AN ACT (S. B. 340) (No ) (Approved July 9, 2017)

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1 (S. B. 340) (No ) (Approved July 9, 2017) AN ACT To establish an Act to Provide for the Study, Development, and Research of Cannabis for Innovation and the Applicable Rules and Limitations, (MEDICAL CANNABIS Act), for the purpose of reasserting the prohibition on the recreational use of cannabis; create the legal framework to regulate medical cannabis; establish the medical and scientific research uses of cannabis in accordance with the federal regulatory framework; create the Cannabis Regulatory Board and to set forth its powers and duties; classify as a misdemeanor a physician s noncompliance with the provisions of this Act; provide a strong oversight structure; amend Section 7.03 of Act No , as amended, known as the Puerto Rico Vehicle and Traffic Act, in order to prohibit the operation of a motor vehicle under the influence of medical cannabis; and for other related purposes. STATEMENT OF MOTIVES In furtherance of the commitment made to the People under the Plan for Puerto Rico, the MEDICAL CANNABIS Act is hereby adopted to set forth a regulatory framework to allow people suffering from certain medical conditions to use cannabis as a feasible treatment alternative. Furthermore, this Act highlights the role played by scientific research and development and integrates Academia into the study of this subject. Puerto Rico cannot turn its back on the development of research, the creation, production, and use of new treatments and medications, including palliative care. We need feedback from experts and people knowledgeable about the subject; thus, this Act also allows interaction among the Academia, health considerations, and the industry within the State s strong and clear controls to make the cannabis study, development, and treatment feasible.

2 2 With this avant garde legislation, Puerto Rico joins more than thirty (30) United States jurisdictions that have regulated the medical cannabis issue, observing the conditions and restrictions established by the federal code of laws and rules. It is worth noting that this Act is similar, to some extent, to the federal legislation applicable to the pharmaceutical industry. Therefore, it recognizes the talent of the Island s human capital with expertise in the pharmaceutical industry to provide support in the different areas of this emerging industry. EXECUTIVE ORDER OF THE PRECEDING ADMINISTRATION (OE ) Under the Plan for Puerto Rico, this Administration made the commitment to repeal Department of Health s Regulation No. 8766, as amended, on medical cannabis, adopted by the preceding Administration on July 8, Said regulation was not based on a legislative mandate setting forth specific parameters to guarantee the health and safety of patients, communities, and people involved in the cannabis industry. This Act provides assurance to patients and the industry, and establishes the applicable rule of law clearly identifying allowed and prohibited activities. We have concluded that the preceding administration acted recklessly by introducing medical cannabis in Puerto Rico and legalizing such an industry pursuant to Executive Order of May 3, 2015 which consisted of merely two and a half pages without prescribing the rules to implement it effectively and responsibly. In other words, Executive Order lacked the guidelines and expertise to ensure the State s intervention; however, such deficiencies have been corrected herein, based on the knowledge of the Academia, the pharmaceutical industry, and experts in the matter. With this Act, we correct the course of action followed by the preceding administration and address this issue responsibly.

3 3 LEGAL FRAMEWORK RESEARCH AND DEVELOPMENT The medical effect of cannabis has been a subject of study and research for decades. Countless research studies have shown that cannabis helps treating certain serious health conditions. For instance, the American Medical Association recommended that the study of cannabis for medical use should be evaluated and allowed. Furthermore, following the federal drug approval process, the Research and Development Division of the Food and Drug Administration (FDA) approved three (3) drugs intended for human use that contain active ingredients which are present in, or similar to those found in botanical marijuana. The FDA approved Marinol capsules in 1985 to treat nausea and vomiting associated with cancer chemotherapy in patients who have failed to respond adequately to conventional treatments. The active ingredients of Marinol capsules are dronabidol, a synthetic delta-9-tetrahydrocannabinol or THC which is considered the psychoactive component of marijuana. Marinol capsules were approved in 1992 for the treatment of anorexia associated with weight loss in Acquired Immunodeficiency Syndrome (AIDS) patients. The FDA recently approved Syndros, an oral solution of dronabidol, with the same indications of Marinol. Moreover, the FDA approved Cesamet capsules in 1985, to treat nausea and vomiting associated with cancer chemotherapy. Cesamet capsules contain the active ingredient nabilone, a synthetic cannabinoid. When analyzing whether to allow the use of medical marijuana, we must also consider its federal classification as a controlled substance. Under the Controlled Substances Act, Section 812 of Title 21 of the United States Code [21 U.S.C. 812(b)(1)], marijuana is included as a Schedule I controlled substance. The Federal Government has included in Schedule I, substances that: have a high potential for abuse; have no currently accepted medical use in treatment; and lack an accepted safety for use thereof under medical supervision. Schedule I substances, however,

4 4 including drugs derived from botanical sources such as marijuana, may be and are subject to clinical trials under the Food, Drug, and Cosmetic Act (FDC); as long as that the parties involved successfully submit an Investigational New Drug (IND) application to the FDA and successfully register with the Drug Enforcement Administration (DEA). Likewise, as it does with other new drugs development processes, the FDA works with researchers who conduct studies in the development of potential new drugs derived from marijuana, regularly meeting with them while planning testing as part of their IND. Although marijuana is listed as a Schedule I controlled substance, it may be used and is actually used in clinical trials, provided that an IND is submitted and is registered with DEA. Medical Cannabis contains THC and CBD, which are the two (2) main chemical compounds that have measurable medical effects. These compounds have been used for their medicinal properties to treat different chronic conditions. Definitely, the scientific research on this subject continues and the medical community has shown a significant interest in such field. LEGAL FRAMEWORK - UNITED STATES DEPARTMENT OF JUSTICE The Government of the United States has allowed states to create programs relating to the production and use of medical cannabis. The U.S. Department of Justice issued a series of guidance instructing federal prosecutors not to intervene in state medical cannabis programs operating under strong and effective regulatory systems. The U.S. Department of Justice has issued the following memoranda in relation to the general prohibition against the possession and use of marijuana at the federal level: Investigations and Prosecutions in States, Authorizing the Medical Use of Marijuana of October 19, 2009; Guidance Regarding the Ogden Memo In Jurisdictions Seeking to Authorize Marijuana for Medical Use of June 29, 2011; Guidance Regarding Marijuana Enforcement of August 29, 2013, and Guidance Regarding Marijuana Related Financial Crimes, of February 14, 2014.

5 5 Upon establishing its policy on the use of medical cannabis, the U.S. Department of Justice set forth eight priorities: Preventing the distribution of marijuana to minors; Preventing the revenues from the sale of marijuana from going to criminal enterprises, gangs, and cartels; Preventing the diversion of marijuana from states where it is legal under state law in some form to other states; Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; Preventing violence and the use of firearms in the cultivation and distribution of marijuana; Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use; Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and Preventing marijuana possession or use on federal property. For the Federal government it is critical that jurisdictions pass laws enabling the use of medical cannabis, within a clear, strong, and effective regulatory framework with adequate safeguards to minimize the threat it may pose on the attainment of their priorities. This protects the main interest of the national government relating to the investigation and prosecution of crimes. Note that the federal laws are not focused on local or specific activities, recognizing state sovereignty, but rather seek to protect children as well as the states that have not authorized a medical cannabis program, and prevent these programs from being used as a pretext for the commission of other offenses that have priority at the national level, such as arms trafficking, human trafficking, and drug trafficking. For all of the

6 6 foregoing, they recommend the states to create a strong and effective regulatory system. LEGAL FRAMEWORK - RESOURCES GENERATED BY THE INDUSTRY Federal regulations require a strict regime regarding the management of cash generated by medical cannabis, therefore, a guidance regarding the management of resources relating to the financial activity generated by the cannabis industry has been issued. This guidance is directed to prevent the use of cannabis as a form of money laundering or as a pretext for the sale of other illicit drugs. See, Guidance Regarding Marijuana Related Financial Crimes, James Cole, (February 14, 2014) ( February 14 Memorandum ) and the Department of the Treasury Financial Crimes Enforcement Network ( FinCEN ) FIN-2014-G001 of February 14, 2014, BSA Expectations Regarding Marijuana-Related Businesses. The financial industry must exercise its duties with due diligence regarding their clients activities. For such reason, FinCEN issued a guidance to clarify the Bank Secrecy Act ( BSA ) expectations for financial institutions seeking to provide services to marijuanarelated businesses. This guidance clarifies how financial institutions can provide services to marijuana-related businesses consistent with their BSA obligations, and aligns the information provided by financial institutions in BSA reports. LEGAL FRAMEWORK OF THIS ACT This Act establishes the controls and tools required to adopt the necessary regulations to allow patients access to medical cannabis and the orderly development of the industry ensuing therefrom. In addition, the provisions of this Act strictly follow the guidelines established by the federal legal framework. In this Act, we create the Cannabis Regulatory Board and require the development of academic degrees as well as licensing and continuing education courses for the different industry participants, including, but not limited to, those directly interacting with patients.

7 7 Furthermore, this Act provides for the oversight of all phases of the process, to wit, research, cultivation, manufacture, laboratories, transportation, and dispensation of cannabis. We have established a specific licensing and identification process for every activity as well as a background investigation, in seeking to prohibit people from having access to the industry when their interest is not in safeguarding the health of patients, but rather in committing financial or other offenses. A stringent monitoring system for cannabis, from the seed and throughout the entire process, would allow that only lawfully grown cannabis be accepted and that the money generated by said activity be appropriately channeled to the financial sector. The technological and oversight tools would allow for the verification of the source of the money generated from the sale, in accordance with the federal guidance on the prevention of money laundering pursuant to the guidelines of the competent federal agencies. This also safeguards the public interest of the Government of Puerto Rico regarding this industry s revenues. To ensure that the public policy on medical cannabis is implemented within the scope of science and the public interest, we require the participation of the entities that have expertise in different areas, to wit: the Department of Health, the Department of Agriculture, the Department of the Treasury, the Puerto Rico Police, the Department of Consumer Affairs, the Department of Economic Development and Commerce, the Office of the Commissioner of Financial Institutions, and the Public Corporation for the Supervision and Insurance of Cooperatives in Puerto Rico. Some of these entities shall be part of the Board created herein, while others shall provide assistance through collaboration agreements to contribute their knowledge to the development of guidelines for the emerging medical cannabis industry.

8 8 In implementing the federal public policy on interstate cannabis trafficking, this Act requires that the medical cannabis lawfully used in Puerto Rico be grown on the Island, by an industry located in Puerto Rico. In addition, the export of cannabis outside of the Island is hereby prohibited. Our main goal is the wellbeing of patients to whom a cannabis treatment has been recommended. Therefore, this Act provides guidelines and parameters to ensure their wellbeing. Cannabis use is permitted for medical and scientific purposes only. The public policy of the Government of Puerto Rico is to allow the use of medical cannabis as an alternative medical treatment for patients who need it. A new, trustworthy, and professional industry will ensue from this authorization. Therefore, the people who will be part of said industry shall be required to: be duly trained on the benefits and risks of cannabis; attend certified continuing education courses; and in some cases, specific academic degrees to perform certain jobs. Under no circumstances shall this Act be construed as authorizing the use of cannabis without the recommendation of a qualified physician who knows the risks and benefits of cannabis and makes such recommendation based on a bona fide physician-patient relationship. In fact, every physician who intends to make medical cannabis recommendations shall be required to have proper training, or otherwise would be subject to penalties. Only people suffering from a condition identified by a physician shall use medical cannabis, upon the recommendation of said physician and under a bona fide physician-patient relationship, if such condition has been listed among the qualified conditions by regulations. To ensure compliance, only qualified people holding an identification issued in accordance with this Act may buy cannabis at retail dispensaries. These people shall be responsible for complying with the provisions of

9 9 this Act. Should they fail to do so, said people may be subject to the provisions of Act No. 4 of June 23, 1971, as amended, known as the Controlled Substances Act. This Act authorizes and promotes research on the health benefits of medical cannabis in compliance with federal regulations. Puerto Rico may and shall be a pioneer in the research and development of medications derived from medical cannabis. Cannabis research constitutes a significant step towards positioning the Island at the forefront of the pharmaceutical industry. Lastly, with this Act we reaffirm the prohibition against the recreational use of cannabis in any form, including those requiring the burning thereof. Likewise, the public consumption of this substance, the use thereof in dispensaries, and children s access to dispensaries is hereby prohibited. Medical cannabis shall be used in private locations, as defined in this Act. With the approval of this Act, this Administration honors its commitment to patients and physicians who have identified medical cannabis as an effective treatment for certain health conditions. Moreover, it renders the cannabis industry in Puerto Rico trustworthy and clarifies that the cannabis would be used exclusively for authorized medical purposes. BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF PUERTO RICO: CHAPTER I.- GENERAL PROVISIONS Section 1.- This Act shall be known as the Act to Provide for the Study, Development, and Research of Cannabis for Innovation, and the Applicable Rules and Limitations, (MEDICAL CANNABIS Act). Section 2.- Definitions (a) Primary Caregiver means a person age twenty-one (21) or older, who is a Puerto Rico resident and is in charge of conducting any transactions to procure the use of medical cannabis for a qualified patient in his care. Said person

10 10 must hold a photo identification issued in accordance with the provisions of this Act and the regulations adopted thereunder. (b) Cannabis or Medical Cannabis means every compound, manufacture, derivative, mixture, or preparation of all parts of the plant Cannabis sativa and Cannabis indica, and any hybrids of these plants, its seeds, flower, or resin. Such term does not include the mature stalks of such plant or fiber produced from such stalks. It further excludes industrial hemp. (c) Industrial Hemp means the plant of the genus cannabis and any part of such plant, whether growing or not, containing a delta-9-tetrahydrocannabinol concentration (THC) of not more than three-tenths (0.03%)[sic] percent on a dry weight basis. (d) Advisory Bodies means the consulting bodies appointed by the Board to provide it with advice on administrative and operational aspects as well as on other matters it may deem pertinent. (e) Medical Advisory Body means a consulting group appointed by the Board to provide it with advice on medical, scientific, and specialized aspects relating to the implementation of this Act. (f) Authorized Pharmacist means a person licensed in Puerto Rico and authorized to practice the profession of pharmacist, who holds a license pursuant to state and federal laws and regulations, and meets the requirements set forth in this Act and the regulations adopted thereunder. (g) Flower means the part where the cannabis plant s reproductive organs are located. (h) Primary Caregiver Identification means the photo identification issued to a primary caregiver of an authorized patient. (i) Medical Cannabis Patient Identification means the photo identification issued to a patient authorized to engage in the medical use of cannabis.

11 11 (j) Occupational Licensee Identification means the photo identification issued to persons who work in the medical cannabis industry, such as license holders and the employees thereof. (k) Medical Cannabis Regulatory Board or Board means the Board responsible for the administration of the medical cannabis program. (l) Cultivation License means the license issued by the Board to a person engaged in the growing, drying, trimming, curing, or packaging process of cultivated medical cannabis for the sale thereof to a licensed manufacturer or dispensary. (m) Dispensary License means the license or permit issued by the Board to a person who purchases cannabis from a grower or a manufacturer and sells, supplies, or provides cannabis to registered patients. Licensed dispensary includes any commercial property where cannabis is sold at retail to qualified patients or primary caregivers. Likewise, includes the delivery service to qualified patients. Licensed dispensaries that shut down operations shall not transfer cannabis to other licensed dispensaries without the approval of the Board. (n) Research License means a scientific and research development license issued by the Board to entities that conduct scientific research on cannabis and that are currently compliant according to the requirements established within the regulatory framework of the Federal Government and the Government of Puerto Rico. (o) Laboratory License means a license issued by the Board that allows the licensee to conduct quality assurance testing, report testing results, and submit said results to the Board.

12 12 (p) Manufacturer License means a license issued by the Board allowing the licensee to operate a medical cannabis manufacturing facility that purchases cannabis from a cultivation license holder, or where cannabis products are produced or packaged for sale and transfer to a licensed dispensary. (q) Occupational License means the license issued by the Board to any person that works in the medical cannabis industry. (r) Authorized Physician License means a license issued by the Board to a person licensed in Puerto Rico to practice the medical profession, who holds a license to prescribe and/or administer drugs pursuant to federal and state laws and regulations and also meets the requirements established in this Act and the regulations approved thereunder. (s) Transporter License means a license issued by the Board to any person for the storage and transport of medical cannabis and/or medical cannabis products between cultivation, dispensary, laboratory, and manufacturer license holders and licensed medical cannabis research and development centers. (t) Private Location means a location or site where an expectation of privacy exists and where no third party is present without consent, and for which an authorization from the legal owner or person in lawful possession thereof is obtained. (u) Authorized Physician means a person licensed in Puerto Rico and authorized to practice the medical profession, who holds a license to prescribe and/or administer drugs pursuant to federal and state laws and regulations, and meets the requirements established in this Act and the regulations approved thereunder. (v) Patient means any person who receives a recommendation from an authorized physician for the use of medical cannabis to treat his condition and who has been issued an identification by the Board upon completing the registration process in accordance with the MEDICAL CANNABIS Act and the regulations

13 13 approved thereunder. Furthermore, it includes patients who are nonresidents of Puerto Rico, but who reside in any other state of the U.S. and hold a medical recommendation from an authorized physician, an identification issued by the state of residence of the nonresident patient for such purposes, and who also meet the requirements established pursuant to this Act. (w) Bona Fide Physician-Patient Relationship means a treatment relationship between a physician and patient where a physician has completed a full assessment of the patient, his medical history, and medical condition that warrants a recommendation for the use of cannabis and the method of administration thereof. (x) Vaporizer means any noncombustible product that employs a heating element, power source, electronic circuit, or other electronic, chemical, or mechanical means, that can be used to produce vapor from medical cannabis. (y) Vaporization means the process that releases the active components of cannabis derivatives through vapor produced by heating to a temperature just below the point of combustion. Section 3.- Public Policy It is the public policy of the Government of Puerto Rico to establish a regulatory framework that provides people with certain medical conditions with treatment alternatives. It is worth noting the critical role played by the research and development as well as by the involvement of the Academia, related organizations, and the private sector in scientific research. Puerto Rico cannot turn its back on the development of scientific research studies, treatment, and medications. The interaction between research and health considerations subject to the State s strong and clear controls to enable the study, development, and treatment with cannabis spearhead the public policy set forth herein.

14 14 CHAPTER II.- MEDICAL CANNABIS REGULATORY BOARD Section 4.- Board A Board, which shall be known as Medical Cannabis Regulatory Board (hereinafter, the Board ), is hereby created and attached to the Department of Health. The Board shall be composed of nine (9) members, six (6) of whom shall be ex officio members: the Secretary of Health; the Secretary of Agriculture; the Secretary of the Department of Economic Development and Commerce; the Secretary of the Treasury; the Secretary of the Department of Consumer Affairs; the Police Superintendent; and three (3) persons appointed by the Governor, of recognized personal, moral, and professional integrity, knowledgeable in the field of medicine, economic development, or the Academia, and with experience in scientific research. The Secretaries may delegate their participation in the Board to an employee or official of their agencies. The Board s determinations shall be made by a majority of members present, but five (5) members of the Board shall constitute a quorum. Notwithstanding, if there is a vacancy in the Board, half plus one appointed members shall constitute a quorum. The board members shall carry out the duties of the office without compensation. The office of the Secretary of Health shall preside over the Board, and the Clerk of the Board shall be appointed from among its members. Board members appointed by the Governor shall hold a position of trust, and may be removed by the Governor at any time. Furthermore, Board members shall be subject to the provisions of Act No , as amended, known as the Puerto Rico Government Ethics Act of Section 5.- Powers of the Board The Board shall have any and all powers as are necessary and convenient to implement the provisions and achieve the purposes of this Act, including, without limiting the generality of the foregoing, the power to:

15 15 a. Constitute a Medical Advisory Body to be composed of the Secretary of Health or his representative, two (2) physicians of recognized personal, moral, and professional integrity, who are knowledgeable in the field of medicine; one (1) authorized pharmacist of recognized personal, moral, and professional integrity, knowledgeable in the pharmaceutical industry; and one (1) member of the Academia with experience in research. The members of the Medical Advisory Body shall discharge the duties of their office without compensation. The Secretary of Health shall preside over the Medical Advisory Body. Furthermore, the members of the Medical Advisory Body shall be subject to the provisions of Act No , as amended, known as the Puerto Rico Government Ethics Act of Any individual appointed to the Medical Advisory Body by the Medical Cannabis Regulatory Board holds a position of trust; therefore, such individual may be removed at any time. Said Advisory Body is created for the purpose of making recommendations to the Board regarding: i. Medical conditions that may be included among the qualifying conditions provided in this Act. ii. Allowed Methods of Administration of Medical Cannabis. Notwithstanding, the Board is hereby expressly prohibited from designating as an allowed method of administration, the ignition or combustion of medical cannabis, which occurs when medical cannabis is heated at a temperature higher than its combustion point. The preceding does not exclude vaporizing medical cannabis, as defined in this Act; therefore, it may be allowed. At the request of an interested party or authorized physician, the Medical Advisory Body may authorize, as an exception, the vaporization of the cannabis flower to a patient diagnosed with a terminal illness or in cases where there is no other suitable or adequate alternative treatment and/or remedy.

16 16 iii. Maximum term during which a medical cannabis recommendation may be valid per condition. iv. Any other issue relating to the bona fide physician-patient relationship and the industry consistent with this MEDICAL CANNABIS Act to, safeguard the health and safety of the community and all the parties involved in the industry and prevent the abuse of medical cannabis, among others. v. Medical cannabis research and medical-related issues. b. Appoint Advisory Bodies to make recommendations to the Board regarding, but not limited to: i. The job safety of the industry s workers. ii. Safety aspects of each one of the facilities or services that require a license. iii. Technology for the following areas: method to track medical cannabis throughout the entire process, patients electronic medical records and collected information and the use thereof, while establishing investigation controls and preventing abuse. iv. Finance, accounting, and taxes. c. Have perpetual existence. d. Adopt an official seal and alter such seal as circumstances warrant. e. Maintain offices at the place or places it determines. f. Sue or be sued. g. Draft, enter into, and execute leases, contracts, and other instruments as are necessary or pertinent to the exercise of the powers and duties of the Board with any person, entity, corporation, federal agency, and any political entity or instrumentality. h. Hire any person, company, or corporation for consulting or advisory services.

17 17 i. Acquire, for the purposes of the Board, any personal or real property or interest thereon, including, but not limited to, acquisition by means of purchase or lease. It may also sell, lease or otherwise dispose of any property that, in the judgment of the Board, is no longer necessary to carry out the purposes of this Act. j. Appoint an executive director and fix his compensation as provided in this Act. The executive director shall be the chief executive officer of the Board, hold a position of trust, and have the administrative and operational powers and duties delegated to him by the Board in accordance with the powers conferred thereto. The Board may not delegate to the executive director the authority to adopt regulations, guidelines, and/or circular letters regarding the services it offers or is called to regulate. Nevertheless, the Board may delegate to the executive director the authority to evaluate and issue a final authorization for applications submitted by physicians, patients, and occupational licensees. Furthermore, the Board may delegate the authority to certify courses, resources, and providers of continuing education and licensing courses. k. Issue regulations to implement this Act pursuant to Act No. 170 of August 12, 1988, as amended, known as the Uniform Administrative Procedures Act. l. Hold hearings in accordance with its adjudicative function. Adjudicate on matters under its jurisdiction when required under Act No. 170 of August 12, 1988, as amended, known as the Uniform Administrative Procedures Act ; and/or the due process of law. m. Conduct inspections to license holders. n. Issue, deny, revoke, suspend, and restrict licenses and impose civil penalties in accordance with the provisions of this Act and the regulations adopted thereunder.

18 18 o. Follow the recommendations and medical decisions made by the Medical Advisory Body created under this Act. p. Any other powers as are necessary to achieve the purposes of this Act. Section 6.- Executive Director The Board shall appoint an executive director who shall earn a salary not greater than the salary of a Superior Judge of the Court of First Instance. In addition to the duties assigned to the executive director by the Board, in accordance with the powers conferred thereto, the executive director shall have the following powers and duties: (a) Take any administrative and managerial actions as are necessary and convenient for the effective implementation of this Act and the regulations adopted thereunder. (b) Establish the administrative structure, including systems, controls, and rules for personnel compensation, budget, finance, procurement, accounting, and any other administrative systems needed to conduct service operations effectively and efficiently. (c) Assign personnel as necessary to ensure that license applications are evaluated and that recommendations are submitted to the Board within a term not to exceed thirty (30) days after the filing thereof in accordance with the regulations adopted under this Act. (d) Assign personnel as necessary to ensure that applications for patient and primary caregiver identifications are evaluated and that the results of said evaluations are notified to the applicants within a term not to exceed of fifteen (15) days. If the evaluation is favorable for the applicant, the identification card shall be issued within a term not to exceed fifteen (15) days after the notification thereof.

19 19 (e) Assign personnel as necessary to ensure that occupational license applications are evaluated and that the results of said evaluations are notified to the applicants within a term not to exceed five (5) business days. If the evaluation is favorable for the applicant, the identification card shall be issued within a term not to exceed five (5) days after the notification thereof. (f) At the close of each fiscal year, but not later than November 1 st of each year, revise, approve, and submit to the Board a report on all administrative operations and services offered by the Board. Moreover, the executive director shall prepare a quarterly report during the first year of its creation, and annual reports thereafter, on the implementation of this Act, and the services offered by the Board. Such reports shall be submitted simultaneously to the Governor and to the Clerk of the House of Representatives and the Secretary of the Senate. Section 7.- Hearing Examiner The Board may delegate to hearing examiners its adjudicative function of presiding over the hearings to be held. The hearing examiners shall be empowered to: (1) administer oaths and take testimonies; (2) issue subpoenas, require the production of reports, books, papers, and documents pertinent to the exercise of their duties; (3) receive relevant evidence and rule upon it; (4) take or direct the taking of depositions; (5) hold hearings and regulate the course of the hearing; (6) hold and preside over preliminary conferences for clarification and simplification of issues in controversy; (7) rule upon procedural requests or similar issues; (8) recommend decisions to the Board; and

20 20 (9) carry out duties in accordance with the adjudicative function delegated to them. The duties of these hearing examiners shall be valid with the affirmative vote of a majority of the Board, unless the Board has delegated to the executive director the authority to decide upon any matter, in which case the approval of the executive director shall suffice. CHAPTER III.- CANNABIS FOR MEDICAL PURPOSES Section 8.- Cannabis only for Medical Purposes and Actions within the Scope of the MEDICAL CANNABIS Act and the regulations adopted by virtue of the MEDICAL CANNABIS Act. a) Cannabis shall be classified as a Schedule II drug under Act No. 4 of June 23, 1971, as amended, known as the Controlled Substances Act of Puerto Rico. Persons who meet all the requirements and act within the scope of this Act and the regulations adopted thereunder, shall not be subject to the criminal sanctions imposed by the Government of Puerto Rico or under the ordinances of any government authority of Puerto Rico. Any person acting outside the scope of this Act and the regulations adopted thereunder shall be subject to criminal penalties in accordance with the applicable criminal laws and to any applicable civil fines and penalties. b) The import of cannabis or cannabis seeds into Puerto Rico outside of the scope of the code of laws in effect of the Government of Puerto Rico and the Federal Government currently in effect is hereby prohibited. Section 9.- Prohibition against Recreational Use Smoking cannabis is hereby strictly prohibited. Any person who uses cannabis for recreational purposes shall be sanctioned in accordance with the provisions of Act No. 4, supra, and any others. Medical cannabis shall not be used for recreational purposes; the use thereof shall be limited exclusively to medical purposes.

21 21 Section 10.- Medical Use and Child Protection (a) The medical use of cannabis is hereby authorized in accordance with the provisions of this Act; provided, that the following requirements are met: (i) It is recommended by an authorized physician in accordance with the provisions of this Act and the regulations adopted thereunder. (ii) The person carries the photo identification issued by the Board, which a patient or primary caregiver shall carry at all times when in possession of medical cannabis. (b) The medical use of cannabis shall be allowed only at home or in private locations, as defined in this Act. The use thereof in public places is hereby prohibited. The use of cannabis in the facilities of a licensee is hereby prohibited, unless it is related to research and development in accordance with a licensed issued by the Board for such purposes. (c) The consumption, sale, and free distribution of medical cannabis, medical cannabis samples, or medical cannabis products or samples thereof in conventions, trade shows, and public or private events is hereby prohibited. (d) Any type of sale or transfer of ownership of medical cannabis, unless it is sold at a dispensary authorized under this Act or delivered by an authorized dispensary holding a license therefor; provided, that all of the statutory and regulatory requirements that render this activity feasible are met. (e) Cannabis shall not be used in the dispensaries. (f) The medical use of cannabis shall only be recommended by an authorized physician to treat the conditions prescribed by the Board through regulations, taking into account the recommendations made by the Medical Advisory Body and in accordance with the public policy set forth in this Act. (g) Children under the age of twenty-one (21) shall not enter a dispensary.

22 22 (h) Any presentation, form, or method, including packaging, labeling, and advertising of any kind that may appeal to children is hereby prohibited; the regulations adopted under this Act shall set forth the criteria to attain these purposes. (i) Every medical cannabis product shall be packed in a dark, childresistant resealable packaging. (j) The sale, distribution, or trade of excess medical cannabis that belong to a patient or primary caregiver is hereby prohibited. Section 11.- Authorization for Medical Recommendation Every authorized physician who recommends the use of medical cannabis to a patient shall have a bona fide physician-patient relationship, as provided in this Act. The effective term of a medical recommendation may be established by the Board taking into account the recommendations made by the Medical Advisory Body for each condition. The authorized physician shall advise the patient on the risks and benefits of medical cannabis. Section 12.- Medical Cannabis Patient Identification A resident patient shall be required to hold and carry a photo identification issued by the Board in order to enter a dispensary, possess cannabis, and use cannabis for medical purposes as recommended by an authorized physician. Likewise, the primary caregiver shall carry a photo identification to enter a dispensary and, at all times, when in possession of medical cannabis. Said identification shall be renewed annually. Any nonresident patient shall carry the identification issued in the appropriate jurisdiction in order to enter a dispensary, and when in possession of medical cannabis. Section 13.- Primary Caregivers A qualified patient who cannot reasonably procure medical cannabis by himself may be assisted by a primary caregiver. Said caregiver shall hold a primary caregiver photo identification issued by the Board and shall be authorized to enter a

23 23 dispensary for the sole purpose of procuring medical cannabis for the patient under his care. No person may be a primary caregiver for more than one (1) patient. However, the Board may establish exceptions by regulations for just cause in order to guarantee access to medical cannabis, safeguard the health and safety of the community and of all of the parties involved in the industry, and prevent the abuse of medical cannabis. Likewise, a person convicted of sale or distribution of controlled substances shall not be a primary caregiver. Section 14.- Authorized Physicians Prohibitions The Board shall issue licenses to any physicians who file applications therefor and meet the criteria to be an authorized physician and be able to make recommendations of medical cannabis. No physician holding a license to recommend the use of medical cannabis shall have a financial interest or receive any compensation whatsoever from any licensee or a person with an economic interest in the industry, with respect to the recommendations issued by said physician. No physician holding a license to recommend the use of medical cannabis shall hold any other licenses related to medical cannabis or have economic interests therein. The Board shall clearly prescribe by regulations any other prohibitions which shall be substantially similar to those established within the federal legal framework that regulates the interactions between authorized physicians and the pharmaceutical industry. Section 15.- Offense and Punishment for Unauthorized Medical Recommendation Any authorized physician who recommends the use of medical cannabis to a patient without having sufficient grounds to believe that the patient suffers from a condition that has not been listed in the regulations, and outside of a bona fide physician-patient relationship, as defined in this Act, shall be guilty of a misdemeanor.

24 24 Moreover, an authorized physician who acts in contravention of this Act may be subject to civil fine and penalties as applicable, in addition to any others provided under any other laws or regulations. CHAPTER IV.- RESEARCH AND DEVELOPMENT Section 16.- Research and Development The Board shall allow and authorize the use of cannabis for scientific research and development and shall prescribe by regulations the requirements to be met in order to issue licenses for research and development, upon the appropriate evaluation of the application therefor. Any entity that uses cannabis for scientific research shall meet the requirements set as part of the regulatory framework of the Federal Government and the Government of Puerto Rico. The Board may authorize a person or entity that holds a research license, as defined in this Act, to use the cannabis flower solely for scientific research and development purposes. The Board shall work in conjunction with Academia and related organizations as well as with the private sector to promote the medical cannabis scientific research. The Board and every concerned government entity shall facilitate and support the participation and the research and development efforts of the University of Puerto Rico and the Medical Sciences Campus. This Act recognizes the vast experience of Puerto Rico s pharmaceutical industry and the skilled personnel in the different disciplines thereof, which can contribute to and collaborate with the medical cannabis scientific research and development in order to render it feasible. CHAPTER V.- RULEMAKING AUTHORITY Section 17.- The Board shall adopt regulations that include and govern the specific criteria for the areas listed below. The regulations to be adopted shall be drafted in accordance with the public policy and the provisions of this MEDICAL CANNABIS Act, in order to safeguard the health, prevent the abuse of medical cannabis, ensure the safety of the community and of all the parties involved in the

25 25 industry all the while adhering to the Federal Government guidelines regarding medical cannabis. Furthermore, the Board shall identify and adopt technological tools for every stage and intervention of this industry. Among other matters, the Board shall regulate on the following areas: a. Cultivation, research, manufacturer, laboratory, transporter, dispensary, physician, and occupational licenses. Only a person holding a license issued by the Board may engage in any of the aforementioned activities within the medical cannabis industry. The Board shall provide for the license application forms to be used and the criteria required to be met for each type of license, and shall identify the compliance requirements with manufacturing and laboratory standards similar to those required from the pharmaceutical industry under the Federal legal framework. The requirements for all licenses and identifications shall abide by the most stringent measures so as to guarantee the safety of the patients, the community, and the persons participating in the medical cannabis industry. i. For the research license, the strict compliance with the federal regulations shall be required. ii. The Board shall establish the number of licenses that may be issued for each type taking into consideration, but not to be construed as a limitation, the expertise of the Board to set limits on the number of licenses, and thus achieve the purposes of this Act; the access to medical cannabis; the geographical area, and the size of the industry with respect to the patients to whom an identification has been issued. iii. The operations of a cultivation, research, manufacturer, laboratory, transporter, and dispensary license holder shall not be conducted within one hundred (100) meters from a public or private school and/or day care center. The Board may set additional safety requirements for licensees whose operations are

26 26 located within one hundred (100) meters from a public or private school and/or day care center, in order to guarantee the wellbeing of children. iv. Likewise, the presentation, promotion, signage, or any advertisement of medical cannabis dispensaries within one hundred (100) meters from a public or private school and/or day care centers is hereby prohibited. v. The Board shall establish the license application form, the information to be included in the application for each identification as well as the contents and form thereof. vi. The Board shall set the reporting requirements to be met by every license or identification holder regarding the use and administration thereof. Any person discharging duties within the medical cannabis industry shall carry the issued identification while discharging said duties. Moreover, the filing of a negative criminal record issued by the Puerto Rico Police, or issued in any other jurisdiction, shall be required to all license applicants, including but not limited to: owners, directors, officers, managers, and employees. Any person who needs an occupational license shall meet the criminal record filing requirement in order to ensure that he is eligible to work in the medical cannabis industry. vii. To develop strict processes and requirements to guarantee the use of medical cannabis for persons who are not residents of Puerto Rico, but are residents of any of the states of the United States, who have a medical cannabis recommendation issued by an authorized physician, hold an identification issued for such purposes by the state of residence of such patient, and who also meet all of the requirements prescribed by regulations, in order to validate the medicinal use of cannabis and prevent the abuse thereof. viii. To establish the format of the license and identification application, as well as the information to be included therein.

27 27 ix. In order to obtain a cultivation, manufacturer, laboratory, transporter, and dispensary license it shall be required that fifty-one percent (51%) of the ownership derives from Puerto Rico capital. x. Other licenses. The Board may establish by regulations other licenses for the different phases of the cannabis industry. The conditions and criteria to issue said licenses shall be established through regulations. xi. To impose any license, authorization, and identifications fees of any kind to be collected under this Act. xii. To establish information controls for dispensaries. xiii. To establish the packaging and labeling standards, as well as any warnings to be included in the packaging used to dispense cannabis. Such packaging shall be opaque, resealable, and child-resistant. Any presentation, format, or method, including packaging, labeling, and advertisement of any kind that may be appealing to children is hereby prohibited, and any regulations adopted under this Act shall include the criteria necessary to achieve this purposes. xiv. To adopt safety guarantees relating to the packaging where medical cannabis shall be dispensed. xv. To adopt quality control and good practices requirements similar to those set forth in the federal legal framework for any licenses within the pharmaceutical industry. xvi. To set reporting requirements for each license holders, such as: Good Agricultural Practices (GAP), Good Manufacturing Practices (GMP), Good Laboratory Practices (GLP), and Good Clinical Practices (GCP). xvii. To establish the process whereby a determination on a license application shall be made within a term not to exceed thirty (30) days from the time a recommendation is filed.

28 28 xviii. To establish the process to evaluate and determine whether an identification shall be issued to persons participating in the industry as employees of a licensee within a term that shall not exceed five (5) business days after the application is filed. xix. To establish the insurance policies and coverage that every licensee shall obtain and maintain, which shall be issued by an insurance company authorized to do business in Puerto Rico. xx. To establish the scope of the actions of a primary caregiver and the criteria to be qualified as such. The primary caregiver may not charge for any assistance provided to either a patient or a licensee. xxi. To establish the criteria to guarantee that the industry maintains the cultivation mechanisms required so as to prevent the import of cannabis and the seeds thereof, in accordance with the federal legal framework. The import of cannabis or the seeds thereof is hereby expressly prohibited. Likewise, the Board shall establish regulations on the reserves that each holder of a cultivation license must have available to sell to new cultivation license holders in Puerto Rico, in accordance with the terms adopted by the Board and the requirements set for cultivation license holders. b. Monitoring, compliance, and technology mechanisms. The Regulations shall cover the development and implementation of digital tools for: i. Tracking medical cannabis throughout the entire process to prevent money laundering and guarantee safety; to allow compliance with the Federal Government guidance that address the financial processes to be followed with regard to the revenues generated by the industry; to provide assistance to financial institutions in complying with the federal legal framework; and allow for the collection of any taxes in connection with the medical cannabis industry; ii. Licensing database;