Legislature(2017 - 2018)BELTZ 105 (TSBldg)

02/20/2017 01:30 PM JUDICIARY

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Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
               SB   6-INDUSTRIAL HEMP PRODUCTION                                                                            
2:17:34 PM                                                                                                                    
CHAIR COGHILL announced  the consideration of SB 6.  [This is the                                                               
first  hearing  and CSSB  6(RES)  is  before the  committee.]  He                                                               
stated his intention is to  hear the introduction, take questions                                                               
and hold the  bill for further consideration to  ensure that some                                                               
of the penalty provisions have been clarified.                                                                                  
2:18:37 PM                                                                                                                    
SENATOR SHELLY  HUGHES, Alaska State  Legislature, sponsor  of SB
6, related  that last spring  several farmers in the  Mat-Su area                                                               
contacted  her office  to express  interest  in legislation  that                                                               
former Senator Johnny Ellis championed  to define industrial hemp                                                               
as an agricultural  product. This bill is a  little different due                                                               
to new  federal statutes. She noted  that one of the  parties who                                                               
expressed  interest was  former  Matanuska-Susitna Borough  Mayor                                                               
Larry  DeVilbiss.  The matter  continued  to  be brought  to  her                                                               
attention at  town hall meetings  and when she had  meetings with                                                               
She explained  that the  legislation is  a little  different than                                                               
the  bill  former  Senator  Ellis  introduced  because  some  new                                                               
federal  statutes   and  regulations  now  apply.   She  deferred                                                               
questions about that to her staff.  She discussed the use of hemp                                                               
throughout the  history of the  U.S. and noted that  some farmers                                                               
in Alaska are  particularly interested in using hemp  as feed for                                                               
SENATOR  HUGHES related  that she  typically works  on innovative                                                               
technology  such  as  unmanned  aircraft  and  issues  that  look                                                               
forward, but  in the  case of  industrial hemp  it's a  matter of                                                               
playing  catch up  because the  U.S. halted  growth in  1937. She                                                               
said  the product  that  has  been around  for  centuries and  is                                                               
currently used  in over 25,000  products. Some farmers  in Alaska                                                               
are  particularly   interested  in  using  industrial   hemp  for                                                               
livestock feed.                                                                                                                 
She described  industrial hemp as  one more  economic opportunity                                                               
the state  should allow  for the  agricultural community  to try.                                                               
Many people believe it would grow well in Alaska.                                                                               
SENATOR  HUGHES said  she found  it reassuring  to hear  from the                                                               
Division of Agriculture that hemp is  not planted the same way as                                                               
marijuana. The spacing between plants  and rows is very different                                                               
for  the  two  products  so  it  would  be  quite  easy  for  law                                                               
enforcement  to tell  if  someone were  growing  the product  for                                                               
purposes other than industrial hemp.                                                                                            
She  summarized that  SB 6  would remove  hemp from  the criminal                                                               
statutes and place  it under the jurisdiction of  the Division of                                                               
Agriculture. The  bill is  longer than  the bill  introduced last                                                               
year  because  it  includes  the  new  federal  requirements  for                                                               
registration. She deferred further introduction to her staff.                                                                   
CHAIR  COGHILL   listed  the  individuals  available   to  answer                                                               
2:24:18 PM                                                                                                                    
SENATOR MEYER  asked if someone  could grow a crop  of industrial                                                               
hemp but sell it as marijuana.                                                                                                  
SENATOR HUGHES  opined there wouldn't be  much recreational value                                                               
for industrial hemp because the  THC content is below 0.3 percent                                                               
and  the cutoff  for  hallucinogenic effects  is  1 percent.  She                                                               
deferred further explanation to Mr. Whitt.                                                                                      
CHAIR COGHILL asked  Mr. Whitt to supplement the  answer and then                                                               
take the committee through the bill in order of sections.                                                                       
2:25:36 PM                                                                                                                    
BUDDY  WHITT, Staff,  Senator  Shelly Hughes,  sponsor  of SB  6,                                                               
stated that  the research he  has shows that the  USDA recognizes                                                               
industrial hemp as  cannabis with no more than 1  percent THC. At                                                               
some  point  between  1  percent  and  3  percent  THC  there  is                                                               
potential  for  the unwanted  side  effects  found in  marijuana.                                                               
Federal law specifically defines hemp  as having no more than 0.3                                                               
percent THC to clearly differentiate between the two products.                                                                  
SENATOR   MEYER  summarized   that   hemp  could   be  sold   for                                                               
recreational purposes, but it would  not give the desired buzz or                                                               
MR. WHITT  pointed out that,  should the bill  pass, registration                                                               
is required to  grow hemp. Growing without  registration would be                                                               
a violation and  would bring penalties under Title 3.  Also, if a                                                               
hemp crop tests higher than 0.3  percent THC, it is classified as                                                               
marijuana and  the grower  would be guilty  of having  an illegal                                                               
marijuana crop.                                                                                                                 
SENATOR MEYER asked  the basis for the statement  that hemp would                                                               
grow well  in Alaska. "Is  it based on the  fact that it's  a lot                                                               
like barley or ... have we actually done some testing?"                                                                         
MR. WHITT related that a  constituent sent the sponsor a clipping                                                               
from 1918  that reported  that in  the span of  a few  month hemp                                                               
planted in Palmer,  Alaska grew more than four  tall. He deferred                                                               
further explanation to Rob Carter.                                                                                              
2:29:21 PM                                                                                                                    
ROB CARTER,  Manager of the  Plant Materials Center,  Division of                                                               
Agriculture,  Department  of  Natural  Resources  (DNR),  Palmer,                                                               
Alaska,  informed   the  committee   that  industrial   hemp  was                                                               
successfully  grown in  an area  north  of the  Mat-Su Valley  in                                                               
1916. The long  hours of sunlight and 100 plus  growing days make                                                               
it likely that  hemp would be successful in Alaska  as a biomass.                                                               
From  an  agronomics  standpoint  it  has  a  lot  of  potential,                                                               
especially for use as a forage crop to feed livestock.                                                                          
2:31:28 PM                                                                                                                    
SENATOR MEYER  asked if industrial  hemp would be  harvested like                                                               
barley or wheat.                                                                                                                
MR. CARTER  replied there are many  ways to harvest hemp  and the                                                               
harvest method would depend on  the scale of the operation. Large                                                               
scale  production  in Canada  is  highly  mechanized, but  if  an                                                               
individual is growing  for the fiber industry they  might cut the                                                               
plant with a sickle mower.                                                                                                      
2:32:55 PM                                                                                                                    
SENATOR WIELECHOWSKI  read the language  on page 1, line  12, and                                                               
asked if there  is some contemplation that an  application can be                                                               
MR.  WHITT answered  yes; the  Division of  Agriculture would  be                                                               
able to  choose up to 15  growers to start in  the pilot program.                                                               
He  deferred to  the  division  to explain  how  that number  was                                                               
derived, but  his belief  is that would  be a  manageable number.                                                               
The program could be expanded in subsequent years.                                                                              
CHAIR  COGHILL  asked  Mr.  Whitt to  go  through  the  sectional                                                               
MR. WHITT read the following sectional analysis for SB 6:                                                                       
     Sec. 1 AS 03.05.078                                                                                                    
     (a)  Industrial   Hemp  will   be   classified  as   an                                                                    
     agricultural crop in the state of Alaska.                                                                                  
     (b)  An individual who is registered  with the state of                                                                    
     Alaska may produce industrial hemp.                                                                                        
     (c)  Those  wishing  to  produce industrial  hemp  must                                                                    
     register   with  the   Division  of   Agriculture  with                                                                    
     information that  must include  but is not  limited to:                                                                    
     name,  address, and  global positioning  coordinates of                                                                    
     the area to be used for production.                                                                                        
MR. Whitt noted that provision is specifically included to                                                                      
address the 2014 federal Farm Act.                                                                                              
     (d)  Registration   is   valid   for   one   year   and                                                                    
     registrants may renew on an annual basis.                                                                                  
     (e)  The   Division   of   Agriculture   shall   assign                                                                    
     application,  registration, or  renewal fees  necessary                                                                    
     to  regulate the  industrial  hemp  industry and  shall                                                                    
     review those  fee structures  annually to  ensure those                                                                    
     fees collected cover regulatory costs.                                                                                     
     (f)  The Division of Agriculture  may issue a stop sale                                                                    
     order  or  issue  a  violation  notice  if  someone  is                                                                    
     producing   industrial    hemp   without    a   current                                                                    
     (g)A   person   registered   with   the   Division   of                                                                    
     Agriculture may  use any  propagation method  needed to                                                                    
     produce industrial hemp.                                                                                                   
     (h)The Division of  Agriculture, a registered producer,                                                                    
     or  any  institution  of higher  education  may  import                                                                    
     and/or sell industrial hemp seeds.                                                                                         
     (i)A person  with a registration may  retain hemp seeds                                                                    
     for the purpose of growing hemp in the future.                                                                             
     (j)A   person   registered   with   the   Division   of                                                                    
     Agriculture to  produce industrial hemp may  retain and                                                                    
     recondition hemp  that tests  between .3 percent  and 1                                                                    
     percent THC on a dry  weight basis, but industrial hemp                                                                    
     intended for  consumption in any  form cannot  exceed a                                                                    
     .3 percent THC level.                                                                                                      
     (k)  Division  of  Agriculture may  create  regulations                                                                    
     for  approved shipping  documentation for  transporting                                                                    
     industrial hemp.                                                                                                           
     (l)  Registered  producers  of   industrial  hemp  must                                                                    
     retain record  of sale for  three years,  including the                                                                    
     name  and  address  of  the  person  who  received  the                                                                    
     industrial hemp and the amount sold.                                                                                       
     (m)  Records in  section (l) are  to be  made available                                                                    
     to the department during normal  business hours and the                                                                    
     department must give three days' notice of inspection.                                                                     
     Sec. 2 AS 03.05.079                                                                                                    
     In  keeping   with  federal  law,  this   section  adds                                                                    
     language  regarding  a  pilot  program  for  industrial                                                                    
     hemp, that  the Division  of Agriculture,  institute of                                                                    
     higher   education   or   a   registered   grower   may                                                                    
     participate in  the pilot program  and the  Division of                                                                    
     Agriculture may adopt regulations for this section.                                                                        
     Sec. 3 AS 03.05.100                                                                                                    
     The  definition of  industrial  hemp,  which meets  the                                                                    
     definition is  federal statute,  is the  plant Cannabis                                                                    
     Sativa  L  containing  less that  0.3  percent  delta-9                                                                    
     tetrahydrocannabinol (THC).                                                                                                
     Sec. 4 AS 11.71.900                                                                                                    
     Amendment  in  statute  to remove  industrial  hemp  as                                                                    
     defined  in AS  03.05.100 from  the list  of controlled                                                                    
     Sec. 5 AS 17.20.020                                                                                                    
     Food  containing  industrial  hemp  as  defined  in  AS                                                                    
     03.05.100 is not considered adulterated.                                                                                   
     Sec. 6 AS 17.38.900                                                                                                    
     Amendment is statute to  further remove industrial hemp                                                                    
     as defined in AS 03.05.100 from marijuana definitions.                                                                     
CHAIR COGHILL said the committee will be asking what activity                                                                   
should have a criminal sanction and what activity is                                                                            
appropriately sanctioned with a fine.                                                                                           
MR. WHITT  read the  existing AS 03.05.090(a)  and (b)  that talk                                                               
about   penalties   for   violations  under   the   Division   of                                                               
Agriculture.  He  described potential  changes  to  the bill:  1)                                                               
adding that the Division of  Agriculture has regulatory authority                                                               
for the pilot  program; 2) refine the language  in subsection (j)                                                               
on  page 2,  lines  18-21, to  protect a  farmer  from having  to                                                               
destroy an entire crop.                                                                                                         
2:45:55 PM                                                                                                                    
CHAIR COGHILL  asked if  the THC  level is  based on  the genetic                                                               
strain or soil and water quality.                                                                                               
MR.  CARTER  explained  that  strains  have  been  developed  and                                                               
selected  to maintain  THC below  0.3 percent,  but there  hasn't                                                               
been much research  in the past 70 years so  it's unclear whether                                                               
environmental conditions may  push a crop above that  level. If a                                                               
crop did test  higher than 0.3 percent, it could  be blended with                                                               
a crop that  was significantly below the threshold  to ensure the                                                               
entire lot was in compliance.                                                                                                   
CHAIR COGHILL asked  if marijuana and hemp look and  dry the same                                                               
and if this could open a new industry.                                                                                          
MR. CARTER  replied hemp leaves  are phenotypically like  what is                                                               
grown in  the recreational cannabis  industry. He  discounted the                                                               
idea  that this  could  open  a new  industry  because there  are                                                               
plenty of legal  products that could in turn  be adulterated with                                                               
some other  product. The hope  and intent  of the division  is to                                                               
support  the agricultural  industry and  he believes  the farmers                                                               
are of a similar mindset.                                                                                                       
SENATOR WIELECHOWSKI asked if there would  be a tax on hemp other                                                               
than a corporate income tax.                                                                                                    
SENATOR  HUGHES said  the bill  removes hemp  from the  marijuana                                                               
statutes, so  the tax  does not  apply. She  said she  isn't sure                                                               
about corporate taxes.                                                                                                          
CHAIR COGHILL  said it would  depend on how the  farmer organized                                                               
the business.                                                                                                                   
SENATOR WIELECHOWSKI  suggested removing  subsection (e)  on page                                                               
2, lines 5-9, relating to fees since the fiscal notes are zero.                                                                 
MR.  WHITT  said  the  language   would  allow  the  Division  of                                                               
Agriculture  to limit  the  number of  growers,  should there  be                                                               
limited funds  to keep  the program  going. The  idea is  to keep                                                               
from relying on unrestricted general funds.                                                                                     
SENATOR WIELECHOWSKI reviewed the fiscal  note and pointed out it                                                               
anticipates  25  farms  with  10 percent  growth  each  year.  He                                                               
emphasized that,  despite the zero  fiscal note, this  program is                                                               
clearly going to  cost money and the committee  should know about                                                               
that. He  also pointed out  that if there  are only 15  farms and                                                               
the state  hires one  person at a  range 22 or  24 the  fees will                                                               
jump  astronomically  and potentially  put  the  industry out  of                                                               
SENATOR  HUGHES  said  she  appreciates  the  concern  and  would                                                               
entertain  the idea  of striking  that provision  if that  is the                                                               
committee's will. The division is  committed to this industry and                                                               
she believes it will do what it can to keep the costs down.                                                                     
CHAIR  COGHILL suggested  the committee  hear  from the  division                                                               
before making  a decision  and emphasized the  need for  truth in                                                               
2:55:59 PM                                                                                                                    
CHAIR COGHILL held SB 6 in committee for further consideration.                                                                 

Document Name Date/Time Subjects
SB 20 - Explanation of Changes (Ver. A to Ver. D).pdf SJUD 2/20/2017 1:30:00 PM
SB 20
SB 20 - Letter of Support ABADA AMHB Executive Director.pdf SJUD 2/20/2017 1:30:00 PM
SB 20
SB 20 - Letter of Support DPoL Attorney General.pdf SJUD 2/20/2017 1:30:00 PM
SB 20
SB 20 - Letter of Support DHSS Chief Medical Officer.pdf SJUD 2/20/2017 1:30:00 PM
SB 20
SB 20 - Support Material Federal Register DEA-440.pdf SJUD 2/20/2017 1:30:00 PM
SB 20
SB 20 - Sponsor Statement.pdf SJUD 2/20/2017 1:30:00 PM
SB 20
SB 20 - Support Material NBC News Article 10.15.16.pdf SJUD 2/20/2017 1:30:00 PM
SB 20
SB 20 - Support Material Pharmacy Times Article 8.21.14.pdf SJUD 2/20/2017 1:30:00 PM
SB 20
SB 20 - Support Material SOA Epidemiology Bulletin.pdf SJUD 2/20/2017 1:30:00 PM
SB 20
SB 20 - Support Material WSJ Article 11.4.16.pdf SJUD 2/20/2017 1:30:00 PM
SB 20
SB 6 - Sectional Analysis.pdf SJUD 2/20/2017 1:30:00 PM
SB 6
SB 6 - Sponsor Statement.pdf SJUD 2/20/2017 1:30:00 PM
SB 6
SB 6 - Supporting Documents - Alaska Industrial Hemp Grow 1916.pdf SJUD 2/20/2017 1:30:00 PM
SB 6
SB 6 - Supporting Documents - Commercial Hemp Chart.png SJUD 2/20/2017 1:30:00 PM
SB 6
SB 6 - Supporting Documents - KPEDD.pdf SJUD 2/20/2017 1:30:00 PM
SB 6
SB 6 - Explanation of Changes (Ver. A to Ver. U).pdf SJUD 2/20/2017 1:30:00 PM
SB 6