Legislature(2017 - 2018)BELTZ 105 (TSBldg)
02/20/2017 01:30 PM JUDICIARY
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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 constituents. 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 livestock. 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 questions. 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 high. 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 denied. 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 analysis. 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 registration. (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 substances. 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 business. 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 implementation. 2:55:59 PM CHAIR COGHILL held SB 6 in committee for further consideration.