Source: http://www.wvlegislature.gov/Bill_Status/bills_text.cfm?billdoc=SB1037%20ENG.htm&yr=2019&sesstype=1X&i=1037
Timestamp: 2019-09-21 05:14:31
Document Index: 44794015

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SB 1037 Text
Engrossed Version Senate Bill 1037 History
Senate Bill 1037
[Introduced May 20, 2019]
A BILL to amend and reenact §16A-2-1 of the Code of West Virginia, 1931, as amended; to amend and reenact §16A-4-3 of said code; to amend and reenact §16A-6-3 and §16A-6-13 of said code; to amend and reenact §16A-7-4 of said code; to amend and reenact §16A-8-1 of said code; to amend and reenact §16A-9-1 of said code; to amend said code by adding thereto two new sections, designated §16A-9-3 and §16A-9-4; to amend and reenact §16A-10-6 of said code; to amend and reenact §16A-11-1 of said code; to amend said code by adding thereto a new section, designated §16A-15-10; and to amend and reenact §16A-16-1 of said code, all relating generally to medical cannabis; defining terms; modifying certain definitions; modifying conditions for issuance of patient certifications; expanding practitioner reporting requirements; defining “resident” for purposes of the act; requiring that state residents own a majority of business entities applying for medical cannabis organization permits; removing regional distribution requirements for growers, processors, and dispensaries; establishing criteria for choosing the locations of dispensary permittees; requiring the Bureau for Public Health to adopt fair and objective evaluation procedures in choosing permittees; requiring numeric scoring of applications; increasing the maximum number of dispensary permits; increasing the number of dispensary permits a person or entity may hold; authorizing persons or entities to hold grower, processor, and dispensary permits; authorizing the bureau to oversee testing of medical cannabis; removing the requirement that dispensaries have a physician or pharmacist onsite; modifying tax rates and tax procedures related to medical cannabis organizations; establishing a 10 percent tax on gross proceeds at the dispensary level; authorizing electronic filing with the Tax Commissioner; directing tax proceeds to be deposited in the Medical Cannabis Program Fund; clarifying applicability of the West Virginia Tax Procedure and Administration Act and the West Virginia Tax Crimes and Penalties Act apply to medical cannabis operations; extending the authority of the bureau to adopt emergency rules until July 1, 2021; adding two osteopathic physicians appointed by the West Virginia Osteopathic Association to the Medical Cannabis Advisory Board; immunizing state officials and employees from causes of action in their personal capacities for actions taken to implement the act; limiting any type of recovery to proceeds of available insurance; obligating the state to defend and indemnify state officials and employees against one type of action brought against them for implementing the act; authorizing precertification of patients; maintaining restriction that patient certificates may not be issued until July 1, 2019; and incorporating certain tax offenses and penalties by reference.
(1) “Act” means the West Virginia Medical Cannabis Act and the provisions contained in §60A-1-101 et seq. of this code.
(2) “Advisory board” means the advisory board established under §16A-11-1 et seq. of this chapter code.
(3) “Bureau” means the Bureau for Public Health within the West Virginia Department of Health and Human Resources.
(4) “Caregiver” means the individual designated by a patient or, if the patient is under 18 years of age, an individual authorized under §16A-5-1 et seq. of this code, to deliver medical cannabis.
(5) “Certified medical use” means the acquisition, possession, use, or transportation of medical cannabis by a patient, or the acquisition, possession, delivery, transportation, or administration of medical cannabis by a caregiver, for use as part of the treatment of the patient’s serious medical condition, as authorized in a certification under this act, including enabling the patient to tolerate treatment for the serious medical condition.
(10) “Dispensary” means a person, including a natural person, corporation, partnership, association, trust, or other entity, or any combination thereof, which holds a permit issued by the bureau to dispense medical cannabis. The term does not include a health care medical cannabis organization under as defined in §16A-13-1 et seq. of this code.
(11) “Family or household member” means the same as defined in §48-27-204 of this code.
(12) “Financial backer” means an investor, mortgagee, bondholder, note holder, or other source of equity, capital, or other assets, other than a financial institution.
(13) “Financial institution” means a bank, a national banking association, a bank and trust company, a trust company, a savings and loan association, a building and loan association, a mutual savings bank, a credit union, or a savings bank.
(14) “Form of medical cannabis” means the characteristics of the medical cannabis recommended or limited for a particular patient, including the method of consumption and any particular dosage, strain, variety and quantity, or percentage of medical cannabis or particular active ingredient.
(15) “Fund” means the Medical Cannabis Program Fund established in §16A-9-2 of this code.
(16) “Grower” means a person, including a natural person, corporation, partnership, association, trust or other entity, or any combination thereof, which holds a permit from the bureau under this act to grow medical cannabis. The term does not include a health care medical cannabis organization as defined in article thirteen §16-13-1 et seq. this chapter code.
(18) “Identification card” means a document issued under §16A-5-1 et seq. of this code that authorizes access to medical cannabis under this act.
(21) “Medical cannabis organization” means a dispensary, grower or processor. The term does not include a health care medical cannabis organization under as defined in §16A-13-1 et seq. of this code.
(24) “Physician” or “practitioner” means a doctor of allopathic or osteopathic medicine who is fully licensed pursuant to the provisions of either §30-3-1 et seq. or §30-14-1 et seq. of this code to practice medicine and surgery in this state.
(25) “Post-traumatic stress disorder” means a diagnosis made as part of continuing care of a patient by a medical doctor, licensed counselor, or psychologist.
(27) (26) “Prescription drug monitoring program” means the West Virginia Controlled Substances Monitoring program under §60A-9-101 et seq. of this code.
(28) (27) “Principal” means an officer, director, or person who directly owns a beneficial interest in or ownership of the securities of an applicant or permittee, a person who has a controlling interest in an applicant or permittee or who has the ability to elect the majority of the board of directors of an applicant or permittee or otherwise control an applicant or permittee, other than a financial institution.
(29) (28) “Processor” means a person, including a natural person, corporation, partnership, association, trust, or other entity, or any combination thereof, which holds a permit from the bureau under this act to process medical cannabis. The term does not include a health care medical cannabis organization under as defined in §16A-13-1 et seq. of this chapter code.
(30) (29) “Registry” means the registry established by the bureau for practitioners.
(31) (30) “Serious medical condition” means any of the following, as has been diagnosed as part of a patient’s continuing care:
(N) Severe chronic or intractable pain of neuropathic origin or severe chronic or intractable pain. in which conventional therapeutic intervention and opiate therapy is contraindicated or has proved ineffective as determined as part of continuing care
(32)(31) “Terminally ill” means a medical prognosis of life expectancy of approximately one year or less if the illness runs its normal course.
(4) In the practitioner’s professional opinion and review of past treatments, the practitioner determines the patient is likely to receive therapeutic or palliative benefit from the use of medical cannabis. and other treatments, including treatments involving opioids, have proven ineffective or otherwise are contraindicated
(1) The patient’s name, date of birth, and address.
(3) Provide to the patient, or caregiver, on behalf of the patient if authorized by the patient, a copy of the patient’s controlled substance history.
(a) The bureau may grant or deny a permit to a grower, processor, or dispensary. In making a decision under this subsection, the bureau shall determine that:
(3) The applicant is a resident of this state as defined in §29-22B-327 of this code or is organized under the law of this state. If the applicant is a business entity, majority ownership in the business entity must be held by a state resident or residents.
(4) The applicant is ready, willing, and able to properly carry on the activity for which a permit is sought.
(5) The applicant possesses the ability to obtain in an expeditious manner sufficient land, buildings, and equipment to properly grow, process, or dispense medical cannabis.
(8) The applicant is able to implement and maintain security, tracking, recordkeeping, and surveillance systems relating to the acquisition, possession, growth, manufacture, sale, delivery, transportation, distribution, or the dispensing of medical cannabis as required by the bureau.
(d) Regions. — The bureau shall establish a minimum of three regions within this state for the purpose of granting permits to grower/processors and dispensaries and enforcing this act. The bureau shall approve permits for growers, processors and dispensaries in a manner which will provide an adequate amount of medical cannabis to patients and caregivers in all areas of this state. The bureau shall consider the following when issuing a permit
(d) Dispensary location. ─ The bureau shall consider the following when issuing a dispensary permit:
(1) Geographic location;
(1) (2) Regional population;
(2) (3) The number of patients suffering from serious medical conditions;
(3) (4) The types of serious medical conditions;
(4) (5) Access to public transportation;
(5) (6) Approval by local health departments;
(6) (7) Whether the county has disallowed the location of a grower, processor or dispensary; and
(7) (8) Any other factor the bureau deems relevant.
(e) Application procedure. — The bureau shall establish a procedure for the fair and objective evaluation of all applications for all medical cannabis organization permits. Such evaluations shall score each applicant numerically according to standards set forth in this chapter.
(a) The following limitations apply to approval of permits for growers, processors, and dispensaries, subject to the limitations in subsection (b) of this section:
(1) The bureau may not issue permits to more than 10 growers: Provided, That each grower may have up to two locations per permit.
(2) The bureau may not issue permits to more than 10 processors.
(3) The bureau may not issue permits to more than thirty 100 dispensaries. with no more than five in any region
(4) The bureau may not issue more than two 10 individual dispensary permits to one person.
(9) A grower or a processor may not be a dispensary A person may hold a grower permit, a processor permit, and a dispensary permit, or any combination thereof, concurrently.
(2) A written statement from the county commission for the county in which the permit is to be located and conduct business that the county has not voted, pursuant to §16A-7-6 of this code, to disapprove a medical cannabis organization to be located or operate within the county.
(a) A grower and processor shall contract with an independent laboratory to test the medical cannabis produced by the grower or processor. The bureau shall approve the laboratory and require that the laboratory report testing results in a manner as the bureau shall determine, including requiring a test at harvest and a test at final processing. The possession by a laboratory of medical cannabis shall be a lawful use.
(b) All medical cannabis produced pursuant to this chapter shall be subject to testing as directed by the bureau.
(c) The bureau shall ensure that there is sufficient testing capacity to meet patient demand.
(d) All laboratories providing testing pursuant to this section shall be certified to do so by the Office of Laboratory Services.
(a) General rule. — A dispensary that has been issued a permit under §16A-6-1 et seq. of this code may lawfully dispense medical cannabis to a patient or caregiver upon presentation to the dispensary of a valid identification card for that patient or caregiver. The dispensary shall provide to the patient or caregiver a receipt, as appropriate. The receipt shall include all of the following:
(b) Requirements. — A dispensary shall have a physician or a pharmacist onsite at all times during the hours the dispensary is open to receive patients and caregivers. A physician or a pharmacist shall, prior to assuming duties under this paragraph, successfully complete the course established in subsection (a), section one, article three of this chapter. A physician may not issue a certification to authorize patients to receive medical cannabis or otherwise treat patients at the dispensary
(c) (b) Filing with bureau. — Prior to dispensing medical cannabis to a patient or caregiver, the dispensary shall file the receipt information with the bureau utilizing the electronic tracking system. When filing receipts under this subsection, the dispensary shall dispose of any electronically recorded certification information as provided by rule.
(d) (c) Limitations. — No dispensary may dispense to a patient or caregiver:
(e) (d) Supply. — When dispensing medical cannabis to a patient or caregiver, the dispensary may not dispense an amount greater than a 30-day supply until the patient has exhausted all but a seven-day supply provided pursuant to §16A-4-5 of this code.
(f) (e) Verification. — Prior to dispensing medical cannabis to a patient or caregiver, the dispensary shall verify the information in subsections (d) and (f) of this section by consulting the electronic tracking system included in the bureau’s electronic database established under §16A-3-1 of this code and the dispensary tracking system under §16A-7-1 of this code.
(g) (f) Form of medical cannabis. — Medical cannabis dispensed to a patient or caregiver by a dispensary shall conform to any requirement or limitation set by the practitioner as to the form of medical cannabis for the patient.
(h) (g) Safety insert. — When a dispensary dispenses medical cannabis to a patient or caregiver, the dispensary shall provide to that patient or caregiver, as appropriate, a safety insert. The insert shall be developed and approved by the bureau. The insert shall provide the following information:
(i) (h) Sealed and labeled package. — Medical cannabis shall be dispensed by a dispensary to a patient or caregiver in a sealed, properly labeled, and child-resistant package. The labeling shall contain the following:
(b) Payment of tax and reports. — A grower/processor shall make quarterly payments under this section for each calendar quarter at the rate prescribed in subsection (a) on the gross receipts for the calendar quarter. The tax shall be due and payable on the 20th day of January, April, July and October for the preceding calendar quarter on a form prescribed by the Department of Revenue
(a) Tax imposed. -- For the privilege of engaging or continuing within this state in the business of a dispensary of medical cannabis, as defined in §16A-2-1 of this code, there is hereby levied upon and collected from every person exercising the privilege a privilege tax.
(b) Rate and measure of tax. ─ The rate of tax imposed by this section shall be 10 percent of the gross receipts the dispensary receives or accrues during the reporting period, depending upon its method of accounting for federal income tax purposes, from the sale of medical cannabis to a patient or to a caregiver. The tax imposed by this section shall not be added by the dispensary as a separate charge or line item on any sales slip, invoice, receipt, other statement, or memorandum of the price paid by a patient, or caregiver.
(c) Definitions. – For purposes of this article:
(1) “Gross receipts” means and includes the gross receipts, however denominated, derived from the sale, distribution, or transfer of medical cannabis, without any deduction on account of the cost of property sold; the cost of materials used to grow, process, or sell the medical cannabis; labor costs, taxes, royalties paid in cash or in kind, or otherwise; interest or discount paid; or any other expense, however denominated.
(2) “Person” includes any natural person, corporation, partnership, limited liability company, or other business entity as those terms are defined in §11-1-1 et seq. of this code.
(b) (d) Payment of tax and reports. — A grower/processor Every person subject to the tax imposed by this section shall make quarterly payments under this section for each calendar quarter at the rate prescribed in subsection (a) (b) of this section on the gross receipts received or accrued for the calendar quarter, depending upon the person’s method of accounting for federal income tax purposes. The tax shall be due and payable on the 20th day of January, April, July and October for the preceding calendar quarter. on a form prescribed by the Department of Revenue When the payment of tax is due, the person shall file a tax return in a form prescribed by the Tax Commissioner. The Tax Commissioner may require such forms, schedules, and returns and impose such filing and remittance requirements as may be necessary or convenient for the efficient administration of taxes imposed by this section.
(e) Electronic filing and payment. ─ The taxes imposed by this section shall be paid to the Tax Commissioner by electronic funds transfer, unless electronic payment is prohibited by state or federal law. Tax returns required by this section shall be filed electronically with the Tax Commissioner.
(f) Liability for reporting and payment of tax. -- If any dispensary does not renew its permit, gives up its permit, loses its permit to operate a dispensary, or otherwise ceases business, then any tax, additions to tax, penalties and interest imposed by this article and by §11-10-1 et seq. of this code shall become due and payable immediately and the dispensary shall make a final return or returns and pay any tax which is due within thirty days after not renewing its permit, giving up its permit, losing its permit to operate a dispensary, or otherwise ceasing business. The unpaid amount of any tax is a lien upon the property of the dispensary and of its owners.
(c) (g) Deposits of proceeds. – All money received from the tax imposed under subsection (a) this section, including any interest and additions to tax paid under §11-10-1 et seq., less the amount of any refunds, shall be deposited into the fund Medical Cannabis Program Fund.
(d) (h) Exemption. — Medical Sales of medical cannabis shall not be subject to a sales tax the taxes imposed by §11-15-1 et seq. and §11-15A-1 et seq. of this code, if gross receipts from the sale thereof are included in the measure of tax under this section and the tax has been paid as provided in this section. Additionally, sales of medical cannabis shall not be subject to a special district excise tax imposed by a county or municipality pursuant to this code, or to a county or municipal sales tax.
(e) (i) Information. — A grower/processor that sells medical cannabis shall provide to the Department of Revenue information required by the bureau
(1) Persons subject to the tax imposed by this section shall provide to the Tax Commissioner any information the Tax Commissioner may require to administer, collect, and enforce the tax imposed by this section.
(2) Notwithstanding any provision of §11-10-1 et seq. of this code or of this article to the contrary, the Tax Commissioner, the bureau, and the Secretary of Health and Human Resources may enter into written agreements pursuant to which the Tax Commissioner will disclose to designated employees of the bureau and the Secretary of Health and Human Resources, whether a particular grower, processor, or dispensary is in good standing with the Tax Commissioner, and the bureau and the Secretary will disclose to designated employees of the Tax Commissioner information a grower, processor, or dispensary provides to the bureau and the Secretary pursuant to this code. Tax information disclosed pursuant to a written agreement shall remain confidential in the hands of the receiver and shall not be disclosable under §29B-1-1 et seq. of this code. To the extent feasible, this information should be shared or exchanged electronically
(j) Rules. -- The Tax Commissioner may promulgate, in accordance with the provisions of §29A-3-1 et seq. of this code, such procedural, interpretive, or legislative rules, including emergency rules, as the Tax Commissioner may deem necessary or convenient for the efficient administration of taxes imposed by this §16A-9-1 of this code.
§16A-9-3. Tax on medical cannabis crimes and penalties.
Notwithstanding any provision in §11-9-1 et seq. of this code to the contrary, each and every provision of the “West Virginia Tax Crimes and Penalties Act” set forth in §11-9-1 et seq. of this code shall apply to the tax imposed by §16A-9-1 et seq. of this code with like effect as if said act were applicable only to the tax imposed by §16A-9-1 et seq. of this code and were set forth in extenso in §16A-9-1 et seq. of this code.
§16A-9-4. Procedure and administration of the tax on medical cannabis.
Notwithstanding any provision of §11-10-1 et seq. of this code or any other provision of this code to the contrary, each and every provision of the “West Virginia Tax Procedure and Administration Act” set forth in §11-10-1 et seq. of this code, shall apply to the tax imposed by §16A-9-1 et seq. with like effect as if the said West Virginia Tax Procedure and Administration Act were applicable only to the tax imposed by §16A-9-1 et seq. of this code and were set forth in extenso in §16A-9-1 et seq. of this code.
(b) Expiration. — The bureau’s authority to adopt emergency rules under subsection (a) of this section shall expire two years after the effective date of this section July 1, 2021. Rules adopted after this period shall be promulgated as provided by law.
(4) Two physicians who are licensed pursuant to §30-14-1 et seq. of this code appointed by the West Virginia Osteopathic Association.
(4) (5) One pharmacist licensed to practice in the state, to be designated by the Board of Pharmacy.
(5) (6) One pharmacologist who has experience in the science of cannabis and a knowledge of the uses, effects, and modes of actions of drugs, to be appointed by the Governor.
(6) (7) One member who is a horticulturalist, to be designated by the West Virginia Commissioner of Agriculture.
(7) (8) One member designated by the West Virginia Association of Alcoholism and Drug Counselors.
(8) (9) An attorney licensed in the state who is knowledgeable about medical cannabis laws.
(9) (10) One member appointed by the West Virginia Prosecuting Attorneys Institute.
(10) (11) One member appointed by the Governor, who shall be a patient, a family or household member of a patient or a patient advocate.
(g) Initial terms. — The initial terms of members appointed under subsection (a) of this section shall be for terms of one, two, three, or four years, the particular term of each member to be designated by the commissioner at the time of appointment. All other members shall serve for a term of four years.
(i) Expenses. — A member shall receive the amount of reasonable travel, hotel, and other necessary expenses incurred in the performance of the duties of the member in accordance with state rules but shall receive no other compensation for the member’s service on the board.
(4) To issue, two years after the effective date of this section, a written report to the Governor, the Senate, and the House of Delegates.
(B) Whether to change, add, or reduce the types of medical conditions which qualify as serious medical conditions under this act.
(D) Whether to change, add, or reduce the number of growers, processors or dispensaries.
§16A-15-10. State employee actions and federal law.
(a) No cause of action exists against the state officers and employees in their personal capacities, while acting within the scope of duties contemplated by §16A-1-1 et seq. of this code. Any recovery for claims or actions arising from this section is limited solely to the proceeds of available insurance coverage.
(b) To the extent permitted by law, the State of West Virginia shall defend state officers and employees involved in implementing the provisions of §16A-1-1 et seq. of this code against any claims, charges, liabilities, or expenses and shall indemnify and hold harmless state officers and employees involved in implementing the provisions of §16A-1-1 et seq. of this code provided they acted within the scope of their duties or employment in accordance with the act, including without limitation, defense in any state, federal, or local court and payment of the amount of any judgment obtained, damages, legal fees, expenses, and any other expenses incurred.
(b) The provisions of §16A-12-1 et seq. of this code, and any other criminal provisions or penalties contained in this act, shall not be effective until 90 days from passage of Senate Bill 386 during the 2017 regular session.
(d) Notwithstanding the prohibition contained in subsection (c) on the issuance of identification cards until July 1, 2019, the bureau may implement a process for the pre-registration of patients with a serious medical condition who have been issued a certification approved by the bureau and to a caregiver designated by the patient: Provided, That a patient who is pre-registered must nevertheless comply with the provisions of §16A-5-1 of this code and may not be issued an identification card necessary to obtain and use medical cannabis as authorized by this act until July 1, 2019.
NOTE: The purpose of this bill is to modify the limitations on permits for growers, processors and dispensaries of medical cannabis. The bill increases the number of permits that the bureau may issue for growers, processors and dispensaries of medical cannabis. The bill permits growers, processors and dispensaries to be the same person or entity. The bill defines and modifies terms; modifies conditions for issuance of patient certifications; and requires that one or more state residents own a majority of a medical cannabis business entity. The bill imposes an excise tax on dispensaries of medical cannabis measured by the gross receipts from such sales, and provides for the administration, collection and enforcement of the tax. In addition to exempting sales of medical cannabis from sales tax, the bill exempts sales from district excises taxes imposed by a county or municipality and from local sales taxes. The bill provides for the state to defend and indemnify state officials and employees acting within the scope of their employment when implementing the act.