Assembly BillPassed first houseBusiness and Professions
AB 2537: Cannabis Enforcement Accountability and Public Health Prioritization Act of 2026.
What AB 2537 does, verified August 15, 2026
<p>The Cannabis Enforcement Accountability and Public Health Prioritization Act of 2026 requires the Department of Cannabis Control to prioritize its enforcement actions based on an enforcement prioritization policy. This policy categorizes enforcement priorities from highest to lowest, focusing on conduct or conditions that pose a risk of harm, such as interference with state law enforcement. The department must adopt and publish this policy and include in its annual report details about the number, geographic distribution, and financial impact of enforcement activities related to these prioritized risks.</p>
Bill journey
✓IntroducedComplete
✓In CommitteeComplete
✓First Chamber FloorComplete
4Second ChamberCurrent
5GovernorPending
6ChapteredPending
Last action: In committee: Held under submission. (2026-08-13)Alert me
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Full contact details, staff, and committees with Connect, $16/moUnlockRecent actions21 total · showing 5
| Aug. 13, 2026 | In committee: Held under submission. |
| Aug. 03, 2026 | In committee: Referred to APPR. suspense file. |
| Jun. 24, 2026 | Read second time and amended. Re-referred to Com. on APPR. |
| Jun. 23, 2026 | From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 10. Noes 0.) (June 22). |
| Jun. 10, 2026 | Referred to Com. on B. P. & E.D. |
Latest bill textAmended version, June 24, 2026 · 2,807 words
| Amended IN Senate June 24, 2026 |
| Amended IN Assembly April 15, 2026 |
| Amended IN Assembly April 09, 2026 |
| Amended IN Assembly March 19, 2026 |
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Assembly Bill
No. 2537
| Introduced by Assembly Member Chen (Coauthor: Assembly Member Lackey) |
February 20, 2026 |
An act to amend amend, repeal, and add Section 26190 of, and to add Section 26039.7 to, the Business and Professions Code, relating to cannabis.
LEGISLATIVE COUNSEL'S DIGEST
AB 2537, as amended, Chen. Cannabis Enforcement Accountability and Public Health Prioritization Act of 2026.
Existing law, the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities. Existing law gives the Department of Cannabis Control the power, duty, purpose, responsibility, and jurisdiction to regulate commercial cannabis activity in the state. Existing law authorizes the department to take disciplinary actions against a licensee, as provided. Existing law requires the department to prepare and disseminate, as specified, an annual report relating to the department’s activities, including, among other things, the amount of funds allocated and spent by the department for cannabis licensing, enforcement, and administration, and the number of state licenses issued, renewed, denied, suspended, and revoked.
This bill, the Cannabis Enforcement Accountability and Public Health Prioritization Act of 2026, would require the department department, beginning January 1, 2028, to prioritize its enforcement of MAUCRSA in a manner consistent with an enforcement prioritization policy, as defined, based on specified categories, that are listed from highest to lowest priority, based on conduct or conditions, as specified, that create a risk of harm, as described. The bill would define “risk of harm” as the likelihood of, among other things, interference with enforcement of state law. The Beginning January 1, 2028, the bill would require the department to adopt and publish an enforcement prioritization policy, as specified, and would require the department to include in the above-described annual report the number, geographic distribution, and, as applicable, dollar amount of specified enforcement activities in relation to the risk-based enforcement framework, as provided.
The people of the State of California do enact as follows:
SECTION 1.
This act shall be known and may be cited as the Cannabis Enforcement Accountability and Public Health Prioritization Act of 2026.SEC. 2.
Section 26039.7 is added to the Business and Professions Code, to read:26039.7.
(a) For purposes of this section, the following definitions apply:(1) “Enforcement prioritization policy” means an enforcement framework that aligns the department’s regulatory oversight, investigations, inspections, and enforcement and disciplinary actions pursuant to this division with the level of risk of harm, as specified in subdivision (c).
(2) “Minor violation” means conduct or conditions prohibited by this division and applicable regulations that create a negligible risk of harm, including, but not limited to, technical or administrative violations.
(3) “Moderate violation” means conduct or conditions prohibited by this division and applicable regulations that create a risk of harm, including, but not limited to, the following:
(A) Negligent failure to maintain accurate testing results, track and trace data, or required regulatory documentation.
(B) Negligent violation of laws related to workplace safety or wage protection.
(C) Manufacture, distribution, or sales of cannabis or cannabis products that are adulterated or misbranded in a manner unlikely to cause illness or bodily injury.
(4) “Risk of harm” means the likelihood of any of the following:
(A) Interference with enforcement of any state law.
(B) False, misleading, or deceptive business practices.
(C) Adversely affecting the environment or the health, safety, or welfare of the public.
(5) “Serious violation” means conduct or conditions prohibited by this division and applicable regulations that create a significant risk of harm, including, but not limited to, the following:
(A) Unlicensed persons engaging in commercial cannabis activity.
(B) Licensees diverting cannabis or cannabis products to unlicensed persons.
(C) Licensees inverting cannabis or cannabis products from unlicensed persons into the licensed market.
(D) Licensees engaging in the manufacture, distribution, or sale of synthetic cannabinoids.
(E) Licensees engaging in the distribution or sales of cannabis or cannabis products to children or that are marketed or packaged in a manner attractive to children.
(F) Manufacture, distribution, or sales of cannabis or cannabis products that are adulterated or misbranded in a manner likely to cause illness or bodily injury.
(G) Degradation of water resources, public lands, or wildlife habitat.
(H) Reckless or repeated failure to maintain accurate testing results, track and trace data, or required regulatory documentation.
(I) Reckless or repeated violation of lawsrelated laws related to workplace safety or wage protections.
(b) In enacting this section, the Legislature finds and declares all of the following:
(1) In January 2025, the department released a report summarizing current market conditions and outlook for the California cannabis industry.
(2) The report found that the illicit market continues to represent a substantial share of cannabis consumption in California, estimated at approximately 60 percent, and identified strengthening enforcement against unlicensed commercial activity, reducing unnecessary regulatory burdens, and increasing consumer participation in the licensed market as critical to expanding the regulated market.
(3) The report further recognized that enforcement resources are limited and that effective enforcement strategies require prioritization of activities that most significantly affect public health, public safety, environmental protection, workplace safety, and market integrity.
(4) Enforcement activity involving minor technical or administrative violations that do not constitute risks of harm may consume departmental resources that could otherwise be directed toward higher risk conduct.
(5) The state’s cannabis excise tax pursuant to Section 34011.2 of the Revenue and Taxation Code is imposed at retail level, underscoring the importance of addressing unlicensed retail and delivery activity within enforcement prioritization efforts.
(6) Effective enforcement is essential to achieving the purposes of this division and requires that limited enforcement resources be directed toward violations posing the greatest risk to public health, public safety, environmental protection, workplace safety, and the integrity of the licensed market.
(7) Enforcement practices that disproportionately focus on minor technical or administrative violations, while more serious violations persist, strain limited enforcement resources and erode public confidence in the licensed market.
(8) It is the intent of the Legislature to provide additional statutory clarity regarding enforcement prioritization to promote a risk-based, proportionate, and transparent approach to implementing this chapter.
(c) (1) In implementing this chapter, beginning January 1, 2028, the department shall prioritize regulatory oversight, investigations, inspections, and enforcement and disciplinary actions in a manner consistent with an enforcement prioritization policy based on the following categories, which are listed in order from highest to lowest priority:
(A) Serious violations.
(B) Moderate violations.
(C) Minor violations.
(2) The Beginning January 1, 2028, the department shall adopt and publish an enforcement prioritization policy to implement this section that does, at a minimum, all of the following:
(A) Ensures personnel and resources are allocated in a manner consistent with the priority of violations in paragraph (1).
(B) Establishes the enforcement and disciplinary actions for each category of violation in paragraph (1).
(C) Provides for documentation of enforcement actions involving all violations.
(d) The department’s disciplinary framework or guidelines for disciplinary action shall not conflict with this section.
(e) This section does not limit the department’s authority to enforce this division and applicable regulations.
SEC. 3.
Section 26190 of the Business and Professions Code is amended to read:26190.
Beginning on March 1, 2023, and on or before March 1 of each year thereafter, the department shall prepare and submit to the Legislature an annual report on the department’s activities, in compliance with Section 9795 of the Government Code, and post the report on the department’s internet website. The report shall include, but not be limited to, the following information for the previous fiscal year:(a) The amount of funds allocated and spent by the department for cannabis licensing, enforcement, and administration.
(b) The number of state licenses issued, renewed, denied, suspended, and revoked, by state license category.
(c) The average time for processing state license applications, by state license category.
(d) The number of appeals from the denial of state licenses or other disciplinary actions taken by the department and the average time spent on these appeals.
(e) The number of complaints submitted by citizens or representatives of cities or counties regarding licensees, provided as both a comprehensive statewide number and by geographical region.
(f) The number and type of enforcement activities conducted by the department and by local law enforcement agencies in conjunction with the department.
(g) The number, type, and amount of penalties, fines, and other disciplinary actions taken by the department.
(h) The number of licenses on which the department imposed conditions and the categories of conditions imposed on licenses.
(i) A detailed list of the petitions for regulatory relief or rulemaking changes received by the department from licensees requesting modifications of the enforcement of rules under this division.
(j) A list of interstate cannabis agreements entered into pursuant to Chapter 25 (commencing with Section 26300), including information regarding the terms and conditions of each agreement, the activities undertaken by state agencies to implement the agreement, and the effects of the agreement on California’s cannabis industry.
(k)The number and geographic distribution of investigations opened and closed in relation to the categories enumerated in Section 26039.7.
(l)The number and geographic distribution of inspections conducted in relation to the categories enumerated in Section 26039.7.
(m)The number and geographic distribution of enforcement actions conducted in relation to the categories enumerated in Section 26039.7.
(n)The number and geographic distribution of petitions filed pursuant to Section 26031.2 against unlicensed persons in relation to the categories enumerated in Section 26039.7.
(o)The number and geographic distribution of injunctions or other appropriate orders pursuant to Section 26031.2 restraining unlicensed persons in relation to the categories enumerated in Section 26039.7.
(p)The number, geographic distribution, and dollar amount of citations issued and collected pursuant to Section 26031.5 against unlicensed persons in relation to the categories enumerated in Section 26039.7.
(q)The number, geographic distribution, and dollar amount of civil penalties imposed and collected pursuant to Section 26038 against unlicensed persons, persons aiding and abetting unlicensed commercial cannabis activity, and persons enumerated in subparagraph (A) of paragraph (3) of subdivision (a) of Section 26038 in relation to the categories enumerated in Section 26039.7.
(r)
(k) (1) For the first publication of the reports, the department shall provide a joint report to the Legislature regarding the state of the cannabis market in California. This report shall identify any statutory or regulatory changes necessary to ensure that the implementation of this division does not do any of the following:
(A) Allow unreasonable restraints on competition by creation or maintenance of unlawful monopoly power.
(B) Perpetuate the presence of an illegal market for cannabis or cannabis products in the state or out of the state.
(C) Encourage underage use or adult abuse of cannabis or cannabis products, or illegal diversion of cannabis or cannabis products out of the state.
(D) Result in an excessive concentration of licensees in a given city, county, or both.
(E) Present an unreasonable risk of minors being exposed to cannabis or cannabis products.
(F) Result in violations of any environmental protection laws.
(2) For purposes of this subdivision, “excessive concentration” means when the premises for a retail license, microbusiness license, or a license issued under Section 26070.5 is located in an area where either of the following conditions exist:
(A) The ratio of licensees to population in a census tract or census division exceeds the ratio of licensees to population in the county in which the census tract or census division is located, unless reduction of that ratio would unduly limit the development of the legal market so as to perpetuate the illegal market for cannabis or cannabis products.
(B) The ratio of retail licenses, microbusiness licenses, or licenses under Section 26070.5 to population in the census tract, division, or jurisdiction exceeds that allowable by local ordinance adopted under Section 26200.
(l) This section shall remain in effect only until January 1, 2028, and as of that date is repealed.
SEC. 4.
Section 26190 is added to the Business and Professions Code, to read:26190.
Beginning on March 1, 2028, and on or before March 1 of each year thereafter, the department shall prepare and submit to the Legislature an annual report on the department’s activities, in compliance with Section 9795 of the Government Code, and post the report on the department’s internet website. The report shall include, but not be limited to, the following information for the previous fiscal year:(a) The amount of funds allocated and spent by the department for cannabis licensing, enforcement, and administration.
(b) The number of state licenses issued, renewed, denied, suspended, and revoked, by state license category.
(c) The average time for processing state license applications, by state license category.
(d) The number of appeals from the denial of state licenses or other disciplinary actions taken by the department and the average time spent on these appeals.
(e) The number of complaints submitted by citizens or representatives of cities or counties regarding licensees, provided as both a comprehensive statewide number and by geographical region.
(f) The number and type of enforcement activities conducted by the department and by local law enforcement agencies in conjunction with the department.
(g) The number, type, and amount of penalties, fines, and other disciplinary actions taken by the department.
(h) The number of licenses on which the department imposed conditions and the categories of conditions imposed on licenses.
(i) A detailed list of the petitions for regulatory relief or rulemaking changes received by the department from licensees requesting modifications of the enforcement of rules under this division.
(j) A list of interstate cannabis agreements entered into pursuant to Chapter 25 (commencing with Section 26300), including information regarding the terms and conditions of each agreement, the activities undertaken by state agencies to implement the agreement, and the effects of the agreement on California’s cannabis industry.
(k) The number and geographic distribution of investigations opened and closed in relation to the categories enumerated in Section 26039.7.
(l) The number and geographic distribution of inspections conducted in relation to the categories enumerated in Section 26039.7.
(m) The number and geographic distribution of enforcement actions conducted in relation to the categories enumerated in Section 26039.7.
(n) The number and geographic distribution of petitions filed pursuant to Section 26031.2 against unlicensed persons in relation to the categories enumerated in Section 26039.7.
(o) The number and geographic distribution of injunctions or other appropriate orders pursuant to Section 26031.2 restraining unlicensed persons in relation to the categories enumerated in Section 26039.7.
(p) The number, geographic distribution, and dollar amount of citations issued and collected pursuant to Section 26031.5 against unlicensed persons in relation to the categories enumerated in Section 26039.7.
(q) The number, geographic distribution, and dollar amount of civil penalties imposed and collected pursuant to Section 26038 against unlicensed persons, persons aiding and abetting unlicensed commercial cannabis activity, and persons enumerated in subparagraph (A) of paragraph (3) of subdivision (a) of Section 26038 in relation to the categories enumerated in Section 26039.7.
(r) (1) For the first publication of the reports, the department shall provide a joint report to the Legislature regarding the state of the cannabis market in California. This report shall identify any statutory or regulatory changes necessary to ensure that the implementation of this division does not do any of the following:
(A) Allow unreasonable restraints on competition by creation or maintenance of unlawful monopoly power.
(B) Perpetuate the presence of an illegal market for cannabis or cannabis products in the state or out of the state.
(C) Encourage underage use or adult abuse of cannabis or cannabis products, or illegal diversion of cannabis or cannabis products out of the state.
(D) Result in an excessive concentration of licensees in a given city, county, or both.
(E) Present an unreasonable risk of minors being exposed to cannabis or cannabis products.
(F) Result in violations of any environmental protection laws.
(2) For purposes of this subdivision, “excessive concentration” means when the premises for a retail license, microbusiness license, or a license issued under Section 26070.5 is located in an area where either of the following conditions exist:
(A) The ratio of licensees to population in a census tract or census division exceeds the ratio of licensees to population in the county in which the census tract or census division is located, unless reduction of that ratio would unduly limit the development of the legal market so as to perpetuate the illegal market for cannabis or cannabis products.
(B) The ratio of retail licenses, microbusiness licenses, or licenses under Section 26070.5 to population in the census tract, division, or jurisdiction exceeds that allowable by local ordinance adopted under Section 26200.
(s) This section shall become operative on January 1, 2028.
Text of AB 2537 as amended, from the official record. Connect Plus keeps every version and highlights what changed.Compare versions