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Ways & Means – week of April 13, 2015

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SF 439 – Iowa ABLE Savings Trust

SF 484 – Medical Cannabis Act

SF 488 – Air quality fund and air quality fees

SF 489 – EPC surcharge extension, UST fund and grant program funding

HF 621 – Streamlined sales tax update

 

FLOOR ACTION:

SF 484 strikes the entire Medical Cannabidiol Act (Iowa Code Chapter 124D) and replaces it with a new Medical Cannabis Act (Iowa Code Chapter 124E). Key highlights:

      • Medical Cannabis: The allowable form of medical cannabis is expanded beyond cannabidiol to include any species of the genus cannabis plant, or any mixture or preparation of them, including whole plant extracts and resins. Forms beyond cannabidiol have been found to be more helpful for various medical conditions. The Iowa Department of Public Health (DPH) is directed to promulgate administrative rules to establish the form and quantity of medical cannabis allowed to be dispensed. Smoking of medical cannabis is prohibited.
      • Registration Card: The bill uses the same registration card application, approval and dispensing processes as those used by DPH and Department of Transportation (DOT) for medical cannabidiol. However, DPH is directed to establish medical cannabis registration card fees ($100 for patients, $25 for low-income patients and $25 for caretakers) to cover administrative costs. Law enforcement has the same access to the registration list for verifying compliance. All information from patients must be kept confidential.
      • Affirmative Defense: The bill uses the same affirmative defense for the possession, use and administration as last year’s Medical Cannabidiol Act, and applies it to the possession and use of medical cannabis for the expanded set of debilitating medical conditions. The same affirmative defenses are also applied to health care practitioners as was applied to neurologists under the Medical Cannabidiol Act. Affirmative defenses are also extended to medical cannabis manufacturers, dispensaries and employees.
      • Eligible Conditions & Medical Advisory Board: The debilitating medical conditions list is expanded beyond intractable epilepsy to include cancer, multiple sclerosis, epilepsy, AIDS or HIV, glaucoma, hepatitis C, Crohn’s Disease, amyotrophic lateral sclerosis, Ehlers-Danlos Syndrome, post-traumatic stress syndrome (PTSD), and chronic pain emanating from an underlying medical condition that is not responsive to conventional treatment or produces debilitating side effects. By August 15, 2015, the director of DPH must establish a Medical Advisory Board consisting of eight board-certified health care practitioners knowledgeable about the use of medical cannabis and three patients. Duties of the Board include reviewing and recommending for approval to DPH additional debilitating medical conditions that qualify for the use of medical cannabis; accepting and reviewing petitions to add debilitating medical conditions to the list of those that qualify for the use of medical cannabis; advising the DPH on the location of dispensaries, the form and quantity of allowable medical cannabis that may be dispensed, and general oversight of manufacturers; and convene at least twice per year to conduct public hearings and evaluate petitions. DPH must promulgate administrative rules to identify criteria and set forth procedures for including additional debilitating medical conditions that qualify for the use of medical cannabis.
      • Health Care Practitioner’s Certification: Recognizing the longer list of eligible conditions, the written recommendation from a neurologist in the Medical Cannabidiol Act is replaced with a written certification provided by a health care practitioner that attests to the patient suffering from a debilitating medical condition that is eligible for the medical cannabis program. Health care practitioners licensed under Chapter 148 to practice medicine or surgery, physician’s assistants licensed under Chapter 148C or advanced registered nurse practitioners licensed under Chapter 152 or 152E may provide written certifications. The patient or caregiver may present the written certification to DPH when applying for the medical cannabis registration card. Written certifications expire after one year and may be renewed annually. Health care practitioners are not required to provide a written certification. This process is modeled after Minnesota’s certification.
      • Manufacturers & Dispensaries: Four medical cannabis manufacturers are to be selected and licensed by DPH to possess, cultivate, supply and transport medical cannabis within the state. Twelve dispensaries are to be licensed by DPH for selling medical cannabis to patients and caregivers who possess a medical cannabis registration card. The locations of the dispensaries are to be based on geographic need. DPH must solicit applications and license the two manufacturers by December 1, 2015. Licenses must be approved or re-issued by December 1 of each year. Dispensaries must be licensed by April 1, 2016, and must agree to begin supplying medical cannabis to patients by July 1, 2016. DPH must consider these factors in determining whether to license a manufacturer or dispensary: technical medical cannabis expertise, qualifications of employees, long-term financial stability, ability to provide appropriate security measures, ability to meet production demands, and projection and ongoing assessment of fees to patients for medical cannabis. Manufacturers must contract with the State Hygienic Lab to test the medical cannabis for content, contamination and consistency.
      • Manufacturers and dispensaries must implement security requirements, including requirements for protection of each location by a operational security alarm system, facility access controls, perimeter intrusion detection systems and a personnel identification system. Manufacturers and dispensaries are prohibited from sharing office space with, referring patients to or having any financial relationships with health care practitioners. Consumption of medical cannabis on the premises of a manufacturer or dispensary is prohibited. Reasonable inspections by DPH are permitted. Manufacturers are prohibited from employing those under age 18 or any person who has been convicted of a disqualifying felony offense. Employees must be subject to a background investigation conducted by the Division of Criminal Investigation and a national criminal history background check. Manufacturers and dispensaries are not allowed within 1,000 feet of a public or private school. DPH may establish reasonable restrictions concerning signage, marketing, displays and advertising of medical cannabis. Manufacturers must provide a reliable and ongoing supply of medical cannabis for all eligible patients. All manufacturing, harvesting, packaging and processing must take place in an enclosed, locked facility at a physical address provided to DPH during the licensure process. Prior to dispensing medical cannabis, the dispensary is required to verify that the patient or caregiver has a valid medical cannabis registration card, assign a tracking number to the medical cannabis, ensure proper packaging (including child resistant packaging and exemptions for packaging for elderly patients), and affix a label with a list of all active ingredients and patient/caregiver identifying information. Any manufacturer or dispensary acting without a valid license will be assessed a civil penalty of up to $1,000 per violation in addition to any other applicable penalties.
      • Fees: The medical cannabis program is intended to be financially self-sufficient. The manufacturer license application fee is set at $7,500, dispensary license fee is set at $5,000, and the manufacturer is authorized to charge fees to the patient/caregiver to dispense medical cannabis. DPH will set annual fees for manufacturers and dispensaries based on regulation and inspection costs. DPH retains all fees.
      • Reciprocity: Medical cannabis registration cards or their equivalent issued in another state will be considered valid in Iowa for possession and use of medical cannabis, but medical cannabis is only to be dispensed to Iowa residents.
      • Reports: The University of Iowa Carver College of Medicine and College of Pharmacy maintains their responsibility to provide an annual report to the Legislature and DPH outlining the scientific literature, studies and clinical trials regarding the use of medical cannabis on patients with a debilitating medical condition.
      • Emergency Rules & Transition Provisions: DPH is authorized to adopt emergency administrative rules to implement this bill. Medical cannabidiol registration cards issued prior to July 1, 2015, remain in effect for the 12-month period following their issuance and may be renewed prior to the expiration of this 12-month period.
      • Rescheduling marijuana: The bill would change the classification of marijuana as a schedule I controlled substance to a schedule II controlled substance. Schedule I drugs are those found to have no medical value. Schedule II drugs have medical value and can be used in research activities.

[4/15: 26-19 (party line except Zaun voting “yes”, Bowman voting “no”; Anderson, Behn, Bertrand, Feenstra, Zumbach absent)]

 

SF 488 establishes an air quality fund in the state treasury to receive fees collected by the Department of Natural Resources (DNR) as part of the state’s air quality program. Fees are to be established by the Environmental Protection Commission and will apply to major source permitted users, minor source permitted users and asbestos-related activities.

Fees must be used for operation of the air quality program. Fees will be deposited into an account that matches the user who paid the fee (major, minor or asbestos). Fees in each account must only be used for activities associated with the respective source.

The DNR must annually meet with a stakeholder group to review fees and the costs of the major source, minor source or asbestos programs. During these meetings, DNR and the stakeholder groups will develop a consensus on the expenses of the air quality program and the fees that will be used to fund those activities.

This legislation came from the air quality stakeholders working group, which met in 2014. This workgroup included a number of permitted air users and was formed with the intent of providing a sustainable and effective funding plan for the operation of the DNR’s air quality program, which is responsible for issuing permits to regulated industries and protecting the health of Iowans by monitoring air emissions and developing strategies for reducing air pollution.

In floor action, the Senate adopted an amendment that established caps on fees to be collected for each of the accounts; outlined how DNR may use those fees to ensure they go toward activities related to the fee payer’s regulation; and established a process for DNR to present its air program budget and proposed fees to stakeholders for review. [4/13: short form (Behn, Garrett, Guth, Sinclair, Whitver, Zaun “no”; Bertrand, Chelgren, Zumbach excused)]

 

COMMITTEE ACTION:

SF 439 creates the Iowa ABLE savings plan trust. Congress passed the Achieving a Better Life Experience (ABLE) Act  in December 2014. The ABLE Act allows those with disabilities to establish tax-free savings trusts into which money can be deposited to pay for future disability-related expenses that help to maintain health, independence and quality of life. Expenses could include modifications to a home to enhance independent living, specialized health and dental care services, education and transportation. Eligible Iowans may save up to $100,000 in an account without losing eligibility for other services, including Social Security benefits. Under current federal gift tax limitations, as much as  $14,000 can be deposited annually, with individual donor deduction caps of approximately $3,100 each. Donors will be able to deduct deposits from income tax calculations, and any gains are protected from income taxes. To be eligible, the disabling condition must have occurred prior to age 26. Each state must create its own program for its residents to be able to establish such savings accounts. Iowa’s program will be modeled after the College Savings Iowa 529 program and administered by the State Treasurer. [4/14: short form (Behn, Seng absent)]

 

SF 489 extends the existing Environmental Protection Charge (EPC) on motor fuel for an additional 10 years. The EPC is scheduled to sunset on June 30, 2016, and would be extended until June 30, 2026. The EPC is 1 cent per gallon of motor vehicle fuel sold in the state. The EPC was initiated in 1989. It generates roughly $21 million per year and is used to clean up contaminated underground storage tank (UST) sites that were in place before 1990 and to fund the Renewable Fuel Infrastructure grant program.

The bill changes the allocation of funding to the UST fund board, which is in charge of administering the UST fund to clean up contaminated sites. There is currently $14 million allocated per year the UST fund to pay for the clean-up of contaminated site. The bill changes that allocation to reserve $7 million per year for the UST fund and use $7 million to establish a grant program to assist motor fuel retailers with upgrades to existing tanks and facilities. These upgrades must be capable of dispensing higher blends of ethanol, up to and including fuel blends of 85 percent ethanol (E-85). [4/9: short form (Behn, Smith “no”)]

 

HF 621 is the annual bill to update Iowa’s sales tax law to maintain compliance with the 24-member state streamlined sales tax coalition. Membership in this coalition allows Iowa to collect a portion of the sales tax owed by online retailers for sales to Iowa residents.

The bill updates the state sales tax law to clarify that prepared but uncooked foods (such as take-and-bake pizzas) are not subject to the sales tax. This codifies Iowa’s current practice, so there is no change in the taxation of these products. The bill also provides a limited liability protection to online retailers for unpaid sales tax if they relied on advice of the Department of Revenue to determine whether they should collect sales tax on certain purchases. [4/14: short form (Behn, Seng absent)]


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