03/17/2017 01:00 PM House RESOURCES

           HB 172-INDUSTRIAL HEMP PRODUCTION LICENSES                                                                       
                                                                                                                                
3:13:07 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TARR announced that the  next 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."                                                                      
                                                                                                                                
3:13:11 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TARR opened public testimony on HB 172.                                                                                
                                                                                                                                
3:13:21 PM                                                                                                                    
                                                                                                                                
DAVID OTNESS  testified that he  thinks it is important  that "we                                                               
expand into a  hardy crop that has so many  applications and none                                                               
of the  negatives formerly associated  with it."  He  opined that                                                               
there is potential  in Alaska for those willing to  remain in the                                                               
state "through  thick and  thin," and he  remarked that  what the                                                               
state is about to endure is "the thin."                                                                                         
                                                                                                                                
MR. OTNESS  said [HB  172] should  give people  "a good  means of                                                               
supplementing their  existing operations and  perhaps incentivize                                                               
others  to  ...  start  up."    He  said  [hemp]  seems  to  have                                                               
"unlimited potential"  and is  a hardy  plant that  should thrive                                                               
with [Alaska's] daylight  hours.  He concluded,  "I just heartily                                                               
endorse the idea of our agriculture expanding this direction."                                                                  
                                                                                                                                
3:14:42 PM                                                                                                                    
                                                                                                                                
JACK    BENNETT,   Alaska    Representative,   Industrial    Hemp                                                               
Manufacturing, LLC  (IHM), testified that industrial  hemp is not                                                               
"a  marijuana  issue"  -  it   is  an  agricultural  issue.    He                                                               
encouraged  the committee  to  "rethink the  way  we think  about                                                               
hemp."  Mr. Bennett stated,  "My company ... [is] North America's                                                               
largest.   It has the  capability of producing 40  million pounds                                                               
annually and it's  ... devoted ... to the oil  well companies, to                                                               
help  Alaskan   fluids  engineers  drill  faster,   lighter,  and                                                               
cheaper."                                                                                                                       
                                                                                                                                
MR.  BENNETT said  all  of  the company's  fiber  is  sold to  an                                                               
automotive   partner  in   Indiana  that   manufactures  American                                                               
automobiles  with bio-composites,  hemp plastics,  which he  said                                                               
are stronger than  fiberglass on a boat [and  more] flexible than                                                               
a formula one race car.                                                                                                         
                                                                                                                                
MR. BENNETT  said he has  presented [hemp]  to the military  as a                                                               
remediation  product that  replaces  polypropylene  booms in  the                                                               
water, is  five times more  absorbent, and rather than  ending up                                                               
in  a land  fill turns  into an  energy source.   He  said, "That                                                               
remediation product, through these  plant fiber technologies, are                                                               
also ...  applied in the soil  in the granular form  to remediate                                                               
land impacted  by crude [oil],  chemicals, radiation -  what have                                                               
you - within 90 days."                                                                                                          
                                                                                                                                
MR. BENNETT  shared that he  is building  a model home  in Homer,                                                               
Alaska, as an  affordable housing solution.  He  said, "There are                                                               
6,000 unit  shortages in rural  Alaska."  He relayed  that 22,000                                                               
acres [of hemp grown] in one  season produce 6,000 homes that are                                                               
1,000 square  feet in size.   Mr. Bennett concluded,  "It doesn't                                                               
matter how green it is; at the end  of the day, we're all here to                                                               
make money."                                                                                                                    
                                                                                                                                
3:17:06 PM                                                                                                                    
                                                                                                                                
MR.  BENNETT,  in  response   to  questions  from  Representative                                                               
Rauscher,  imparted that  the  equipment used  by  IHM costs  $30                                                               
million and  there are  only five  made:  two  in France,  two in                                                               
South Africa,  and one in  North Carolina.   He said  the company                                                               
works with farmers in Alaska  "to collect the material devoted to                                                               
remediation and oil and gas industries in Alaska."                                                                              
                                                                                                                                
3:18:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAUSCHER asked,  "Where do you get  your hemp from                                                               
now to be a head manufacturer incorporated?"                                                                                    
                                                                                                                                
MR. BENNETT  answered that North Carolina  is currently "shaping"                                                               
its regulations and policies.   He said 7,000 acres of industrial                                                               
hemp is  needed in order to  produce 40 million annually  and his                                                               
"counterparts" are looking to purchase  14,000 acres, because the                                                               
machinery "has the  ability to expand to 80 million  pounds."  He                                                               
indicated that the  company is currently using kenaf,  which is a                                                               
member of  the hibiscus family.   He indicated the U.S.  Navy had                                                               
studied  the high  absorbency of  kenaf in  use as  a remediation                                                               
product, and  he stated  that hemp  is even  more absorbent.   He                                                               
indicated that IHM uses kenaf as an alternative to hemp.                                                                        
                                                                                                                                
MR. BENNETT,  in response to Representative  Rauscher, said kenaf                                                               
is grown  in "the tobacco  belt," in Georgia and  North Carolina.                                                               
To a follow-up question, Mr.  Bennett informed the committee that                                                               
kenaf  is a  legal product  used in  the automotive  industry [in                                                               
the]  manufacture   of  automotive   parts.     The  [automotive]                                                               
companies are  transitioning out of  kenaf [use] into the  use of                                                               
industrial  hemp,  because  the   latter  has  "more  value-added                                                               
products."                                                                                                                      
                                                                                                                                
3:20:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PARISH offered his  understanding that Mr. Bennett                                                               
had  implied  that  his  organization   is  prepared  to  make  a                                                               
substantial investment in  Alaska.  He asked Mr.  Bennett if that                                                               
estimation is accurate and what the dollar amount might be.                                                                     
                                                                                                                                
MR. BENNETT  responded that  he "has presented  to many  oil well                                                               
drilling companies in  Alaska."  He stated, "This  is an emergent                                                               
... technology that  helps the fluids engineer, and  this is what                                                               
they'll use for now on.   That industry alone - that mud additive                                                               
- is a billion-dollar industry annually."                                                                                       
                                                                                                                                
3:21:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PARISH offered his  understanding that Mr. Bennett                                                               
had said  IMH is considering  "bringing a  plant to Alaska."   He                                                               
asked  how quickly  "we" could  expect to  see "more  substantive                                                               
investment"  from  Mr.  Barrett's organization  if  the  proposed                                                               
legislation was made law tomorrow.                                                                                              
                                                                                                                                
MR. BENNETT  answered, "Baby  steps."   He said  once legislation                                                               
passes, the company would help  Alaska acquire [equipment], while                                                               
not as  expensive as the  $30 million ones  previously mentioned,                                                               
something  that will  work in  Alaska in  a centralized  location                                                               
accessible to farmers.                                                                                                          
                                                                                                                                
3:22:29 PM                                                                                                                    
                                                                                                                                
WES SCHACHT, Alaska Cannabis Advocacy,  spoke to the long history                                                               
of  hemp being  grown  in American  agriculture  even before  the                                                               
inception of [the  United States].  He shared that  both sides of                                                               
his  ancestry raised  hemp.   He  stated, "It's  also helped  the                                                               
American economy off and on  for years - Revolutionary War, Civil                                                               
War - it was required by every  farmer over five acres of land to                                                               
raise one acre of industrial hemp,  and to outlaw it and not have                                                               
its production is ludicrous."                                                                                                   
                                                                                                                                
MR. SCHACHT  said there  are many uses  for hemp,  including [the                                                               
prevention of] soil  erosion, the use of its  fibers for building                                                               
materials, the use of its oil  "for everything from edible oil to                                                               
bird  seed."    He  urged  everyone  to  read  a  pamphlet  about                                                               
industrial  hemp  [included in  the  committee  packet] to  learn                                                               
about  the product.   He  stated, "I  find it  really inane  that                                                               
we're allowed  to grow psychoactive  cannabis but  not industrial                                                               
hemp."   He indicated  that [the worst  thing that  could result]                                                               
from smoking hemp is "a headache or sore lungs."                                                                                
                                                                                                                                
3:23:57 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TARR  commented on the historical  aspect of agriculture                                                               
and its renaissance.                                                                                                            
                                                                                                                                
3:24:57 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TARR closed public testimony on HB 172.                                                                                
                                                                                                                                
3:25:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAUSCHER prefaced his query  by stating that he is                                                               
not "against  this bill."   He then  asked for  confirmation that                                                               
the Division of Agriculture would "draw the regulations."                                                                       
                                                                                                                                
3:27:00 PM                                                                                                                    
                                                                                                                                
ROBERT CARTER,  Manager, Plant  Materials Center  (PMC), Division                                                               
of Agriculture,  Department of Natural Resources  (DNR), answered                                                               
that it  is DNR's intent to  draft the regulations that  would be                                                               
needed  upon  passage of  HB  172  to  "make this  a  sustainable                                                               
program  for  ...  those  interested  all  around  the  state  of                                                               
Alaska."  He indicated that  because [industrial hemp] is "guilty                                                               
by  association"  with  recreational  marijuana,  the  department                                                               
wants to  ensure a  good foundation so  that the  industrial hemp                                                               
industry can grow.                                                                                                              
                                                                                                                                
3:28:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAUSCHER asked  for comment  regarding the  three                                                               
zero fiscal notes.                                                                                                              
                                                                                                                                
3:29:42 PM                                                                                                                    
                                                                                                                                
PATRICK  FITZGERALD,  Staff,   Representative  Harriet  Drummond,                                                               
Alaska State  Legislature, on behalf of  Representative Drummond,                                                               
prime  sponsor of  HB 172,  acknowledged that  one of  the fiscal                                                               
notes  states  that  the   proposed  legislation  would  regulate                                                               
industrial   hemp  through   the   Department  of   Environmental                                                               
Conservation (DEC).   He explained  that that was a  mistake and,                                                               
when corrected, there will still  be three zero fiscal notes, but                                                               
the [corrected]  fiscal note will  reflect that  "the regulations                                                               
will be under the Division of Agriculture."                                                                                     
                                                                                                                                
REPRESENTATIVE  RAUSCHER indicated  that  he would  like to  hear                                                               
from  the division,  because "we're  looking  for something  else                                                               
here."                                                                                                                          
                                                                                                                                
3:30:41 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  TARR  suggested that  the  drafting  of regulations  is                                                               
something  that [the  Division of  Agriculture]  does within  its                                                               
"existing scope of work."                                                                                                       
                                                                                                                                
MR. CARTER  responded, "Wonderfully  said."   He added  that from                                                               
the standpoint of PMC, once  a crop has been deemed agricultural,                                                               
it  becomes the  purview of  the Division  of Agriculture,  which                                                               
takes on  the responsibility of supporting  agricultural industry                                                               
in Alaska.                                                                                                                      
                                                                                                                                
3:32:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PARISH cited language at the  top of page 3, of HB
,  which says  that "the  state may  create and  administer an                                                               
agricultural  pilot  program  to study  growth,  cultivation  and                                                               
marketing of industrial hemp."  He  suggested it may be useful to                                                               
set a  fee schedule to finance  such a pilot program  "so that we                                                               
could be doing research as we're ... charging forward,"                                                                         
                                                                                                                                
3:33:18 PM                                                                                                                    
                                                                                                                                
MR.  FITZGERALD   responded,  "That's  the  idea   of  the  pilot                                                               
program."                                                                                                                       
                                                                                                                                
CO-CHAIR TARR  asked Mr. Fitzgerald  if he meant that  [the pilot                                                               
program] would be "self-funded through the fees."                                                                               
                                                                                                                                
MR. FITZGERALD  confirmed that  "the fees  would ...  produce the                                                               
funds  in order  to conduct  the studies  through ...  [the pilot                                                               
program]."                                                                                                                      
                                                                                                                                
REPRESENTATIVE PARISH offered his  understanding that there would                                                               
be allowance for  regulating the industry, but not  for the pilot                                                               
program.                                                                                                                        
                                                                                                                                
MR.  FITZGERALD responded,  "I will  take a  look at  the Section                                                               
76.06 of the farm bill, and I will follow up with that."                                                                        
                                                                                                                                
3:34:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TARR reopened public testimony on HB 172.                                                                              
                                                                                                                                
3:34:18 PM                                                                                                                    
                                                                                                                                
GEORGE  PIERCE recommended  the committee  take a  look at  a web                                                               
site,  called  "information  distillery."   He  said  [industrial                                                               
hemp] is  not like marijuana;  it cannot  make someone high.   He                                                               
advised the committee that hemp is  one of the most useful plants                                                               
on earth, with  the following attributes:  the  ability to enrich                                                               
the soil  where it is grown;  seeds that are an  excellent source                                                               
of  minerals, protein,  and dietary  fiber; and  a source  of all                                                               
essential fatty and amino acids.                                                                                                
                                                                                                                                
MR. PIERCE  noted that many individuals  eat fish as a  source of                                                               
essential  fats,   but  because   of  concern   about  commercial                                                               
overfishing and possible chemical  contaminants, many have chosen                                                               
to switch  to hemp.   He said hemp is  also good for  animals and                                                               
can be used  for body care and papermaking.   He relayed that the                                                               
first American Flag was made from  hemp.  Mr. Pierce said hemp is                                                               
also good for:  fiber,  textile, rope, petroleum, and to "replace                                                               
gasoline for diesel engines."  He called the product "amazing."                                                                 
                                                                                                                                
MR.  PIERCE restated  the safe  nature of  hemp and  repeated his                                                               
recommendation about  the information distillery.   He noted that                                                               
hemp  is a  renewable  resource, as  well as  being  a source  of                                                               
income, of which he said the state is in need.                                                                                  
                                                                                                                                
CO-CHAIR TARR said  that as a botanist, she is  familiar with the                                                               
many uses of  hemp, and she expressed appreciation  to Mr. Pierce                                                               
for his comments.                                                                                                               
                                                                                                                                
3:37:39 PM                                                                                                                    
                                                                                                                                
ED  MARTIN,  JR. said  he  currently  owns property  in  Sterling                                                               
Alaska, which would  be available for growing  both marijuana and                                                               
hemp;  however, he  pointed  out that  he and  his  wife are  not                                                               
allowed  to get  a license  to grow  in Alaska,  because although                                                               
they have  been residents in Alaska  for many years, they  do not                                                               
apply  for  the  Alaska  Permanent   Fund  Dividend  (PFD).    He                                                               
expressed  hope that  there would  not  be "a  requirement for  a                                                               
protection  racket in  the industry  to just  Alaskans" under  HB
.   He  said he  had pleaded  with the  legislature to  review                                                               
administrative regulations related to marijuana law.                                                                            
                                                                                                                                
MR. MARTIN  said there  is a  distinction between  [marijuana law                                                               
and law  pertaining to hemp]  and both are "revenue  getters" for                                                               
Alaska.  He talked about the  efforts on the House floor to state                                                               
spending.   He indicated that  the sale  of land could  result in                                                               
the  ability  to grow  more  product  and  create both  jobs  and                                                               
revenue for the  state.  He said many  legislators "voted against                                                               
cutting government," and he urged  legislators to "be responsible                                                               
and create an industry that'll create revenue for the state."                                                                   
                                                                                                                                
MR. MARTIN  explained that he has  to be out of  state during the                                                               
winter for medical  reasons but is "every bit of  an Alaskan" and                                                               
will  defend  [the  state's]   constitution  and  individual  and                                                               
property rights.  He urged the committee, "Please look at this."                                                                
                                                                                                                                
CO-CHAIR TARR said the reason the  committee is hearing HB 172 is                                                               
that it would provide an opportunity  for Alaska.  She noted that                                                               
following  the bill  hearing, the  committee would  segue into  a                                                               
presentation  related  to  access  to  agricultural  land.    She                                                               
offered  her  understanding   that  Representative  Talerico  had                                                               
introduced a  bill on the  topic of getting more  Alaskans access                                                               
to some of the state-owned land.                                                                                                
                                                                                                                                
3:41:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DRUMMOND  asked  Mr.  Martin to  expound  on  his                                                               
comment  about licenses  being limited  to  residents of  Alaska.                                                               
She said  she knows that  licenses for marijuana  businesses have                                                               
been limited  to Alaskans, because  "the department is  trying to                                                               
keep outside influence out of our local marijuana business."                                                                    
                                                                                                                                
3:41:56 PM                                                                                                                    
                                                                                                                                
MR.  MARTIN  responded  that when  regulations  were  passed  for                                                               
marijuana growth or  sale, there was a  requirement that [growers                                                               
and sellers]  must be PFD  applicants.  He  said he and  his wife                                                               
left  Alaska  in 2004,  but  he  reemphasized his  commitment  to                                                               
Alaska.  He indicated that he  had served in the military and was                                                               
involved in  rebuilding training facilities  in Hawaii.   He said                                                               
he has  no desire to live  year-round in Alaska any  more, but he                                                               
claimed that does not make him any less Alaskan.                                                                                
                                                                                                                                
MR.   MARTIN   said  under   current   law   pertaining  to   PFD                                                               
qualifications, [Alaskan residents] are allowed  to be out of the                                                               
state for six months.   He indicated that representatives working                                                               
for  the Alaska  Permanent  Fund Division  informed  him that  he                                                               
could "go  back to 2006  and maybe apply for  that."  He  said he                                                               
doesn't necessarily wish to do that,  but he is being barred from                                                               
entering  into business  in  Alaska.   He  said  he is  "somewhat                                                               
upset"  about Representative  Mike Chenault  having worked  to do                                                               
away  with  the  Administrative Review  Committee,  because  "you                                                               
folks  should be  reviewing  those regulations  to  see how  they                                                               
violate people like  my wife and our individual liberty  to be in                                                               
business in our  own state."  He  said he and his  wife pay taxes                                                               
in both  Alaska and Hawaii, but  his heart is and  always will be                                                               
in Alaska.   He urged the committee not to  pass legislation that                                                               
would bar him and his wife  from entering in to commerce in their                                                               
own state.                                                                                                                      
                                                                                                                                
3:44:43 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TARR re-closed public testimony on HB 172.                                                                             
                                                                                                                                
[HB 172 was held over.]