SECTION 1. The legal history of cannabis or marijuana in the United States primarily addresses the regulation of marijuana for medical use, and secondarily the use of marijuana for personal or recreational purposes. Regulations and restrictions on the sale of cannabis sativa as a drug began as early as 1860. Increased restrictions and labeling of cannabis as a poison began in many states from 1906 onward, and outright prohibitions began in the 1920s. By the mid-1930s cannabis was regulated as a drug in every state, including thirty-five states that adopted the Uniform State Narcotic Drug Act which was subsequently replaced in 1970 with the federal Uniform Controlled Substances Act.

The Uniform Controlled Substances Act classifies marijuana and tetrahydrocannabinol as schedule I controlled substances. In 1996, California voters passed Proposition 215, which legalized medical cannabis. The Oakland Cannabis Buyers' Cooperative was created to provide seriously ill patients with a safe and reliable source of medical cannabis, information, and patient support in accordance with Proposition 215. In January 1998 the United States government sued Oakland Cannabis Buyers' Cooperative for violating federal laws. On May 14, 2001, the United States Supreme Court ruled in United States v. Oakland Cannabis Buyers' Club that federal anti-drug laws do not permit an exception for medical cannabis. Subsequently, the United States Supreme Court in Gonzales v. Raich held that even where persons are cultivating, possessing, or distributing medical cannabis in accordance with state-approved medical cannabis programs, medical cannabis is in violation of federal marijuana laws and therefore federal authorities may prosecute offenses involving the Uniform Controlled Substances Act.

Notwithstanding the prospect of federal prosecution, several states, including Hawaii, have enacted medical marijuana laws. Chapter 329, part IX, Hawaii Revised Statutes, was enacted pursuant to Act 228, Session Laws of Hawaii 2000, to create a medical use of marijuana exemption from criminal sanctions. Other jurisdictions, such as Alaska, Arizona, California, Colorado, Connecticut, District of Columbia, Delaware, Maine, Massachusetts, Michigan, Montana, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, and Washington, also allow the use of marijuana for medicinal purposes.

In addition to medicinal marijuana laws, some states have legalized or decriminalized marijuana. Most places that have decriminalized cannabis have civil fines, confiscation, drug education, or drug treatment in place of incarceration or criminal charges for possession of small amounts of cannabis, or have made various cannabis offenses the lowest priority for law enforcement. The states of Alaska, California, Colorado, Connecticut, Maine, Massachusetts, Minnesota, Mississippi, Nebraska, Nevada, New York, North Carolina, Ohio, Oregon, Rhode Island, Vermont, and Washington have decriminalized marijuana in small amounts. In each of these states, marijuana users no longer face arrest or jail time for the possession or use of marijuana in an amount permitted by statute.

The legislature finds increasing public support for the decriminalization of marijuana possession. In November 2008, Hawaii county voters approved ordinance 08-181, the "lowest law enforcement priority of cannabis ordinance." The ordinance provides in pertinent part, "The cultivation, possession and use for adult personal use of Cannabis shall be the [l]owest [l]aw [e]nforcement [p]riority for law enforcement agencies in the county of Hawaii." Adult personal use is defined in the ordinance as use of cannabis on private property by adults.

Many critics of drug legalization are concerned that lifting the prohibition on illegal drugs like marijuana will increase crime and make streets less safe. However, a study released in 2011 by the nonprofit RAND Corp. indicates that just the opposite might be true: counter intuitively, stricter drug policies might actually lead to an increase in crime. The study found that when hundreds of medical marijuana dispensaries were closed last year in Los Angeles, crime rates rose in surrounding neighborhoods. Therefore, the legislature finds that legalization of marijuana sales by law-abiding corporations instead of by criminals has the potential to end a major source of crime on the streets.

On October 18, 2010, CNN reported in an article entitled "Former surgeon general calls for marijuana legalization" that then United States Surgeon General Jocelyn Elders supports legalizing marijuana. She is quoted in the article, "What I think is horrible about all of this, is that we criminalize young people. And we use so many of our excellent resources ... for things that aren't really causing any problems. It's not a toxic substance."

The legislature further finds that the legalization of marijuana for personal or recreational use is a natural, logical, and reasonable outgrowth of the current science of marijuana and attitude toward marijuana. In 2012, voters in Colorado voted to amend the state's constitution (Amendment 64) to legalize and regulate the production, possession, and distribution of marijuana for persons age twenty-one and older. Also in 2012, voters in Washington approved a proposition to legalize and regulate the production, possession, and distribution of cannabis for persons age twenty-one and older. Colorado is the first state to remove the prohibition on commercial production of marijuana for general use. Colorado realized state tax revenue of approximately $18,900,000 during the first half of 2014, and this revenue is expected to increase as sales of retail marijuana increase.

The legislature further finds that marijuana cultivation and sales hold potential for economic development, increased tax revenues, and reduction in crime.

The purpose of this Act is to:

(1) Decriminalize and regulate small amounts of marijuana for personal use;

(2) Establish a licensing scheme for the cultivation, sale, and use of small amounts of marijuana for personal use;

(3) Tax marijuana sales in the same manner as state excise taxes; and

(4) Subject income derived from marijuana sales to state income taxes.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

LEGALIZATION OF MARIJUANA FOR PERSONAL USE

§ -1 Definitions. As used in this chapter:

"Department" means the department of taxation.

"License" means a license issued by the department to authorize the operation of a marijuana establishment.

"Marijuana" means all parts of the plant of the genus cannabis, whether growing or not; the seeds thereof; the resin extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or its resin, including marijuana concentrate. "Marijuana" does not include industrial hemp; fiber produced from the stalks, oil, or cake made from the seeds of the plant; sterilized seed of the plant which is incapable of germination; or the weight of any other ingredient combined with marijuana to prepare topical or oral administrations, food, drink, or other product. For purposes of this definition, "industrial hemp" means the plant of the genus cannabis and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration that does not exceed 0.3 per cent on a dry weight basis.

"Marijuana accessories" means any equipment, products, or materials of any kind that are used, intended for use, or designed for use in planting, propagating, cultivating, growing, harvesting, composting, manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing, packaging, repackaging, storing, vaporizing, or containing marijuana, or for ingesting, inhaling, or otherwise introducing marijuana into the human body.

"Marijuana cultivation facility" means an entity licensed to cultivate, prepare, and package marijuana and sell marijuana to retail marijuana stores, marijuana product manufacturing facilities, and other marijuana cultivation facilities, but not to consumers.

"Marijuana establishment" means a marijuana cultivation facility, marijuana testing facility, marijuana product manufacturing facility, or retail marijuana store.

"Marijuana product manufacturing facility" means an entity licensed to purchase marijuana; manufacture, prepare, and package marijuana products; and sell marijuana and marijuana products to other marijuana product manufacturing facilities and retail marijuana stores, but not to consumers.

"Marijuana products" means marijuana concentrate products and products that comprise marijuana and other ingredients intended for use or consumption and include but are not limited to edible products, ointments, and tinctures.

"Marijuana testing facility" means an entity licensed to analyze and certify the safety and potency of marijuana.

"Personal use" means an amount of marijuana not exceeding one ounce that is used for private, personal, or recreational purposes by persons age twenty-one years or older. The term personal use includes display, possession, sale, transport, transfer, or processing of marijuana or marijuana products.

"Retail marijuana store" means an entity licensed to purchase marijuana from marijuana cultivation facilities, purchase marijuana and marijuana products from marijuana product manufacturing facilities, and sell marijuana and marijuana products to consumers.

§ -2 Personal use of marijuana. (a) Notwithstanding any law to the contrary, the personal use of marijuana is permitted.

(b) Personal use of marijuana shall not be the basis for arrest, seizure, or forfeiture of assets.

(c) The possession, use, display, purchase, transfer, or transport of marijuana, marijuana accessories, or marijuana paraphernalia for personal use shall be immune from criminal prosecution.

(d) The possession, growing, processing, or transporting of not more than six marijuana plants, with three or fewer being mature, flowering plants, and possession of the marijuana produced by the plants on the premises where the plants are grown shall not be subject to criminal prosecution; provided that the growing takes place in an enclosed and locked space and is not conducted openly or publicly, and that the plants are not made available for sale.

(e) The transfer or sale of one ounce or less of marijuana with or without remuneration to a person who is twenty-one years of age or older is permitted.

(f) The consumption of marijuana products is permitted.

(g) Assisting, advising, or abetting another person who is twenty-one years of age or older in any actions described in this section is permitted.

§ -3 Lawful operation of marijuana establishments; license required. Notwithstanding any law to the contrary, the following acts are permitted and shall not constitute a criminal offense or be the basis for search, seizure, or forfeiture of assets of a person age twenty-one years or older:

(1) Manufacturing, possessing, or purchasing marijuana accessories or selling marijuana accessories to a person who is twenty-one years of age or older;

(2) Manufacturing, possessing, displaying, or transporting marijuana or marijuana products; purchase of marijuana from a marijuana cultivation facility; purchase of marijuana or marijuana products from a marijuana product manufacturing facility; or sale of marijuana or marijuana products to consumers; provided that the person conducting the activities described in this paragraph has obtained a current, valid license to operate a retail marijuana store or is acting in the capacity of an owner, employee, or agent of a licensed retail marijuana store;

(3) Cultivating, harvesting, processing, packaging, transporting, displaying, or possessing marijuana; delivering or transferring marijuana to a marijuana testing facility; selling marijuana to a marijuana cultivation facility, marijuana product manufacturing facility, or retail marijuana store; or purchasing marijuana from a marijuana cultivation facility; provided that the person conducting the activities described in this paragraph has obtained a current, valid license to operate a marijuana cultivation facility or is acting in the capacity of an owner, employee, or agent of a licensed marijuana cultivation facility;

(4) Packaging, processing, transporting, manufacturing, displaying, or possessing marijuana or marijuana products; delivering or transferring marijuana or marijuana products to a marijuana testing facility; selling marijuana or marijuana products to a retail marijuana store or marijuana product manufacturing facility; purchasing marijuana from a marijuana cultivation facility; or purchasing marijuana or marijuana products from a marijuana product manufacturing facility; provided that the person conducting the activities described in this paragraph has obtained a current, valid license to operate a marijuana product manufacturing facility or is acting in the capacity as an owner, employee, or agent of a licensed marijuana product manufacturing facility;

(5) Possessing, cultivating, processing, repackaging, storing, transporting, displaying, transferring or delivering marijuana or marijuana products; provided that the person has obtained a current, valid license to operate a marijuana testing facility or is acting in the capacity as an owner, employee, or agent of a licensed marijuana testing facility; and

(6) Leasing or otherwise allowing the use of property owned, occupied, or controlled by any person, corporation, or other entity for any of the activities conducted lawfully in accordance with this section.

§ -4 Regulation of marijuana; rules. (a) No later than July 1, 2016, the department shall adopt rules, pursuant to chapter 91, necessary for implementation of this chapter. The rules shall not require such a high investment of risk, money, time, or any other resource or asset that the operation of a marijuana establishment is not worthy of being carried out in practice by a reasonably prudent businessperson. The rules shall include:

(1) Procedures for the application, issuance, renewal, suspension, and revocation of a license to operate a marijuana establishment; provided that any license to be issued shall be issued no later than ninety days after receipt of an application;

(2) A schedule of application, licensing, and renewal fees; provided that application fees shall not exceed $5,000, adjusted annually for inflation, unless the department determines a greater fee is necessary to carry out its responsibilities under this section;

(3) Qualifications for licensure that are directly and demonstrably related to the operation of a marijuana establishment;

(4) Security requirements for the premises of marijuana establishments;

(5) Requirements to prevent the sale or diversion of marijuana and marijuana products to persons under the age of twenty-one;

(6) Labeling requirements for marijuana and marijuana products sold or distributed by a marijuana establishment;

(7) Health and safety regulations and standards for the manufacture of marijuana products and the cultivation of marijuana;

(8) Restrictions on the advertising and display of marijuana and marijuana products; and

(9) Civil penalties for the failure to comply with rules adopted pursuant to this section.

(b) In order to ensure that individual privacy is protected, the department shall not require a consumer to provide a retail marijuana store with personal information other than government-issued identification to determine the consumer's age. A retail marijuana store shall not be required to acquire and record personal information about consumers.

(c) If an application for a license under this section is denied, the applicant shall be notified in writing of the specific reason for the denial. The applicant shall be entitled to resubmit the application at any time after denial of the initial application.

§ -5 Effect on employers. This chapter shall not be construed to:

(1) Require an employer to permit or accommodate the use, consumption, possession, transfer, display, transport, sale, or growing of marijuana in the workplace; or

(2) Affect the ability of an employer to have policies restricting the use of marijuana by employees.

§ -6 Effect on intoxicated driving laws. This chapter shall not be construed as a defense, exemption, or immunity from chapter 291E.

§ -7 Effect on medical marijuana law. This chapter shall not be construed to affect medical use of marijuana as provided in chapter 329 and shall not be deemed to expand the medical use of marijuana beyond the uses provided in chapter 329.

§ -8 Effect on property rights. This chapter shall not be construed to prohibit a person, employer, school, hospital, detention facility, corporation, or any other entity who occupies, owns, or controls a property from prohibiting or otherwise regulating the possession, consumption, use, display, transfer, distribution, sale, transportation, or growing of marijuana on or in that property.

§ -9 Taxes. A marijuana establishment shall be subject to payment of income taxes on gross receipts under chapter 235 and payment of excise taxes under chapter 237 for each transaction conducted by the marijuana establishment."

SECTION 3. Chapter 712, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows:

"§712- Legalization of marijuana. The following acts shall be exempt from arrest, prosecution, and criminal culpability under this part:

(a) Any act permitted under section ‑2;

(b) Any act permitted under section ‑3; and

SECTION 4. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	873
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII