HF 2206 (LSB 5998YH (3) 91)

HOUSE FILE 2206

BY  AMOS JR., WICHTENDAHL, GAINES, LEVIN, MADISON, McBURNEY, RAMIREZ, GOSA, WILSON, SCHOLTEN, KRESSIG, WILBURN, R. JOHNSON, KURTH, and WESSEL-KROESCHELL

A BILL FOR

An Act relating to the manufacture, delivery, and possession of marijuana, the licensure of retail marijuana, providing fees, including excise taxes, establishing funds, providing penalties, and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
MARIJUANA —— CRIMINAL PENALTIES

    Section 1.  Section 124.401, subsection 1, unnumbered paragraph 1, Code 2026, is amended to read as follows:
   Except as authorized by this chapter, chapter 124E, or chapter 124F, it is unlawful for any person to manufacture, deliver, or possess with the intent to manufacture or deliver, a controlled substance, a counterfeit substance, a simulated controlled substance, or an imitation controlled substance, or to act with, enter into a common scheme or design with, or conspire with one or more other persons to manufacture, deliver, or possess with the intent to manufacture or deliver a controlled substance, a counterfeit substance, a simulated controlled substance, or an imitation controlled substance.
    Sec. 2.  Section 124.401, subsection 1, paragraph a, subparagraph (6), Code 2026, is amended by striking the subparagraph.
    Sec. 3.  Section 124.401, subsection 1, paragraph b, subparagraph (6), Code 2026, is amended by striking the subparagraph.
    Sec. 4.  Section 124.401, subsection 1, paragraph c, subparagraph (5), Code 2026, is amended by striking the subparagraph.
    Sec. 5.  Section 124.401, subsection 1, paragraph c, subparagraph (9), Code 2026, is amended to read as follows:
   (9)  Any other controlled substance, counterfeit substance, simulated controlled substance, or imitation controlled substance classified in schedule I, II, or III, except as provided in paragraph “d”, chapter 124E, or chapter 124F.
    Sec. 6.  Section 124.401, subsection 1, paragraph d, Code 2026, is amended to read as follows:
   d.  Violation of this subsection, with respect to any other controlled substances, counterfeit substances, simulated controlled substances, or imitation controlled substances classified in schedule IV or V is an aggravated misdemeanor. However, violation of this subsection involving fifty kilograms or less of marijuana or involving flunitrazepam is a class “D” felony.
    Sec. 7.  Section 124.401, subsection 5, paragraph b, Code 2026, is amended to read as follows:
   b.  If the controlled substance is marijuana, the punishment shall be by imprisonment in the county jail for not more than six months or by a fine of not more than one thousand dollars, or by both such fine and imprisonment for a first offense. If the controlled substance is marijuana and the person has been previously convicted of a violation of this subsection in which the controlled substance was marijuana, the punishment shall be as provided in section 903.1, subsection 1, paragraph “b”. If the controlled substance is marijuana and the person has been previously convicted two or more times of a violation of this subsection in which the controlled substance was marijuana, the person is guilty of an aggravated misdemeanor.  This subsection does not apply to the possession of marijuana which is punishable pursuant to chapter 124F.
    Sec. 8.  Section 124.401G, Code 2026, is amended to read as follows:
   124.401G  Iowa hemp Act.
   Notwithstanding any provision of this chapter to the contrary, a person shall not be guilty of an offense under this chapter, including under section 124.401 or 124.410, for producing, possessing, using, harvesting, handling, manufacturing, marketing, transporting, delivering, or distributing the plant cannabis, to the extent that the person is a USDA licensee acting in accordance with the federal hemp law, as those terms are defined in chapter 204A. 
    Sec. 9.  Section 124.407, subsection 2, Code 2026, is amended to read as follows:
   2.  a.  Any person who violates this section, and where the controlled substance is any one a controlled substance other than marijuana, is guilty of a class “D” felony.
   b.  Any person who violates this section, and where the controlled substance is marijuana only, is guilty of a serious misdemeanor.
    Sec. 10.  Section 124.411, subsection 2, Code 2026, is amended to read as follows:
   2.  For purposes of this section, an offense is considered a second or subsequent offense, if, prior to the person’s having been convicted of the offense, the offender has ever been convicted under this chapter or under any state or federal statute relating to narcotic drugs or cocaine, marijuana, depressant, stimulant, or hallucinogenic drugs.
    Sec. 11.  Section 124.413, subsection 2, Code 2026, is amended to read as follows:
   2.  This section shall not apply if:
   a.  The offense is found to be an accommodation pursuant to section 124.410; or
   b.  The the controlled substance is marijuana.
    Sec. 12.  NEW SECTION.  124F.1  Definitions.
   As used in this subchapter:
   1.  “Counterfeit substance” means the same as defined in section 124.101.
   2.  “Imitation controlled substance” means the same as defined in section 124.101.
   3.  “Marijuana” means the same as defined in section 124.101, and includes a counterfeit substance, imitation controlled substance, or simulated controlled substance containing a detectable amount of marijuana.
   4.  “Simulated controlled substance” means the same as defined in section 124.101.
    Sec. 13.  NEW SECTION.  124F.2  Marijuana —— penalties.
   1.  a.  Except as otherwise provided in this subchapter and chapter 124E, it is unlawful for any person to manufacture, deliver, or possess with the intent to manufacture or deliver marijuana, or to act with, enter into a common scheme or design with, or conspire with one or more other persons to manufacture, deliver, or possess with the intent to manufacture or deliver marijuana. A violation of this subsection involving the following amounts of marijuana shall be punishable as follows:
   (1)  More than fifty kilograms shall be a class “C” felony.
   (2)  More than two kilograms but not more than fifty kilograms shall be a class “D” felony.
   (3)  More than twelve ounces but not more than two kilograms shall be an aggravated misdemeanor.
   (4)  More than four ounces but not more than twelve ounces shall be punishable as a serious misdemeanor.
   (5)  Four ounces or less shall be punishable as a simple misdemeanor, except as provided in section 124F.3.
   b.  In addition to any other penalties provided in this subsection, a person who is eighteen years of age or older who unlawfully manufactures with the intent to distribute, distributes, or possesses with the intent to distribute marijuana to another person who is eighteen years of age or older in or on, or within one thousand feet of, the real property comprising a public or private elementary or secondary school, public park, public swimming pool, public recreation center, or on a marked school bus, may be sentenced up to an additional term of confinement of five years.
   2.  It is unlawful for any person knowingly or intentionally to possess marijuana unless such substance was obtained directly from, or pursuant to, a valid prescription or order of a practitioner while acting in the course of the practitioner’s professional practice, or except as otherwise authorized by this subsection. A violation of this subsection involving the possession of the following amounts of marijuana shall be punishable as follows:
   a.  More than six ounces but not more than twelve ounces is a serious misdemeanor.
   b.  More than one-half ounce but not more than six ounces is a simple misdemeanor.
   c.  One-half ounce or less is not a criminal offense but shall be assessed as a civil penalty in the amount of one hundred dollars, except if the person is under twenty-one years of age, the person shall complete a drug awareness program and ten hours of unpaid community service, and shall notify the person’s parents or legal guardian.
   (1)  The civil penalty shall be collected by the clerk of the district court pursuant to section 602.8105, subsection 5.
   (2)  Any records relating to the civil penalty shall not be displayed for public viewing on the Iowa court information system.
   (3)  Any records relating to the civil penalty shall not be kept in the criminal history data files maintained by the department of public safety. Any records relating to the civil penalty shall not be disseminated to other criminal or juvenile justice agencies.
   3.  a.  A retail marijuana store shall not sell retail marijuana in excess of the following amounts in a single transaction:
   (1)  Thirty grams of marijuana flower.
   (2)  Five hundred milligrams of tetrahydrocannabinol contained in a product infused with marijuana.
   b.  A person shall not possess more than five ounces of marijuana flower.
   c.  A person in possession of retail marijuana in excess of the amounts specified in paragraph “a” equivalent to the amounts specified in subsection 2, shall be subject to the penalties in subsection 2.
   d.  A retail marijuana store in violation of this subsection shall be subject to licensee discipline pursuant to section 124F.16.
   e.  For purposes of this subsection, “retail marijuana” and “retail marijuana store” mean the same as defined in section 124F.4.
   4.  a.  Upon the expiration of two years following a conviction for a violation of subsection 2, paragraph “a” or “b”, a person may petition the court to expunge the conviction, and if the person has had no other criminal convictions, other than local traffic violations or simple misdemeanor violations of chapter 321 during the two-year period, the conviction shall be expunged as a matter of law. The court shall enter an order that the record of the conviction be expunged by the clerk of the district court. Notwithstanding section 692.2, after receipt of notice from the clerk of the district court that a record of conviction has been expunged pursuant to this subsection, the record of conviction shall be removed from the criminal history data files maintained by the department of public safety.
   b.  On the effective date of this Act, each court shall review its records to identify persons who have been convicted of an offense based on conduct allowed under this Act. Each such conviction shall be expunged as a matter of law as provided in paragraph “a”.
    Sec. 14.  NEW SECTION.  124F.3  Juvenile offenses.
   The juvenile court shall have exclusive original jurisdiction in a proceeding concerning a minor who is alleged to have committed a violation of this subchapter.
    Sec. 15.  NEW SECTION.  321.284B  Marijuana in motor vehicles.
   1.  A driver of a motor vehicle upon a public street or highway shall not use marijuana in the passenger area of the motor vehicle. “Passenger area” means the area designed to seat the driver and passengers while the motor vehicle is in operation and any area that is readily accessible to the driver or a passenger while in their seating positions, including the glove compartment.
   2.  A driver or passenger of or in a motor vehicle upon a public street or highway shall not possess marijuana in the passenger area of a motor vehicle except in a sealed, odor proof, child resistant container.
   3.  For the purposes of this section, “marijuana” means the same as defined in section 124.401.
   4.  A person who knowingly violates a provision of this section is guilty of a simple misdemeanor.
    Sec. 16.  Section 321J.2, subsection 1, paragraph c, Code 2026, is amended to read as follows:
   c.  While Except as provided in section 321J.2C, any amount of a controlled substance is present in the person, as measured in the person’s blood or urine.
    Sec. 17.  NEW SECTION.  321J.2C  Operating while under the influence of marijuana.
   1.  A person shall not operate a motor vehicle in this state while having fifty nanograms of tetrahydrocannabinol in the person, as measured in the person’s blood.
   2.  A person who violates subsection 1 is guilty of a serious misdemeanor, punishable as follows:
   a.  For a first offense, revocation of the person’s driver’s license for a period of one hundred eighty days, except that if the person refused to submit to chemical testing, the person’s driver’s license shall be revoked for a period of one year.
   b.  For a second or subsequent offense, revocation of the person’s driver’s license for a period of one year, except that if the person refused to submit to chemical testing, the person’s driver’s license shall be revoked for a period of two years.
    Sec. 18.  Section 602.8105, Code 2026, is amended by adding the following new subsection:
   NEW SUBSECTION.  5.  The clerk of the district court shall collect the civil penalty assessed pursuant to section 124F.2, subsection 2, paragraph “c”, subparagraph (1).
    Sec. 19.  NEW SECTION.  901C.4  Felony offenses related to marijuana —— expungement.
   1.  In addition to the expungement provisions available to a defendant convicted of a misdemeanor marijuana offense under chapter 124, upon application of a defendant convicted of a felony offense under chapter 124 in the county where the conviction occurred, related to the possession or transfer of marijuana, the court shall enter an order expunging the record of such a criminal case.
   2.  A person shall be granted an expungement of a record under this section one time in the person’s lifetime. However, the one application may request the expungement of records relating to more than one nonviolent offense under this section if the offenses arose from the same transaction or occurrence, and the application contains the offenses to be expunged.
   3.  The expunged record under this section is a confidential record exempt from public access under section 22.7 but shall be made available by the clerk of the district court upon court order.
   4.  Notwithstanding section 692.2, after receipt of notice from the clerk of the district court that a record of conviction has been expunged under subsection 1, the record of conviction shall be removed from the criminal history data files maintained by the department of public safety if such a record was maintained in the criminal history data files.
   5.  The supreme court may prescribe rules governing the procedures applicable to the expungement of a criminal case under this section.
   6.  This section applies to a felony conviction that occurred prior to January 1, 2027.
    Sec. 20.  REPEAL.  Section 124.410, Code 2026, is repealed.
DIVISION II
RETAIL MARIJUANA

    Sec. 21.  NEW SECTION.  124F.4  Definitions.
   For the purposes of this subchapter:
   1.  “Division” means the division of the department of revenue responsible for the issuance of alcohol licenses.
   2.  “Immature plant” means a nonflowering marijuana plant that is no taller than eight inches and no wider than eight inches, is produced from a cutting, clipping, or seedling, and is in a cultivating container.
   3.  “License” means a license or registration issued pursuant to this subchapter.
   4.  “Licensed premises” means the premises specified in an application for a license under this subchapter, which are owned or in possession of the licensee and within which the licensee is authorized to cultivate, manufacture, distribute, sell, or test retail marijuana and retail marijuana products in accordance with this subchapter.
   5.  “Licensee” means a person licensed or registered pursuant to this subchapter.
   6.  “Local jurisdiction” means a county.
   7.  “Local licensing authority” means, for any local jurisdiction that has chosen to adopt a local licensing requirement in addition to the state licensing requirements of this subchapter, an authority designated by a municipal or county ordinance, or resolution, or the governing body of a municipality or county, or the board of commissioners of a county if no such authority is designated.
   8.  “Location” means a particular parcel of land that may be identified by an address or other descriptive means.
   9.  “Marijuana” means the same as defined in section 124.101.
   10.  “Marijuana accessories” means any equipment, products, or materials of any kind which are used, intended for use, or designed for use in planting, 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.
   11.  “Person” means a natural person, partnership, association, company, corporation, limited liability company, or organization; except that “person” does not include any governmental organization.
   12.  “Retail 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 resin, including marijuana concentrate. “Retail marijuana” does not include industrial hemp, nor does it include fiber produced from the stalks, oil or cake made from the seeds of the plant, sterilized seeds of the plant which are incapable of germination, or the weight of any other ingredient combined with marijuana to prepare topical or oral administrations, food, drink, or other product.
   13.  “Retail marijuana cultivation facility” means an entity licensed to cultivate, prepare, package, and sell marijuana to retail marijuana stores, to marijuana product manufacturing facilities, and to other marijuana cultivation facilities, but not to consumers.
   14.  “Retail marijuana establishment” means a retail marijuana store, a retail marijuana cultivation facility, or a retail marijuana products manufacturer.
   15.  “Retail marijuana products” means concentrated marijuana products and marijuana products that are comprised of marijuana and other ingredients and are intended for use or consumption, such as but not limited to edible products, ointments, and tinctures.
   16.  “Retail marijuana products manufacturer” 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 to retail marijuana stores, but not to consumers.
   17.  “Retail marijuana store” means an entity licensed to purchase marijuana from marijuana cultivation facilities and sell marijuana and to purchase marijuana products from retail marijuana product manufacturing facilities and to sell marijuana and marijuana products to consumers.
   18.  “Retail marijuana transporter” means an entity or person licensed to transport retail marijuana and retail marijuana products from one retail marijuana establishment to another retail marijuana establishment and to temporarily store the transported retail marijuana and retail marijuana products at its licensed premises, but is not authorized to sell retail marijuana or retail marijuana products under any circumstances.
    Sec. 22.  NEW SECTION.  124F.5  Applicability.
   1.  On or after July 1, 2027, an applicant may apply for licensure of a retail marijuana establishment pursuant to this subchapter. 
   2.  a.  Pursuant to subsection 1, an applicant shall complete forms as provided by the division and shall pay the application fee and the licensing fee. The division shall forward, within seven days of the date of the application, one-half of the application fee to the local jurisdiction unless the local jurisdiction has prohibited the operation of retail marijuana establishments. If the license is denied, the division shall refund the licensing fee to the applicant.
   b.  The division shall act upon an application made pursuant to subsection 1 no sooner than forty-five days and no later than ninety days after the date of the application. The division shall process applications in the order in which completed applications are received by the division.
   3.  a.  Any local jurisdiction may enact ordinances or regulations governing the time, place, manner, and number of retail marijuana establishments, which may include a local licensing requirement, or may prohibit the operation of retail marijuana establishments by ordinance or by a referred or initiated measure. If a county acts through an initiated measure, the proponents shall submit a petition signed by not less than fifteen percent of the registered electors in the county.
   b.  If a county prohibits the operation of retail marijuana establishments, the county shall, upon receipt of a petition signed by fifteen percent of the registered voters in the county, submit to the voters of the county the question of whether the operation of retail marijuana establishments should be allowed in the county at the next general election.
    Sec. 23.  NEW SECTION.  124F.6  Retail marijuana licensure.
   1.  The division shall develop and maintain a seed-to-sale tracking system that tracks retail marijuana from either seed or immature plant stage until the marijuana or retail marijuana product is sold to a customer at a retail marijuana establishment to ensure that no marijuana grown or processed by a retail marijuana establishment is sold or otherwise transferred except by a retail marijuana store.
   2.  The division shall adopt all rules necessary for the implementation of this chapter.
   3.  Nothing in this subchapter shall be construed to be a delegation to the division of the power to fix prices for retail marijuana.
   4.  Nothing in this subchapter shall be construed to limit a law enforcement agency’s ability to investigate unlawful activity in relation to a retail marijuana establishment. A law enforcement agency shall have the authority to conduct a criminal history record check of a licensee and an employee of a licensee during an investigation of unlawful activity related to retail marijuana and retail marijuana products.
   5.  The division shall create a statewide licensure class system for retail marijuana cultivation facilities. The classifications may be based upon square footage of the facility; lights, lumens, or wattage; canopy lighting; the number of cultivating plants; a combination of the foregoing; or other reasonable metrics. The division shall create a fee structure for the licensure class system.
    Sec. 24.  NEW SECTION.  124F.7  State and local participation in licensure.
   1.  When the division receives an application for an initial license or a renewal of an existing license for any retail marijuana establishment, the division shall provide, within seven days of receipt of an application, a copy of the application to the local jurisdiction in which the establishment is to be located unless the local jurisdiction has prohibited the operation of retail marijuana establishments. The local jurisdiction shall determine whether the application complies with local restrictions relating to time, place, manner, and the number of retail marijuana establishments allowed. The local jurisdiction shall inform the division whether the application complies with local restrictions.
   2.  A local jurisdiction may impose a separate local licensing requirement as a part of its restrictions relating to time, place, manner, and the number of retail marijuana establishments allowed. A local jurisdiction may decline to impose any local licensing requirements, but a local jurisdiction shall notify the division that it either approves or denies each application received by the local jurisdiction.
   3.  If a local jurisdiction issues a local license for a retail marijuana establishment, a local jurisdiction may schedule a public hearing on the application. If the local jurisdiction schedules a hearing, it shall post and publish public notice of the hearing not less than ten days prior to the hearing. The local jurisdiction shall give public notice by posting a sign in a conspicuous place on the license applicant’s premises for which a local license application has been made and by publication in a newspaper of general circulation in the county in which the applicant’s premises are located.
   4.  If a local jurisdiction does not issue local licenses, the local jurisdiction may give public notice of the state license application by posting a sign in a conspicuous place on the state license applicant’s premises for which a state license application has been made and by publication in a newspaper of general circulation in the county in which the applicant’s premises are located.
   5.  Applications for a state license under this subchapter must be made to the division on forms prepared and furnished by the division and must set forth such information as the division may require to enable the division to determine whether a state license should be granted.
   6.  The division shall deny a state license if the premises on which the applicant proposes to conduct its business does not meet the requirements of this subchapter. The division may refuse or deny a license renewal, reinstatement, or initial license issuance for good cause. For purposes of this subsection, “good cause” means any of the following:
   a.  The licensee or applicant has violated, does not meet, or has failed to comply with any of the terms, conditions, or provisions of this subchapter, any rules promulgated pursuant to this subchapter, or any supplemental local law, rules, or regulations.
   b.  The licensee or applicant has failed to comply with any special terms or conditions of the license pursuant to an order of the division or local licensing authority.
   c.  The licensed premises have been operated in a manner that adversely affects the public health or safety of the immediate neighborhood in which the retail marijuana establishment is located.
   d.  The licensed premises are located within two thousand feet of real property comprising a school, child care facility, or public park.
   7.  If the division denies a state license pursuant to subsection 6, the applicant shall be entitled to a hearing pursuant to section 17A.12 and judicial review pursuant to section 17A.19. The division shall provide written notice of the grounds for denial of the state license to the applicant and to the local jurisdiction at least fifteen days prior to the hearing.
   8.  The division shall give primary preference to applicants for licensure who are currently licensed as a medical cannabidiol manufacturer or medical cannabidiol dispensary pursuant to chapter 124E. The division shall also prioritize applicants for licensure that are businesses that are majority-owned by persons who are women, citizens or permanent legal residents of Iowa, or disabled veterans.
   9.  The division shall issue licenses to businesses that are majority-owned by persons who are racial minorities in a proportion that meets or exceeds the percentage of persons in this state who are racial minorities according to the most recent federal decennial census.
    Sec. 25.  NEW SECTION.  124F.8  Establishment and owner requirements.
   1.  An owner who is a natural person must have been either of the following:
   a.  A resident of Iowa for at least one year prior to the date of the application.
   b.  A United States citizen prior to the date of the application.
   2.  A retail marijuana establishment may be composed of an unlimited number of owners that have been residents of Iowa for at least one year prior to the date of the application.
   3.  A retail marijuana establishment shall not interfere with the creation of or participation in a labor organization, as defined in section 216.2, by employees of the retail marijuana establishment.
   4.  The division shall review the retail marijuana establishment’s operating documents to ensure compliance with this section.
    Sec. 26.  NEW SECTION.  124F.9  Retail marijuana establishment licensure.
   1.  Local jurisdictions may adopt and enforce regulations for retail marijuana establishments that are at least as restrictive as the provisions of this subchapter and any rule promulgated pursuant to this subchapter.
   2.  A retail marijuana establishment shall not operate until the retail marijuana establishment is licensed by the division pursuant to this subchapter and approved by the relevant local jurisdiction. If an application is denied by the local licensing authority, the division shall revoke the state license. In connection with a license, the applicant shall provide a complete and accurate application as required by the division.
   3.  A retail marijuana establishment shall notify the division in writing of the name, address, and date of birth of a new owner, officer, or manager before the new owner, officer, or manager begins managing, owning, working, or otherwise associating with the establishment. The owner, officer, manager, or employee shall pass a fingerprint-based criminal history record check as required by the division and shall obtain the required identification prior to managing, owning, working, or otherwise associating with the establishment. The division shall not deny licensure to a retail marijuana establishment on the basis that an owner, officer, manager, or employee has been convicted of a crime other than a violent crime, as defined in section 915.10, if the person has completed any term of probation or parole imposed by the court.
   4.  Before granting a state license, the division may consider, except when this subchapter specifically provides otherwise, the requirements of this subchapter and any rules promulgated pursuant to this subchapter, and all other reasonable restrictions that are or may be placed upon a licensee by the division or local licensing authority.
   5.  a.  Each license issued under this subchapter is separate and distinct. It is unlawful for a person to exercise any of the privileges granted under a license other than the license that the person holds or for a licensee to allow any other person to exercise the privileges granted under the licensee’s license. A separate license shall be required for each specific business or business entity and each geographical location.
   b.  At all times, a licensee shall possess and maintain possession of the premises for which the license is issued through ownership, lease, rental, or other arrangement for possession of the premises.
   6.  Each licensee shall manage the licensed premises personally or employ a separate and distinct manager on the premises and shall report the name of the manager to the division and local licensing authority. The licensee shall report any change in manager to the division and local licensing authority within seven days after the change.
    Sec. 27.  NEW SECTION.  124F.10  License renewal.
   1.  Ninety days prior to the expiration date of an existing license, the division shall notify a licensee of the expiration date by first class mail at the licensee’s address of record with the division. A licensee may apply for the renewal of an existing license to the division not less than thirty days prior to the date of expiration of the existing license. Upon receipt of an application for renewal of an existing license and any applicable fees, the division shall submit, within seven days of the application, a copy of the application to the local jurisdiction to determine whether the application complies with all local restrictions on renewal of licenses. The division shall not accept an application for renewal of a license after the date of expiration, except as provided in subsection 3. The division may extend the expiration date of the license and accept a late application for renewal of a license if the applicant has filed a timely renewal application with the local licensing authority. The division or the local licensing authority, in its discretion, and subject to the requirements of this subsection and subsection 3 and based upon reasonable grounds, may waive the thirty-day time requirements set forth in this subsection.
   2.  The division may request additional fingerprints from a licensee when there is a demonstrated investigative need.
   3.  a.  Notwithstanding the provisions of subsection 1, a licensee whose license has been expired for not more than ninety days may file a late renewal application upon the payment of a nonrefundable late application fee of five hundred dollars to the division. A licensee who files a late renewal application and pays the requisite fees may continue to operate until the division takes final action to approve or deny the licensee’s late renewal application unless the division summarily suspends the license pursuant to chapter 17A, this subchapter, and rules adopted pursuant to this subchapter.
   b.  The division may administratively continue a license and accept a later application for renewal of a license at the discretion of the division.
    Sec. 28.  NEW SECTION.  124F.11  Classes of licenses.
   For the purpose of regulating the cultivation, manufacture, distribution, sale, and testing of retail marijuana and retail marijuana products, the division in its discretion, upon receipt of an application in the prescribed form, may issue and grant to the applicant a license or registration in any of the following classes, subject to the provisions and restrictions provided by this subchapter:
   1.  Retail marijuana store license.
   2.  Retail marijuana cultivation facility license.
   3.  Retail marijuana products manufacturing license.
   4.  Occupational licenses and registrations for owners, managers, operators, employees, contractors, and other support staff employed by, working in, or having access to restricted areas of the licensed premises, as determined by the division. The division may take any action with respect to a registration pursuant to this subchapter as it may with respect to a license pursuant to this subchapter, in accordance with the procedures established pursuant to this subchapter.
   5.  Retail marijuana transporter license.
    Sec. 29.  NEW SECTION.  124F.12  Retail marijuana store license.
   1.  a.  A retail marijuana store license shall be issued by the division only to a person selling retail marijuana or retail marijuana products pursuant to the terms and conditions of this subchapter.
   b.  A retail marijuana store shall not accept any retail marijuana purchased from a retail marijuana cultivation facility unless the retail marijuana store is provided with evidence that any applicable excise tax due was paid.
   2.  Notwithstanding the provisions of this section, a retail marijuana store licensee may also sell retail marijuana products that are prepackaged and labeled as required by rules of the division pursuant to section 124F.21.
   3.  a.  A retail marijuana store shall not sell more than one ounce of retail marijuana or its equivalent in retail marijuana products, including retail marijuana concentrate, except for nonedible, nonpsychoactive retail marijuana products, including ointments, lotions, balms, and other nontransdermal topical products to a person.
   b.  (1)  Prior to initiating a sale, an employee of the retail marijuana store making the sale shall verify that the purchaser has a valid identification card showing the purchaser is twenty-one years of age or older. If a person under twenty-one years of age presents fraudulent proof of age, any action relying on the fraudulent proof of age shall not be grounds for the revocation or suspension of any license issued under this subchapter.
   (2)  (a)  If a retail marijuana store licensee or employee has reasonable cause to believe that a person is under twenty-one years of age and is exhibiting fraudulent proof of age in an attempt to obtain any retail marijuana or cannabis-infused product, the licensee or employee is authorized to confiscate such fraudulent proof of age, if possible, and shall, within seventy-two hours after the confiscation, remit such fraudulent proof of age to a state or local law enforcement agency. The failure to confiscate such fraudulent proof of age or to remit such fraudulent proof of age to a state or local law enforcement agency within seventy-two hours after the confiscation shall not constitute a criminal offense.
   (b)  If a retail marijuana store licensee or employee believes that a person is under twenty-one years of age and presents fraudulent proof of age in an attempt to obtain any retail marijuana or retail cannabis-infused product, the licensee or employee or any peace officer or police officer, acting in good faith and upon probable cause based upon reasonable grounds therefor, may detain and question such person in a reasonable manner for the purpose of ascertaining whether the person is guilty of any unlawful act regarding the purchase of retail marijuana. The questioning of a person by a licensee, employee, peace officer, or police officer does not render the licensee, employee, peace officer, or police officer civilly or criminally liable for slander, false arrest, false imprisonment, malicious prosecution, or unlawful detention.
   4.  All retail marijuana and retail marijuana products sold at a licensed retail marijuana store shall be packaged and labeled as required by rules of the division pursuant to section 124F.21.
   5.  a.  A licensed retail marijuana store shall only sell retail marijuana, retail marijuana products, marijuana accessories, nonconsumable products such as apparel, and marijuana-related products such as childproof packaging containers, but shall be prohibited from selling or giving away any consumable product, including but not limited to cigarettes, alcohol, or an edible product that does not contain marijuana, including but not limited to sodas, candies, or baked goods.
   b.  A licensed retail marijuana store shall not sell any retail marijuana or retail marijuana products that contain nicotine or alcohol, if the sale of the alcohol would require a license pursuant to chapter 123.
   c.  A licensed retail marijuana store shall not sell retail marijuana or retail marijuana products over the internet nor deliver retail marijuana or retail marijuana products to a person who is not physically present in the retail marijuana store’s licensed premises.
   6.  Retail marijuana or retail marijuana products shall not be consumed on the premises of a retail marijuana store.
   7.  Notwithstanding any other provision of state law, sales of retail marijuana and retail marijuana products are not exempt from state or local sales tax.
   8.  The division shall not issue more than one retail marijuana store license per county, except that the division may, upon receipt of a petition, issue one additional retail marijuana store license per one hundred thousand population in the county according to the most recent federal decennial census.
   9.  A retail marijuana store may also be licensed as a medical cannabis dispensary pursuant to chapter 124E. The division shall, in consultation with the department of public health, adopt rules for the implementation of this subsection.
    Sec. 30.  NEW SECTION.  124F.13  Retail marijuana cultivation facility license.
   1.  A retail marijuana cultivation facility license shall be issued by the division only to a person who cultivates retail marijuana for sale and distribution to licensed retail marijuana stores, retail marijuana products manufacturing licensees, or other retail marijuana cultivation facilities.
   2.  A retail marijuana cultivation facility shall remit any applicable excise tax due.
   3.  A retail marijuana cultivation facility shall track the marijuana it cultivates from seed or immature plant to wholesale purchase of the retail marijuana. Prior to delivery of any retail marijuana that is sold, the retail marijuana cultivation facility shall provide evidence that the facility paid any applicable excise tax on the retail marijuana due.
   4.  A retail marijuana cultivation facility may provide, except as required by section 124F.21, a sample of its products to the state hygienic laboratory for testing and research purposes. A retail marijuana cultivation facility shall maintain a record of the sample provided to the state hygienic laboratory and the testing results.
   5.  Retail marijuana or retail marijuana products shall not be consumed on the premises of a retail marijuana cultivation facility.
    Sec. 31.  NEW SECTION.  124F.14  Retail marijuana products manufacturing license.
   1.  a.  A retail marijuana products manufacturing license shall be issued by the division to a person who manufactures retail marijuana products pursuant to the terms and conditions of this subchapter.
   b.  A retail marijuana products manufacturer may cultivate its own retail marijuana if the manufacturer obtains a retail marijuana cultivation facility license, or it may purchase retail marijuana from a licensed retail marijuana cultivation facility. A retail marijuana products manufacturer shall track all of its retail marijuana from the point the retail marijuana is either transferred from its retail marijuana cultivation facility or from the point when the retail marijuana is delivered to the retail marijuana products manufacturer from a licensed retail marijuana cultivation facility to the point of transfer to a licensed retail marijuana store.
   c.  A retail marijuana products manufacturer shall not accept any retail marijuana purchased from a retail marijuana cultivation facility unless the retail marijuana products manufacturer is provided with evidence that any applicable excise tax due was paid.
   2.  All retail marijuana products shall be prepared on a licensed premises used exclusively for the manufacture and preparation of retail marijuana or retail marijuana products and using equipment that is used exclusively for the manufacture and preparation of retail marijuana products; except that, if permitted by the local jurisdiction, a retail marijuana products manufacturing licensee may share the same premises as a medical cannabidiol-infused products manufacturing licensee so long as a virtual or physical separation of inventory is maintained pursuant to rules promulgated by the division.
   3.  All licensed premises on which retail marijuana products are manufactured shall meet the sanitary standards for retail marijuana product preparation promulgated pursuant to section 124F.21.
   4.  Retail marijuana or retail marijuana products shall not be consumed on the premises of a retail marijuana products manufacturing facility.
   5.  A retail marijuana products manufacturer may provide, except as required by section 124F.21, a sample of its products to the state hygienic laboratory for testing and research purposes. A retail marijuana products manufacturer shall maintain a record of what was provided to the state hygienic laboratory and the results of the testing.
   6.  A licensed retail marijuana products manufacturer shall package and label each product manufactured as required by rules of the division pursuant to section 124F.21.
   7.  All retail marijuana products that require refrigeration to prevent spoilage must be stored and transported in a refrigerated environment.
    Sec. 32.  NEW SECTION.  124F.15  Retail marijuana use —— protections.
   1.  No person shall be subject to arrest, prosecution, or penalty in any manner, or be denied any right or privilege, including but not limited to disciplinary action by a business, occupational, or professional licensing board, solely for conduct permitted under this subchapter.
   2.  a.  Except as provided in this section, neither the state nor any of its political subdivisions shall impose any penalty or deny any benefit or entitlement for conduct permitted under this subchapter or for the presence of cannabinoids or cannabinoid metabolites in the urine, blood, saliva, breath, hair, or other tissue or fluid of a person who is twenty-one years of age or older.
   b.  Except as provided in this section and section 321J.2C, neither the state nor any of its political subdivisions shall deny a driver’s license, a professional license, housing assistance, social services, or other benefits based on marijuana use or for the presence of cannabinoids or cannabinoid metabolites in the urine, blood, saliva, breath, hair, or other tissue or fluid of a person who is twenty-one years of age or older.
   3.  No person shall be denied custody of or visitation with a minor for acting in accordance with this subchapter, unless the person’s behavior creates an unreasonable danger to the minor that can be clearly articulated and substantiated.
   4.  Except as provided in this section, neither the state nor any of its political subdivisions shall deny employment or a contract to a person for engaging in conduct permitted under this subchapter, for a prior conviction for a nonviolent marijuana offense that does not involve distribution to minors, or for testing positive for the presence of cannabinoids or cannabinoid metabolites in the urine, blood, saliva, breath, hair, or other tissue or fluid of the individual’s body.
   5.  For the purposes of medical care, including organ and tissue transplants, the use of marijuana does not constitute the use of an illicit substance or otherwise disqualify a person from needed medical care and may only be considered with respect to evidence-based clinical criteria.
   6.  Notwithstanding any other provision of law to the contrary, unless there is a specific finding that the individual’s use, cultivation, or possession of marijuana could create a danger to the individual or another person, it shall not be a violation of conditions of parole, probation, or pretrial release to do any of the following:
   a.  Engage in conduct allowed by this subchapter.
   b.  Test positive for marijuana, delta-9 tetrahydrocannabinol, or any other cannabinoid or metabolite of marijuana, except as provided in section 321J.2C.
   7.  a.  This section does not prevent a governmental employer from disciplining an employee or contractor for ingesting marijuana in the workplace or for working while under the influence of marijuana.
   b.  The protections provided by this section do not apply to the extent that they conflict with a governmental employer’s obligations under federal law or regulations or to the extent that they would disqualify the entity from a monetary or licensing-related benefit under federal law or regulations.
   c.  This section does not authorize any person to engage in, and does not prevent the imposition of any civil, criminal, discipline, or other penalties, including discipline or termination by a governmental employer, any task while under the influence of marijuana, when doing so would constitute negligence or professional malpractice.
    Sec. 33.  NEW SECTION.  124F.16  Discipline.
   In addition to any other sanctions prescribed by this subchapter or rules adopted pursuant to this subchapter, the division has the power, on its own motion or upon complaint, after investigation and opportunity for a public hearing at which a licensee must be afforded an opportunity to be heard, to fine a licensee or to suspend or revoke a license issued by the division for a violation by the licensee or by any of the agents or employees of the licensee of the provisions of this subchapter, or any of the rules promulgated pursuant to this subchapter, or of any of the terms, conditions, or provisions of the license issued by the division. The division has the power to administer oaths and issue subpoenas to require the presence of persons and the production of papers, books, and records necessary to the determination of a hearing that the division is authorized to conduct. The division shall conduct a contested case pursuant to chapter 17A prior to imposing discipline, except in the case of an emergency adjudication.
    Sec. 34.  NEW SECTION.  124F.17  Disposition of seized materials.
   1.  This section shall apply in addition to any criminal, civil, or administrative penalties and in addition to any other penalties prescribed by this subchapter or any rules promulgated pursuant to this subchapter.
   2.  A state or local agency shall not be required to cultivate or care for any retail marijuana or retail marijuana product belonging to or seized from a licensee. A state or local agency shall not be authorized to sell marijuana or retail marijuana.
   3.  If the division issues a final order imposing a disciplinary action against a licensee pursuant to section 124F.16, then, in addition to any other remedies, the division’s final order may specify that some or all of the licensee’s marijuana or marijuana product is not retail marijuana or a retail marijuana product and is an illegal controlled substance. The final order may further specify that the licensee shall lose any interest in any of the marijuana or marijuana product even if the marijuana or marijuana product previously qualified as retail marijuana or a retail marijuana product.
   4.  On or before January 1, 2027, the division shall adopt rules governing the implementation of this section.
    Sec. 35.  NEW SECTION.  124F.18  Inspection procedures.
   1.  A licensee shall keep a complete set of all records necessary to show fully the business transactions of the licensee, all of which shall be accessible at all times during business hours for inspection and examination by the division or its authorized representatives. The division may require a licensee to furnish such information as necessary for the proper administration of this subchapter and may require an audit to be made of the books of account and records on such occasions as necessary by an auditor selected by the division who shall have access to all books and records of the licensee. All associated expenses shall be paid by the licensee.
   2.  Any licensed premises, including any places of storage where retail marijuana or retail marijuana products are stored, cultivated, sold, dispensed, or tested shall be subject to inspection by the state or local jurisdictions and their investigators, during all business hours and during other times when employees are present, for the purpose of inspection or investigation. Access shall be required during business hours for examination of any inventory or books and records required to be kept by the licensees. If any part of the licensed premises consists of a locked area, upon demand to the licensee, such area shall be made available for inspection without delay, and, upon request by authorized representatives of the state or local jurisdiction, the licensee shall open the area for inspection.
   3.  A licensee shall retain all books and records necessary to show fully the business transactions of the licensee for a period of the current tax year and the three immediately preceding tax years.
    Sec. 36.  NEW SECTION.  124F.19  Marijuana excise tax.
   1.  An excise tax is imposed on consumers at the rate of ten percent of the sales price of each sale of retail marijuana and retail marijuana products.
   2.  The tax imposed by this section shall be paid by the consumer to the retail marijuana establishment. Each retail marijuana establishment shall collect from the consumer the full amount of the tax payable on each taxable sale.
   3.  On the fifteenth day of each month, each retail marijuana establishment that sells retail marijuana to a consumer shall pay the excise taxes due on the retail marijuana that the retail marijuana establishment sold in the previous calendar month to the division.
    Sec. 37.  NEW SECTION.  124F.20  Occupational licensing —— protections.
   1.  A person holding a professional or occupational license shall not be subject to professional discipline for providing advice or services related to retail marijuana establishments or applications to operate retail marijuana establishments on the basis that marijuana is illegal under federal law.
   2.  An applicant for a professional or occupational license shall not be denied a license based on previous employment related to retail marijuana establishments operating in accordance with state law.
    Sec. 38.  NEW SECTION.  124F.21  Rulemaking.
   1.  The division shall, within one year of the effective date of this Act, adopt rules for the implementation of this subchapter. The rules shall not prohibit the operation of retail marijuana establishments or require such a high investment of risk, money, time, or other resource or asset that the operation of a retail marijuana establishment is not worthy of being carried out in practice by a reasonably prudent businessperson. Such rules shall include all of the following:
   a.  Procedures for the issuance, renewal, suspension, and revocation of a registration to operate a retail marijuana establishment, subject to chapter 17A.
   b.  A schedule of reasonable application, registration, and renewal fees, provided application fees shall not exceed five thousand dollars, with this upper limit adjusted annually for inflation, unless the division determines a greater fee is necessary to carry out its responsibilities under this subchapter. Fees shall be collected by the division and used to administer this subchapter.
   c.  Qualifications for registration that are directly and demonstrably related to the operation of a retail marijuana establishment and that may not disqualify applicants solely for marijuana offenses prior to the effective date of this Act.
   d.  Security requirements.
   e.  Requirements for the transportation and storage of retail marijuana and retail marijuana products by retail marijuana establishments.
   f.  Requirements for the delivery of retail marijuana and retail marijuana products to consumers, including a prohibition on business names, logos, and other identifying language or images on delivery vehicles and a prohibition on delivering retail marijuana and retail marijuana products to any address located on land owned by the federal government or any address on land or in a building leased by the federal government.
   g.  Employment and training requirements, including requiring that each retail marijuana establishment create an identification badge for each employee or agent. These requirements shall not disqualify applicants solely for marijuana offenses prior to the effective date of this Act.
   h.  Requirements designed to prevent the sale or diversion of retail marijuana and retail marijuana products to persons under the age of twenty-one.
   i.  Requirements for retail marijuana and retail marijuana products sold or distributed by a retail marijuana establishment, including prohibiting any misleading labeling and requiring retail marijuana product labels to include all of the following:
   (1)  The length of time it typically takes for the product to take effect.
   (2)  A disclosure of ingredients and possible allergens.
   (3)  A nutritional fact panel.
   (4)  Requiring opaque, child resistant packaging, which must be designed or constructed to be significantly difficult for children under five years of age to open and not difficult for adults to use properly as defined by 16 C.F.R. §1700.20.
   (5)  Requiring that edible retail marijuana products be clearly identifiable, when practicable, with a standard symbol indicating the retail marijuana product contains marijuana.
   j.  Health and safety regulations and standards for the manufacture of retail marijuana products and both the indoor and outdoor cultivation of retail marijuana by retail marijuana establishments.
   k.  Restrictions on advertising, marketing, and signage including but not limited to a prohibition on mass-market campaigns that have a high likelihood of reaching minors.
   l.  Rules to create at least six tiers of retail marijuana cultivation facilities, based on the size of the facility or the number of plants cultivated, and whether the cultivation occurs outdoors, indoors, or in a greenhouse. Security regulations and licensing fees must vary based on the size of the cultivation facility.
   m.  Restrictions or prohibitions on additives in retail marijuana and retail marijuana-infused products, including but not limited to those that are toxic or designed to make the product more addictive.
   n.  Prohibitions on products that are designed to make the product more appealing to children, including prohibiting the use of any images designed or likely to appeal to minors, including cartoons, toys, animals, or children, and any other images, characters, or phrases that are popularly used to advertise to children.
   o.  Restrictions on the use of pesticides that are injurious to human health.
   p.  Rules governing visits to retail marijuana cultivation facilities and retail marijuana product manufacturing facilities, including requiring the retail marijuana establishment to log visitors.
   q.  A definition of the amount of delta-9 tetrahydrocannabinol that constitutes a single serving in a retail marijuana product.
   r.  Standards for the safe manufacture of marijuana extracts and concentrates.
   s.  Requirements that educational materials be disseminated to consumers who purchase retail marijuana-infused products.
   t.  Requirements for random sample testing to ensure quality control, including by ensuring that retail marijuana and retail marijuana-infused products are accurately labeled for potency. Unless the division determines that remediation or treatment is sufficient to ensure product safety, the testing analysis must include testing for residual solvents, poisons, or toxins; harmful chemicals; dangerous molds or mildew; filth; and harmful microbials such as E. coli or salmonella and pesticides.
   u.  Standards for the operation of marijuana testing facilities, including requirements for equipment and qualifications for personnel.
   v.  Civil penalties for the failure to comply with rules adopted pursuant to this subchapter. Civil penalties shall be collected by the division and used to administer this subchapter.
   w.  Procedures for collecting taxes levied on retail marijuana establishments.
   x.  Requirements for on-site consumption establishments, including for security, ventilation, odor control, and consumption by patrons. These rules may include a prohibition on smoking indoors.
   y.  Requirements for the verification of licensure in transactions between licensees.
   2.  After consultation with researchers knowledgeable about the risks and benefits of marijuana and providing an opportunity for public comment, the division shall develop a scientifically accurate safety information label or handout or both, which shall be available to each adult-use marijuana consumer. The label or handout shall include all of the following:
   a.  Advice about the potential risks of marijuana, including all of the following:
   (1)  The risks of driving under the influence of marijuana, and the fact that doing so is illegal.
   (2)  Any adverse effects unique to younger adults, including related to the developing mind.
   (3)  Potential adverse events and other risks.
   (4)  The risks of using marijuana during pregnancy and breastfeeding.
   b.  The need to safeguard all retail marijuana and retail marijuana products from children and pets.
   3.  The division shall review and update the safety information materials at least once every two years to ensure they remain accurate. The review period shall include soliciting input from researchers knowledgeable about the risks and benefits of marijuana and an opportunity for public comment.
   4.  In order to ensure that individual privacy is protected, the division 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, and a retail marijuana store shall not be required to acquire and record personal information about consumers.
    Sec. 39.  NEW SECTION.  124F.22  Marijuana use by minors —— prohibited.
   Nothing in this subchapter allows the transfer of marijuana, with or without remuneration, to a person under the age of twenty-one years, or the use of marijuana by a person under the age of twenty-one years.
    Sec. 40.  NEW SECTION.  124F.23  Private property and tenant rights.
   1.  Except as provided in this section, the provisions of this subchapter do not require any person, corporation, or any other entity that occupies, owns, or controls a property to allow the consumption, cultivation, display, sale, or transfer of marijuana on or in that property.
   2.  a.  Except as provided in this section, a landlord or property manager shall not refuse to rent to a tenant or otherwise discriminate against a tenant based on a past conviction for a marijuana offense that would have been legal under this chapter.
   b.  Except as provided in this section, in the case of the rental of a residential dwelling, a landlord or property manager shall not prohibit the possession of retail marijuana or medical cannabis, as defined in section 124E.2, or the consumption of retail marijuana or medical cannabis, as defined in section 124E.2, by nonsmoking means.
   c.  The limitations in this subsection do not apply in any of the following circumstances:
   (1)  The tenant is a roomer who is not leasing the entire residential dwelling.
   (2)  The residence is incidental to detention or the provision of medical, geriatric, educational, counseling, religious, or similar services.
   (3)  The residence is a transitional housing or sober living facility.
   (4)  Failing to prohibit marijuana possession or consumption would violate federal law or regulations or cause a landlord or property manager to lose a monetary or licensing-related benefit under federal law or regulations.
   d.  After a warning, a landlord or property manager may take action against a tenant if the tenant’s use of marijuana or medical cannabis, as defined in section 124E.2, creates an odor that interferes with a person’s peaceful enjoyment of the person’s home or property.
    Sec. 41.  NEW SECTION.  124F.24  Apportionment of revenue.
   Revenues generated by the marijuana excise tax shall be deposited as follows:
   1.  Thirty-five percent in the community reinvestment fund created pursuant to section 124F.25.
   2.  Thirty-two and one-half percent in the mental health services and substance use disorder prevention fund created pursuant to section 124F.26.
   3.  Thirty-two and one-half percent in the local public safety fund created pursuant to section 124F.27.
    Sec. 42.  NEW SECTION.  124F.25  Community reinvestment fund.
   1.  A community reinvestment fund is created under the control of the division. Moneys in the fund shall be appropriated by the general assembly as provided in subsection 2.
   2.  Moneys in the community reinvestment fund shall be appropriated exclusively for the purpose of funding scholarships for Iowa students for two years of postsecondary education at Iowa schools.
   3.  Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys deposited in the community reinvestment fund shall be credited to the community reinvestment fund. Notwithstanding section 8.33, moneys credited to the community reinvestment fund shall not revert at the close of a fiscal year.
    Sec. 43.  NEW SECTION.  124F.26  Mental health services and substance use disorder prevention fund.
   1.  A mental health services and substance use disorder prevention fund is created under the control of the division. Moneys in the fund shall be appropriated by the general assembly as provided in subsection 2.
   2.  Moneys in the mental health services and substance use disorder prevention fund shall be appropriated exclusively for the purposes of providing mental health services and preventing substance use disorders.
   3.  Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys deposited in the mental health services and substance use disorder prevention fund shall be credited to the mental health services and substance use disorder prevention fund. Notwithstanding section 8.33, moneys credited to the mental health services and substance use disorder prevention fund shall not revert at the close of a fiscal year.
    Sec. 44.  NEW SECTION.  124F.27  Local public safety fund.
   1.  A local public safety fund is created under the control of the division. Moneys in the fund shall be appropriated by the general assembly as provided in subsection 2.
   2.  Moneys in the local public safety fund shall be appropriated exclusively for the purposes of supporting local law enforcement personnel, fire department personnel, and emergency medical personnel in municipalities.
   3.  Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys deposited in the local public safety fund shall be credited to the local public safety fund. Notwithstanding section 8.33, moneys credited to the local public safety fund shall not revert at the close of a fiscal year.
    Sec. 45.  NEW SECTION.  332.1  Definitions.
   1.  “Department” means the department of revenue.
   2.  “Director” means the director of the department of revenue.
   3.  “Retail marijuana” means the same as defined in section 124F.4.
   4.  “Retail marijuana store” means the same as defined in section 124F.4.
   5.  “Retail sale” means the same as defined in section 423.1.
   6.  “Surcharge” means a retail marijuana surcharge imposed pursuant to this chapter.
    Sec. 46.  NEW SECTION.  332.2  Retail marijuana surcharge.
   1.  A surcharge may be imposed, in accordance with the provisions of this section, by ordinance of the board of supervisors of a county that has not prohibited the sale of retail marijuana. The surcharge shall be imposed at a rate of one percent upon the retail sales price of retail marijuana.
   2.  The surcharge shall be in addition to the state sales tax imposed pursuant to chapter 423, subchapter II, and the local sales and services tax imposed pursuant to chapter 423B.
   3.  a.  Within ten days of the passage of an ordinance imposing a surcharge, the county auditor shall give written notice to the director by sending a copy of the ordinance to the director.
   b.  A surcharge shall be imposed either January 1 or July 1 following the notification of the director but not sooner than ninety days following the passage of the ordinance imposing the surcharge and not sooner than sixty days following notice to sellers, as defined in section 423.1.
   c.  A surcharge shall be repealed only on June 30 or December 31 but not sooner than ninety days following repeal of the ordinance. At least forty days before the repeal of the surcharge, the board of supervisors shall provide notice of the action by certified mail to the director of revenue.
   4.  Upon the remittance of the revenues from the state surcharge revenue fund to each county that has imposed a retail marijuana surcharge under section 332.4, the revenues shall be deposited into the general fund of the county.
    Sec. 47.  NEW SECTION.  332.3  Administration of surcharge.
   1.  The director shall administer the surcharge imposed pursuant to this chapter as nearly as possible in conjunction with the administration of state sales tax laws. The director shall provide appropriate forms, or provide space on the regular state tax forms, for reporting surcharge liability.
   2.  a.  Section 422.25, subsection 4, sections 422.30, 422.67, and 422.68, section 422.69, subsection 1, sections 422.70, 422.71, 422.72, 422.74, and 422.75, section 423.14, subsection 1, and sections 423.23, 423.24, 423.25, 423.31, 423.33, 423.35, 423.37 through 423.42, and 423.47, consistent with the provisions of this chapter, apply with respect to the surcharge authorized under this chapter, in the same manner and with the same effect as retail sales taxes within the meaning of those statutes. The director may require all persons who are engaged in the business of deriving any sales price subject to a surcharge under this chapter to register with the department. All surcharges collected under this chapter are deemed to be held in trust for the state of Iowa and the counties imposing the surcharges. County officials shall confer with the director of revenue for assistance in drafting the ordinance imposing the surcharge. A certified copy of the ordinance shall be filed with the director as soon as possible after passage.
   b.  Frequency of deposits and quarterly reports of the surcharge with the department of revenue are governed by the provisions in section 423.31. Local surcharge collections shall not be included in computation of the total tax to determine frequency of filing under section 423.31.
   3.  a.  The director, in consultation with county officials, shall collect and account for the surcharge. The director shall certify each quarter the amount of the surcharge receipts and any interest and penalties to be credited to the county account in the state surcharge revenue fund established in section 332.4. County authorities shall not require any permit not required by the director of revenue.
   b.  All surcharge revenues and interest and penalties received or refunded one hundred eighty days or more after the date on which the county repeals the surcharge shall be deposited in or withdrawn from the general fund of the state.
   4.  Each county that has imposed a retail marijuana surcharge under this chapter shall assist the department in identifying new establishments required to impose the surcharge in the county. This process shall be ongoing until the surcharge is repealed.
    Sec. 48.  NEW SECTION.  332.4  State surcharge revenue fund —— county accounts.
   1.  A state surcharge revenue fund is established in the state treasury under the control of the department consisting of the surcharge revenues collected within each county and deposited in the fund pursuant to section 332.3. Revenues deposited in the fund are appropriated to the department for the purposes of this section.
   2.  A county account is created within the fund for each county imposing a retail marijuana surcharge under this chapter.
   3.  The department shall deposit the revenues described in subsection 1 that were collected in a quarter beginning on or after the imposition of the surcharge into the appropriate county account in the fund.
   4.  All revenues in each county account within the fund shall be remitted quarterly by the department to the county that imposed the retail marijuana surcharge for deposit in the general fund of the county.
   5.  The department shall adopt rules pursuant to chapter 17A necessary to administer the department’s responsibilities under this chapter.
    Sec. 49.  NEW SECTION.  453B.19  Retail marijuana.
   This chapter shall not apply to retail marijuana or retail marijuana products produced or sold pursuant to chapter 124F.
DIVISION III
EFFECTIVE DATE

    Sec. 50.  EFFECTIVE DATE.  This Act, being deemed of immediate importance, takes effect upon enactment, except that the division of the department of revenue responsible for issuing alcohol licenses shall not issue a license to operate a retail marijuana establishment prior to January 1, 2027.
DIVISION IV
CODE EDITOR DIRECTIVE

    Sec. 51.  CODE EDITOR DIRECTIVE —— SUBCHAPTER DESIGNATIONS.
   1.  The Code editor is directed to create two new subchapters in chapter 124F as follows:
   a.  Subchapter I shall be entitled “CRIMINAL PENALTIES” and include sections 124F.1 through 124F.3.
   b.  Subchapter II shall be entitled “RETAIL MARIJUANA” and include sections 124F.4 through 124F.27.
   2.  The Code editor may modify subchapter titles if necessary and is directed to correct internal references in the Code as necessary due to enactment of this section.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to retail marijuana.
   DIVISION I —— MARIJUANA —— CRIMINAL PENALTIES. The bill modifies criminal penalties relating to marijuana by eliminating and modifying certain criminal provisions in Code chapter 124 (uniform controlled substances Act), and transferring certain criminal provisions from Code chapter 124 to new Code chapter 124F.
   MANUFACTURE, DELIVERY, OR POSSESSION WITH INTENT TO DELIVER MARIJUANA. The bill provides that an unauthorized person commits a class “C” felony punishable by confinement for no more than 10 years and a fine of at least $1,370 but not more than $13,660 if the person violates new Code section 124F.2(1)(a) and the controlled substance involves more than 50 kilograms of marijuana. Currently, such a person commits a class “B” felony punishable by confinement of no more than 50 years if the controlled substance involves more than 1,000 kilograms of a mixture or substance containing a detectable amount of marijuana, or a class “B” felony punishable by confinement of no more than 25 years if the controlled substance involves more than 100 kilograms of marijuana but not more than 1,000 kilograms.
   The bill provides that an unauthorized person commits a class “D” felony if the person violates new Code section 124F.2(1)(a) and the controlled substance involves more than 2 kilograms of marijuana but not more than 50 kilograms. A class “D” felony is punishable by confinement for no more than five years and a fine of at least $1,025 but not more than $10,245. Currently, such a person commits a class “C” felony if the controlled substance involves more than 50 kilograms of marijuana but not more than 100 kilograms.
   The bill provides that an unauthorized person commits an aggravated misdemeanor if the person violates new Code section 124F.2(1)(a) and the controlled substance involves more than 12 ounces of marijuana but not more than 2 kilograms. An aggravated misdemeanor is punishable by confinement for no more than two years and a fine of at least $855 but not more than $8,540. Currently, such a person commits a class “D” felony if the controlled substance involves 50 kilograms or less of marijuana.
   The bill provides that an unauthorized person commits a serious misdemeanor if the person violates new Code section 124F.2(1)(a) and the controlled substance involves more than 4 ounces of marijuana but not more than 12 ounces. A serious misdemeanor is punishable by confinement for no more than one year and a fine of at least $430 but not more than $2,560. Currently, such a person commits a class “D” felony.
   The bill provides that an unauthorized person commits a simple misdemeanor if the person violates new Code section 124F.2(1)(a) and the controlled substance involves 4 ounces or less of marijuana except as otherwise provided in the bill. A simple misdemeanor is punishable by confinement for no more than 30 days and a fine of at least $105 but not more than $855. Currently, such a person commits a class “D” felony. A person who is 18 years of age or older who unlawfully manufactures with the intent to distribute, distributes, or possesses with the intent to distribute marijuana to another person who is 18 years of age or older in or on, or within 1,000 feet of, the real property comprising a public or private elementary or secondary school, public park, public swimming pool, public recreation center, or on a marked school bus, may be sentenced up to an additional term of confinement of five years.
   POSSESSION OF MARIJUANA. The bill provides that if a person unlawfully possesses more than 6 ounces of marijuana but not more than 12 ounces, the person commits a serious misdemeanor. 
   The bill provides that if a person unlawfully possesses more than one-half ounce of marijuana but not more than 6 ounces, the person commits a simple misdemeanor.
   The bill provides that if a person 21 years of age or older possesses one-half ounce or less of marijuana, the person does not commit a criminal offense but shall be assessed a civil penalty in the amount of $100. If the person is under 21 years of age, the person must complete 10 hours of unpaid community service and a substance abuse program, and inform the person’s parents or legal guardians. The bill provides that any records relating to the civil penalty shall not be displayed for public viewing on the Iowa court information system and such records shall not be kept in the criminal history files maintained by the department of public safety. 
   RETAIL MARIJUANA —— POSSESSION LIMITS. The bill establishes possession limits for retail marijuana, defined in the bill. The bill prohibits a person 21 years of age or older from possessing more than 5 ounces of marijuana flower, or 500 milligrams of tetrahydrocannabinol contained in a product infused with marijuana. A person in possession of retail marijuana in excess of amounts equivalent to the amounts specified in the bill for the possession of marijuana is subject to prosecution for a simple or serious misdemeanor or a civil penalty. A retail marijuana store that sells retail marijuana in excess of the amounts allowed in the bill is subject to a fine or other discipline imposed by the division.
   Currently, if a person unlawfully possesses marijuana, the person shall be punished by imprisonment in the county jail for not more than six months or by a fine of not more than $1,000, or by both for a first offense. If the person has previously been convicted of marijuana possession, the person commits a serious misdemeanor under current law, and if the person has been convicted of marijuana possession two or more times, the person commits an aggravated misdemeanor.
   JUVENILE MARIJUANA OFFENSES. The bill specifies that the juvenile court shall have exclusive original jurisdiction in a proceeding concerning a minor who is alleged to have committed a violation of the bill.
   GATHERINGS WHERE CONTROLLED SUBSTANCES UNLAWFULLY USED.  The bill strikes a provision making it a serious misdemeanor for a person to sponsor, promote, or aid in the sponsoring or promoting of a meeting or gathering with the knowledge or intent that marijuana be distributed, used, or possessed at the meeting or gathering in violation of Code chapter 124.
   ACCOMMODATION OFFENSE. The bill strikes a provision allowing a prosecution for unlawful delivery or possession with intent to deliver marijuana, if the prosecution proves that the defendant delivered or possessed with intent to deliver one-half ounce or less of marijuana which was not offered for sale, the defendant is guilty of an accommodation offense and rather than being sentenced for a class “D” felony under Code section 124.401(1)(d), the person is sentenced for a misdemeanor in violation of Code section 124.401(5). The bill makes conforming changes to Code sections 124.401G (Iowa hemp Act) and 124.413 (mandatory minimum sentences —— controlled substances).
   SECOND OR SUBSEQUENT OFFENSES. Currently, a person convicted of a second or subsequent offense under Code chapter 124 may be punished by imprisonment for a period not to exceed three times the term otherwise authorized, or fined not more than three times the amount otherwise authorized. The bill strikes the provision that allows for the use of a previous marijuana conviction in determining if a person has been convicted of a second or subsequent offense under Code chapter 124.
   MARIJUANA IN MOTOR VEHICLES. The bill prohibits a driver of a motor vehicle upon a public street or highway from using marijuana in the passenger area of the motor vehicle. The bill also prohibits a driver or passenger of or in a motor vehicle upon a public street or highway from possessing marijuana in the passenger area of a motor vehicle except in a sealed, odor proof, child resistant container. The bill defines “passenger area” as the area designed to seat the driver and passengers while the motor vehicle is in operation and any area that is readily accessible to the driver or a passenger while in their seating positions, including the glove compartment. A person who knowingly violates this provision of the bill is guilty of a simple misdemeanor. A simple misdemeanor is punishable by confinement for no more than 30 days and a fine of at least $105 but not more than $855.
   The bill prohibits a person from operating a motor vehicle with 50 or more nanograms of tetrahydrocannabinol in the person, as measured in the person’s blood. A person who operates a motor vehicle with 50 or more nanograms of tetrahydrocannabinol in the person shall have that person’s driver’s license suspended for 180 days for a first offense and one year for each subsequent offense. A person who refuses to submit to chemical testing for tetrahydrocannabinol shall have the person’s driver’s license suspended for one year for a first offense, and two years for each subsequent offense.
   EXPUNGEMENT. The bill provides that upon application by a defendant convicted of a felony offense under Code chapter 124 (controlled substances) related to the possession or transfer of marijuana prior to January 1, 2027, the court shall enter an order expunging the record of such a criminal case. A person may only seek an expungement once, but an application may request the expungement of multiple nonviolent offenses if the offenses arose from the same transaction or occurrence. Under current law, misdemeanor marijuana offenses may be expunged pursuant to Code section 901C.3 (misdemeanor expungement). The bill requires each court, on the effective date of the bill, to review its records to identify persons convicted of marijuana offenses that would have been legal under the bill and to automatically expunge each such conviction.
   DIVISION II —— RETAIL MARIJUANA. Division II of the bill relates to the regulation of retail marijuana in Iowa. The bill grants the division of the department of revenue responsible for issuing alcohol licenses (division) the authority to regulate the cultivation, production, transportation, testing, and sale of retail marijuana and retail marijuana products, including by issuing appropriate licenses and promulgating rules.
   The bill requires the division to transfer half of any application fee collected to the local jurisdiction in which the retail marijuana establishment will be located. The bill allows local jurisdictions to impose limitations on the operation of retail marijuana establishments, including by prohibiting their operation.
   The bill directs the division to develop and maintain a seed-to-sale tracking system to track retail marijuana from the seed or immature plant stage until it is sold to a consumer at a retail marijuana establishment.
   The bill requires the division to prioritize applicants for state licenses who currently hold a license pursuant to Code chapter 124E (medical cannabidiol) or that are businesses majority-owned by women, citizens or permanent legal residents of Iowa, or disabled veterans. The bill requires the division to issue licenses to businesses that are majority-owned by persons who are racial minorities in a proportion that meets or exceeds the percentage of persons in this state who are racial minorities according to the most recent federal decennial census.
   The bill prohibits the owner of a retail marijuana establishment from interfering with activities of employees relating to labor organizations.
   LOCAL LICENSES. The bill requires the division to transmit any application for a retail marijuana establishment it receives to the local jurisdiction where the establishment will be located within seven days of receipt unless the local jurisdiction has prohibited the operation of retail marijuana establishments. The local jurisdiction must then inform the division whether the application complies with any local restrictions on the operation of retail marijuana establishments it may have imposed. The bill requires a person to receive approval from both the division and the local jurisdiction before operating a retail marijuana establishment. A person whose application for a license is denied is entitled to a hearing and judicial review pursuant to Code chapter 17A.
   RETAIL MARIJUANA LICENSES. Ninety days prior to the expiration date of an existing license, the division shall notify the licensee of the expiration date by first class mail at the licensee’s address of record with the division. A licensee may apply for the renewal of an existing license to the division not less than 30 days prior to the date of expiration.
   RETAIL MARIJUANA STORES. The bill allows a retail marijuana store to purchase retail marijuana from a retail marijuana cultivation facility. A retail marijuana store may also sell prepackaged and labeled retail marijuana products. A retail marijuana store must track all of its retail marijuana and retail marijuana products from the point that they are transferred to the retail marijuana store to the point of sale. The bill prohibits a retail marijuana store from selling more than one ounce of retail marijuana or its equivalent to a person in a single transaction, excluding nonedible, nonpsychoactive retail marijuana products.
   Prior to initiating a sale, the bill requires a retail marijuana store employee to verify that purchaser has a valid identification card showing that the person is 21 years of age or older. If a purchaser presents a retail marijuana store employee with fraudulent proof of age, any action taken in reliance on that proof of age shall not be grounds for the revocation or suspension of a license.
   The bill allows a retail marijuana store to provide to the state hygienic laboratory a sample of its products for testing and research purposes. The retail marijuana store shall maintain a record of what was provided to the laboratory and the results of the testing.
   The bill prohibits a retail marijuana store from selling any products other than retail marijuana, retail marijuana products, marijuana accessories, nonconsumable products such as apparel, and marijuana products such as childproof packaging containers.
   The bill prohibits the division from issuing more than one retail marijuana store license per county, except that the division may, upon receipt of a petition, issue one additional retail marijuana store license per 100,000 population in the county. The bill allows a location licensed as a retail marijuana store to also be licensed as a medical cannabis dispensary, pursuant to rules adopted by the division in consultation with the Iowa department of public health.
   RETAIL MARIJUANA CULTIVATION. The bill allows the division to issue retail marijuana cultivation facility licenses to persons who cultivate retail marijuana for sale and distribution to retail marijuana stores, manufacturers, or other cultivation facilities. The bill requires a retail marijuana cultivation facility to remit any applicable tax due. The bill also requires a retail marijuana cultivation facility to track the marijuana it cultivates from seed or immature plant to wholesale purchase.
   RETAIL MARIJUANA PRODUCTS MANUFACTURING LICENSES. The bill allows the division to issue retail marijuana products manufacturing licenses to persons who manufacture retail marijuana products. The bill requires a retail marijuana products manufacturer to track all of its retail marijuana from the point it is either transferred from its retail marijuana cultivation facility or the point when it is delivered to the retail marijuana products manufacturer from a retail marijuana cultivation facility to the point of transfer to a retail marijuana store.
   The bill requires retail marijuana products to be manufactured and prepared in a facility that only manufactures retail marijuana products, except that premises may be shared with a medical cannabis-infused products manufacturer so long as a virtual or physical separation of inventory is maintained.
   RETAIL MARIJUANA USE —— PROTECTIONS. The bill prohibits the state and its political subdivisions from taking certain actions against a person on the basis that the person has engaged in conduct allowed by the bill. The state and its political subdivisions shall not prosecute a person, deny a person a professional license, deny a person a benefit or entitlement, deny a person custody or visitation of a child, deny a person employment or a contract, or deny a person medical care on the basis that the person has engaged in conduct allowed by the bill. The bill also prohibits the state or a political subdivision from denying employment or a contract to a person on the basis of a person’s prior conviction of a nonviolent marijuana offense that does not involve distribution to a minor. The bill excludes engaging in conduct allowed by the bill from being classified as a violation of a condition of parole, probation, or pretrial release unless there is a specific finding that the conduct could create a danger to the individual or another person. The bill does not prohibit a governmental employer from disciplining an employee or contractor for ingesting marijuana at work or working while under the influence of marijuana, nor does it prohibit a licensing board from imposing a penalty on a person for engaging in conduct that would constitute negligence or professional malpractice. The protections of the bill do not apply to the extent that they conflict with a governmental employer’s obligations under federal law or would disqualify a governmental employer from a monetary or licensing-related benefit under federal law.
   FEES. The bill allows the division to collect and charge fees. The bill sets the application fee for a person applying for a new retail marijuana establishment license at $5,000, which shall be divided evenly between the division and the local jurisdiction where the license is proposed to be issued. The bill permits a local jurisdiction to impose operating fees on retail marijuana establishments to which it has granted a license.
   LICENSE DISCIPLINE. The bill permits the division, on its own motion or complaint, and after investigation, notice, a public hearing, and opportunity to be heard, to suspend or revoke a license if the licensee or any of its agents or employees violate a provision of the bill or a rule promulgated by the division. The division may administer oaths and issue subpoenas to require the presence of persons and the production of documents. The division may impose discipline pursuant to rules and Code chapter 17A.
   INSPECTION. The bill requires a licensee to keep a complete set of all records necessary to show fully the business transactions of the licensee, all of which shall be open at all times during business hours for the inspection and examination by the division or its duly authorized representatives.
   The bill requires the licensed premises of a retail marijuana establishment, including any places of storage where retail marijuana or retail marijuana products are stored, cultivated, sold, dispensed, or tested to be subject to inspection by the state or local jurisdictions and their investigators, during all business hours and other times of apparent activity, for the purpose of inspection or investigation.
   STATE MARIJUANA EXCISE TAX. The bill imposes an excise tax on consumers at the rate of 10 percent of the sale price on each sale of retail marijuana. The tax shall be paid by the consumer to the retail marijuana establishment at the time of sale, and each retail marijuana establishment shall remit the tax collected to the division on the 15th day of each month. Revenues generated by the excise tax shall be deposited in the community reinvestment fund, mental health services and substance use disorder prevention fund, and local public safety fund created in the bill. Moneys in the community reinvestment fund, mental health services and substance use disorder prevention fund, and local public safety fund shall be appropriated by the general assembly for purposes enumerated in the bill.
   OCCUPATIONAL LICENSING PROTECTIONS. The bill prohibits a professional or occupational licensing board from imposing discipline on a licensee for providing services related to retail marijuana establishments. The bill also prohibits a professional or occupational licensing board from denying a license to a person based on a person’s past employment with a retail marijuana establishment. 
   RULEMAKING. The bill requires the division to adopt rules within one year of the effective date of the bill to adopt rules for the implementation of the bill. The rules shall not prohibit the operation of retail marijuana establishments or make the operation of retail marijuana establishments so costly as to be impractical. Required rules include but are not limited to rules relating to applications, fees, licensure, security requirements, labeling requirements, health and safety requirements, restrictions on advertising, cultivation, testing, and penalties. The division shall also develop and regularly update safety materials to be distributed upon the sale of retail marijuana.
   ACTS PROHIBITED. The bill does not allow the transfer of marijuana to a person under 21 years of age or the possession of marijuana by a person under 21 years of age.
   PROPERTY RIGHTS. The bill does not require the owner of a property to allow the consumption, cultivation, display, sale, or transfer of marijuana at that property. However, in the case of a residential dwelling, a landlord or property manager shall not prohibit the possession of retail marijuana or medical cannabis or the consumption of retail marijuana or medical cannabis by means other than smoking except under certain circumstances. The bill allows a landlord to take action against a tenant after a warning if the tenant’s use of marijuana creates an odor that interferes with the peaceful enjoyment of property by other tenants. The bill prohibits a landlord from discriminating against a tenant or applicant on the basis of a past conviction of a marijuana offense that would have been legal under the bill.
   LAW ENFORCEMENT. The bill prohibits law enforcement agencies from expending resources on the investigation of or arrest for activity related to marijuana that is in violation of federal law if the officer performing the investigation or arrest has reason to believe that the activity complies with the requirements of the bill. The bill also prohibits an agency or political subdivision of the state from taking an adverse action against a person on the sole basis that the person has violated a federal law related to marijuana.
   SURCHARGE. The bill allows a county that has not prohibited the sale of retail marijuana to impose a 1 percent surcharge on the retail sales price of retail marijuana. The surcharge shall be administered by the department of revenue and funds collected by the department of revenue shall be remitted to the county on a quarterly basis. The bill includes additional provisions regarding the implementation and operation of retail marijuana surcharges.
   DIVISION III —— EFFECTIVE DATE. The bill takes effect upon enactment, except that the division of the department of revenue responsible for issuing alcohol licenses shall not issue a license to operate a retail marijuana establishment prior to January 1, 2027.
   DIVISION IV —— CODE EDITOR DIRECTIVE. The bill directs the Code editor to create two subchapters in new Code chapter 124F. The first subchapter shall be designated “criminal penalties” and the second subchapter shall be designated “retail marijuana”.