Senate Study Bill 1177 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON ZAUN) A BILL FOR An Act relating to the medical cannabidiol program, including 1 medical cannabidiol registration cards, medical cannabidiol 2 dispensaries, and income tax deductions, and establishing a 3 medical cannabidiol tax fund. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2384XC (2) 89 ss/rh

S.F. _____ Section 1. Section 124E.4, subsection 1, paragraph e, Code 1 2021, is amended to read as follows: 2 e. Submits a medical cannabidiol registration card fee of 3 one hundred ten dollars to the department. If the patient 4 attests to receiving social security disability benefits, 5 supplemental security insurance payments, or being enrolled in 6 the medical assistance program, the fee shall be twenty-five 7 dollars. 8 Sec. 2. Section 124E.4, subsection 3, paragraph c, Code 9 2021, is amended to read as follows: 10 c. Submits a medical cannabidiol registration card fee of 11 twenty-five ten dollars to the department. 12 Sec. 3. Section 124E.4, Code 2021, is amended by adding the 13 following new subsection: 14 NEW SUBSECTION . 3A. Issuance to an institution. The 15 department shall adopt rules for the issuance of a medical 16 cannabidiol registration card to an institution, including but 17 not limited to a school, university, nursing home, long-term 18 care facility, correctional facility, or jail, allowing 19 employees of the institution to administer medical cannabidiol 20 to qualified patients in the care of the institution. 21 Sec. 4. Section 124E.4, subsection 5, Code 2021, is amended 22 to read as follows: 23 5. Expiration date of card. A medical cannabidiol 24 registration card issued pursuant to this section shall expire 25 one year two years after the date of issuance and may be 26 renewed. 27 Sec. 5. Section 124E.7, subsection 4, Code 2021, is amended 28 to read as follows: 29 4. A medical cannabidiol manufacturer shall not share 30 office space with, refer patients to, or have any direct 31 financial relationship with a health care practitioner. 32 Sec. 6. Section 124E.8, subsection 1, paragraph a, Code 33 2021, is amended to read as follows: 34 a. The department shall issue a request for proposals 35 -1- LSB 2384XC (2) 89 ss/rh 1/ 5

S.F. _____ accept applications to select and license by April 1, 2018, up 1 to five medical cannabidiol dispensaries to dispense medical 2 cannabidiol within this state consistent with the provisions 3 of this chapter . The department shall license new medical 4 cannabidiol dispensaries or relicense the existing medical 5 cannabidiol dispensaries by December 1 of each year. 6 Sec. 7. Section 124E.8, subsection 2, Code 2021, is amended 7 to read as follows: 8 2. As a condition for licensure, a medical cannabidiol 9 dispensary must agree to begin supplying medical cannabidiol 10 to patients by December 1, 2018 within one year of the date of 11 licensure . 12 Sec. 8. Section 124E.8, Code 2021, is amended by adding the 13 following new subsection: 14 NEW SUBSECTION . 3A. The department shall not issue a 15 license for a medical cannabidiol dispensary to be located in a 16 county with a medical cannabidiol dispensary that was licensed 17 prior to July 1, 2021, or in a bordering county of a county with 18 a medical cannabidiol dispensary that was licensed prior to 19 July 1, 2021. 20 Sec. 9. Section 124E.9, subsection 1, paragraph a, Code 21 2021, is amended by striking the paragraph. 22 Sec. 10. Section 124E.9, subsection 4, Code 2021, is amended 23 to read as follows: 24 4. A medical cannabidiol dispensary shall not share office 25 space with, refer patients to, or have any direct financial 26 relationship with a health care practitioner. 27 Sec. 11. Section 124E.11, subsection 2, paragraph f, Code 28 2021, is amended to read as follows: 29 f. Establish and collect annual fees not to exceed two 30 thousand dollars from medical cannabidiol manufacturers 31 and medical cannabidiol dispensaries to cover the costs 32 associated with regulating and inspecting medical cannabidiol 33 manufacturers and medical cannabidiol dispensaries. 34 Sec. 12. Section 124E.11, subsection 2, Code 2021, is 35 -2- LSB 2384XC (2) 89 ss/rh 2/ 5

S.F. _____ amended by adding the following new paragraph: 1 NEW PARAGRAPH . j. Allow an operator of a medical 2 cannabidiol dispensary to conduct dispensary operations using a 3 mobile location, provided that a mobile dispensary shall not 4 operate in a county with a medical cannabidiol dispensary. 5 Sec. 13. Section 422.7, Code 2021, is amended by adding the 6 following new subsection: 7 NEW SUBSECTION . 63. Subtract, to the extent included, 8 the amount of business expense for a medical cannabidiol 9 manufacturer or medical cannabidiol dispensary licensed 10 pursuant to chapter 124E without regard to section 280E of the 11 Internal Revenue Code. 12 Sec. 14. Section 422.35, Code 2021, is amended by adding the 13 following new subsection: 14 NEW SUBSECTION . 31. Subtract, to the extent included, 15 the amount of business expense for a medical cannabidiol 16 manufacturer or medical cannabidiol dispensary licensed 17 pursuant to chapter 124E without regard to section 280E of the 18 Internal Revenue Code. 19 Sec. 15. Section 423.2A, subsection 2, Code 2021, is amended 20 by adding the following new paragraph: 21 NEW PARAGRAPH . h. Beginning the first day of the calendar 22 quarter following July 1, 2021, transfer to the medical 23 cannabidiol tax fund created in section 423.4, subsection 12, 24 the sales tax receipts collected and remitted upon sales of 25 tangible personal property furnished by medical cannabidiol 26 dispensaries or medical cannabidiol manufacturers pursuant to 27 chapter 124E. 28 Sec. 16. Section 423.4, Code 2021, is amended by adding the 29 following new subsection: 30 NEW SUBSECTION . 12. a. There is established within the 31 state treasury under the control of the Iowa department of 32 public health a medical cannabidiol tax fund consisting of the 33 amount of state sales tax revenues transferred pursuant to 34 section 423.2A, subsection 2, paragraph “h” . Moneys in the fund 35 -3- LSB 2384XC (2) 89 ss/rh 3/ 5

S.F. _____ shall be used by the Iowa department of public health only for 1 the following purposes and in the following order of priority: 2 (1) The repayment of fees paid to the state hygienic 3 laboratory at the university of Iowa in Iowa City by a medical 4 cannabidiol manufacturer pursuant to section 124E.7 on or after 5 the effective date of this Act. 6 (2) The repayment of fees paid to a laboratory, as defined 7 in section 124E.2, other than the state hygienic laboratory at 8 the university of Iowa in Iowa City, by a medical cannabidiol 9 manufacturer pursuant to section 124E.7 on or after the 10 effective date of this Act. 11 (3) For other purposes as provided in section 124E.10. 12 b. Notwithstanding section 8.33, moneys appropriated in this 13 subsection that remain unencumbered or unobligated at the close 14 of the fiscal year shall not revert but shall remain available 15 for expenditure for the purposes designated. 16 EXPLANATION 17 The inclusion of this explanation does not constitute agreement with 18 the explanation’s substance by the members of the general assembly. 19 This bill relates to the medical cannabidiol Act, including 20 medical cannabidiol registration cards and medical cannabidiol 21 dispensaries. 22 The bill changes the application fee for a medical 23 cannabidiol registration card to $10. The bill also changes 24 the expiration date of medical cannabidiol registration cards 25 from one year after issuance to two years after issuance. 26 The bill requires the Iowa department of public health (DPH) 27 to develop rules for the issuance of a medical cannabidiol 28 registration card to an institution, which would allow 29 employees of the institution to administer medical cannabidiol 30 to qualified medical cannabidiol patients in the care of the 31 institution. 32 The bill requires DPH to accept applications for the 33 licensure of medical cannabidiol dispensaries beyond the five 34 currently allowed in Code beginning July 1, 2021. The bill 35 -4- LSB 2384XC (2) 89 ss/rh 4/ 5

S.F. _____ prohibits the department from issuing such a license to a 1 dispensary in a county where a dispensary is currently located, 2 or in a county bordering such a county. As a condition for 3 licensure, the medical cannabidiol dispensary must agree to 4 begin supplying medical cannabidiol to patients within one year 5 of the date of licensure. 6 The bill strikes a provision prohibiting a medical 7 cannabidiol dispensary from referring patients to a health care 8 practitioner. The bill requires DPH to adopt rules allowing 9 the operator of a medical cannabidiol dispensary to conduct 10 dispensary operations from a mobile location, and prohibits a 11 mobile dispensary from operating in a county with a medical 12 cannabidiol dispensary. The bill prohibits DPH from imposing 13 annual fees of greater than $2,000 on medical cannabidiol 14 manufacturers and dispensaries. 15 The bill allows individuals and corporations to subtract 16 from net income, to the extent included, business expenses 17 for a medical cannabidiol manufacturer or medical cannabidiol 18 dispensary. 19 The bill creates a medical cannabidiol tax fund within the 20 state treasury under the control of DPH. Beginning the first 21 day of the calendar quarter following July 1, 2021, sales tax 22 for the sales of medical cannabidiol shall be transferred 23 to the fund. Moneys in the fund shall be used, in order of 24 priority, for the repayment of fees paid to the state hygienic 25 laboratory at the university of Iowa in Iowa City by a medical 26 cannabidiol manufacturer on or after the effective date of the 27 bill, the repayment of fees paid to other laboratories by a 28 medical cannabidiol manufacturer on or after the effective date 29 of the bill, and the administration of the medical cannabidiol 30 program. Moneys in the fund are not subject to reversion. 31 -5- LSB 2384XC (2) 89 ss/rh 5/ 5