Legislature(2017 - 2018)SENATE FINANCE 532

04/04/2017 09:00 AM FINANCE

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

Document Name Date/Time Subjects
SB97 Sectional Analysis.pdf SFIN 4/4/2017 9:00:00 AM
SB 97
SB97 Sponsor Statement.pdf SFIN 4/4/2017 9:00:00 AM
SB 97
HB 16 Sponsor Response to Concerns of Senate State Affairs Committee from Mtg on 3-23-17.pdf SFIN 4/4/2017 9:00:00 AM
HB 16
SCS HB 16- Legal Memo - Concerns from SSA Committee.pdf SFIN 4/4/2017 9:00:00 AM
HB 16
HB 57 Public Testimony Packet 040317.pdf SFIN 4/4/2017 9:00:00 AM
HB 57
SB 97 Von Imhof Amendment D.1.pdf SFIN 4/4/2017 9:00:00 AM
SB 97
SB 6 Carter Testimony.pdf SFIN 4/4/2017 9:00:00 AM
SB 6