Legislature(2017 - 2018)HOUSE FINANCE 519

05/12/2017 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Moved SB 28 Out of Committee
Scheduled but Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
<Bill Hearing Canceled>
-- Public Testimony <Time Limit 2 Minutes> --
Moved CSHB 25(FIN) Out of Committee
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."                                                                                   
2:40:32 PM                                                                                                                    
Co-Chair Foster OPENED public testimony.                                                                                        
JOHN   BUADIUG,   SELF,  FAIRBANKS   (via   teleconference),                                                                    
testified in favor  of the legislation. He  reported that it                                                                    
was  possible  to convert  hemp  oil  into biodiesel,  which                                                                    
contained  hydrogen, carbon,  and oxygen  molecules creating                                                                    
cleaner  burning   fuel.  He   cited  statistics   from  the                                                                    
Sequential  Biodiesel Fuels  Company that  claimed emissions                                                                    
reductions    in    carbon   dioxide,    carbon    monoxide,                                                                    
hydrocarbons,   particulate  matter,   and  sulfur   dioxide                                                                    
through its use.                                                                                                                
Representative  Wilson  queried  whether  he  knew  anything                                                                    
about cannabidiol  (CBD) oil. Mr. Bauding  answered that CBD                                                                    
oil  fell under  a "different  category" and  that only  0.3                                                                    
percent  or  less  was  contained  in  industrial  hemp.  He                                                                    
declared  that  an  individual  "could  not  get  high  with                                                                    
industrial hemp."                                                                                                               
2:45:26 PM                                                                                                                    
EMBER   HAYNES,   SELF,  TALKEETNA   (via   teleconference),                                                                    
testified in favor of the  legislation. She relayed that her                                                                    
business, Denali  Hemp Company,  created salves,  soaps, and                                                                    
body  products with  hemp  seeds  and oil  that  she had  to                                                                    
outsource.  She wanted  to use  Alaskan grown  hemp for  her                                                                    
products.  In   addition,  she  wished  to   supplement  her                                                                    
livestock  with hemp  for greens,  bedding, and  fodder. She                                                                    
offered  that hemp  grew well  in Alaska,  was a  beneficial                                                                    
cover  crop, and  that  commonly  used harvesting  equipment                                                                    
worked for  hemp. Hemp was  successfully harvested  in other                                                                    
parts of  the world  and that specific  harvesting equipment                                                                    
had been invented. She asked for the committees support.                                                                        
Representative Grenn asked how  long the Denali Hemp Company                                                                    
was in  business. Ms. Haynes  answered that the  company had                                                                    
been making products  with hemp seed oil since  2014 and she                                                                    
operated  another   business  that   used  it   since  2008.                                                                    
Representative Grenn asked for  verification that she had to                                                                    
outsource  hemp. Ms.  Haynes  answered  in the  affirmative.                                                                    
Representative  Grenn   asked  how  much  her   costs  would                                                                    
decrease  if  she  could  grow  her  own  hemp.  Ms.  Haynes                                                                    
answered that one acre of  hemp produced approximately 50 to                                                                    
70  gallons  of oil  per  year,  which  was enough  for  her                                                                    
products.   In  addition,   the  harvest   would  feed   her                                                                    
livestock. One  of the challenges  of the hemp  industry was                                                                    
finding the  particular varieties that would  grow in Alaska                                                                    
and produce  oil or  other desired  qualities of  the plant.                                                                    
Representative  Grenn stated  that  Alaska's growing  season                                                                    
for hemp  was challenging  and asked for  clarification. Ms.                                                                    
Haynes answered  in the  affirmative. She  briefly described                                                                    
methods and varieties that would likely work in the state.                                                                      
2:51:17 PM                                                                                                                    
COURTNEY  MORAN, ATTORNEY,  EARTHLAW  LLC, PORTLAND,  OREGON                                                                    
(via teleconference), testified in  support of the bill. She                                                                    
related  that  she  was  an  industrial  hemp  attorney  and                                                                    
advised  the   bill's  sponsors  and  state's   Division  of                                                                    
Agriculture  on how  to design  a regulatory  framework that                                                                    
would  support  a  sustainable industrial  hemp  program  in                                                                    
compliance  with federal  law.   She hoped  the bill  passed                                                                    
unanimously from committee.                                                                                                     
Representative Guttenberg  indicated that an issue  had been                                                                    
raised  about  the  legal  distance between  a  hemp  and  a                                                                    
marijuana farm.  He asked who administered  control over the                                                                    
issue  in  other  jurisdictions.  Ms.  Moran  answered  that                                                                    
Oregon  did  not  currently   have  any  specific  isolation                                                                    
designations. She  detailed that farmers were  encouraged to                                                                    
plant  only  female plants  as  a  prevention to  any  cross                                                                    
pollination. Oregon  encouraged farmers  to talk  with their                                                                    
neighbors  to  limit  the  risk as  much  as  possible.  She                                                                    
suggested the  Canadian system  as a  model for  Alaska. She                                                                    
delineated that Canada had a  certified seed program and the                                                                    
minimum  isolation distance  was 5  kilometers (3.1  miles).                                                                    
She  qualified  that  specific  guidelines  for  Alaska  was                                                                    
necessary  to accommodate  variables  based on  the time  of                                                                    
planting  and   pollinating,  the  geographic   region,  and                                                                    
2:55:07 PM                                                                                                                    
REGINA   MANTEUFEL,  EXECUTIVE   DIRECTOR,  BACK   TO  WORK,                                                                    
ANCHORAGE (via  teleconference), testified  in favor  of the                                                                    
bill. She was currently healing  from stage IV breast cancer                                                                    
and  believed CBD  oil was  assisting in  her recovery.  She                                                                    
listed the health  benefits of CBD oil, juice  from the hemp                                                                    
leaves, and hemp  powder and shared the methods  she used to                                                                    
intake hemp products.  She mentioned that she  was the owner                                                                    
of Regina's Hotel in the  Fairview neighborhood of Anchorage                                                                    
as  well as  the  Executive  Director of  the  Back to  Work                                                                    
Network. She  believed that her clients  and customers would                                                                    
benefit from  taking hemp products  for health.  She related                                                                    
antidotes  and  made  suggestions from  personal  experience                                                                    
regarding the use of hemp products as health supplements.                                                                       
Vice-Chair Gara  was glad Ms.  Manteufel was  recovering and                                                                    
noted his support for the bill.                                                                                                 
3:01:49 PM                                                                                                                    
STEVE ALBERS,  KENAI SOIL  AND WATER  CONSERVATION DISTRICT,                                                                    
KENAI  (via teleconference),  testified  in  support of  the                                                                    
bill. He had researched  the numerous benefits of industrial                                                                    
hemp and endorsed the legislation.                                                                                              
3:02:32 PM                                                                                                                    
Representative  Guttenberg asked  whether the  Department of                                                                    
Commerce,  Community and  Economic  Development (DCCED)  was                                                                    
satisfied  with  DNR   regulations  regarding  the  distance                                                                    
between an industrial hemp and legal marijuana farm.                                                                            
ERIKA  MCCONNELL, DIRECTOR,  ALCOHOL  AND MARIJUANA  CONTROL                                                                    
OFFICE,  DEPARTMENT  OF  COMMERCE,  COMMUNITY  AND  ECONOMIC                                                                    
DEVELOPMENT  (via   teleconference),  felt  that   the  bill                                                                    
"adequately addressed" the  regulatory issues. She indicated                                                                    
that  the Division  of Agriculture  was tasked  with writing                                                                    
the regulations  regarding industrial hemp  farms, including                                                                    
the  distance  issue. She  assured  the  committee that  the                                                                    
Marijuana Control  Board would  "pay close attention  to the                                                                    
regulation's"  development. In  addition, provisions  in the                                                                    
legislation  required   division  communications   with  the                                                                    
3:05:07 PM                                                                                                                    
AT EASE                                                                                                                         
3:26:44 PM                                                                                                                    
Co-Chair Foster CLOSED public testimony.                                                                                        
Representative  Kawasaki  referred   to  provisions  in  the                                                                    
legislation  requiring  that  the fees  for  application  or                                                                    
registration equaled  regulatory costs. He  wondered whether                                                                    
estimates for the regulatory costs were known.                                                                                  
BUDDY  WHITT, STAFF,  SENATOR SHELLEY  HUGHES, deferred  the                                                                    
question to the Department of Natural Resources.                                                                                
Representative Kawasaki  indicated that he would  obtain the                                                                    
answer at a later time.                                                                                                         
Co-Chair Foster  MOVED to  ADOPT Amendment  1, 30-LS0173\E.1                                                                    
(Bruce, 5/3/17) (copy on file):                                                                                                 
Page 1, line 3, following "marijuana;":                                                                                         
     Insert "providing that cannabidiol oil is not included                                                                     
     in the definition of 'hashish oil';"                                                                                       
     Page 5, line 25:                                                                                                           
     Delete ", but do not include cannabidiol oil"                                                                              
     Page 6, following line 23:                                                                                                 
     Insert new bill sections to read:                                                                                          
     "* Sec. 6. AS 11.71.900(11) is amended to read:                                                                            
     (11) "hashish oil"   means   the   viscous liquid                                                                          
     concentrate    of  tetrahydrocannabinols  extracted                                                                        
     from the plant (genus) Cannabis, but does not                                                                              
     include cannabidiol oil;                                                                                                   
     * Sec. 7. AS 11.71.900 is amended by adding a new                                                                          
     paragraph to read:                                                                                                         
     (31)  "cannabidiol oil" means the viscous liquid                                                                           
     concentrate of cannabidiol extracted from the plant                                                                        
    (genus)   Cannabis   containing   not  more   than   0.3                                                                    
     percent delta-9 tetrahydrocannabinol;"                                                                                     
     Renumber the following bill sections accordingly.                                                                          
Representative Wilson OBJECTED for discussion.                                                                                  
Co-Chair  Foster  explained  that  the  amendment  had  been                                                                    
brought  to  his attention  by  the  Department of  Law.  He                                                                    
detailed   that   the  definition   of   hash   oil  in   AS                                                                    
11.71.900(11)  had  not  been   amended  and  would  include                                                                    
cannabidiol oil (CBD) therefore,  CBD would still fall under                                                                    
the  definition of  hashish oil  in the  criminal code.  The                                                                    
amendment, if  adopted, required the definition  of hash oil                                                                    
in  statute to  be redefined  and necessitated  a Concurrent                                                                    
Resolution due to triggering a title change in the bill.                                                                        
3:30:10 PM                                                                                                                    
Representative  Kawasaki asked  for  the  Department of  Law                                                                    
(DOL) to address the difference  between the CBD oil and the                                                                    
recent confiscation  by the state  of cannabidiol  oils. Mr.                                                                    
Whitt delineated that  the section was added  in response to                                                                    
concerns  that a  method of  concentrating large  amounts of                                                                    
industrial   hemp  to   create  a   THC  product   would  be                                                                    
discovered. He  reminded the committee that  industrial hemp                                                                    
contained    0.3    percent     or    below    of    delta-9                                                                    
tetrahydrocannabinol  (THC).   He  related  that   hash  oil                                                                    
contained the "psycho addictive"  elements of marijuana. Due                                                                    
to the current legal definitions  of hashish oil CBD oil was                                                                    
illegal   in  the   state.   He   acknowledged  that   three                                                                    
confiscations  of CBD  oil took  place  since January  2017,                                                                    
which was a  costly and wasteful endeavor since  CBD oil had                                                                    
no psycho addictive effects. The  amendment ensured that CBD                                                                    
oil was removed from the criminal statute.                                                                                      
Representative   Guttenberg  referred   to  earlier   public                                                                    
testimony regarding  extracting 55 gallons of  hemp oil from                                                                    
an  acre  of  hemp.  He  asked  whether  the  amendment  was                                                                    
designed  to  prevent  the ability  to  concentrate  the  55                                                                    
gallons down to one ounce of  hash oil. Mr. Whitt replied in                                                                    
the  affirmative. Additionally,  he spoke  to the  desire to                                                                    
prevent creating an illegal product out of a legal product.                                                                     
Co-Chair  Seaton  surmised  that  the  percentage  over  0.3                                                                    
percent  was the  part  that made  the  product change  from                                                                    
cannabidoil  to  hashish  oil. Mr.  Whitt  answered  in  the                                                                    
affirmative.  He elaborated  that the  goal of  SB 6  was to                                                                    
create a  program that produced  products that  excluded the                                                                    
possibility of any associated criminal activity.                                                                                
3:36:39 PM                                                                                                                    
Representative  Guttenberg  wondered  at  what  point  -  if                                                                    
someone  had  a 55  gallon  drum  of  hemp oil,  they  could                                                                    
legally turn it  into hash oil. He asked if  there was a way                                                                    
to legally go above 0.3 percent with industrial hemp.                                                                           
KACI   SCHROEDER,  ASSISTANT   ATTORNEY  GENERAL,   CRIMINAL                                                                    
DIVISION, DEPARTMENT OF  LAW, offered that she  did not know                                                                    
the science behind the issue  and whether it was possible to                                                                    
produce hash  oil from CBD oil.  However, producing anything                                                                    
above the 0.3 percent threshold was illegal.                                                                                    
Representative Wilson WITHDREW her OBJECTION.                                                                                   
There being NO OBJECTION, Amendment 1 was ADOPTED.                                                                              
SB  6   was  HEARD  and   HELD  in  committee   for  further                                                                    
Co-Chair  Foster reviewed  the  schedule  for the  following                                                                    

Document Name Date/Time Subjects
SB 28 LOS Petersburg Economic Development Council 1.26.17.pdf HFIN 5/12/2017 1:30:00 PM
SB 28
HJR23 Additional Documents-Ak Perm Fund financial history and projections 5.9.17.pdf HFIN 5/12/2017 1:30:00 PM
HJR 23
HJR23 Additional Documents-Presentation AK Perm Fund Corp 5.9.17.pdf HFIN 5/12/2017 1:30:00 PM
HJR 23
HJR23 Sponsor Statement.pdf HFIN 5/12/2017 1:30:00 PM
HJR 23
HJR23 Supporting Document-APRN - PFD cuts 5.9.17.pdf HFIN 5/12/2017 1:30:00 PM
HJR 23
HJR23 Supporting Document-ISER How PFDs reduce poverty 5.9.17.pdf HFIN 5/12/2017 1:30:00 PM
HJR 23
HJR23 Supporting Document-Leg Research Effect of PFD Reductions 5.9.17.pdf HFIN 5/12/2017 1:30:00 PM
HJR 23
SB 6 - Amendment 5.12.17.pdf HFIN 5/12/2017 1:30:00 PM
SB 6
SB6_Support_051217.pdf HFIN 5/12/2017 1:30:00 PM
SB 6
HB25_Support_051217.pdf HFIN 5/12/2017 1:30:00 PM
HB 25