Legislature(2021 - 2022)SENATE FINANCE 532
05/10/2021 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB27 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 27 | TELECONFERENCED | |
| + | HB 117 | TELECONFERENCED | |
| + | HB 126 | TELECONFERENCED | |
| += | HB 69 | TELECONFERENCED | |
| += | HB 71 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
May 10, 2021
9:18 a.m.
9:18:34 AM
CALL TO ORDER
Co-Chair Bishop called the Senate Finance Committee meeting
to order at 9:18 a.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lyman Hoffman
Senator Donny Olson
Senator Natasha von Imhof
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Senator Shelley Hughes, Sponsor; Buddy Whitt, Staff,
Senator Shelley Hughes.
PRESENT VIA TELECONFERENCE
David Schade, Director, Division of Agriculture, Eagle
River.
SUMMARY
SB 27 INDUSTRIAL HEMP PROGRAM;MANUFACTURING
CSSB 27(RES) was REPORTED out of committee with a
"no recommendation" recommendation and with one
new fiscal impact note from the Department of
Natural Resources.
HB 69 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 69 was SCHEDULED but not HEARD.
HB 71 APPROP: MENTAL HEALTH BUDGET
HB 71 was SCHEDULED but not HEARD.
HB 117 EXTEND BOARD OF DIRECT-ENTRY MIDWIVES
HB 117 was SCHEDULED but not HEARD.
HB 126 EXTEND BOARD OF PUBLIC ACCOUNTANCY
HB 126 was SCHEDULED but not HEARD.
SENATE BILL NO. 27
"An Act relating to industrial hemp; and providing for an
effective date."
9:19:01 AM
Co-Chair Bishop noted that the committee would hear SB 27,
and all other bills listed on the agenda would not be
heard. He intended to hear the bill introduction, take
public testimony, review the fiscal note, and look to the
will of the committee.
9:19:49 AM
SENATOR SHELLEY HUGHES, SPONSOR, thanked the committee for
hearing the bill. She relayed that the bill was time
sensitive. She referenced changing regulations at the U.S.
Food and Drug Administration and farm bills being passed.
She thought it was important for the issue to be updated in
Alaska. She thought it was good news for the state that the
bill proposed to change the industrial hemp industry from a
pilot program to a permanent program, which would be
positive for investment opportunities. She mentioned the
benefit of interstate commerce of hemp products.
9:21:14 AM
BUDDY WHITT, STAFF, SENATOR SHELLEY HUGHES, discussed a
Sectional Analysis (copy on file):
Section 1 AS 03.05.010(a) Page 1, Line 3 through
Page 3, Line 8
Two subsections added to this section authorizing the
commissioner of the Department of Natural Resources to
include the manufacturing and retail sales of products
made from industrial hemp, as well as registration and
renewal procedures, in the regulations for the
industrial hemp program.
Section 2 AS 03.05.010(c) Page 3, Lines 9 through
15
Amends AS 03.05.010(c) to allow that the Commissioner
of the Department of Natural Resources may issue a
stop sale order to a person found to be producing
industrial hemp over 0.3 delta-9-testahydrocannibinol.
Precious language was overly restrictive and did not
allow the department to work with a good actor to
recondition their crop. The new language allows the
department to determine whether someone was acting in
good faith or not prior to issuing the stop order.
Mr. Whitt explained that the previous language had been
overly restrictive and did not allow the department to work
with good actors to recondition crops. The new language
allowed the department to determine whether someone was
acting in good faith prior to issuing a stop order.
Section 3 AS 03.05.076(a)
Page 3, Lines 16 through 31
Adds language that a registrant for the industrial
hemp program is not eligible if they had been
convicted of a felony involving a controlled substance
within the last ten years. This section is added to
comply with provisions of the 2018 Farm Bill.
Section 4 AS 03.05.076(i)
Page 4, Lines 1 through 4
Adds that the department may develop an industrial
hemp program that complies with federal requirements
and submit a plan for the program to USDA for
approval.
Section 5 AS 03.05.079 Page 4, Line 5 through 11
A grower may retain and recondition their crop if it
tests above .3% but below 1.0% THC.
Section 6 AS 03.05.079(b) Page 4, Lines 12 through
14
A new subsection adds that a person who retains but
fails to recondition is guilty of a violation.
Mr. Whitt explained that Section 4 was new language added
to conform to language in Section 2 regarding stop sale
orders. Section 5 was a new section that allowed the
department to comply with United States Department of
Agriculture (USDA) guidelines. He explained that Section 6
made a small change that brought sections into congruence.
He continued to address the Sectional Analysis:
Section 7 AS 03.05.100(5) Page 4, Lines 15 through
21
Changes the statutory definition of industrial hemp to
match the federal definition which was changed in the
2018 Farm Bill.
Section 8 Page 4, Line 22
Repeals AS 03.05.077 the Industrial Hemp Pilot Program
Section 9 Page 4, Lines 23 through 31
Conditional effect for Section 8 of the bill, in that
the Pilot Program statute is repealed when the
Industrial Hemp Program developed by the department is
approved by the USDA.
Section 10 Page 5, Lines 1 through 3
Effective date language stating that if section 8 is
repealed under the conditions of section 9, the
effective date of section 8 is the day after notice is
received by the reviser of statutes by the
Commissioner of Natural Resources.
9:25:20 AM
Senator Hughes wanted to comment on the time sensitivity of
the bill. She relayed that the switch from the pilot
program to the permanent program had originally had a
deadline of October 2020, and after the COVID-10 pandemic
the deadline was extended to October 2021.
Co-Chair Bishop noted that Senator Hughes had been working
on the subject for quite some time. He asked if she sponsor
could provide anecdotal evidence about how the program had
been received in the agricultural community.
Senator Hughes head heard from the Division of Agriculture
that there had never been as many inquiries on any single
crop as there had for hemp. She knew that when a program
went from a pilot to a permanent program, there was often
greater interest.
Co-Chair Bishop asked how the crop was reconditioned to get
it into compliance.
Mr. Whitt thought there was invited testimony that could
speak to Co-Chair Bishop's question.
9:27:07 AM
DAVID SCHADE, DIRECTOR, DIVISION OF AGRICULTURE, EAGLE
RIVER (via teleconference), explained that reconditioning
involved mixing a product that was slightly over the .03
percent tetrahydrocannabinol (THC) level with product that
was slightly less than the limit for a product that would
come under the legal limit.
Co-Chair Bishop asked if the process "watered down" the
product.
Mr. Schade explained that the process involved making a
bigger batch that was homogenized so that the percentage of
THC would be below the legal limit.
Senator Wielechowski asked how many individuals were taking
part in the current pilot program.
Mr. Schade noted that the program was based on the calendar
year. He recalled that the previous year there had been 9
growers with 70 acres and 9000 square feet of indoor space.
There were two processors, and he estimated that there had
been roughly 50 retail registrants. He thought the numbers
had roughly doubled. He thought there was a forthcoming
additional 20 producers, 2 manufacturers, and a significant
increase in registrants in the retail side. He noted that
with the program becoming permanent there could be an
additional 2,000 to 2,500 retail applicants. He thought the
program had created a lot of excitement because of the
COVID-19 pandemic.
Senator Wielechowski noted that the fiscal note projected
2,000 to 3,000 applicants per year. He thought the amount
seemed rather high.
Mr. Schade reminded that the projection included retail
sales. He explained that any product, including cannabidiol
(CBD), required registration, and there were CBD sales
through almost every town and village in the state. He
relayed that the division had been handing out literature
around the state and encouraged people to become a
permanent part of the program. He affirmed that the
division would be ramping up its enforcement. He cited that
industrial hemp was a multi-billion industry in the United
States, and even larger throughout the world.
9:30:11 AM
Senator Wielechowski wondered about the funds to run the
program if the applicants only added up to 1,000 per year.
Mr. Schade explained that the division would not be hiring
people until funds were available. He believed there would
be significant income coming in and there was a good profit
margin on the product. He was aware of the need for budget
constraints.
Co-Chair Bishop recalled that industrial hemp could be used
in concrete. He asked if a concrete supplier would need to
register in order to use the material in its product.
Mr. Schade explained that if the concrete supplier was
buying hemp from a registered retailer, no further
registration would be needed.
9:32:03 AM
Senator Wielechowski did not see a fiscal note for
increased general fund revenue from taxes on the product.
He asked if Mr. Schade anticipated any additional revenue
from sales of industrial hemp.
Mr. Schade noted that hemp was an agricultural crop that
did not involve additional taxes beyond the normal business
license, taxes, and fees.
Senator Wielechowski referenced the tax on marijuana. He
asked if tax revenue generation was being contemplated.
Mr. Schade deferred to the sponsor.
Senator Hughes stated that since industrial hemp was
separated from marijuana, an additional tax had not been
contemplated.
Senator Wielechowski asked for the department's thoughts on
taxation of industrial hemp since marijuana was taxed
somewhat heavily.
Mr. Schade stated that the department did not believe it
would be appropriate to additionally tax the product, which
was an agricultural crop. He thought the increased economic
vitality of the state was driving the bill. He noted that
SB 6, the original bill, was a self-sustaining program,
which the department thought was appropriate.
Senator Wielechowski was curious if other states had
received revenue from hemp production.
Mr. Schade was not aware of any state that had put an
additional excise tax on marijuana greater than any other
agricultural product.
Co-Chair Bishop asked about the crop rotation with hemp.
Mr. Schade believed that hemp would be used with crop
rotation. He thought the division's state agronomist could
speak to specifics.
Co-Chair Bishop stated he would call and get the answer at
another time.
Mr. Schade thought industrial hemp needed to have crop
rotation and noted that the crop drew heavy metals and
other nutrients from the soil. He emphasized the care was
needed as with any other crop.
9:36:09 AM
Co-Chair Bishop OPENED public testimony.
9:36:19 AM
Co-Chair Bishop CLOSED public testimony.
Co-Chair Bishop discussed a new fiscal impact note from the
Department of Natural Resources, OMB Component 455. There
was $736.4 thousand per year in total yearly operating
costs. Additional staff would be brought on as needed as
the project grew. The department projected 2,000 to 3,000
applications from the farmer to the retailer. Personal
services costs included a Natural Resource Manager I at
range 18, an Agricultural Inspector at range 16, and an
Administrative Assistant I at range 12.
Co-Chair Stedman MOVED to report CSSB 27(RES) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSSB 27(RES) was REPORTED out of committee with a "no
recommendation" recommendation and with one new fiscal
impact note from the Department of Natural Resources.
9:38:10 AM
AT EASE
9:38:47 AM
RECONVENED
Co-Chair Bishop noted that there was no meeting scheduled
for the afternoon. The following days agenda included bills
previously heard.
ADJOURNMENT
9:39:01 AM
The meeting was adjourned at 9:39 a.m.
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