S.B. NO.



S.D. 2


H.D. 1














     SECTION 1.  Chapter 46, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§46-    Establishment of compassion centers.  In addition to the powers of the counties enumerated under section 46-1.5, a county may provide by ordinance for the establishment of one or more compassion centers; provided that compassion centers shall  not be located within fifty miles of each other, in accordance with section 329-A; and be located within two miles of a school."

     SECTION 2.  Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237-    General excise tax on marijuana sales.  In addition to the amounts taxable under this chapter, there shall be assessed, levied, and collected a general excise tax on the sale of marijuana by a compassion center under section 329-A in the amount of $30 per ounce of sale; provided that the department of taxation shall deposit the amount into the state general fund.

 Any violation of general excise tax laws shall result in the immediate rescission of the compassion center license, which will result in closure of the compassion center until the violation is addressed."

     SECTION 3.  Chapter 329, Hawaii Revised Statutes, is amended by adding two new sections to part IX to be appropriately designated and to read as follows:

     "§329-A  Compassion centers; establishment.  (a)  A county may authorize by ordinance the establishment of one or more compassion centers for the legal distribution of marijuana.  The purpose of a compassion center shall be to sell marijuana or the marijuana plant, or both, to qualifying patients and their primary caregivers; provided that they are registered in compliance with section 329-123.

(b)  A compassion center shall:

(1)  Comply with section 712-1249.6;

(2)  Not hire any convicted felon to work in a compassion center;

(3)  Register annually with the department of public safety; and

(4)  Pay an annual registration fee of $5,000; provided that the registration fee be deposited into the general fund of the county in which the compassion center conducts business.

     (c)  Every ordinance enacted under subsection (a) shall include, at minimum, the following requirements for the establishment of a compassion center:

     (1)  That the sale of the marijuana or marijuana plant for medical use be made only to qualifying patients or their caregivers who are registered with the department of public safety, as provided in section 329-123;

     (2)  That the purchaser of the marijuana or marijuana plant for medical use present to the dispenser at the time of sale a photo identification issued by a government agency, along with:

         (A)  Written certification and the registration certificate required under section 329-123; or

         (B)  Proof of registration with the department of public safety in the case of a primary caregiver;

     (3)  That the compassion center make a record, to be kept for not less than five years following the sale, of every sale of marijuana or marijuana plant with the name, address, and patient identification number of the purchaser as appears on the written certification, the prescribing physician's name, and other identifying information as may be required by ordinance;

     (d)  Each county's ordinance shall provide for:

     (1)  County licensing and registration of compassion centers; and

     (2)  Unannounced county inspections of the premises, amount of marijuana or marijuana plants that may be stored on the premises, and security measures to protect the premises from burglary.

     (e)  Each compassion center shall cultivate and grow its own supply of marijuana; provided that the compassion center shall provide for adequate security to protect the marijuana.

     §329-B  Registration recognition of other jurisdictions.  A person who is duly issued a medical marijuana registration certificate or similar authorization from a jurisdiction outside of this State shall be entitled to purchase marijuana for medical use from a compassion center established pursuant to section 329-A; provided that the person provides approved government identification, verified information on the prescribing physician, and temporary residence information."

SECTION 4.  Section 237-24.3, Hawaii Revised Statutes, is amended to read as follows:

     "§237-24.3  Additional amounts not taxable.  In addition to the amounts not taxable under section 237-24, this chapter shall not apply to:

     (1)  Amounts received from the loading, transportation, and unloading of agricultural commodities shipped for a producer or produce dealer on one island of this State to a person, firm, or organization on another island of this State.  The terms "agricultural commodity", "producer", and "produce dealer" shall be defined in the same manner as they are defined in section 147-1; provided that agricultural commodities need not have been produced in the [State;] state;

     (2)  Amounts received from sales of:

         (A)  Intoxicating liquor as the term "liquor" is defined in chapter 244D;

         (B)  Cigarettes and tobacco products as defined in chapter 245; and

         (C)  Agricultural, meat, or fish products;

          to any person or common carrier in interstate or foreign commerce, or both, whether ocean-going or air, for consumption out-of-state on the shipper's vessels or airplanes;

     (3)  Amounts received by the manager, submanager, or board of directors of:

         (A)  An association of owners of a condominium property regime established in accordance with chapter 514A or 514B; or

         (B)  A nonprofit homeowners or community association incorporated in accordance with chapter 414D or any predecessor thereto and existing pursuant to covenants running with the land,

          in reimbursement of sums paid for common expenses;

     (4)  Amounts received or accrued from:

         (A)  The loading or unloading of cargo from ships, barges, vessels, or aircraft, whether or not the ships, barges, vessels, or aircraft travel between the State and other states or countries or between the islands of the State;

         (B)  Tugboat services including pilotage fees performed within the [State,] state, and the towage of ships, barges, or vessels in and out of state harbors, or from one pier to another; and

         (C)  The transportation of pilots or governmental officials to ships, barges, or vessels offshore; rigging gear; checking freight and similar services; standby charges; and use of moorings and running mooring lines;

     (5)  Amounts received by an employee benefit plan by way of contributions, dividends, interest, and other income; and amounts received by a nonprofit organization or office, as payments for costs and expenses incurred for the administration of an employee benefit plan; provided that this exemption shall not apply to any gross rental income or gross rental proceeds received after June 30, 1994, as income from investments in real property in this [State;] state; and provided further that gross rental income or gross rental proceeds from investments in real property received by an employee benefit plan after June 30, 1994, under written contracts executed prior to July 1, 1994, shall not be taxed until the contracts are renegotiated, renewed, or extended, or until after December 31, 1998, whichever is earlier.  For the purposes of this paragraph, "employee benefit plan" means any plan as defined in [section] Section 1002(3) of [title] Title 29 of the United States Code, as amended;

     (6)  Amounts received for purchases made with United States Department of Agriculture food coupons under the federal food stamp program, and amounts received for purchases made with United States Department of Agriculture food vouchers under the Special Supplemental Foods Program for Women, Infants and Children;

     (7)  Amounts received by a hospital, infirmary, medical clinic, health care facility, pharmacy, or a practitioner licensed to administer the drug to an individual for selling prescription drugs or prosthetic devices to an individual; provided that this paragraph shall not apply to any amounts received for services provided in selling prescription drugs or prosthetic devices[.]; provided further that this paragraph shall not apply to any amounts received by compassion centers established under section 46-   for selling marijuana for medical use.  As used in this paragraph:

              "Prescription drugs" are those drugs defined under section 328-1 and dispensed by filling or refilling a written or oral prescription by a practitioner licensed under law to administer the drug and sold by a licensed pharmacist under section 328-16 or practitioners licensed to administer drugs; and

              "Prosthetic device" means any artificial device or appliance, instrument, apparatus, or contrivance, including their components, parts, accessories, and replacements thereof, used to replace a missing or surgically removed part of the human body, which is prescribed by a licensed practitioner of medicine, osteopathy, or podiatry and which is sold by the practitioner or which is dispensed and sold by a dealer of prosthetic devices; provided that "prosthetic device" shall not mean any auditory, ophthalmic, dental, or ocular device or appliance, instrument, apparatus, or contrivance;

     (8)  Taxes on transient accommodations imposed by chapter 237D and passed on and collected by operators holding certificates of registration under that chapter;

     (9)  Amounts received as dues by an unincorporated merchants association from its membership for advertising media, promotional, and advertising costs for the promotion of the association for the benefit of its members as a whole and not for the benefit of an individual member or group of members less than the entire membership;

    (10)  Amounts received by a labor organization for real property leased to:

         (A)  A labor organization; or

         (B)  A trust fund established by a labor organization for the benefit of its members, families, and dependents for medical or hospital care, pensions on retirement or death of employees, apprenticeship and training, and other membership service programs.

          As used in this paragraph, "labor organization" means a labor organization exempt from federal income tax under section 501(c)(5) of the Internal Revenue Code, as amended;

    (11)  Amounts received from foreign diplomats and consular officials who are holding cards issued or authorized by the United States Department of State granting them an exemption from state taxes; and

    (12)  Amounts received as rent for the rental or leasing of aircraft or aircraft engines used by the lessees or renters for interstate air transportation of passengers and goods.  For purposes of this paragraph, payments made pursuant to a lease shall be considered rent regardless of whether the lease is an operating lease or a financing lease.  The definition of "interstate air transportation" is the same as in 49 [U.S.C.] United States Code 40102."

     SECTION 5.  In codifying the new sections added by sections 1, 2, and 3 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.
     SECTION 6.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 7.  This Act shall take effect on August 7, 2112.

Report Title:

Counties; Compassion Centers



Provides that each county has the power to establish compassion centers for the dispensing of medical marijuana.  Requires that compassion centers shall only provide service to qualifying patients and primary caregivers registered with the department of public safety.  Makes compassion centers subject to the general excise tax by making inapplicable the exemption for amounts received from sales of prescription drugs or prosthetic devices.  Imposes a general excise tax on marijuana sales.  Imposes registration fee on compassion centers, to be shared with counties.  Effective August 7, 2112.  (SB2113 HD1)




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