Legislature(2017 - 2018)SENATE FINANCE 532
04/04/2017 09:00 AM Senate FINANCE
Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
Audio | Topic |
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Start | |
SB97 | |
HB16 | |
SB6 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | SB 6 | TELECONFERENCED | |
+ | HB 16 | TELECONFERENCED | |
+ | TELECONFERENCED | ||
+= | SB 97 | TELECONFERENCED | |
SENATE BILL NO. 6 "An Act relating to industrial hemp; and relating to controlled substances." 9:57:05 AM SENATOR SHELLEY HUGHES, SPONSOR, thanked the committee for hearing the bill. She recounted that several farmers who wanted to grow hemp had contacted her office the previous spring. She noted that the farmers were particularly interested due to the privatization of the meat plant in Palmer. She highlighted that hemp was a nutritious, easy to grow, and fast growing forage that could be used for livestock. Farmers were working to build up their herds in order to have locally grown beef and pork in Alaska's grocery stores. She cited Kentucky as another state where ranches were growing hemp. Senator Hughes discussed the history of hemp. 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. In 1937, related to marijuana, hemp had been made illegal in the U.S. In recent decades and because of federal legislation, hemp was on the rise in the U.S. She believed it was another economic opportunity for farmers and growers in Alaska. In addition to feed for animals, there were more than 25,000 uses for hemp. She pointed out that because of federal law, the bill was more complicated than one that was previously offered by former Senator Johnny Ellis. She had begun with the draft language from the previous bill, but once she had learned of changes at the federal level the bill had grown somewhat. She stressed the importance of the economic opportunity for Alaska. 10:00:40 AM Senator Hughes communicated there had been tremendous support across the state for the bill. She noted that one person expressed concern that the bill could result in a money pit and grow the Division of Agriculture. She shared that the division director and other agency staff were available online who could assure the committee the concern would not come to fruition. She reported that some other states that had not been in a fiscal bind had appropriated money to add staff to their departments of agriculture. She explained that it was not the intention of SB 6. She believed the issue would be manageable and highlighted that registration user fees would cover any costs. 10:01:41 AM BUDDY WHITT, STAFF, SENATOR SHELLEY HUGHES, discussed the Sectional Analysis for SB 6 (copy on file): Sec. 1 Page 1, Lines 6-9 Intent language that the legislature will reevaluate the regulation of industrial hemp in seven years. Sec. 2 AS 03.05.010 Pages 1, 2 and 3, lines 1 - 10 Section one of the bill amends Title 3 to give additional powers and duties to the Department of Natural Resources, Division of Agriculture, to adopt regulations relating to Industrial Hemp. This section also stipulates that the prescribed regulations must include provisions for approved sources of hemp seed and testing requirements (paid for by the registrant). This section also stipulates that a list of registered hemp growers must be provided to the Marijuana Control Board and the Department of Public Safety. Co-Chair MacKinnon asked about lines 26 and 27 on page 2 of the bill. She had read the backup document entitled "Statement of Principles on Industrial Hemp" [published in the Federal Register Volume 81, No. 156, dated Friday, August 12, 2016] (copy on file), which provided guidance from the federal government on the subject of industrial hemp. She referred to the first paragraph of page 2 of the statement: ?the importation of viable cannabis seeds must be carried out by persons registered with the DEA to do so. Co-Chair MacKinnon read from page 2, lines 26 and 27 of the bill: (A) specify approved sources or varieties of hemp seed to be grown, sold, or offered for sale... Co-Chair MacKinnon thought the notice did not provide "offer for sale" allowances anywhere. She noted it provided for research by a higher education university or the state agriculture program. She wondered if the bill would preempt federal law, or whether the state had to comply with federal law. She asked what was happening with the seeds. She remarked that seeds were also discussed on page 2, lines 14 and 15 of the bill pertaining to transportation and movement. She wondered about the conflict between the two documents. 10:04:47 AM Mr. Whitt replied that the document referenced by Co-Chair MacKinnon was a statement of principles on industrial hemp. He explained that after the Farm Act of 2014 defined industrial hemp and made it legal to create hemp pilot programs at the state level, the U.S. Department of Agriculture had submitted the statement of principals in August 2016. The issue pertained more to the regulatory arm of federal law. He stated that there was a second act, the Omnibus bill of 2015 passed by Congress that had included additional provisions for the transportation of hemp and hemp seeds across state lines. He offered to provide the materials to the committee. He explained that the federal government would issue an associated statement of principles at some time in the future. He deferred to the department regarding registration with the federal Drug Enforcement Administration (DEA). He had worked with the Division of Agriculture and the previous committee of referral to include language pertaining to idea of certifying industrial hemp seed. 10:06:46 AM ROB CARTER, DIVISION OF AGRICULTURE, PALMER (via teleconference), stated that federal guidelines were guidelines. He thought the bill did a good job at setting the foundation and cornerstone for the growth and sustainability of an industrial hemp program in Alaska. He believed there could be interpretations of all of the forms, none of it was completely clear. Within the agricultural pilot program resulting from the 2014 farm bill was a program to study the growth, cultivation, and marketing. He believed the interpretation of marketing was the to "offer for sale" language. The reason for specifying approved seed sources was to ensure the state maintained the federal guideline to stay within 0.3 percent THC seed sources or lower. Co-Chair MacKinnon read from the statement of principles: Section 7606 specifically authorized certain entities to ``grow or cultivate'' industrial hemp but did not eliminate the requirement under the Controlled Substances Import and Export Act that the importation of viable cannabis seeds must be carried out by persons registered with the DEA to do so. Co-Chair MacKinnon explained that a person had to be registered with the DEA. She asked if Mr. Carter was stating it was a guideline when the statement of principles read that it "did not eliminate." Mr. Carter affirmed that the guideline and bullet point were there. He stipulated that in any importation/exportation or intra/interstate commerce of viable cannabis seeds would require a permit from the DEA (form 225). He elaborated that a person could not apply for the permit through the DEA unless they were a program registrant. 10:09:14 AM Co-Chair MacKinnon asked if other states had interpreted marketing as "the sale of." Mr. Carter believed Colorado, Oregon, and Kentucky had started using the pilot program and marketing language to make all parts of industrial hemp, including seeds, to be made or offered for sale within their state. Co-Chair MacKinnon read additional language from the statement of principles: For purposes of marketing research by institutions of higher education or State departments of agriculture (including distribution of marketing materials), but not for the purpose of general commercial activity, industrial hemp products may be sold in a State... Co-Chair MacKinnon thought the language specified that hemp could not be sold. She asked for clarification. Mr. Carter replied that he did not have the document and wanted to review it. He reported that everyone he had spoken with in other states with hemp programs had communicated that the sales of industrial hemp and marketing had been occurring through their industrial hemp pilot programs. He offered to look into the issue further and follow up with the committee. Co-Chair MacKinnon read another bullet point: Only the State Department of Agriculture and persons licensed, registered, or otherwise authorized to conduct research under an agricultural pilot program in accordance with this section. Co-Chair MacKinnon wanted to understand how research could be taken into an economic activity that would be available for Alaskans as an income generator. She asked Mr. Carter to follow up with clarification. 10:11:35 AM Mr. Whitt notified that committee that attorney Courtney Moran had been working with the sponsor's office. She was familiar with the industrial hemp programs in other states and with how federal and state laws had intertwined. He believed she may be able to provide additional information. COURTNEY MORAN, EARTH LAW LLC, PORTLAND (via teleconference), pointed out that the statement of principles was a general guidance document. She elaborated it was important to note that subsection 2 of the document read that "This Statement of Principles does not establish any binding legal requirements." She detailed that marketing research was being conducted in the majority of states implementing industrial hemp programs. She expounded that marketing required sales of products. The bullet point specifically stated that the product may not be used for the purpose of general commercial activity; it further stated that the products may not be sold in states where such sale was prohibited. Ms. Moran explained that if a state did not have an established program or was otherwise prohibiting the particular products, the products should not be sold there. The language was not an outright prohibition on the research that Congress had specifically provided for in Section 7606 of the Agricultural Act, which specifically provided for marketing research. The legislation provided for the development of an agricultural pilot program in the state. Therefore, registrants registered with the Division of Agriculture would be able to engage in market research. 10:13:51 AM Co-Chair MacKinnon asked if someone engaging in market research normally sold the product for profit. Ms. Moran answered that some people were doing that. Co-Chair MacKinnon understood that some people were doing that. She asked if that qualified as research. Ms. Moran replied in the affirmative. She questioned how a market could be developed or studied if people were not engaging in sales within the market. She confirmed it was the practice in Oregon, Colorado, and Kentucky (and potentially other states). 10:14:27 AM Co-Chair MacKinnon referred to Section 2 of the legislation. She pointed to page 2, line 24 through page 3, line 10 outlining regulations for the industry to adopt. She noted that under the guidance [in the statement of principles] there was language related to a GPS location of all crops. She saw the language later in the legislation and wondered why it was not included in Section 2. She clarified that one of the bullet points in the statement of principles included criteria to include in legislation in order to be consistent with the federal guidelines. She read an excerpt of the bullet point: ...it is recommended that such registration should include the name of the authorized manufacturer, the period of licensure or other time period during which such person is authorized by the State to manufacture industrial hemp, and the location, including Global Positioning System coordinates... Co-Chair MacKinnon asked if the reference should also be included in Section 2. Mr. Whitt stated that the bill's provision on GPS location was a direction from the federal government. The additional regulatory requirements were added after the GPS provision had already been included. The sponsor had no issue with requiring it under regulation and the provision included was sufficient to meet federal guidelines. The intent was that a grower would disclose the location of their crop. Where the provision appeared in the bill should not make a huge difference, but the bill sponsor would be amenable to a change if the committee deemed it important enough to include it under regulatory requirements. 10:17:37 AM Co-Chair MacKinnon understood that the provision was included in another section of the bill. She did not know whether there was a differentiation for including it under the powers and duties of the commissioner of the Department of Natural Resources. Mr. Whitt clarified that it made no difference where the provision appeared in the bill; wherever its location, it would still be a requirement. Co-Chair MacKinnon surmised the issue was important because [hemp] leaves looked exactly like higher producing THC plants. She asked if her statement was accurate. Mr. Whitt replied in the affirmative. Co-Chair MacKinnon wanted law enforcement to be able to recognize a crop that would be for other purposes than THC content. Mr. Whitt agreed. 10:18:33 AM Senator von Imhof stated that she had heard the bill in the Senate Resources Committee. She detailed that the committee had been concerned with how to handle the fact that the [hemp and marijuana] leaves looked identical. She recalled testimony that [hemp] plants had to be registered, spacing was tighter (one foot apart as opposed to three to four feet apart as with marijuana plants), GPS was used, and pictures were taken on a daily basis. She had wondered about cloudy days and times when there was snow on the ground. She believed the sponsor and her staff had done a good job answering questions in the Senate Resources Committee as well. Co-Chair MacKinnon spoke to the importance of the issue addressed by the bill and explained it could provide an economic opportunity, particularly in the district represented by Senator Hughes where farming was common. She added that the community also grew marijuana and carrots. She stated that the district was a good agricultural community that was wanting another product to invest in. 10:20:31 AM Mr. Whitt continued to address the Sectional Analysis: Sec. 3 AS 03.05.010 Page 3, lines 22-28 This section instructs the department to issue a stop order to any person growing a plant with a THC level over .3 percent and to notify the Marijuana Control Board and the Department of Public Safety when any stop sale order is issued. Sec. 4 AS 03.05.076 Page 3, lines 29-31, Page 4 and Page 5, lines 1-27 Title 3, Chapter 5 is amended by adding a new section for Industrial Hemp and guidelines for registered producers and the department. This section establishes that: (a)Industrial Hemp will be classified as an agricultural crop in the state of Alaska. 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. (b)An individual who is registered with the state of Alaska may 1. Produce industrial hemp 2. Use any propagation method needed to produce industrial hemp. 3. Retain hemp seeds for the purpose of growing hemp in the future. 4. 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. (c)An individual who is registered with the state of Alaska shall 1. Comply with testing standards and procedures as established in regulation 2. Retain record of sale for three years, including the name and address of the person who received the industrial hemp and the amount sold or transferred. 3. Make records available to the department during normal business hours and the department must give three days' notice of inspection. (d)The Department shall 1. Establish fee levels. 2. Annually review fee levels. 3. Notify the MCB and DPS when they have issued a stop sale order. 4. Require a person producing industrial hemp over 1 percent to destroy their crop. (e)The Department may 1. Issue a stop sale order or violation for those growing industrial hemp without a registration. 2. Adopt regulations for approved shipping documents for industrial hemp. 3. Conduct random tests and inspections. (f)The Division of Agriculture, a registered producer, or any institution of higher education may import and/or sell industrial hemp seeds. (g)Industrial hemp intended for human consumption cannot exceed .3 percent THC, cannot be used for hashish or hashish oil and CBD oil is not considered hashish or hashish oil for the purposes of this section. (h) Producing Industrial Hemp without a registration is a violation that carries a fine of $500. 10:24:12 AM Mr. Whitt continued reviewing the Sectional Analysis: AS 03.05.077 Page 5, Lines 28-31 and Page 6, Lines 1-4 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. AS 03.05.078 Page 6, lines 5-15 Authorized copy of a current hemp registration is required when transporting industrial hemp and a copy of the registration must be presented upon request of a law enforcement officer. Using a mobile electronic device to store proof of registration is acceptable and displaying proof is such a way is not consent for a peace officer to access any other information on a person's personal mobile electronic device. AS 03.05.079 Page 6, lines 16-20 A registered grower of industrial hemp is guilty of a violation when they produce industrial hemp with a THC content of between .3 percent and 1 percent. 10:25:45 AM Co-Chair MacKinnon pointed to language at the top of page 4 of the bill that addressed individuals would be registered for one year. She noted she had asked earlier whether the GPS language in the section should be included elsewhere in the bill. She referenced line 14, item (4) related to retaining and reconditioning [of specific industrial hemp]. She thanked the sponsor's office for coming to her office to review the bill. She did not see a definition of "reconditioning" and asked Mr. Whitt to provide detail for the public. Mr. Whitt replied that Mr. Carter had provided a written response (copy on file). He detailed that Mr. Carter could speak to the standard practice of reconditioning as it related to agricultural products. Co-Chair MacKinnon asked Mr. Carter to provide a recognizable definition of reconditioning in regard to agriculture. Mr. Carter stated that reconditioning was a widely used practice in agricultural crops, commodities, and seeds. Reconditioning was done with most grains and grasses and seeds sold around the world. He elaborated that if something did not meet a grade or set tolerance, there were options to try to improve that lot. The definition of a lot was a field harvested, a collection of one that was contiguous. Mr. Carter provided an example where an acre of industrial hemp was grown. At the time of testing the hemp came out to be 0.35 percent. He explained that given a short growing season and significant investment by a farmer, it was not desirable to put the farmer in a situation where they could not generate revenue or utilize the crop. He expounded that if a crop came in to be a bit higher (between 0.3 and 1 percent THC value), with the approval of the division, the registrant could blend the lot that was a bit over with a lot that was under the minimum requirement to achieve the appropriate level. He explained that if the lot still did not meet the requirement it would be recommended to be destroyed. He relayed that the practice was very unique to the industrial hemp industry because it depended on the type and parts of plants being used. He furthered that two noncontiguous fields of stocks, leaves, and flowers used for feed or fiber could be blended at the baling time at the processing facility to drop the overall THC value below the 0.3 percent. 10:29:46 AM Co-Chair MacKinnon asked whether Alaska statute included a definition of recondition and whether a definition was needed. She explained that in other bill sections specified that a crop with 1 percent or more [THC] needed to be burned. She wondered how a grower would know if they should burn or try to recondition the crop. She asked if it was a normal process a grower would undertake. Mr. Carter answered that the threshold to retain and recondition industrial hemp was between 0.3 percent and 1 percent (page 4, line 14 of the bill). He elaborated that if a lot fell between 0.3 and 1 percent, it had the option, under the direction of the division, to be reconditioned. He explained the lot would have to be destroyed if it tested above 1 percent. The state did not have a definition of reconditioning [in statute]. He noted the division also addressed reconditioning in its other seed regulations. 10:31:10 AM Co-Chair MacKinnon was interested in the section of the bill that specified crops above 1 percent [THC] would be destroyed. She discussed that within a field there may be a plant producing a higher rate than anticipated. She asked if a grower would continually mix a product down or get rid of certain plants if a larger group of plants produced a higher content. She wondered how a grower would know at what point to burn versus recondition. Mr. Carter directed attention to page 5, line 5, of the bill, which required an individual registered under the section whose industrial hemp tested over 1 percent THC to destroy the product, so it could not be used for the purpose of reconditioning. The section set the upper threshold - that anything over 1 percent would be destroyed. He agreed that a THC level between 0.3 percent and 1 percent would allow a producer to begin the reconditioning process. He relayed that regulations would establish the testing requirements and testing would likely not occur until around harvest time. He explained that industrial hemp had been outlawed for over 70 years so no one was certain what the values of THC would be through the growing season. He considered whether levels would be affected by environmental conditions (e.g. if one grower watered more than another). Part of the research of the pilot program was to gain the information. He believed the threshold language provided growers the ability to blend lots to meet the threshold. 10:33:20 AM Vice-Chair Bishop provided a scenario where a crop held a couple of rogue seeds. He wondered how random testing and inspections would be conducted. He expressed concern about the possibility of inadvertent wild seeds that might adversely affect a large acreage of crops. Mr. Carter concurred. He detailed that like any other agricultural crop, there were set protocols for sampling fields or seed lots, which would be defined in regulation based on size and planting density. He expounded that industrial hemp was planted similarly to wheat or barley at 1 million to 1.2 million seeds per acre. He explained that hemp crops looked like an extremely large and tall crop of cereal grains. The sampling protocols would be defined in regulation. He explained that the agricultural industry allowed the option for roguing or to remove certain diseased, virus, or insect plants. He believed it would be a bit more difficult basing an inspection on THC values because it would not be a visual inspection and would require testing in a laboratory. He furthered that if a crop ended up with one or two "hot" seeds above 0.3 percent or over 1 percent out of a field of 1 million seeds per acre, the representative sample was a process. He acknowledged that the testing did not catch everything, but how lots were tested nationally and internationally was a set standard. The testing would provide the best opportunity for the producer to have a representative sample for testing. 10:36:32 AM Vice-Chair Bishop thought it was interesting that the Alaska agricultural experimental stations had been growing hemp in 1916. He wondered if records were available at the University of Alaska to learn about the THC content in 1916. Co-Chair MacKinnon shared that she had additional questions in the regulation of hemp oil being added to food. She remarked that Alaska regulated food only in the crop form, but not in the content that may be put into food. She relayed her intent to move to public testimony. Senator Hughes commented that it was helpful to understand that marijuana growers were aiming for THC levels between 20 and 30 percent. She thought the information was useful as a barometer when considering THC levels of 1 percent or below. Co-Chair MacKinnon agreed the point was important to note. She added that individuals growing marijuana for medical purposes were looking for a much higher THC level. Co-Chair MacKinnon OPENED public testimony on version E of SB 6. 10:38:37 AM STEVE ST. CLAIR, SELF, MAT-SU (via teleconference), testified in opposition to the bill. He was not opposed to farming of hemp, but he was opposed to increasing the scope of government by creating additional regulations. He had examined Washington, Kentucky, and Colorado hemp programs and had learned they were not fiscally self-sustaining. He stated that the Colorado program was almost self-sustaining after three years - fees had to be increased for the program to pay for itself. He referred to a fiscal note by the Department of Natural Resources specifying the department would adopt regulations and manage associated registrations through existing staff. He thought it sounded like the bill would have to be passed to see what it entailed. He thought the budget had been cut to the bone. He believed the Division of Agriculture would have to spend excess funds that it should not have to begin with. He thought the bill was fiscally irresponsible. He did not support running pilot programs during a fiscal crisis when the state was considering increasing taxes and taking Permanent Fund Dividends. 10:40:46 AM EMBER HAYNES, SELF, TALKEETNA (via teleconference), spoke in support of the bill. She supported the Alaska agricultural hemp industry. She encouraged keeping the bill as simple as possible while complying with the federal farm bill. She shared that she and her husband were in the business of creating hempseed oil products by infusing Alaskan wildcrafted herbs into oil to make soaps, balms, and tinctures. She would love to incorporate Alaskan hemp into their products. She believed the bill was the first step towards the possibility. 10:41:44 AM STEVE ALBERS, KENAI SOIL & WATER CONSERVATION DISTRICT, KENAI (via teleconference), spoke in support of the bill. He stated that according to the 2015 Congressional research report, annual sales of industrial hemp products in the U.S. were about $550 million. He detailed that the U.S. was the only developed nation that had not developed industrial hemp on a commercial basis; therefore, the U.S. imported all of the products from China and Canada. He stated that Kenai Peninsula farmers were eager to explore the economic opportunities represented by the hearty, multipurpose crop, which could be used for food, forage, fiber, and thousands of industrial uses. Crop trials conducted decades ago in Alaska and hemp grown in Canada demonstrated the crop would grow successfully in Alaska. Mr. Albers asserted that industrial hemp presented opportunities to farmers and could help address problems with affordable housing and energy in Alaska. He emphasized that the use of hemp in construction and insulation had the potential to significantly mitigate waste in energy consumption and other. He stated that industrial hemp fiber provided an alternative to polypropylene products and chemical dispersants used in oil spills and other bioremediation efforts. He shared that each year more states were opening the door to additional research and the application of industrial hemp by legalizing its commercial cultivation. He urged the committee to add Alaska to the growing number of states and to allow farmers the ability to pursue hemp as a viable commercial product. 10:44:28 AM ABIGAIL ST. CLAIR, SELF, MAT-SU (via teleconference), spoke in opposition to the bill. She had found evidence that industrial hemp in Washington, Colorado, and Kentucky was not self-sustaining. She elaborated that the aforementioned states had spent hundreds of thousands of dollars with no guarantee that the investment would pencil out. She had looked at various sources including information from the University of Kentucky and Ontario's Ministry of Agriculture, Food, and Rural Affairs website. She discussed the costs of farming hemp, and thought it was an expensive process that the state could not afford. She listed costs she had estimated. She emphasized that the governor had taken half of the Permanent Fund Dividend and wanted to introduce other taxes. She stressed that many residents were leaving the state because the legislature had not reduced spending. She stated that hemp would not support the legislature's spending habits. She thought there had been enough government intervention. She wanted to reduce the government footprint. Co-Chair MacKinnon CLOSED public testimony. 10:47:14 AM AT EASE 10:48:13 AM RECONVENED SB 6 was HEARD and HELD in committee for further consideration. Co-Chair MacKinnon shared that SB 6 would be heard again during the afternoon meeting. She relayed that amendments were due by Wednesday at 5:00 p.m. She provided additional information regarding other legislation.
Document Name | Date/Time | Subjects |
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SB97 Sectional Analysis.pdf |
SFIN 4/4/2017 9:00:00 AM |
SB 97 |
SB97 Sponsor Statement.pdf |
SFIN 4/4/2017 9:00:00 AM |
SB 97 |
HB 16 Sponsor Response to Concerns of Senate State Affairs Committee from Mtg on 3-23-17.pdf |
SFIN 4/4/2017 9:00:00 AM |
HB 16 |
SCS HB 16- Legal Memo - Concerns from SSA Committee.pdf |
SFIN 4/4/2017 9:00:00 AM |
HB 16 |
HB 57 Public Testimony Packet 040317.pdf |
SFIN 4/4/2017 9:00:00 AM |
HB 57 |
SB 97 Von Imhof Amendment D.1.pdf |
SFIN 4/4/2017 9:00:00 AM |
SB 97 |
SB 6 Carter Testimony.pdf |
SFIN 4/4/2017 9:00:00 AM |
SB 6 |