Legislature(2017 - 2018)HOUSE FINANCE 519

02/09/2018 01:30 PM FINANCE

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01:33:08 PM Start
01:33:58 PM SB6
02:44:11 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved HCS CSSB 6(FIN) Out of Committee
-- Public Testimony --
+ 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."                                                                                   
1:33:58 PM                                                                                                                    
Co-Chair  Foster relayed  that the  committee had  heard the                                                                    
bill twice the previous session.  He intended to hear public                                                                    
testimony  and consider  amendments. He  asked to  hear from                                                                    
the  bill sponsor  and the  sponsor of  the House  companion                                                                    
bill HB 172.                                                                                                                    
REPRESENTATIVE HARRIET DRUMMOND, introduced herself and                                                                         
read from a prepared statement:                                                                                                 
     House  Bill   172  allows  for  a   pilot  program  for                                                                    
     cultivation of industrial hemp in  the state of Alaska.                                                                    
     Section 76.06  of the federal Agricultural  Act of 2014                                                                    
     allows for a pilot program  to operate in the states to                                                                    
     monitor the  cultivation, harvesting, and  marketing of                                                                    
     industrial hemp.  Hemp is a  very diverse  product that                                                                    
     has  the   potential  to  be  successful   in  multiple                                                                    
     markets,  including agriculture,  textiles, automotive,                                                                    
     and livestock  feed to name  just a few. Senate  Bill 6                                                                    
     by Senator  Hughes is only  slightly different  from my                                                                    
     bill,  but  I'm  here  to assure  all  members  of  the                                                                    
     committee that it  meets the intent of  House Bill 172.                                                                    
     Hemp cultivation  will benefit Alaskans no  matter what                                                                    
     political  party they  align with.  That's why  I fully                                                                    
     support the movement of Senate  Bill 6 and will help in                                                                    
     any  way  I can  to  make  sure Alaska's  hopeful  hemp                                                                    
     harvesters can get  to the fields as  soon as possible.                                                                    
     Thank you.                                                                                                                 
1:36:15 PM                                                                                                                    
SENATOR SHELLEY  HUGHES, SPONSOR, thanked the  committee for                                                                    
hearing SB  6. She noted that  the bill had last  been heard                                                                    
in May [2017].  She detailed that the idea  had been brought                                                                    
to her by farmers in her  district, who at the time had been                                                                    
very interested  in legislation sponsored by  former Senator                                                                    
Johnny  Ellis. The  issue had  been discussed  at town  hall                                                                    
meetings and  she had  reintroduced it  two years  back. She                                                                    
was  delighted  to  have Representative  Drummond's  support                                                                    
with HB 172.                                                                                                                    
Senator  Hughes explained  the bill  would remove  hemp from                                                                    
the marijuana  statutes and would  define it as  having less                                                                    
than  0.3  percent  THC, meaning  it  held  no  psychoactive                                                                    
qualities. Some  of the early  drafts of the  Declaration of                                                                    
Independence had  been drafted on hemp  paper. Additionally,                                                                    
hemp  had been  used to  make sails  for boats  traveling to                                                                    
America and for covered wagons.  She elaborated that some of                                                                    
the country's founding fathers had  hemp fields. In 1937 the                                                                    
Marijuana Act had  been introduced - cotton had  been on the                                                                    
rise and there had  been a push to use wood  for paper. As a                                                                    
result, hemp  had taken a  back seat and was  categorized as                                                                    
illegal. The bill would fix the  issue. The Farm Act in 2014                                                                    
had paved  the way  for the change.  She believed  29 states                                                                    
were  currently  on  board.  She  thanked  the  Division  of                                                                    
Agriculture and others  for their work. She  noted her staff                                                                    
was available for further detail.                                                                                               
Co-Chair   Foster  recognized   individuals  available   for                                                                    
1:39:58 PM                                                                                                                    
Vice-Chair Gara supported  the bill. He knew  there had been                                                                    
a change  in federal  policy on marijuana  prosecutions from                                                                    
the  new  federal  administration.  He  remarked  there  was                                                                    
statute  that   allowed  [the  cultivation  of   hemp).  His                                                                    
understanding  was  that  even though  policy  on  marijuana                                                                    
prosecutions had  taken place,  policy could not  be shifted                                                                    
on  hemp prosecutions.  He asked  if  his understanding  was                                                                    
Senator Hughes believed it was  true. She detailed the issue                                                                    
emphasized the need for the passage  of the bill in order to                                                                    
separate hemp from  marijuana. She did not  believe the bill                                                                    
was in violation of federal  statute. The bill was compliant                                                                    
with  federal statute  and had  grown in  length because  of                                                                    
federal law passed in 2014.                                                                                                     
1:41:26 PM                                                                                                                    
ROBERT HARR, HARR  TECHNOLOGIES, KENAI (via teleconference),                                                                    
testified in  favor of  the legislation.  He shared  that he                                                                    
had  ranches in  Colorado and  in  Alaska. He  was a  patent                                                                    
developer and innovator. He spoke  about a study and patents                                                                    
he had  done related  to degrading infrastructure.  He spoke                                                                    
about his  involvement in the  development of  hemp products                                                                    
in the  past year.  There were numerous  unique applications                                                                    
for hemp. He  shared that he had  provided written testimony                                                                    
and a document. His patents  used hemp fiber to add strength                                                                    
to products. He had alliance  members who wanted to use hemp                                                                    
worldwide. He shared that it  was a trillion dollar industry                                                                    
and would bring substantial money into Alaska.                                                                                  
Mr. Harr  provided further  examples about  the use  of hemp                                                                    
products.  He wanted  to  see Alaska  more  involved in  the                                                                    
agricultural  side  -  he  believed  the  product  was  more                                                                    
sustainable  than  gas and  oil  because  it was  not  stock                                                                    
market  driven. He  continued to  address  various uses  for                                                                    
Co-Chair  Foster  relayed  that public  testimony  could  be                                                                    
submitted in writing.                                                                                                           
1:46:27 PM                                                                                                                    
AMY    SEITZ,   ALASKA    FARM    BUREAU,   SOLDOTNA    (via                                                                    
teleconference), testified in favor  of the legislation. She                                                                    
discussed the rise of agriculture  production in Alaska. The                                                                    
number of  farms, the variety of  agricultural products, and                                                                    
demand  for local  products  were  increasing. She  believed                                                                    
everyone should be  looking for ways to  assist in expanding                                                                    
the agriculture  industry; it would benefit  the economy and                                                                    
the state's  sustainability. The bill  would set up  a pilot                                                                    
program to  study the growth, cultivation,  and marketing of                                                                    
industrial hemp.  She detailed that  hemp had been  a staple                                                                    
crop  for  a  long  time  in the  U.S.  until  it  had  been                                                                    
reclassified  as a  controlled substance  in the  1970s. She                                                                    
shared  that hemp  was  one of  the  most versatile  natural                                                                    
fibers with over  25,000 different uses from  food and fiber                                                                    
to  construction  and  cosmetics. She  referenced  questions                                                                    
about the viability  of a hemp crop in  Alaska and explained                                                                    
that without the passage of SB  6 no one would find out. The                                                                    
retail  value in  the  U.S. was  over  $600 million.  Alaska                                                                    
currently had  to import  raw hemp  material because  it was                                                                    
not legal  to grow in-state  (some states were  now allowing                                                                    
hemp as  an agricultural crop).  She discussed uses  of hemp                                                                    
including animal feed, bedding,  and rotation crops for soil                                                                    
supplement. Hemp is also a  prolific pollinator, which could                                                                    
help  the  honey  bee  industry  and  other  pollinators  in                                                                    
Alaska.  She reasoned  that even  if it  took time  to build                                                                    
infrastructure, there  were many uses for  the raw material.                                                                    
She believed everyone  should be looking for  ways to expand                                                                    
the agriculture  industry in Alaska.  She urged  support for                                                                    
the bill.                                                                                                                       
1:49:00 PM                                                                                                                    
JOHN  BRADING, SELF,  FAIRBANKS (via  teleconference), spoke                                                                    
in support of  the legislation. He wanted to  amend the bill                                                                    
to  allow  small  scale  gardeners  to  grow  the  crop  for                                                                    
personal  use on  their own  property. He  explained it  was                                                                    
possible  to convert  hemp oil  into  biodiesel -  it was  a                                                                    
cleaner burning  fuel made from vegetable  oil or industrial                                                                    
hemp  oil. He  provided detail  about biodiesel  oil -  more                                                                    
oxygen meant  the oil burned  cleaner. Any  diesel equipment                                                                    
could run on biodiesel  - cars, boats, tractors, generators,                                                                    
and heating  oil. He stressed  the need for  cleaner heating                                                                    
options especially  in areas like Fairbanks  and Mat-Su with                                                                    
air  pollution problems.  He shared  that biodiesel  reduced                                                                    
carbon  dioxide  by  78  percent,   carbon  monoxide  by  50                                                                    
percent, hydrocarbons  by 70 percent, and  sulfur dioxide by                                                                    
100 percent. He stated that  sulfur dioxide still existed in                                                                    
regular diesel,  which was one  of the causes of  PM2.5 [air                                                                    
pollution].  Hemp oil  contained  simple organic  non-toxic,                                                                    
biodegradable  compounds.   He  continued  to   discuss  the                                                                    
benefits of hemp oil as a clean fuel source.                                                                                    
1:52:48 PM                                                                                                                    
GERSHON COHEN, SELF,  HAINES (via teleconference), testified                                                                    
in  support  of   the  bill.  He  shared   that  his  infant                                                                    
granddaughter  had been  diagnosed with  a form  of epilepsy                                                                    
and the  long-term prognosis was  dire for  many individuals                                                                    
with the diagnosis.  He shared that they had  started her on                                                                    
a  variety  of  harsh   anti-seizure  medicines.  He  had  a                                                                    
background  in biochemistry  and molecular  biology and  had                                                                    
done   significant   research   on  CBD   (cannabidiol),   a                                                                    
derivative of  industrial hemp because  he had heard  it was                                                                    
as good  or better  than many prescribed  pharmaceuticals at                                                                    
reducing  or eliminating  epileptic  seizures  with no  side                                                                    
effects. The  family decided to  ween his  granddaughter off                                                                    
of the other drugs and kept  her on CBD for seizure control;                                                                    
about one  month later  she had started  to change.  She was                                                                    
now walking without assistance.                                                                                                 
Mr. Cohen shared numerous  details about his granddaughter's                                                                    
progress. They had not witnessed  any seizures for 26 months                                                                    
after beginning  to use  CBD. The  substance was  also being                                                                    
used  by veterans  for  post-traumatic  stress disorder.  He                                                                    
noted that for this reason  Congressmen Young had become the                                                                    
founding  co-chair of  the cannabis  caucus  about one  year                                                                    
back.  The American  Legion had  passed  two resolutions  in                                                                    
2016 for the full legalization  of CBD and medical marijuana                                                                    
because  the substances  had  significantly helped  numerous                                                                    
veterans.  He spoke  to other  medical issues  the substance                                                                    
helped  with  including   multiple  sclerosis  and  treating                                                                    
chronic  pain.  The  greatest  proof  of  CBD's  ability  to                                                                    
address  the  disorders was  that  the  drug companies  were                                                                    
scrambling to create a synthetic CBD.                                                                                           
1:58:19 PM                                                                                                                    
Co-Chair  Foster  reiterated  the  House  Finance  Committee                                                                    
email address.                                                                                                                  
FRANK  TURNEY, SELF,  FAIRBANKS (via  teleconference), spoke                                                                    
in favor of  the legislation. He supported  the testimony of                                                                    
previous speakers. He  shared that since the  early 1990s he                                                                    
had   been  educating   people   on   industrial  hemp.   He                                                                    
acknowledged  individuals in  the region  for their  work on                                                                    
the issue. He hoped farmers  were given the "green" light to                                                                    
grow industrial hemp. He stressed  that hemp had been around                                                                    
for thousands  of years. He thanked  Representative Thompson                                                                    
for  getting hemp  rolling at  the University.  He mentioned                                                                    
desire  to fix  federal  regulations because  hemp seed  was                                                                    
needed in Alaska.                                                                                                               
2:01:11 PM                                                                                                                    
COURTNEY  MORAN,  INDUSTRIAL  HEMP ATTORNEY,  EARTHLAW  LLC,                                                                    
WASHINGTON D.C.  (via teleconference), testified  in support                                                                    
of the  legislation and the  amendments. She  confirmed that                                                                    
SB 6 was aligned with the  intent of HB 172. She was honored                                                                    
to work  with the sponsors  and their staff in  the drafting                                                                    
of  the   legislation,  which  complied  with   the  federal                                                                    
Agricultural  Act   of  2014.   The  bill   established  the                                                                    
regulatory  framework to  provide for  successful industrial                                                                    
hemp programs  for farmers, manufacturers,  and agricultural                                                                    
businesses throughout Alaska. She  mentioned a memo that did                                                                    
not  change state  or federal  law; it  only applied  to the                                                                    
guidance  given   to  federal   prosecutors  in   regard  to                                                                    
marijuana  enforcement  - it  did  not  apply to  industrial                                                                    
hemp.  She stated  that the  Agricultural Act  of 2014,  was                                                                    
federal  statutory  law  defining industrial  hemp  distinct                                                                    
from  marijuana  and   protecting  industrial  hemp  growth,                                                                    
cultivation, and marketing.                                                                                                     
Ms.   Moran  continued   that  the   omnibus  appropriations                                                                    
provision and the exemptions provided  in the definition for                                                                    
marijuana  under  the  controlled  substances  act  provided                                                                    
federal   authority   for   the  implementation   of   state                                                                    
industrial  hemp  programs.  The  bill  would  establish  an                                                                    
industrial  hemp  pilot  program  in  Alaska.  She  provided                                                                    
further  detail.  She  supported  an amendment  [yet  to  be                                                                    
offered]  that  would  ensure   a  sustainable  program  and                                                                    
successful implementation.  With the bill's  passage, Alaska                                                                    
would join  34 other  states in legalizing  industrial hemp.                                                                    
In  2017,  19 states  had  cultivated  industrial hemp.  She                                                                    
thanked the committee for its support for the legislation.                                                                      
2:04:09 PM                                                                                                                    
Co-Chair Seaton  pointed to page  3, line 4,  subsection (d)                                                                    
related   to  establishing   isolation  distances   for  the                                                                    
production of  industrial hemp. He  was trying  to determine                                                                    
the  purpose  of  the isolation  distance.  He  wondered  if                                                                    
industrial hemp could  be a way to  delegitimize permits for                                                                    
cultivation of  cannabis for other purposes.  He wondered if                                                                    
there  could  be   a  conflict  in  the   law  and  disallow                                                                    
previously permitted cannabis cultivation.                                                                                      
Ms. Moran replied the provision  was included because of the                                                                    
concern for  potential cross pollination  between industrial                                                                    
hemp and  marijuana. She elaborated that  Washington had set                                                                    
a  four-mile isolation  distance  between the  two types  of                                                                    
cultivation. She furthered the issue  had been dealt with in                                                                    
Oregon over the past  four years where responsible, friendly                                                                    
farming had been encouraged. They  had worked to ensure that                                                                    
industrial hemp  farmers planting  in a sensitive  area with                                                                    
marijuana cannabis  cultivation, only planted  female plants                                                                    
and non-feminized  seed to  avoid cross  pollination. Canada                                                                    
had   a  certified   seed  program   with  certified   seed,                                                                    
foundational   seed,  and   registered  seed;   its  minimum                                                                    
distance  buffers were  set at  5 kilometers  or 3.1  miles,                                                                    
which  had been  very  successful. The  goal  was to  ensure                                                                    
there were  no negative  impacts on industrial  hemp farmers                                                                    
or  marijuana  growers.  It   was  about  collaboration  and                                                                    
responsible, friendly farming.                                                                                                  
2:07:37 PM                                                                                                                    
Co-Chair Seaton  remarked that the state  had issued permits                                                                    
for the cultivation  of marijuana in Alaska.  He wondered if                                                                    
the isolation zone would prevent  industrial hemp from being                                                                    
grown 3.5 to 4 miles  from a marijuana cultivation facility.                                                                    
Alternatively,   he  wondered   whether  it   would  prevent                                                                    
marijuana  cultivation within  4  miles  of industrial  hemp                                                                    
Ms. Moran  asked for verification  that Co-Chair  Seaton was                                                                    
questioning whether  the bill would  limit the  hemp growers                                                                    
or the marijuana growers.                                                                                                       
Co-Chair  Seaton replied  in  the  affirmative. He  wondered                                                                    
which  grower would  be  limited if  an  isolation zone  was                                                                    
required.  He asked  if hemp  could  not be  grown within  4                                                                    
miles  of  a  marijuana  growing operation  or  a  marijuana                                                                    
growing permit could not be  within 4 miles of an industrial                                                                    
hemp crop.                                                                                                                      
Ms.  Moran  replied  that the  marijuana  program  had  been                                                                    
implemented  first; therefore,  she  believed the  marijuana                                                                    
growers  would  have  deference  over  the  industrial  hemp                                                                    
growers.  She  clarified  the bill  would  still  allow  the                                                                    
cultivation of  industrial hemp within an  isolation zone as                                                                    
long as the  crop was limited to female plants  to avoid the                                                                    
risk of pollen. The aim of  the provision was to establish a                                                                    
distance  - she  thought research  could determine  what the                                                                    
actual  isolation distance  needed  to be  for a  particular                                                                    
region or  area. She believed  Rob Carter with  the Division                                                                    
of Agriculture had  the authority to establish  rules on the                                                                    
Co-Chair Seaton stated  he would follow up  with Mr. Carter.                                                                    
He believed the question needed  to be on record because the                                                                    
provision would be statutory.                                                                                                   
Representative Guttenberg  pointed out  that there  had been                                                                    
quite  a  bit  of  conversation  on  the  issue  during  the                                                                    
previous bill hearing. He agreed it was a major concern.                                                                        
2:10:49 PM                                                                                                                    
EMBER   HAYNES,   SELF,  TALKEETNA   (via   teleconference),                                                                    
testified in support of the  bill. She and her husband owned                                                                    
the  Denali  Hemp  Company   and  Silverbear  Sundries.  She                                                                    
detailed they  infused oils with wild  crafted and homegrown                                                                    
plants.  They  had  been importing  legal  hempseed  oil  to                                                                    
incorporate  for the  past ten  years  - their  goal was  to                                                                    
utilize  Alaskan grown  and processed  hemp as  they did  in                                                                    
their  other balms  and products.  They raised  livestock on                                                                    
their property and  hemp cultivated on their  own land could                                                                    
be used for  animal bedding and food.  Hemp was sustainable,                                                                    
and the entire plant could  be utilized. She elaborated that                                                                    
one acre of hemp could produce  600 to 2,000 pounds of seed,                                                                    
50 to 100  gallons of oil, and  2 to 5 tons  of fiber stock.                                                                    
She  shared  that  it would  supplement  her  business.  She                                                                    
represented Alaskans who lived a self-sustaining lifestyle.                                                                     
Ms. Haynes  associated herself with others  with small-scale                                                                    
plans who  would like to  participate in the  pilot program.                                                                    
She continued that  Alaska was a vast state  with many micro                                                                    
climates and  myriad potential uses  for hemp.  She believed                                                                    
farmers and  non-farmers could be successful  and find their                                                                    
own niche. She understood there  was a concern with staffing                                                                    
and administering too many  applications. She suggested that                                                                    
perhaps more fees with more  applicants would allow for more                                                                    
staff.  She   appreciated  the  Division   of  Agriculture's                                                                    
mission to  help Alaskans succeed.  Agricultural hemp  was a                                                                    
hot  market  -  Alaskans  had  been  successful  with  other                                                                    
alternative  agriculture such  as  peony  farming and  birch                                                                    
products, fisheries, crafters, and  other; the same could be                                                                    
true for hemp. She spoke to  keeping the fees at the minimum                                                                    
level  needed  to  run  a   successful  hemp  industry.  She                                                                    
implored the committee to pass the bill.                                                                                        
Representative Kawasaki  asked if Ms. Haynes  had stated she                                                                    
currently produced hash oil from imported hemp.                                                                                 
Ms. Haynes answered in the  negative. She explained she used                                                                    
legal hempseed  oil (with  less than a  trace, if  any, THC)                                                                    
that  anyone could  purchase. She  elaborated they  used the                                                                    
oil just as they would olive  oil, avocado oil, and other to                                                                    
get  all of  the properties  out  of herbs  like yarrow  and                                                                    
devil's  club.  She underscored  there  was  no hashish  oil                                                                    
being made.                                                                                                                     
2:15:05 PM                                                                                                                    
ED MARTIN, SELF, COOPER  LANDING (via teleconference), spoke                                                                    
in  support of  the  bill.  He believed  the  bill was  long                                                                    
overdue.  He opined  that the  benefits  of industrial  hemp                                                                    
would  help  Alaska's  economy and  would  create  jobs.  He                                                                    
encouraged passing  the bill immediately in  order to enable                                                                    
crops to be grown in the coming summer.                                                                                         
2:16:18 PM                                                                                                                    
DENNIS WADE, SELF, HOMER  (via teleconference), testified in                                                                    
favor  of the  legislation.  The bill  would enable  Alaskan                                                                    
farmers to turn  the product into a  profit. He acknowledged                                                                    
it would take  several years to begin  making paper products                                                                    
and woven garments.  He spoke about the use of  hemp oil for                                                                    
health  purposes. He  noted that  hemp was  cultivated at  a                                                                    
latitude  above Nome  in Europe;  therefore, he  believed it                                                                    
could be grown virtually anywhere  in Alaska. He reasoned it                                                                    
could  be  useful for  rural  communities  to use  hemp  for                                                                    
diesel  fuel, to  build structures,  and for  insulation. He                                                                    
thanked the  bill sponsors and  the committee. He  had heard                                                                    
testimony  the previous  year considering  whether a  person                                                                    
could get high  from cooking the product down.  He stated it                                                                    
was a  ridiculous conversation. He elaborated  on the issue.                                                                    
He asked the committee to pass the bill.                                                                                        
2:18:32 PM                                                                                                                    
Co-Chair Foster CLOSED public testimony.                                                                                        
Co-Chair  Seaton directed  his earlier  question related  to                                                                    
isolation distances  between industrial hemp and  a licensed                                                                    
marijuana growing  facility to the Division  of Agriculture.                                                                    
He  wondered   if  the  isolation  distances   could  impact                                                                    
permitted marijuana  growers or areas where  industrial hemp                                                                    
could be grown.                                                                                                                 
ROB CARTER,  DIVISION OF AGRICULTURE, DEPARTMENT  OF NATURAL                                                                    
RESOURCES (via  teleconference), replied there  were general                                                                    
agronomic practices that were  sometimes lost in translation                                                                    
when it came to statute.  He stated that isolation distances                                                                    
were set  for hundreds  of agricultural crops  worldwide. He                                                                    
continued  that isolation  distances were  set for  the seed                                                                    
industry  in  Canada,  Washington,  Oregon,  and  other.  He                                                                    
clarified that  individuals growing industrial hemp  for the                                                                    
product  itself,   would  not   be  affected   by  isolation                                                                    
distances.  Good  farming  practices  existed  in  order  to                                                                    
prevent one  industry from disturbing another.  He addressed                                                                    
Co-Chair  Seaton's question  about which  industry would  be                                                                    
impacted by  the potential of cross  pollination. The impact                                                                    
would be on recreational  cannabis if industrial hemp pollen                                                                    
was transferred and pollination occurred.                                                                                       
Mr. Carter  clarified that isolation distances  were set for                                                                    
the   seed  industry   (seed   classes   such  as   breeder,                                                                    
foundation, registered, or seed).  If a person was concerned                                                                    
that hemp would cross  pollinate with recreational marijuana                                                                    
or vice versa, the genetic  degradation of the crop would be                                                                    
seen  until  the  following  year when  the  seed  crop  was                                                                    
harvested,  planted,  and  grown.  The  isolation  distances                                                                    
within  the  pilot  program  would   be  set  for  the  seed                                                                    
producers.  Additionally, some  good agricultural  practices                                                                    
would   be  recommended   and  suggested   to  all   program                                                                    
participants to grow  only female crops if  they were within                                                                    
a  selected  area  where registered  recreational  marijuana                                                                    
growers may be located.                                                                                                         
2:23:11 PM                                                                                                                    
Co-Chair  Seaton   wanted  to  ensure  there   was  a  well-                                                                    
established legislative record that  the provision could not                                                                    
be used  by someone  growing industrial  hemp to  impact the                                                                    
permit of a  marijuana cultivation activity. He  was in full                                                                    
support  of industrial  hemp, but  he wanted  to ensure  the                                                                    
isolation  distance would  not preclude  the operation  of a                                                                    
marijuana  cultivation  facility  because it  was  the  same                                                                    
variety  or species.  He wanted  the intent  clearly on  the                                                                    
record.  He asked  for clarification  from  Mr. Carter  that                                                                    
industrial hemp  would not  impact the  cultivation approval                                                                    
license for marijuana.                                                                                                          
Mr.  Carter replied  that he  did not  see how  it would  be                                                                    
physiologically possible for the  transmittal of pollen from                                                                    
industrial  hemp to  null and  void  any of  the current  or                                                                    
future  recreational cannabis  registrants. He  acknowledged                                                                    
that the  pollen transfer could  degrade the  future prodigy                                                                    
of  recreational marijuana.  He believed  the provision  had                                                                    
been included so  that when the pilot program  was defined -                                                                    
working  with the  Alaska Marijuana  Control  Board and  its                                                                    
registrants  -  the  agricultural  producers  interested  in                                                                    
industrial hemp seed production  could be identified to make                                                                    
sure  good   agronomic  practices   were  provided   to  the                                                                    
individuals  to  meet  the   needed  isolation  distance  by                                                                    
region.  There  were  numerous  environmental  factors  that                                                                    
could  increase  or  decrease   the  opportunity  for  cross                                                                    
pollination  between similar  species.  He  believed it  was                                                                    
highly  unlikely  a  person could  affect  anyone  producing                                                                    
either cannabis species.                                                                                                        
2:26:28 PM                                                                                                                    
Co-Chair Seaton clarified that he  was not talking about the                                                                    
physiological  action between  the plants;  he was  speaking                                                                    
about  a   regulatory  restriction.  He  wanted   to  ensure                                                                    
everyone  understood that  the  isolation  distance did  not                                                                    
restrict a cultivation permit.                                                                                                  
Mr. Carter  answered that  there was no  way the  bill could                                                                    
regulatorily  impede  anyone  from applying  for  the  pilot                                                                    
program or a permit through the recreational side.                                                                              
Representative  Guttenberg recalled  hearing that  marijuana                                                                    
cultivators were  not concerned  about seed  production, but                                                                    
about  the possibility  that the  transfer  of pollen  could                                                                    
destroy a crop.  He asked if the concern  was legitimate. He                                                                    
believed it was  part of the reason  for isolation distances                                                                    
implemented in Colorado, Alberta, and other.                                                                                    
Mr.  Carter agreed  there  were  concerns from  recreational                                                                    
growers that  cross pollination  from industrial  hemp could                                                                    
degrade    recreational   marijuana    grown   by    current                                                                    
registrants. He believed that the  issues would be addressed                                                                    
during  the rules  and regulations  that  would be  outlined                                                                    
from the  law, to  ensure that what  one producer  was doing                                                                    
within the  state was  not impacting  a producer  in another                                                                    
program  regulated  under  the   state  system.  There  were                                                                    
isolation   distances  set   in  Colorado   where  a   large                                                                    
recreational industry  for other types of  cannabis existed.                                                                    
He explained  that the  issues would have  to be  taken into                                                                    
consideration.  The bill  represented  the  generation of  a                                                                    
pilot  program  -  applicants could  be  selected  based  on                                                                    
region, size, and what the  end-point products would be - to                                                                    
enable the state to understand  what the impacts could be on                                                                    
other lines of business within  the state. The program would                                                                    
allow  the  state to  gain  the  data  to  ensure it  had  a                                                                    
successful industry on each side.                                                                                               
2:30:17 PM                                                                                                                    
Representative  Kawasaki stated  that the  issue had  arisen                                                                    
the  past  session.  He  believed  the  committee  had  been                                                                    
provided   with  materials   specifying  that   pollen  from                                                                    
marijuana and hemp had been  known to travel more than seven                                                                    
miles.  There was  only  one  outdoor cultivation  facility,                                                                    
which  was located  in Fairbanks.  The Fairbanks  delegation                                                                    
had  been  contacted  about the  concern  that  crops  could                                                                    
potentially be damaged  as far as seven  miles from adjacent                                                                    
plots.  He  spoke  to  the establishment  of  fees  for  the                                                                    
applications  and  registrations.  He shared  the  committee                                                                    
held recent hearings regarding  fees for marijuana licensure                                                                    
- fees  were recouped  from program participants.  He looked                                                                    
at  the  bill's zero  fiscal  note  commencing in  2019.  He                                                                    
wondered  what  kind of  fee  schedule  the committee  could                                                                    
anticipate.  He   surmised  that  there  would   be  a  cost                                                                    
associated with  starting the program. He  stated that after                                                                    
the department figured out the  regulation cost, it may cost                                                                    
additional  money,  but  the  cost  would  likely  start  to                                                                    
decrease  in future  years. He  asked what  it would  cost a                                                                    
consumer to purchase a permit.                                                                                                  
Mr.  Carter  answered  there  were   many  unknowns  in  the                                                                    
question.  There  were  a  diverse  range  of  program  fees                                                                    
nationally.  The current  fiscal note  factored in  building                                                                    
the  regulation and  rules.  The  Division of  Agriculture's                                                                    
role was  to support and promote  agricultural production in                                                                    
Alaska. He  currently did not  know what the cost  would be.                                                                    
The  mission  was to  help  grow  an industry.  Through  the                                                                    
regulatory  process,  the  division would  ensure  the  fees                                                                    
would be  covered and  would begin to  define the  number of                                                                    
participants.  The higher  the number  of participants,  the                                                                    
lower  the program  cost would  be over  time. He  could not                                                                    
currently provide a number. It  was the division's objective                                                                    
to make  the program  as affordable  as possible  because it                                                                    
was a  good opportunity to increase  agricultural production                                                                    
in Alaska.                                                                                                                      
2:33:20 PM                                                                                                                    
Representative  Kawasaki asked  if the  division had  enough                                                                    
technical support to handle requests.                                                                                           
Mr. Carter replied in the  affirmative. He acknowledged that                                                                    
the crop  had not been  grown nationally  or in Alaska  in a                                                                    
long  time. He  believed the  division had  the professional                                                                    
and academic  background to implement the  pilot program and                                                                    
make it  successful for participants  and the  future growth                                                                    
of  the   industry.  He  currently  served   on  a  national                                                                    
industrial  hemp regulatory  committee  that held  quarterly                                                                    
meetings.  The   majority  of  states   currently  producing                                                                    
industrial hemp  and the 34  other states in the  process of                                                                    
getting legislation  passed were  very willing to  help with                                                                    
the  scientific  process  to make  sure  other  agricultural                                                                    
producers were protected, good  quality products were grown,                                                                    
and that the industry moved forward.                                                                                            
Representative  Thompson pointed  to  a typo  on  page 2  of                                                                    
fiscal  note  OMB Component  Number  2204.  He believed  the                                                                    
first sentence should read  "conduct oversight of industrial                                                                    
hemp" instead of the current  language "conduct oversight of                                                                    
industrial help." He asked for the correction to be made.                                                                       
Representative  Wilson  asked  why   the  fiscal  note  [OMB                                                                    
Component  Number  2204] had  come  from  the House  Finance                                                                    
Committee  and  not  the  Department  of  Natural  Resources                                                                    
(DNR). The note addressed  that regulations would be drafted                                                                    
and fees  would apply  to permittees.  She wanted  to ensure                                                                    
the  department   realized  it  would  be   responsible  for                                                                    
collecting the fees and recouping the $10,000.                                                                                  
2:36:42 PM                                                                                                                    
ALEXEI  PAINTER,  ANALYST,   LEGISLATIVE  FINANCE  DIVISION,                                                                    
answered that DNR had prepared  a fiscal note that requested                                                                    
$25,000  of  unrestricted  general fund  (UGF).  The  Senate                                                                    
Finance  Committee had  written its  own fiscal  note, which                                                                    
had  reduced the  amount  to $10,000  and  changed the  fund                                                                    
source to  general fund  program receipts  to fund  the cost                                                                    
with fees; however,  the fees would not come  in until after                                                                    
regulations were  written. The House Finance  Committee note                                                                    
changed the fund  source back to UGF and kept  the amount at                                                                    
Representative Wilson  asked if there  was a way  to specify                                                                    
the $10,000  would be paid  back to UGF as  the registration                                                                    
fees  came in.  Alternatively, she  wondered if  the process                                                                    
would be  automatic. She likened  the process to  the method                                                                    
used for marijuana permitting. She  thought the funds should                                                                    
turn to DGF  as explained on the second page  [of the fiscal                                                                    
Mr.  Painter  answered  that  in  the  future  it  would  be                                                                    
possible,  but  the  startup  costs   needed  to  write  the                                                                    
regulations  would require  some general  funds because  the                                                                    
fee  schedule would  not yet  be in  place. He  believed the                                                                    
intent was for  program receipts to pay for the  cost in the                                                                    
Representative  Wilson  pointed  out that  the  fiscal  note                                                                    
specified that the money would be recovered.                                                                                    
Vice-Chair Gara surmised  the fees that would  come in later                                                                    
were  designated,  but  they   were  not  really  designated                                                                    
because they would go into the General Fund.                                                                                    
Mr. Painter agreed. Any general  fund program receipts could                                                                    
be appropriated for any purpose.                                                                                                
2:38:54 PM                                                                                                                    
Co-Chair Foster  MOVED to  ADOPT Amendment  2, 30-LS0173\E.4                                                                    
(Martin, 2/8/18) (copy on file):                                                                                                
     Page 5, lines 22 - 25:                                                                                                     
     Delete "Industrial  hemp produced under  a registration                                                                    
     under this section may not  be used to produce hashish,                                                                    
     hashish  oil,   or  marijuana  concentrates.   In  this                                                                    
     subsection,  "hashish"  and   "hashish  oil"  have  the                                                                    
     meanings given  in AS  l l.71.900,  but do  not include                                                                    
     cannabidiol oil."                                                                                                          
There being NO OBJECTION, it was so ordered.                                                                                    
2:39:20 PM                                                                                                                    
Co-Chair Foster  MOVED to  ADOPT Amendment  3, 30-LS0173\E.3                                                                    
(Martin/Wayne, 2/6/18) (copy on file):                                                                                          
     Page 7. line 11:                                                                                                           
     Delete "oil."                                                                                                              
     Insert "oil [.]"                                                                                                           
There being NO OBJECTION, it was so ordered.                                                                                    
Vice-Chair  Gara reviewed  the five  fiscal notes  including                                                                    
one  zero  fiscal  note from  the  Department  of  Commerce,                                                                    
Community  and Economic  Development  (OMB Component  Number                                                                    
3119); one zero fiscal note  from the Department of Law (OMB                                                                    
Component  Number  2202); two  zero  fiscal  notes from  the                                                                    
Department of Public Safety (OMB  Component Numbers 3052 and                                                                    
527);  and one  fiscal  impact note  [by  the House  Finance                                                                    
Committee]  from the  Department  of  Natural Resources  for                                                                    
$10,000  for the  drafting  and  publication of  regulations                                                                    
(OMB  Component   Number  2204).   He  clarified   that  all                                                                    
references to industrial help should read industrial hemp.                                                                      
2:41:19 PM                                                                                                                    
Representative  Wilson spoke  to OMB  Component Number  2204                                                                    
related to  the North  Latitude Plant Materials  Center. She                                                                    
clarified  the center  was not  responsible for  writing the                                                                    
regulations, which  was included  in a separate  fiscal note                                                                    
specifying the  costs would be  absorbed. She  stated, "this                                                                    
is  just   determined  after  regulations  are   drafted  to                                                                    
administer  the program."  She wondered  if the  $10,000 was                                                                    
included on the wrong fiscal note.                                                                                              
Vice-Chair  Gara  agreed  with  Representative  Wilson.  The                                                                    
center  would  enter  into  an  RSA  [reimbursable  services                                                                    
agreement]  with the  Department  of Law  to  assist in  the                                                                    
drafting of regulations.                                                                                                        
Representative Wilson clarified  there were costs associated                                                                    
with the  bill that  other departments specified  they could                                                                    
absorb. She noted that the program was not free.                                                                                
Co-Chair Seaton MOVED  to REPORT HCS CSSB  6(FIN) as amended                                                                    
out  of committee  with individual  recommendations and  the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
HCS CSSB  6(FIN) was  REPORTED out of  committee with  a "do                                                                    
pass"  recommendation and  with  two new  zero fiscal  notes                                                                    
from the  Department of Public  Safety; one new  zero fiscal                                                                    
note  from   the  Department  of  Commerce,   Community  and                                                                    
Economic  Development; one  new  zero fiscal  note from  the                                                                    
Department  of Law;  and  one fiscal  impact  note from  the                                                                    
House  Finance  Committee  for  the  Department  of  Natural                                                                    
Co-Chair Foster reviewed the schedule for the following                                                                         
Representative Grenn applauded the sponsors on the bill.                                                                        

Document Name Date/Time Subjects
SB 6 Version E - Sectional Analysis.pdf HFIN 2/9/2018 1:30:00 PM
SB 6
SB6 testimony 2818.pdf HFIN 2/9/2018 1:30:00 PM
SB 6
SB 6 - Amendments 2 and 3.pdf HFIN 2/9/2018 1:30:00 PM
SB 6
SB 6 Letters of Support 2.9.18.pdf HFIN 2/9/2018 1:30:00 PM
SB 6
SB 6 Letter of support 2.9.18.pdf HFIN 2/9/2018 1:30:00 PM
SB 6