Legislature(2017 - 2018)HOUSE FINANCE 519

05/01/2017 01:30 PM FINANCE

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Audio Topic
01:34:39 PM Start
01:35:49 PM Presentations: the Economy and Fiscal Policy Overview
03:55:00 PM SB6
04:16:26 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: The Economy & Fiscal Policy TELECONFERENCED
- David Teal, Director, Legislative Finance Div.
- Carl Davis, Institute of Taxation & Economic
Policy (ITEP)
+ SB 6 INDUSTRIAL HEMP PRODUCTION TELECONFERENCED
Heard & Held
+ HB 172 INDUSTRIAL HEMP PRODUCTION LICENSES TELECONFERENCED
<Bill Hearing Canceled>
+ Bills Previously Heard/Scheduled TELECONFERENCED
CS FOR SENATE BILL NO. 6(JUD)                                                                                                 
                                                                                                                                
     "An Act  relating to the  regulation and  production of                                                                    
     industrial  hemp;  relating  to industrial  hemp  pilot                                                                    
     programs;  providing   that  industrial  hemp   is  not                                                                    
     included   in  the   definition  of   'marijuana';  and                                                                    
     clarifying  that adding  industrial hemp  to food  does                                                                    
     not create an adulterated food product."                                                                                   
                                                                                                                                
3:55:00 PM                                                                                                                    
                                                                                                                                
SENATOR SHELLEY HUGHES, SPONSOR,  relayed that the preceding                                                                    
year,  former Senator  Johnny Ellis  had  introduced a  bill                                                                    
about  hemp. She  recalled  receiving a  phone  call from  a                                                                    
farmer who  had been very  interested in the bill.  The bill                                                                    
had  been  introduced  at  the  tail  end  of  the  previous                                                                    
session; therefore, she had committed  to introducing a bill                                                                    
in  the  current  session.  She  noted  that  when  she  had                                                                    
initially introduced the  bill it had been quite  short - it                                                                    
had  been   simply  to  remove   hemp  from   the  marijuana                                                                    
definition  section  in  statute  and  place  it  under  the                                                                    
Division of Agriculture defined  as an agricultural product.                                                                    
The current  bill was slightly  different in order to  be in                                                                    
compliance with  federal law. She  was still  confident that                                                                    
the Division  of Agriculture  and individuals  interested in                                                                    
farming hemp were comfortable with the bill.                                                                                    
                                                                                                                                
Senator Hughes  relayed that she  had worked on a  number of                                                                    
policies to  help bring the  state into the 21st  century in                                                                    
terms of technology  and other. She remarked  that the state                                                                    
had  basically gone  silent on  the  topic for  a number  of                                                                    
years and it  was now going back to catch  up. She continued                                                                    
that  in the  1600s,  hemp had  been a  stable  crop in  the                                                                    
United  States. She  elaborated that  the sails  of European                                                                    
ships  traveling   to  America   had  been  made   of  hemp.                                                                    
Additionally,  some  early  drafts  of  the  Declaration  of                                                                    
Independence  had been  drafted  on hemp  paper and  covered                                                                    
wagon canvas had been made of  hemp. In 1937 the product had                                                                    
been  made  illegal  nationwide; therefore  there  had  been                                                                    
little usage  until the  product had  been redefined  at the                                                                    
federal level  by the 2014  Farm Bill [the  Agricultural Act                                                                    
of  2014].   She  elaborated  that  30   states  had  passed                                                                    
legislation -  there were 17  states that were  conducting a                                                                    
pilot act.  There were  tens of  thousands of  products that                                                                    
could be made from hemp.                                                                                                        
                                                                                                                                
Senator Hughes  continued that  a meat  plant in  Palmer was                                                                    
currently being  privatized. She elaborated that  hemp was a                                                                    
nutritional  forage for  livestock -  in order  to make  the                                                                    
meat plant work, the farmers  needed to grow their livestock                                                                    
herds. Hemp  grew easily in  Alaska, it was  nutritious, and                                                                    
was  good  for   the  soils.  She  had   heard  from  others                                                                    
throughout the  state interested  in using the  product. She                                                                    
referred to a  person interested in using  hemp for building                                                                    
insulation and another  person using hemp to  make soaps and                                                                    
body products.  She highlighted  that the  sponsor statement                                                                    
in members' packets was printed on hemp paper.                                                                                  
                                                                                                                                
Senator Hughes explained that SB  6 defined hemp as cannabis                                                                    
with  a  THC content  of  0.3  percent.  She shared  that  1                                                                    
percent  was the  threshold  of  intoxication. When  growers                                                                    
were trying  to produce  marijuana they aimed  for 20  to 30                                                                    
percent  THC.  The  bill  would   also  define  hemp  as  an                                                                    
agricultural  product and  would remove  it from  controlled                                                                    
substances  statutes.  She  furthered that  the  bill  would                                                                    
create  a  pilot program,  which  was  part of  the  federal                                                                    
requirement,  and would  allow  registrants to  participate.                                                                    
The  Division  of  Agriculture  would  have  the  regulatory                                                                    
authority  and would  create  a fee  structure  to have  the                                                                    
program be self-sustaining. The  bill also removed CBD oils.                                                                    
She noted  her staff and  others were available to  speak to                                                                    
the  bill. She  remarked that  her office  had been  working                                                                    
with  an attorney  at Hemp  Law  LLC who  had worked  across                                                                    
states and  helped her office understand  legal requirements                                                                    
in terms  of compliance  with federal  law. She  thanked the                                                                    
committee for  its time  and noted the  next day  was Alaska                                                                    
Agriculture  Day.   She  believed   hemp  was   an  economic                                                                    
opportunity the state should promote.                                                                                           
                                                                                                                                
4:02:11 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg  was supportive  of the  bill, but                                                                    
he had  concern with  the conflict between  hemp and  pot in                                                                    
outdoor growing fields. He mentioned  pollen as an issue. He                                                                    
thought there  needed to be  an understanding about  the two                                                                    
crops. He  wondered if  the Division  of Agriculture  or the                                                                    
bill sponsor had been approached about the issue.                                                                               
                                                                                                                                
Senator Hughes deferred to her staff for detail.                                                                                
                                                                                                                                
BUDDY  WHITT, STAFF,  SENATOR SHELLEY  HUGHES, relayed  that                                                                    
the sponsor's  office had been approached  with the concern.                                                                    
He directed  attention to page 3,  lines 4 through 7  of the                                                                    
bill  and explained  that the  provision had  been added  to                                                                    
address  the  concern  -  it  fell  under  the  Division  of                                                                    
Agriculture's  responsibility to  adopt regulations  related                                                                    
to industrial  hemp. The provision  stated the  division was                                                                    
required   to   establish   isolation  distances   for   the                                                                    
production  of  industrial  hemp.   The  reason  a  specific                                                                    
distance had  not been identified  was to give  the division                                                                    
the  leniency to  decide what  the distance  should be.  The                                                                    
sponsor's office had  determined it would be  better for the                                                                    
division  to  establish   the  distance  through  regulation                                                                    
rather than the legislature  including a distance in statute                                                                    
that  may not  be  workable  or ideal.  He  deferred to  the                                                                    
department for further detail.                                                                                                  
                                                                                                                                
4:04:48 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg  stated  it  was  his  impression                                                                    
there  were  a  limited  number of  outdoor  facilities  and                                                                    
farmers -  most were  located in controlled  greenhouses. He                                                                    
shared that he  had been asked to visit a  garden that had a                                                                    
strain growing outside. He surmised  the issue may not apply                                                                    
to greenhouses or inside commercial growers.                                                                                    
                                                                                                                                
ROB CARTER, AGRONOMIST, PLANT  MATERIALS CENTER, DIVISION OF                                                                    
AGRICULTURE,   DEPARTMENT   OF    NATURAL   RESOURCES   (via                                                                    
teleconference),   referred  to   isolation  distances   and                                                                    
relayed they were a minimum  separation required between two                                                                    
or  more   varieties  of  the  same   species.  The  current                                                                    
discussion pertained to cannabis  sativa industrial hemp and                                                                    
cannabis sativa  recreational marijuana. The purpose  of the                                                                    
isolation distance was to keep  seeds pure in the production                                                                    
process.   Additionally,  in   the   case  of   recreational                                                                    
marijuana, the purpose  was to keep female  crops from being                                                                    
seed-free in  order to  have a viable  product to  sell. The                                                                    
isolation distances were set for  a multitude of other crops                                                                    
(e.g. alfalfa, barley, oats, wheat,  and other) that met the                                                                    
federal certified seed standards;  the distances were set in                                                                    
accordance  with documented  global scientific  research. He                                                                    
spoke  specifically  to  the   bill  and  relayed  that  the                                                                    
Division of  Agriculture would conduct its  due diligence to                                                                    
ensure  it had  explored  other  opportunity from  Colorado,                                                                    
Manitoba,  Saskatchewan,  Canada,  and  the  European  Union                                                                    
(that  had been  growing industrial  hemp for  a significant                                                                    
amount of time),  to make sure the  isolation distances were                                                                    
set  in order  to  prevent  a hemp  crop  from impeding  the                                                                    
production of a recreational crop.                                                                                              
                                                                                                                                
4:07:37 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg  understood   that  Colorado  was                                                                    
considering  5 or  10 miles  and he  recognized the  federal                                                                    
government  had probably  done no  research on  the specific                                                                    
topic.  He   asked  about  the   parameters  set   by  other                                                                    
jurisdictions.                                                                                                                  
                                                                                                                                
Mr.  Carter answered  that Colorado  had started  looking at                                                                    
the  aforementioned  ideals  [5  to  10  miles  between  two                                                                    
similar species]. The Division  of Agriculture looked at the                                                                    
issue from  the purity  standards of setting  seed tolerance                                                                    
isolation   distances.   Colorado    had   established   its                                                                    
recommendation  for  its  isolation distances  required  for                                                                    
cannabis  production. He  detailed that  it depended  on the                                                                    
type, which  was unique to  this crop. There  were dioecious                                                                    
and  monoecious types  and hybrids  that were  all female  -                                                                    
each   one  had   a   different   isolation  distance.   The                                                                    
recommended isolation  distance in Colorado for  the highest                                                                    
quality  and   most  pure  was  called   the  foundation  or                                                                    
registered  seed,   was  16,150  feet.  He   furthered  that                                                                    
distances  were  set  regionally   based  on  wind  patterns                                                                    
because cannabis  sativa is highly wind  pollinated and also                                                                    
pollinated  by insect.  Isolation distances  in Canada  were                                                                    
anywhere  between  1 meter  and  5,000  meters. He  believed                                                                    
there  would need  to be  regional  isolation distances  for                                                                    
Alaska  and  he  believed  there would  need  to  be  strong                                                                    
communication  with  registered  and  recognized  commercial                                                                    
growers  through the  marijuana control  board in  order for                                                                    
the  division to  identify  where  the outdoor  recreational                                                                    
cannabis was  being produced in  order to give  everyone the                                                                    
right to produce crops.                                                                                                         
                                                                                                                                
4:10:05 PM                                                                                                                    
                                                                                                                                
Representative Grenn  referred to fiscal note  OMB Component                                                                    
2204   that   mentioned   the   division   anticipated   the                                                                    
registration  of possibly  25 farms  in the  first year.  He                                                                    
asked  if regulations  would prohibit  someone from  growing                                                                    
recreational marijuana and industrial hemp.                                                                                     
                                                                                                                                
Mr. Whitt answered  there was no provision in  the bill that                                                                    
would preclude someone from growing  both; however, it would                                                                    
be  highly  risky for  a  person  to  do  both in  terms  of                                                                    
ensuring the viability of the commercial marijuana.                                                                             
                                                                                                                                
Representative  Kawasaki   asked  when  states   started  to                                                                    
legalize the manufacturing and growing of hemp.                                                                                 
                                                                                                                                
Senator Hughes  answered that  the law  had been  changed by                                                                    
the federal  Farm Bill  in 2014. She  deferred to  her staff                                                                    
for further detail.                                                                                                             
                                                                                                                                
Mr. Whitt  replied there were  a few of states  that started                                                                    
their process  before federal law  had allowed it.  He could                                                                    
not speak  about each  state, but he  relayed that  when the                                                                    
cart was  put before the  horse, states were having  to make                                                                    
some changes  to fit federal  guidelines. He  referenced the                                                                    
2014 Farm  Bill and a  2016 omnibus bill, which  had allowed                                                                    
transportation of industrial hemp  across state lines. There                                                                    
was  also the  USDA Statement  of Principles  [on Industrial                                                                    
Hemp], which  had been published  in 2016 and  specified how                                                                    
the USDA  would treat  the product. There  were a  number of                                                                    
states that  had put the effort  in prior to the  release of                                                                    
federal  guidelines.  He  offered  to follow  up  with  more                                                                    
detail on the timeline.                                                                                                         
                                                                                                                                
Representative Kawasaki  relayed there  had been  six states                                                                    
prior  to 2006  that had  passed laws  including California.                                                                    
The Industrial Hemp Act had passed  in 2009. He asked why it                                                                    
had  taken  Alaska so  long  to  get  to  the point  it  was                                                                    
considering  industrial  hemp  farming. He  believed  Alaska                                                                    
would be the 33rd or 34th state to take on the activity.                                                                        
                                                                                                                                
Senator  Hughes responded  that although  some states  began                                                                    
early, there  had been  some colonies  that started  early -                                                                    
she relayed  that George  Washington, Thomas  Jefferson, and                                                                    
John Adams  had all grown  hemp. She relayed that  she would                                                                    
probably have  worked on  the issue earlier  if it  had been                                                                    
brought to her attention earlier.                                                                                               
                                                                                                                                
4:14:27 PM                                                                                                                    
                                                                                                                                
Representative   Kawasaki   recalled   that  as   a   former                                                                    
councilperson,  the  council  [Fairbanks City  Council]  had                                                                    
introduced  a resolution  supporting industrial  hemp around                                                                    
2006. He supported  the bill and thought it would  be a boon                                                                    
for the agricultural and scientific community in Alaska.                                                                        
                                                                                                                                
Representative  Thompson relayed  that he  had tried  to get                                                                    
something similar to  the bill going in 2011.  He had spoken                                                                    
with   the  University   of  Alaska   Fairbanks  Agriculture                                                                    
Department.  He  provided  further  detail  about  the  past                                                                    
effort to do  an experimental grow with  the community's 24-                                                                    
hours  of  sunlight to  see  how  the  product would  do  in                                                                    
Northern Alaska.  The goal  had also been  to check  the oil                                                                    
and fiber content. The effort  had ceased because it had not                                                                    
been possible to obtain the seeds  at that time. He was glad                                                                    
to see the  bill and believed hemp was a  possible cash crop                                                                    
that could be an economic boon for Alaska.                                                                                      
                                                                                                                                
CSSB  6(JUD) was  HEARD and  HELD in  committee for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Foster addressed the agenda for the following day.                                                                     
                                                                                                                                

Document Name Date/Time Subjects
ITEP Davis HFIN 050117.pdf HFIN 5/1/2017 1:30:00 PM
HFIN Fiscal Policy
ITEP_RevenueOptionsPresentation.pdf HFIN 5/1/2017 1:30:00 PM
ITEP Slides HFIN 5-1-17
CSSB6 (JUD) - Sectional Analysis.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB 6 Sponsor Statement.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB6 Explanation of Changes Version R to E.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB6 Supporting Documents-Alaska Industrial Hemp Grow 1916.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB6 Supporting Documents-Commercial Hemp Chart.png HFIN 5/1/2017 1:30:00 PM
SB 6
SB6 Supporting Documents-Federal Laws and Guidelines for Industrial Hemp.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB6 Supporting Documents-KPEDD.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB6 Supporting Documents-Letter Ember Haynes.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB6 Supporting Documents-Letter form Constance.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB6 Supporting Documents-Letter from Connie Fredenberg.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB6 Supporting Documents-Letter from Connor Scher.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB6 Supporting Documents-Letter from Jeremiah Emmerson.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB6 Supporting Documents-Letter from Mayor Navarre of Kenai Borough.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB6 Supporting Documents-Letter Jack Bennett.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB6 Supporting Documents-Letter Larry DeVilbiss.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB6 Supporting Documents-Letter Sara Williams Letter.pdf HFIN 5/1/2017 1:30:00 PM
SB 6
SB8 Supporting Documents-Letter from Jack Bennett 2.pdf HFIN 5/1/2017 1:30:00 PM
SB 8
HFIN LFD Static Graphs for Interactive Modeling 5-1-17.pdf HFIN 5/1/2017 1:30:00 PM
LFD Fiscal Plan 5 1 17 HFC SB26.pdf HFIN 5/1/2017 1:30:00 PM
SB 26