safety, or the integrity of the licensed market, as described. The bill would prohibit minor technical or administrative violations that do not constitute a material threat from being the sole basis for suspension or revocation of a license, except as specified. The bill would require the department to adopt and publish an enforcement prioritization policy, as specified, and would require the department to include in the above-described annual report the number, geographic distribution, and, as applicable, dollar amount of specified enforcement activities in relation to the risk-based enforcement framework, as provided.</html:p>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
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<ns0:Num>SECTION 1.</ns0:Num>
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This act shall be known and may be cited as the
<ns0:DocName>Cannabis Enforcement Accountability and Public Health Prioritization Act of 2026</ns0:DocName>
.
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 26031 of the
<ns0:DocName>Business and Professions Code</ns0:DocName>
is amended to read:
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<ns0:Num>26031.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
The department may suspend, revoke, place on probation with terms and conditions, or otherwise discipline licenses issued by the department and fine a licensee, after proper notice and hearing to the licensee, except as provided in Section 26031.01, if the licensee is found to have committed any of the acts or omissions constituting grounds for disciplinary action. The disciplinary proceedings under this chapter shall be conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the director shall have all the powers granted therein.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The department may suspend or revoke a license when a local agency has notified the department that a licensee within its jurisdiction is in
violation of state rules and regulations relating to commercial cannabis activities, and the department, through an investigation, has determined that the violation is grounds for suspension or revocation of the license.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The department may take disciplinary action against a licensee for any violation of this division when the violation was committed by the licensee’s officers, directors, owners, agents, or employees while acting on behalf of the licensee or engaged in commercial cannabis activity.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The suspension or expiration of a license issued by the department, or its suspension, forfeiture, or cancellation by order of the department or by order of a court of law, or its surrender without the written consent of the department, shall not, during any period in which it may be renewed, restored, reissued, or reinstated, deprive the department of its authority to institute
or continue a disciplinary proceeding against the licensee upon any ground provided by law or to enter an order suspending or revoking the license or otherwise taking disciplinary action against the licensee on any such ground.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
Minor technical or administrative violations that do not constitute a material threat, as defined in Section 26039.7, shall not be the sole basis for suspension or revocation of a license unless the department demonstrates a pattern of repeated noncompliance indicating broader systemic risk.
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 26039.7 is added to the
<ns0:DocName>Business and Professions Code</ns0:DocName>
, to read:
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<ns0:Num>26039.7.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
For purposes of this section, the following definitions apply:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Material threat” means conduct, practices, or conditions that create a reasonably foreseeable risk of significant harm to public health, public safety, environmental protection, workplace safety, or the integrity of the licensed market, including, but not limited to, any of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Manufacture, distribution, or sales of cannabis or cannabis products that are adulterated or misbranded in a manner likely to cause illness or bodily injury.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Diversion of cannabis or cannabis products to unlicensed
persons.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Falsification of testing results, track and trace data, or required regulatory documentation in a manner that creates a reasonably foreseeable risk of significant harm to public health, public safety, environmental protection, workplace safety, or the integrity of the licensed market.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Significant degradation of water resources, public lands, or wildlife habitat.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
Repeated or intentional violations of laws or regulations related to workplace safety or wage protections.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
Distribution or sales of cannabis or cannabis products to minors or that are marketed or packaged in a manner attractive to minors.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A violation does not constitute a material threat solely
because it is categorized as a regulatory violation unless the violation resulted in, or created a substantial likelihood of, significant harm to public health, public safety, environmental protection, workplace safety, or the integrity of the licensed market.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Risk-based enforcement framework” means an enforcement framework that aligns the department’s regulatory oversight, investigations, inspections, and enforcement and disciplinary actions pursuant to this division with the level of risk of material threat, as specified in subdivision (c), focusing its oversight and enforcement activities on material threats while applying less intensive and less punitive measures on minor technical or administrative violations by licensees.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
In enacting this section, the Legislature finds and declares all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
In January 2025, the department released a report summarizing current market conditions and outlook for the California cannabis industry.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The report found that the illicit market continues to represent a substantial share of cannabis consumption in California, estimated at approximately 60 percent, and identified strengthening enforcement against unlicensed commercial activity, reducing unnecessary regulatory burdens, and increasing consumer participation in the licensed market as critical to expanding the regulated market.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The report further recognized that enforcement resources are limited and that effective enforcement strategies require prioritization of activities that most significantly affect public health, public safety, environmental protection, workplace safety, and market integrity.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Enforcement activity involving minor technical or administrative violations that do not constitute material threats may consume departmental resources that could otherwise be directed toward higher risk conduct.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The state’s cannabis excise tax pursuant to Section 34011.2 of the Revenue and Taxation Code is imposed at retail level, underscoring the importance of addressing unlicensed retail and delivery activity within enforcement prioritization efforts.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
Effective enforcement is essential to achieving the purposes of this division and requires that limited enforcement resources be directed toward violations posing the greatest risk to public health, public safety, environmental protection, workplace safety, and the integrity of the licensed market.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
Enforcement practices that
disproportionately focus on minor technical or administrative violations, while more serious violations persist, strain limited enforcement resources and erode public confidence in the licensed market.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
It is the intent of the Legislature to provide additional statutory clarity regarding enforcement prioritization to promote a risk-based, proportionate, and transparent approach to implementing this chapter.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
In implementing this chapter, the department shall prioritize regulatory oversight, investigations, inspections, and enforcement and disciplinary actions in a manner consistent with a risk-based enforcement framework with emphasis on all of the following categories, which are listed in order from highest to lowest level of risk of material threat:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Unlicensed persons engaging in the retail sale or
delivery of cannabis, cannabis products, or synthetic cannabinoids to customers or minors.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Unlicensed persons engaging in the distribution or manufacture of synthetic cannabinoids.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Unlicensed persons engaging in the cultivation or manufacture of cannabis, cannabis products, or synthetic cannabinoids where the activity results in significant degradation of water resources, public lands, or wildlife habitat.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Unlicensed persons engaging in commercial cannabis activity not otherwise described in paragraphs (1) to (3), inclusive.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Licensees diverting cannabis or cannabis products to unlicensed persons.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
Licensees engaging in the manufacture, distribution, or sale of synthetic
cannabinoids.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
Licensees engaging in the distribution or sales of cannabis or cannabis products to minors or that are marketed or packaged in a manner attractive to minors.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
Licensees engaging in actions, or failing to take actions, that create or constitute material threats.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The department shall adopt and publish an enforcement prioritization policy consistent with this section that does all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Ensures personnel and resources are allocated in a manner consistent with subdivision (c).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Establishes risk-based enforcement categories.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Provides for documentation of enforcement actions involving
minor technical or administrative violations.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
The department’s disciplinary framework shall not conflict with this section.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
This section does not limit the department’s authority to enforce this division and applicable regulations.
</html:p>
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<ns0:Num>SEC. 4.</ns0:Num>
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Section 26190 of the
<ns0:DocName>Business and Professions Code</ns0:DocName>
is amended to read:
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<ns0:Num>26190.</ns0:Num>
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<html:p>Beginning on March 1, 2023, and on or before March 1 of each year thereafter, the department shall prepare and submit to the Legislature an annual report on the department’s activities, in compliance with Section 9795 of the Government Code, and post the report on the department’s internet website. The report shall include, but not be limited to, the following information for the previous fiscal year:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
The amount of funds allocated and spent by the department for cannabis licensing, enforcement, and administration.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The number of state licenses issued, renewed, denied, suspended, and revoked, by state license category.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The average time for
processing state license applications, by state license category.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The number of appeals from the denial of state licenses or other disciplinary actions taken by the department and the average time spent on these appeals.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
The number of complaints submitted by citizens or representatives of cities or counties regarding licensees, provided as both a comprehensive statewide number and by geographical region.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The number and type of enforcement activities conducted by the department and by local law enforcement agencies in conjunction with the department.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
The number, type, and amount of penalties, fines, and other disciplinary actions taken by the department.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
The number of
licenses on which the department imposed conditions and the categories of conditions imposed on licenses.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
A detailed list of the petitions for regulatory relief or rulemaking changes received by the department from licensees requesting modifications of the enforcement of rules under this division.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
A list of interstate cannabis agreements entered into pursuant to Chapter 25 (commencing with Section 26300), including information regarding the terms and conditions of each agreement, the activities undertaken by state agencies to implement the agreement, and the effects of the agreement on California’s cannabis industry.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
The number and geographic distribution of investigations opened and closed in relation to the categories
enumerated in Section 26039.7.
</html:p>
<html:p>
(l)
<html:span class="EnSpace"/>
The number and geographic distribution of inspections conducted in relation to the categories enumerated in Section 26039.7.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
The number and geographic distribution of enforcement actions conducted in relation to the categories enumerated in Section 26039.7.
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
The number and geographic distribution of petitions filed pursuant to Section 26031.2 against unlicensed persons in relation to the categories enumerated in Section 26039.7.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
The number and geographic distribution of injunctions or other appropriate orders pursuant to Section 26031.2 restraining unlicensed persons in relation to the categories
enumerated in Section 26039.7.
</html:p>
<html:p>
(p)
<html:span class="EnSpace"/>
The number, geographic distribution, and dollar amount of citations issued and collected pursuant to Section 26031.5 against unlicensed persons in relation to the categories enumerated in Section 26039.7.
</html:p>
<html:p>
(q)
<html:span class="EnSpace"/>
The number, geographic distribution, and dollar amount of civil penalties imposed and collected pursuant to Section 26038 against unlicensed persons, persons aiding and abetting unlicensed commercial cannabis activity, and persons enumerated in subparagraph (A) of paragraph (3) of subdivision (a) of Section 26038 in relation to the categories enumerated in Section 26039.7.
</html:p>
<html:p>
(r)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
For the first publication of the reports, the department shall provide a joint report to the Legislature regarding the state of the cannabis market in California. This report shall identify any statutory or regulatory changes necessary to ensure that the implementation of this division does not do any of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Allow unreasonable restraints on competition by creation or maintenance of unlawful monopoly power.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Perpetuate the presence of an illegal market for cannabis or cannabis products in the state or out of the state.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Encourage underage use or adult abuse of cannabis or cannabis products, or illegal diversion of cannabis or cannabis products out of the state.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Result in an excessive
concentration of licensees in a given city, county, or both.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Present an unreasonable risk of minors being exposed to cannabis or cannabis products.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
Result in violations of any environmental protection laws.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For purposes of this subdivision, “excessive concentration” means when the premises for a retail license, microbusiness license, or a license issued under Section 26070.5 is located in an area where either of the following conditions exist:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The ratio of licensees to population in a census tract or census division exceeds the ratio of licensees to population in the county in which the census tract or census division is located, unless reduction of that ratio would unduly limit the development of the legal market so as to perpetuate the
illegal market for cannabis or cannabis products.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The ratio of retail licenses, microbusiness licenses, or licenses under Section 26070.5 to population in the census tract, division, or jurisdiction exceeds that allowable by local ordinance adopted under Section 26200.
</html:p>
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