03/15/2017 01:00 PM House RESOURCES

           HB 172-INDUSTRIAL HEMP PRODUCTION LICENSES                                                                       
                                                                                                                                
5:13:34 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOSEPHSON announced  that the  final order  of business                                                               
would be HOUSE  BILL NO. 172, "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."                                                                                                                       
                                                                                                                                
REPRESENTATIVE  DRUMMOND, speaking  as prime  sponsor of  HB 172,                                                               
urged for passage of the bill.                                                                                                  
                                                                                                                                
5:14:34 PM                                                                                                                    
                                                                                                                                
PATRICK  FITZGERALD,  Staff,   Representative  Harriet  Drummond,                                                               
Alaska State  Legislature, speaking  on behalf  of Representative                                                               
Drummond,  prime sponsor,  informed  the committee  HB 172  would                                                               
define  industrial hemp  under  AS 03.05.100  as  "all parts  and                                                               
varieties  of Cannabis  sativa  L. containing  no  more than  0.3                                                               
percent   delta-9   tetrahydrocannabinol  (THC),"   which   would                                                               
classify  hemp  as  a  crop  for  the  Division  of  Agriculture,                                                               
Department of Natural Resources  (DNR), and allow the cultivation                                                               
of  hemp products  through a  regulated pilot  program.   Section                                                               
7606 of the federal [Agricultural  Act of 2014] allows industrial                                                               
hemp to  be grown  through a  pilot program,  and over  30 states                                                               
have taken  advantage of  the pilot  program to  explore domestic                                                               
and   international  markets.      Although   hemp  shares   many                                                               
similarities  with marijuana,  marijuana  is  used medically  and                                                               
recreationally  due to  its high  concentration of  delta 9  THC;                                                               
however, under the  classification within HB 172,  hemp must have                                                               
less  than 0.3  percent delta  9 THC.   Mr.  Fitzgerald explained                                                               
that the percentage of delta 9  THC is affected by how the plants                                                               
are  grown;  for example,  marijuana  requires  delicate care  in                                                               
order  to produce  a psychoactive  effect.   However,  industrial                                                               
hemp  would be  planted, cultivated,  and harvested  in a  manner                                                               
similar  to that  of  wheat  or barley,  and  thus  have low  THC                                                               
concentrations as stipulated  by the legislation.   Hemp has been                                                               
grown successfully  in Alaska in  the past, and the  stock, seed,                                                               
and roots  are sold for  industrial use.   He concluded  that the                                                               
passage of HB 172 would incorporate  a hemp crop into the state's                                                               
economy,  which  would  expand markets  in  multiple  industries,                                                               
create jobs, and raise state revenue.                                                                                           
                                                                                                                                
REPRESENTATIVE BIRCH asked why hemp cannot be grown now.                                                                        
                                                                                                                                
MR. FITZGERALD responded  that hemp is currently  classified as a                                                               
controlled  substance through  the  Alcohol  & Marijuana  Control                                                               
Office.   In further  response to  Representative Birch,  he said                                                               
the bill will reclassify hemp  with the Division of Agriculture -                                                               
and not as a controlled substance  - as long as the percentage of                                                               
delta-9  THC  remains   below  0.3.    In   further  response  to                                                               
Representative Birch, he said it is  against the law to grow hemp                                                               
as an industrial crop.                                                                                                          
                                                                                                                                
5:19:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WESTLAKE questioned  why  a  registrant would  be                                                               
required to retain sales records for three years.                                                                               
                                                                                                                                
MR.  FITZGERALD explained  the  records are  to  comply with  the                                                               
pilot program regulated by the federal Agricultural Act of 2014.                                                                
                                                                                                                                
REPRESENTATIVE DRUMMOND added that  federal law also requires the                                                               
hemp  farmer   register  the  global  positioning   system  (GPS)                                                               
coordinates   of  the   crop  location   with  the   Division  of                                                               
Agriculture.                                                                                                                    
                                                                                                                                
5:20:25 PM                                                                                                                    
                                                                                                                                
MR.  FITZGERALD directed  attention to  a presentation  entitled,                                                               
"HB 172  - Industrial  Hemp," included  in the  committee packet.                                                               
He said the main points of the bill are:                                                                                        
                                                                                                                                
   · allows  the host  of the  pilot program  the opportunity  to                                                               
     grow, cultivate, transport, process, and market industrial                                                                 
     hemp                                                                                                                       
   · changes  the  definition  from   the  [Alcohol  &  Marijuana                                                               
     Control Office] to the Division of Agriculture                                                                             
   · industrial hemp grows  from the same plant  as marijuana but                                                               
     they are two distinct strains made by differences in                                                                       
     planting, habitat, cultivation, processing, and use                                                                        
   · hemp  is  mainly  used  for   industrial  purposes  such  as                                                               
     textiles, farming, furniture, and livestock feed                                                                           
   · the cropping  of hemp  that HB 172  would allow  is strictly                                                               
     for industrial purposes and there is no intent to produce                                                                  
     marijuana to be sold for recreational consumption                                                                          
   · hemp has very  low THC concentration, is  versatile, and its                                                               
     product is mostly derived from stock fibers                                                                                
   · marijuana  has  high  THC concentration,  requires  specific                                                               
     growing conditions, and the product is extracted from the                                                                  
     flower                                                                                                                     
   · any hemp  products above 0.3  percent delta-9 THC  would not                                                               
     be valid for production                                                                                                    
   · farmers must register GPS coordinates of crop locations                                                                    
   · licensing must be renewed annually                                                                                         
   · three years of records must be kept by registrant                                                                          
   · introduction of  industrial hemp  to Alaska's  economy would                                                               
     create jobs, spur revenue, and incorporate a growing                                                                       
     industry                                                                                                                   
   · hemp products are produced from every part of the plant                                                                    
   · rapid growth yields paper, textiles, and other products                                                                    
     more efficiently than timber, and leaves a smaller                                                                         
     footprint                                                                                                                  
   · hemp products come from seeds, stalk, leaves, and roots,                                                                   
     but not the flower                                                                                                         
  · hemp was successfully grown in Alaska in the early 1900's                                                                   
   · HB 172 would benefit the state with economic expansion and                                                                 
     career opportunities                                                                                                       
                                                                                                                                
CO-CHAIR JOSEPHSON  asked whether  the bill  would result  in the                                                               
production  of  value-added  finished  products  or  in  shipping                                                               
unfinished hemp out of the state.                                                                                               
                                                                                                                                
MR.  FITZGERALD said  the  pilot program  allows  both; the  crop                                                               
could  be  marketed  to  local industries  and  the  Division  of                                                               
Agriculture would be authorized to ship the crop out of state.                                                                  
                                                                                                                                
CO-CHAIR JOSEPHSON  asked about the current  "culture surrounding                                                               
hemp and the acceptance of it."                                                                                                 
                                                                                                                                
5:25:24 PM                                                                                                                    
                                                                                                                                
ROB CARTER, Program Manager, Plant  Materials Center, Division of                                                               
Agriculture,  DNR,  expressed  his  belief  that  nationally  and                                                               
internationally, industrial hemp is  "gaining ground" after being                                                               
outlawed  in the  U.S. since  1932; members  of the  agricultural                                                               
community  are interested  in the  crop as  an addition  to their                                                               
farm management plans.                                                                                                          
                                                                                                                                
REPRESENTATIVE  PARISH  directed  attention to  the  fiscal  note                                                               
[Identifier:   HB172-DNR-PMC-03-10-17] that anticipates  25 farms                                                               
would  apply for  licenses, and  asked for  the locations  of the                                                               
farms.                                                                                                                          
                                                                                                                                
MR.  CARTER  said recently  interest  in  farming hemp  has  been                                                               
growing, and he  has been contacted by  potential applicants from                                                               
Juneau, the  Delta and Nenana regions,  and the Matanuska-Susitna                                                               
valley.                                                                                                                         
                                                                                                                                
REPRESENTATIVE PARISH  asked for an  estimate of how  many people                                                               
would be directly employed by the farms.                                                                                        
                                                                                                                                
MR. CARTER, based on his  experience with farming, estimated a 5-                                                               
10  percent growth  in agricultural  workers; large  growth would                                                               
result  if  processing  facilities  opened  and  exports  of  raw                                                               
industrial hemp and processed products began.                                                                                   
                                                                                                                                
REPRESENTATIVE JOHNSON directed attention to  the bill on page 3,                                                               
line 8, which read:                                                                                                             
                                                                                                                                
          (c) The department may adopt regulations to                                                                           
     implement this section.                                                                                                    
                                                                                                                                
REPRESENTATIVE   JOHNSON  asked   what  agency,   department,  or                                                               
institution would issue the aforementioned regulations.                                                                         
                                                                                                                                
5:30:43 PM                                                                                                                    
                                                                                                                                
MR. CARTER opined  the Division of Agriculture  is best qualified                                                               
to draft and complete the regulations.                                                                                          
                                                                                                                                
REPRESENTATIVE   JOHNSON  suggested   the   sponsor  insert   the                                                               
regulatory agency in the bill.                                                                                                  
                                                                                                                                
REPRESENTATIVE WESTLAKE related his  interest in producing energy                                                               
from biomass, noting that above  the Arctic Circle willow regrows                                                               
in about  five years.  He  asked about the growth  rate for hemp,                                                               
and whether the  crop could become a viable  biomass product that                                                               
could be used to bring down the cost of energy in villages.                                                                     
                                                                                                                                
MR. FITZGERALD said the pilot  program would determine the growth                                                               
rate of hemp in each location.                                                                                                  
                                                                                                                                
MR. CARTER added  there is high potential; last  year research in                                                               
Sweden  showed significant  production  of  biomass [from  hemp]:                                                               
approximately 8,000 pounds  per acre as a  biodiesel fuel product                                                               
-  a  traditional producer  such  as  canola produces  about  120                                                               
gallons  of oil  per  acre -  and hemp  seeds  produced over  300                                                               
gallons per  acre, along  with a  byproduct of 3  to 3.5  tons of                                                               
hemp meal supplement per acre.                                                                                                  
                                                                                                                                
5:34:21 PM                                                                                                                    
                                                                                                                                
BRYCE  WRIGLEY, President,  Alaska Farm  Bureau, Inc.,  expressed                                                               
amazement that the  state recently voted to  allow the production                                                               
of  marijuana,  yet  continues   to  apply  restrictions  on  the                                                               
production of  hemp.  Speaking  from the prospective  of farmers,                                                               
he said  farmers seek to produce  any viable crop, and  urged for                                                               
passage of the bill.                                                                                                            
                                                                                                                                
5:36:14 PM                                                                                                                    
                                                                                                                                
SARA  CHAMBERS,   Acting  Director,  Juneau  Office,   Alcohol  &                                                               
Marijuana  Control Office,  Department of  Commerce, Community  &                                                               
Economic   Development,  in   response  to   Co-Chair  Josephson,                                                               
explained the Marijuana  Control Board has not  issued an opinion                                                               
on HB  172 but anticipates that  there would be a  strong working                                                               
relationship   with  the   Division   of   Agriculture  to   draw                                                               
jurisdictional   lines  between   the  sister   agencies  through                                                               
regulations.                                                                                                                    
                                                                                                                                
CO-CHAIR  TARR announced  public testimony  would be  heard at  a                                                               
future meeting.                                                                                                                 
                                                                                                                                
[HB 172 was held over with public testimony open.]