Legislature(2021 - 2022)BARNES 124

04/07/2021 01:00 PM RESOURCES

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           HB 156-INDUSTRIAL HEMP PROGRAM;MANUFACTURING                                                                     
1:38:16 PM                                                                                                                    
CHAIR PATKOTAK announced that the final order of business would                                                                 
be HOUSE BILL NO. 156 "An Act relating to industrial hemp; and                                                                  
providing for an effective date."                                                                                               
1:39:15 PM                                                                                                                    
The committee took a brief at-ease at 1:39 p.m.                                                                                 
1:39:56 PM                                                                                                                    
REPRESENTATIVE GRIER HOPKINS, Alaska  State Legislature, as prime                                                               
sponsor presented HB 156.   He noted his partnership with Senator                                                               
Shelly Hughes in advancing the  proposed legislations.  He read a                                                               
statement as follows:                                                                                                           
     As  my staff  will elaborate  later, there  are federal                                                                    
     timelines  which require  action  by  the Alaska  State                                                                    
     Legislature this  year in order  to keep  our fledgling                                                                    
     industrial  hemp industry  alive,  progressing, and  in                                                                    
     compliance with  federal law.   Today,  Alaskan farmers                                                                    
     are   growing   industrial   hemp  for   animal   feed;                                                                    
     nutriceuticals,  which   are  nutritional  supplements;                                                                    
     manufacturing; and other uses.   Farmers in Alaska have                                                                    
     been growing  hemp for several  years, since  our pilot                                                                    
     project  went  into  place.    I  would  note  for  the                                                                    
     committee that industrial hemp,  as governed by federal                                                                    
     law,  is a  different industry  entirely than  Alaska's                                                                    
     state-licensed,  recreational  marijuana program.    In                                                                    
     2018, the Thirtieth Alaska  [State] Legislature saw the                                                                    
     unanimous passage  of Senate Bill 6,  which established                                                                    
     a pilot  industrial hemp program  in Alaska.   With the                                                                    
     passage,  then,  of the  federal  2018  Farm Bill,  the                                                                    
     United  States  Congress changed  federal  requirements                                                                    
     for  state  industrial  hemp programs.    HB  156  will                                                                    
     empower  the Alaska  Division  of  Agriculture to  work                                                                    
     constructively  with Alaskan  farmers, both  small- and                                                                    
     large-scale, and  the federal  government, to  create a                                                                    
     new  industrial  hemp  program compliant  with  federal                                                                    
     guidelines.   It  is my  hope that  these changes  will                                                                    
     result  in  the  continued  development of  a  new  and                                                                    
     thriving    industry   for    Alaska's   farmers    and                                                                    
     manufacturers,  diversify  our  economy,  and  increase                                                                    
     state revenues.                                                                                                            
1:42:02 PM                                                                                                                    
JOE  HARDENBROOK,  Staff,  Representative Grier  Hopkins,  Alaska                                                               
State  Legislature, on  behalf of  Representative Hopkins,  prime                                                               
sponsor, detailed the  Sectional Analysis of HB  156 [included in                                                               
the   committee  packet],   which  read   as  follows   [original                                                               
punctuation provided]:                                                                                                          
     Section  1  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 Gives  the DNR  Commissioner the  ability to                                                                    
     work constructively  with a grower if  their crop tests                                                                    
     above .3% but below 1.0% THC.                                                                                              
     Section  3  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  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 A  grower may  retain and  recondition their                                                                    
     crop if it tests above .3% but below 1.0% THC.                                                                             
     Section  6 A  new  subsection adds  that  a person  who                                                                    
     retains  but  fails  to  recondition  is  guilty  of  a                                                                    
     Section   7  Changes   the   statutory  definition   of                                                                    
     industrial hemp  to match the federal  definition which                                                                    
     was changed in the 2018 Farm Bill.                                                                                         
     Section  8 Repeals  AS  03.05.077  the Industrial  Hemp                                                                    
     Pilot Program                                                                                                              
     Section  9  Conditional effect  for  Section  7 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 Effective  date  language  stating that  if                                                                    
     section 7  is repealed under the  conditions of section                                                                    
     8, the  effective date  of section 7  is the  day after                                                                    
     notice is  received by the  revisor of statutes  by the                                                                    
     Commissioner of Natural Resources.                                                                                         
1:50:15 PM                                                                                                                    
REPRESENTATIVE SCHRAGE asked what "reconditioning" means.                                                                       
MR.  HARDENBROOK explained  that  a farmer  with  a crop  showing                                                               
tetrahydrocannabinol  (THC) levels  above the  legal limit  could                                                               
work with another farmer whose  crop's THC concentration is below                                                               
the  legal  limit,  intermingling  the  crops  and  resulting  in                                                               
acceptable THC levels.                                                                                                          
1:50:58 PM                                                                                                                    
CHAIR  PATKOTAK asked  whether there  are examples  in the  pilot                                                               
program of  the DNR commissioner either  exercising his authority                                                               
to issue citations, or working with  growers who have a crop over                                                               
the THC concentration limit.                                                                                                    
MR. HARDENBROOK responded that he  does not know of any examples.                                                               
He  explained that  current law  states that  if a  hemp crop  is                                                               
above  .3 percent  THC,  the DNR  commissioner  "shall" cite  the                                                               
grower  as being  in  violation; however,  provisions  in HB  156                                                               
would allow a  farmer who is acting in good  faith to address the                                                               
issue instead  of being automatically  cited and reported  to the                                                               
Department of Public Safety and Marijuana Control Board.                                                                        
CHAIR PATKOTAK  noted the importance of  recognizing when someone                                                               
is acting in good faith.                                                                                                        
1:52:20 PM                                                                                                                    
REPRESENTATIVE  CRONK asked  why there  is language  in the  bill                                                               
referencing the farming of elk.                                                                                                 
REPRESENTATIVE HOPKINS  replied that  it is  legislative drafting                                                               
style to amend  AS 03.05.010(a) to include  the sections relating                                                               
to industrial hemp.                                                                                                             
1:53:24 PM                                                                                                                    
REPRESENTATIVE   HANNAN   asked   whether  there   would   be   a                                                               
presentation from Division of Agriculture Director Dave Schade.                                                                 
MR.  HARDENBROOK replied  that a  presentation would  be possible                                                               
when HB 156 comes back up before the committee.                                                                                 
REPRESENTATIVE  HANNAN   noted  that   this  industry   could  be                                                               
successful in Alaska and asked how the pilot programs have gone.                                                                
MR. HARDENBROOK deferred to Mr. Schade.                                                                                         
1:55:39 PM                                                                                                                    
DAVE  SCHADE, Director,  Division of  Agriculture, Department  of                                                               
Natural Resources  (DNR), said  that things  have gone  well this                                                               
growing season.  He introduced  Rob Carter, the state agronomist,                                                               
to provide more information.                                                                                                    
1:56:06 PM                                                                                                                    
ROB  CARTER,   Manager,  Plant  Materials  Center,   Division  of                                                               
Agriculture,  Department of  Natural Resources,  said that  there                                                               
were 70 acres  registered for hemp production in  2020 with 9,000                                                               
square feet  of indoor growing  space in  the pilot program.   No                                                               
grower  tested over  .2 percent,  he  said, and  the Division  of                                                               
Agriculture, in testing 25 varieties  of industrial hemp, has not                                                               
yet experienced a  variety that tests above the legal  limit.  He                                                               
noted  that applications  for the  2021 season  total 11  growers                                                               
representing 200 acres.                                                                                                         
1:57:40 PM                                                                                                                    
CHAIR  PATKOTAK   asked  for  a  table   outlining  the  industry                                                               
performance in 2020.                                                                                                            
1:57:57 PM                                                                                                                    
REPRESENTATIVE  HANNAN  asked  whether cannabidiol  (CBD)  levels                                                               
would be tested, or if testing is only to determine THC content.                                                                
MR. CARTER answered that the  industry is very open with business                                                               
processes and THC  concentration is tested to ensure  that a crop                                                               
is truly  industrial hemp instead  of recreational cannabis.   In                                                               
2020, he  said, all of  the growers  shared with the  Division of                                                               
Agriculture the array  of uses of their crops  including feed and                                                               
biomass  production, bioplastics,  pelletized fuel,  and wellness                                                               
2:00:20 PM                                                                                                                    
REPRESENTATIVE RAUSCHER asked Mr.  Carter about the efficiency of                                                               
indoor versus outdoor growing operations.   He also asked whether                                                               
the  market   for  industrial  hemp   is  local,   nationwide  or                                                               
MR. CARTER  explained that indoor production  follows a different                                                               
methodology than  outdoor production;  industrial hemp  for fiber                                                               
and biomass,  when grown  on acreage,  follows the  same planting                                                               
tactics as  barley or  corn, with  some varieties  flowering only                                                               
because of the  long periods of daylight.   Indoor production, he                                                               
said, is more  focused on the floral production  for CBD wellness                                                               
products.    The market  for  industrial  hemp within  Alaska  is                                                               
significant, he  said, but in-state  production hasn't  caught up                                                               
with  the  national  average;  the  Division  of  Agriculture  is                                                               
evaluating  the  possibilities   for  large-scale  production  of                                                               
bioplastic to be  sold and used within the state.   He noted that                                                               
due  to the  overall clean  environment in  Alaska, international                                                               
interest is growing.                                                                                                            
REPRESENTATIVE RAUSCHER  asked whether manufacturing  is catching                                                               
up to agricultural production.                                                                                                  
MR. CARTER  responded that in  2020 the growers  largely switched                                                               
to  growing food  instead of  industrial hemp;  however, in  2021                                                               
there is much more activity in processing and development.                                                                      
2:03:50 PM                                                                                                                    
REPRESENTATIVE GILLHAM asked how the  THC percentage in the crops                                                               
can be controlled, and who does the testing for THC levels.                                                                     
MR.  CARTER replied  that the  Division of  Agriculture maintains                                                               
the chain  of custody  from pulling the  samples to  testing, and                                                               
the crop  can't leave the  farm until test results  are finalized                                                               
and provided to the grower.                                                                                                     
REPRESENTATIVE  GILLHAM  noted  that  recreational  marijuana  is                                                               
highly regulated  and asked how regulations  work with industrial                                                               
MR.  CARTER   answered  that  the   2018  Farm   Bill  identified                                                               
industrial hemp  as an agricultural  commodity, and  the genetics                                                               
of the plant keep the THC concentration low.                                                                                    
2:06:09 PM                                                                                                                    
REPRESENTATIVE CRONK  asked about  the best  geographic locations                                                               
for growing industrial hemp.                                                                                                    
MR.  CARTER replied  that in  2020  there were  producers on  the                                                               
Kenai Peninsula,  in the Matanuska-Susitna Borough,  and north of                                                               
Talkeetna.   In  2021, he  said, there  are producers  from Delta                                                               
Junction  and  Fairbanks  down   to  Homer,  with  interest  from                                                               
potential  growers   in  Southeast   Alaska.    From   a  biomass                                                               
perspective, he  said, greatest production is  expected from just                                                               
north of the Alaska Range.                                                                                                      
2:07:44 PM                                                                                                                    
CHAIR PATKOTAK asked about the finances of the pilot program.                                                                   
MR. HARDENBROOK  said that  the state  is anticipating  new state                                                               
revenues of $750,000 annually, with potential for growth.                                                                       
CHAIR  PATKOTAK  asked  whether  that  figure  is  based  on  the                                                               
performance of the pilot program.                                                                                               
MR.  HARDENBROOK answered  yes, based  on the  expected increases                                                               
across all aspects of the industry.                                                                                             
2:08:43 PM                                                                                                                    
REPRESENTATIVE  HANNAN asked,  "This is  the revenue  to run  the                                                               
program, correct?"                                                                                                              
MR. HARDENBROOK responded  that the costs of the  program will be                                                               
covered through program  receipts and noted that  the fiscal note                                                               
shows the change in revenues.                                                                                                   
REPRESENTATIVE HANNAN asked about the revenue structure.                                                                        
MR. SCHADE explained that in the  pilot program there is a set of                                                               
registration criteria for  growers, manufacturers, and retailers,                                                               
and he  noted that there  are 2,000-3,000 retailers in  the state                                                               
with only 200  registered; as registration grows  and the program                                                               
builds, revenues  will increase.   He said  that the  majority of                                                               
fees are  expected to come from  the retailers as opposed  to the                                                               
growers.   He noted that receipts  are not kept from  one year to                                                               
the  next, so  DNR is  working with  the Office  of Management  &                                                               
Budget (OMB) to  bridge the funding from one year  to the next so                                                               
that staffing can go uninterrupted.                                                                                             
REPRESENTATIVE HANNAN  asked whether there are  specific taxes or                                                               
revenue required to be shared.                                                                                                  
MR. SCHADE replied that since  industrial hemp is an agricultural                                                               
product, there are no specific taxes.                                                                                           
2:12:52 PM                                                                                                                    
REPRESENTATIVE GILLHAM  asked whether industrial  hemp businesses                                                               
are able to use the banking system.                                                                                             
MR.  SCHADE  said  that  legally, banking  is  allowed,  and  the                                                               
Division  of  Agriculture  is  working  to  educate  the  banking                                                               
industry  on   the  differences   between  industrial   hemp  and                                                               
recreational  marijuana.   He noted  that there  are out-of-state                                                               
banks that service industrial hemp companies.                                                                                   
2:14:09 PM                                                                                                                    
REPRESENTATIVE CRONK asked about  possible wildlife damage to the                                                               
MR. CARTER  said that DNR saw  "no predation from any  animal" in                                                               
REPRESENTATIVE CRONK asked how fast the plants grow.                                                                            
MR. CARTER  responded that plantings  in May can be  harvested in                                                               
2:16:26 PM                                                                                                                    
CHAIR PATKOTAK opened public testimony on HB 156.                                                                               
2:16:45 PM                                                                                                                    
EMBER HAYNES  testified in support of  HB 156 and noted  that her                                                               
business  is in  its  second  year in  the  pilot  program.   She                                                               
expressed that there  are many small-scale growers  in Alaska who                                                               
would like to grow industrial hemp.                                                                                             
2:18:34 PM                                                                                                                    
CHAIR PATKOTAK,  after ascertaining  that no  one else  wished to                                                               
testify, closed public testimony on HB 156.                                                                                     
2:19:04 PM                                                                                                                    
REPRESENTATIVE HOPKINS noted  that there are a  number of growers                                                               
already  operating, and  that  ensuring  compliance with  federal                                                               
regulations will be important in  continuing the momentum of this                                                               
[HB 156 was held over.]                                                                                                         

Document Name Date/Time Subjects
HB 156 Letter of Support Ember Haynes 4.7.2021.pdf HRES 4/7/2021 1:00:00 PM
HRES 4/12/2021 1:00:00 PM
HB 156
HB 156 Sponsor Statement 3.30.2021.pdf HRES 4/7/2021 1:00:00 PM
HRES 4/12/2021 1:00:00 PM
HB 156
SJR 8 Letter of Support UAF Alumni Association 3.29.2021.pdf HRES 4/7/2021 1:00:00 PM
HRES 4/12/2021 1:00:00 PM
SJR 8 Presentation to HRES 4.7.2021.pdf HRES 4/7/2021 1:00:00 PM
2021 01 15 Support for the UA Land Grant Conveyance.pdf HRES 4/7/2021 1:00:00 PM
HRES 4/12/2021 1:00:00 PM
SEDC 2/15/2021 9:00:00 AM
SJR08_UnivAK_LandGrant_SponsorStatement.pdf HRES 4/7/2021 1:00:00 PM
HRES 4/12/2021 1:00:00 PM
SEDC 2/15/2021 9:00:00 AM
SJR08_UnivAK_LandGrant_Research_Land-Grant-History.pdf HRES 4/7/2021 1:00:00 PM
HRES 4/12/2021 1:00:00 PM
SEDC 2/15/2021 9:00:00 AM
HB 156 Draft Fiscal Note DNR AGR 4.2.2021.pdf HRES 4/7/2021 1:00:00 PM
HB 156
HB 156 Letter of Support Jack Bennet 4.7.2021.pdf HRES 4/7/2021 1:00:00 PM
HRES 4/12/2021 1:00:00 PM
HB 156
HB 156 Sectional Analysis 4.7.2021.pdf HRES 4/7/2021 1:00:00 PM
HRES 4/12/2021 1:00:00 PM
HB 156