Legislature(2021 - 2022)BELTZ 105 (TSBldg)

03/08/2021 01:30 PM Senate LABOR & COMMERCE

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Audio Topic
01:29:47 PM Start
01:31:16 PM Confirmation Hearing(s)
01:46:55 PM SB27
02:36:06 PM SB87
02:49:18 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Consideration of Governor's Appointees: Board of
Barbers & Hairdressers
- Connie Dougherty
- Tina Taylor
- Khitsana Sypakanphay
-- Invited & Public Testimony --
Heard & Held
-- Testimony <Invitation Only> --
Heard & Held
-- Testimony <Invitation Only> --
Bills Previously Heard/Scheduled
**Streamed live on AKL.tv**
          SB 27-INDUSTRIAL HEMP PROGRAM; MANUFACTURING                                                                      
1:46:55 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration  of  SENATE  BILL  NO.  27,  "An  Act  relating  to                                                               
industrial hemp; and providing for an effective date."                                                                          
She noted that this was the  first hearing, and the intention was                                                               
to  hear  invited  testimony  and   hold  the  bill  for  further                                                               
She noted the friendly amendment and asked for a motion.                                                                        
1:47:24 PM                                                                                                                    
SENATOR HOLLAND  moved Amendment 1, work  order 32-LS0249\A.1, to                                                               
SB 27.                                                                                                                          
                          AMENDMENT 1                                                                                       
     OFFERED IN THE SENATE                                                                                                      
          TO: SB 27                                                                                                             
     Page 3, following line 8:                                                                                                  
          Insert a new bill section to read:                                                                                    
        "* Sec. 2. AS 03.05.010(c) is amended to read:                                                                      
                    (c)  The commissioner of natural                                                                            
          resources may  [SHALL] issue a  stop order  to any                                                                
          person  who  is  found  to be  producing  a  plant                                                                    
          product  with   delta-9-tetrahydrocannabinol  over                                                                    
          0.3 percent,  regardless of whether the  person is                                                                    
          registered  under  AS 03.05.076. The  commissioner                                                                    
          of  natural resources  shall notify  the Marijuana                                                                    
          Control Board and the  Department of Public Safety                                                                    
          when the commissioner issues a stop order."                                                                           
     Renumber the following bill sections accordingly.                                                                          
     Page 4, line 19:                                                                                                           
          Delete "Section 7"                                                                                                    
          Insert "Section 8"                                                                                                    
     Page 4, line 25:                                                                                                           
          Delete "sec. 8"                                                                                                       
          Insert "sec. 9"                                                                                                       
          Delete "sec. 7"                                                                                                       
          Insert "sec. 8"                                                                                                       
     Page 4, line 27:                                                                                                           
          Delete "sec. 8"                                                                                                       
          Insert "sec. 9"                                                                                                       
CHAIR COSTELLO objected for discussion purposes.                                                                                
SENATOR HOLLAND  explained that the US  Department of Agriculture                                                               
allows a  0.5 percent to  1.0 percent standard of  negligence for                                                               
the  levels of  delta-9-tetrahydrocannabinol  in plant  products.                                                               
This amendment  changes the  term "shall" to  "may" issue  a stop                                                               
order to  provide the commissioner  of the Department  of Natural                                                               
Resources (DNR) latitude in the  seed stock that hemp growers are                                                               
allowed to purchase.                                                                                                            
1:48:57 PM                                                                                                                    
CHAIR COSTELLO removed her objection to Amendment 1 to SB 27.                                                                   
1:49:18 PM                                                                                                                    
SENATOR  STEVENS  objected  to  say   he  thought  there  was  no                                                               
connection between  marijuana and  hemp, yet the  amendment talks                                                               
about notifying the Marijuana Control Board.                                                                                    
1:49:29 PM                                                                                                                    
BUDDY  WHITT,  Staff,  Senator Shelley  Hughes,  sponsor,  Alaska                                                               
State  Legislature,  Juneau,  Alaska,  explained  that  hemp  and                                                               
marijuana are both  the same species but the small  amount of THC                                                               
in hemp  is not an  intoxicant. The amendment gives  the Division                                                               
of Agriculture the latitude to allow  a hemp grower who is acting                                                               
in good  faith the opportunity  to recondition their crop  if the                                                               
THC level tests above the allowed limit.                                                                                        
MR. WHITT advised that the  existing language, which was added to                                                               
Senate Bill 6,  is prohibitive. The department must  issue a stop                                                               
order if  the crop tests above  the allowed limit and  send their                                                               
name to the Marijuana Control  Board and the Department of Public                                                               
Safety.  The  amendment  allows the  division  more  latitude  in                                                               
managing  the program.  He said  the sponsor  believes this  is a                                                               
middle  ground on  the path  towards a  long-lasting program.  He                                                               
deferred further explanation to Rob Carter.                                                                                     
SENATOR STEVENS  remarked that one would  have to smoke a  lot of                                                               
industrial hemp to have any affect.                                                                                             
SENATOR HOLLAND advised  that hemp is used to  make products such                                                               
as hemp-concrete  and animal food  stock. It has just  a fraction                                                               
of the active ingredient found in marijuana.                                                                                    
1:52:14 PM                                                                                                                    
SENATOR  SHELLEY   HUGHES,  Alaska  State   Legislature,  Juneau,                                                               
Alaska, sponsor  of SB  27, added that  reconditioning a  crop by                                                               
mixing seed with  a level of THC  that is above the  limit with a                                                               
crop that has a  lower level of THC allows a grower  who is not a                                                               
bad actor the opportunity to remedy the situation.                                                                              
1:52:54 PM                                                                                                                    
SENATOR STEVENS removed his objection.                                                                                          
CHAIR COSTELLO found  no further objection and Amendment  1 to SB
27 was adopted.  She asked the sponsor and staff  to walk through                                                               
the amended bill.                                                                                                               
1:53:18 PM                                                                                                                    
SENATOR HUGHES recounted the history  of the bill. A federal farm                                                               
bill passed  in 2014 that  allowed states to start  an industrial                                                               
hemp  pilot program.  Former  Senator  Johnny Ellis  subsequently                                                               
introduced legislation to remove  hemp from the criminal statutes                                                               
and identify it as a crop.                                                                                                      
She  related that  late  in  the 2016  session  one  of her  most                                                               
conservative constituents  said he wanted to  try industrial hemp                                                               
as food  stock for his  cattle. She  committed to carry  the bill                                                               
after Senator Ellis retired and  the US Department of Agriculture                                                               
(USDA) established a  path for states to have  an industrial hemp                                                               
program  that would  comply  with  the law.  In  2017, she  filed                                                               
Senate Bill  6 and  it passed  in April  2018. In  December 2018,                                                               
Congress passed  the Hemp Farming  Act as  part of the  2018 Farm                                                               
Act,  which   removed  industrial   hemp  from  the   Schedule  I                                                               
Controlled  Substance  list.  In  2019,  the  USDA  released  new                                                               
regulations that allowed states  to continue their pilot programs                                                               
until October  2020. The USDA  subsequently extended the  date to                                                               
October 2021.                                                                                                                   
SENATOR HUGHES  said that  because of  the federal  changes since                                                               
2018, Alaska has  to change its statutes. SB 27  is the response,                                                               
and it  primarily removes the  industrial hemp pilot  program and                                                               
directs the  Department of Natural  Resources (DNR) to  develop a                                                               
compliant program  and submit  it to the  USDA for  approval. The                                                               
bill also  gives DNR the  authority to permit the  manufacture of                                                               
hemp products  and to set  up a registration and  renewal process                                                               
to  participate in  the program.  It also  says that  registrants                                                               
cannot have a controlled substance  felony conviction in the last                                                               
10 years.                                                                                                                       
She  shared that  her  preference would  have  been that  growing                                                               
industrial hemp required no bureaucracy,  but the extra framework                                                               
is necessary  because of concerns  at the federal level  that the                                                               
plant looks  like marijuana. Nevertheless,  she said it  is still                                                               
worth  doing  because  hemp is  a  multibillion-dollar  industry.                                                               
Canada  is the  second largest  hemp  producer in  the world  and                                                               
Alaska's climate is similar so  this could help Alaska businesses                                                               
and  the economy.  She  advocated for  updating  the statute  and                                                               
opening the door for this opportunity.                                                                                          
1:59:06 PM                                                                                                                    
SENATOR  GRAY-JACKSON asked  if a  hemp plant  is the  same as  a                                                               
marijuana plant.                                                                                                                
SENATOR HUGHES  said Rob Carter  can explain in detail,  but hemp                                                               
has less THC and is not psychoactive.                                                                                           
SENATOR  GRAY-JACKSON  questioned  whether  they  were  the  same                                                               
SENATOR  HUGHES  suggested  that  Rob Carter  could  provide  the                                                               
botanist's explanation.                                                                                                         
CHAIR COSTELLO  solicited the will  of the committee to  hear the                                                               
sectional  analysis of  SB  27  or a  botanical  analysis of  the                                                               
difference between industrial hemp and recreational cannabis.                                                                   
SENATOR STEVENS asked to hear from Rob Carter.                                                                                  
2:00:53 PM                                                                                                                    
ROB   CARTER,   Chief   Agronomist,  Division   of   Agriculture,                                                               
Department of  Natural Resources (DNR) Palmer,  Alaska, explained                                                               
that industrial hemp is Cannabis  sativa, which is the same genus                                                               
and species  as recreational  cannabis/marijuana. The  two plants                                                               
can look  similar but  industrial hemp  traditionally grows  in a                                                               
solid  stand like  a barley  or  wheat. Industrial  hemp that  is                                                               
grown  for  cannabinoid  production  may  look  more  similar  to                                                               
marijuana,  whereas it  will  look more  like  an extremely  tall                                                               
stand of  corn, barley, or wheat  when grown for fiber,  grain or                                                               
biomass for feed  or fuel. The leaves look the  same but there is                                                               
significantly more  fibrous material  inside the hemp  plant. The                                                               
methodology to produce  the hemp plant creates  an upright leaner                                                               
look than in  the typical marijuana plant that  is grown indoors.                                                               
Marijuana plants  are grown specifically for  the floral material                                                               
whereas  plants  grown  for  fiber   or  biomass  production  are                                                               
harvested before the flower appears.                                                                                            
SENATOR  STEVENS  asked if  it  is  legal  to grow  marijuana  in                                                               
MR. CARTER  replied that  the Alcohol  & Marijuana  Control Board                                                               
regulates   all  aspects   of  the   growth  and   production  of                                                               
recreational marijuana. The 2014  Farm Bill identified industrial                                                               
hemp or cannabis  that tests below 0.3 percent  delta-9-THC as an                                                               
industrial agriculture crop. He  said the Division of Agriculture                                                               
treats these  crops much like  regulated potato or  barley crops,                                                               
which are called certified non-grass grain seeds.                                                                               
SENATOR  STEVENS  summarized  his understanding  that  industrial                                                               
hemp and marijuana  are not the same thing and  not controlled in                                                               
the same way.                                                                                                                   
CHAIR  COSTELLO  asked Mr.  Whitt  to  go through  the  sectional                                                               
analysis for SB 27. She  also listed the individuals available to                                                               
answer questions.                                                                                                               
2:05:22 PM                                                                                                                    
MR. WHITT presented the following sectional analysis for SB 27:                                                                 
     Section 1    AS 03.05.010(a)    Page 1, Line  3 through                                                                
     Page 3, Line 8                                                                                                         
     Two subsections  added to this section  authorizing the                                                                    
     commissioner of the Department  of Natural Resources to                                                                    
     include the manufacturing and  retail sales of products                                                                    
     made from industrial hemp, as  well as registration and                                                                    
     renewal   procedures,  in   the  regulations   for  the                                                                    
     industrial hemp program.                                                                                                   
2:06:02 PM                                                                                                                    
     Section 2    AS 03.05.076(a)   Page 3,  Lines 9 through                                                                
     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.                                                                              
MR.  WHITT  noted   that  the  2018  Farm   Bill  and  subsequent                                                               
regulations gave  grandfather rights to those  growing industrial                                                               
hemp before  the federal requirement.  He offered to  provide the                                                               
code of federal regulations (CFR) reference.                                                                                    
     Section 3   AS 03.05.076(i)    Page 3, Lines 25 through                                                                
     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                                                                    
MR. WHITT  added that the state  is able to continue  running the                                                               
pilot program until  the permanent hemp production  program is in                                                               
     Section  4    AS 03.05.079    Page  3, Line  29 through                                                                
     Page 4, Line 4                                                                                                         
     A grower  may retain and  recondition their crop  if it                                                                    
     tests above .3% but below 1.0% THC.                                                                                        
MR. WHITT  explained that  Sections 4 and  5 work  in conjunction                                                               
with Amendment 1.  Section 4 removes the  automatic violation and                                                               
allows a  grower who tests  above 0.3  percent THC but  below 1.0                                                               
percent THC the opportunity to  recondition their crop. Section 5                                                               
authorizes the Division of Agriculture  to issue a violation if a                                                               
bad  faith grower  fails  to recondition  their  crop that  tests                                                               
above the 0.3 percent threshold for THC.                                                                                        
2:09:14 PM                                                                                                                    
SENATOR STEVENS asked what it means to recondition a crop.                                                                      
MR. WHITT deferred the question to Mr. Carter.                                                                                  
MR.  CARTER  explained that  reconditioning  is  a commonly  used                                                               
process in agriculture to allow a  farmer to blend crops when the                                                               
seed or,  in this case,  the industrial hemp tests  as borderline                                                               
in violation  of a regulation.  Reconditioning prevents  a farmer                                                               
from having to destroy their crop when it tests too high.                                                                       
2:10:52 PM                                                                                                                    
SENATOR REVAK joined the meeting.                                                                                               
SENATOR STEVENS  observed that farmers  who grow  industrial hemp                                                               
are subject  to many  more requirements than  a farmer  who grows                                                               
crops such as wheat or corn. "Aren't  we asking a lot more of the                                                               
farmers than we would if they were just doing wheat," he asked.                                                                 
MR.  CARTER answered  yes;  the  2014 and  2018  farm bills  have                                                               
specific federal  requirements that  provide a sense  of security                                                               
to those who  do not understand the  botanical difference between                                                               
industrial hemp  and recreational  cannabis because they  are the                                                               
same  genus and  species.  He advised  that  farmers who  produce                                                               
certified  potatoes  or  grow  certified  wheat  crops  also  are                                                               
required  to  meet  specific  requirements  and  are  subject  to                                                               
similarly  rigorous testing.  He added  that industrial  hemp was                                                               
produced in the state last year  and the division is committed to                                                               
providing a legal avenue for this new industry.                                                                                 
SENATOR STEVENS expressed appreciation for the explanation.                                                                     
CHAIR  COSTELLO asked  if  the  bill has  a  mechanism to  handle                                                               
repeat  violations or  if the  assumption  is that  there are  no                                                               
intentional violators.                                                                                                          
MR. WHITT said the division can  speak in detail, but the testing                                                               
so far  has been positive  and there  is no evidence  to indicate                                                               
that bad actors  will be a problem. He added  that he believes it                                                               
is a big  help for the state  to have the USDA  stamp of approval                                                               
on  the industrial  hemp  program and  it comes  at  the cost  of                                                               
specific statutory guidelines.                                                                                                  
Responding to Senator Stevens, he  agreed that the regulatory and                                                               
statutory requirements are greater for  a hemp producer than many                                                               
other crops,  but those do not  have the potential for  high THC.                                                               
He characterized the additional guidelines as appropriate.                                                                      
2:15:31 PM                                                                                                                    
CHAIR  COSTELLO asked  Mr. Carter  what industrial  hemp products                                                               
have been produced and if some of the products will be exported.                                                                
MR. CARTER replied  that farmers produced 70  acres of industrial                                                               
hemp in 2020,  9,000 square feet of which was  indoors. To ensure                                                               
compliance  and  safety,  the division  physically  samples  each                                                               
field lot  and all the  tests returned  values of less  than half                                                               
the federal legal limit for THC,  which was better than any other                                                               
state in the country.                                                                                                           
MR. CARTER said  Alaska is renowned for its clean  water and soil                                                               
and  the expectation  is  that these  products  will be  exported                                                               
worldwide for industrial hemp derivatives.  In the trial year the                                                               
division  has  seen  interest  in  grain  for  human  and  animal                                                               
consumption;  fiber for  biomass for  experimental fuel  sources,                                                               
hempcrete, insulation,  fiber bond,  and bioplastics; as  well as                                                               
extraction for non-psychoactive cannabinoid  uses for things like                                                               
shampoos,  salves,  and lotions.  In  2020,  the industrial  hemp                                                               
industry totaled about $20 billion.  He described industrial hemp                                                               
as  a unique  crop that  has  generated massive  interest for  an                                                               
endless number of uses.                                                                                                         
2:19:35 PM                                                                                                                    
MR. WHITT continued the sectional analysis for SB 27.                                                                           
     Section 5    AS 03.05.079(b)   Page 4,  Lines 5 through                                                                
     A new  subsection adds  that a  person who  retains but                                                                    
     fails to recondition is guilty of a violation.                                                                             
     Section 6    AS 03.05.100(5)   Page 4,  Lines 8 through                                                                
     Changes the statutory definition  of industrial hemp to                                                                    
     match the  federal definition which was  changed in the                                                                    
     2018 Farm Bill.                                                                                                            
     Section 7  Page 4, Line 15                                                                                             
     Repeals AS 03.05.077 the Industrial Hemp Pilot Program                                                                     
     Section 8  Page 4, Lines 16 through 21                                                                                 
     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 9  Page 4, Lines 25 through 27                                                                                 
     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.                                                                                         
MR.  WHITT summarized  that Sections  7-9 allow  the Division  of                                                               
Agriculture to  continue the Industrial Hemp  Pilot Program until                                                               
the USDA approves DNR's permanent Industrial Hemp Program.                                                                      
CHAIR COSTELLO asked Ms. Williams to provide her testimony.                                                                     
2:22:42 PM                                                                                                                    
SARA  WILLIAMS, Founder,  Hemp for  Healthcare, Wasilla,  Alaska,                                                               
stated support for  99 percent of SB 27. She  did not support the                                                               
new language in  Section 2 that prohibits individuals  who have a                                                               
controlled substance  felony conviction  within the  preceding 10                                                               
years   from   contributing  to   the   economy   of  Alaska   by                                                               
participating in  the industrial  hemp program. She  advised that                                                               
she  submitted  language  that   creates  a  compromise  to  this                                                               
prohibitive language.                                                                                                           
MS. WILLIAMS  described her vision  for an Alaskan  hemp industry                                                               
that fuels  the economy.  This includes  taxing the  hemp biomass                                                               
sales and selling the hemp  products statewide. The proceeds will                                                               
go into a healthcare fund  that creates a single payer healthcare                                                               
system for all Alaska residents.                                                                                                
She also spoke of new  partnerships and anticipated projects that                                                               
she believes  will bring from 20  to 350 new jobs  to Alaska that                                                               
is  in addition  to  the boost  to  transportation, farmers,  and                                                               
laborers that will grow hemp for processing.                                                                                    
2:30:37 PM                                                                                                                    
SENATOR STEVENS  asked Mr.  Whitt if the  provision in  Section 2                                                               
that  excludes  applicants  with a  controlled  substance  felony                                                               
conviction within the past 10 years is a federal requirement.                                                                   
MR. WHITT  confirmed that it  is a  federal requirement in  7 CFR                                                               
Sec. 990.6(e)(1).  The USDA will  not approve an  industrial hemp                                                               
program in states that do not have that law on the books.                                                                       
SENATOR  STEVENS summarized  that while  it may  be offensive  to                                                               
some  people, removing  the provision  would result  in the  USDA                                                               
withholding approval for a program to grow hemp in Alaska.                                                                      
MR. WHITT  replied that was  his understanding, but he  would get                                                               
that in writing and present it to the committee.                                                                                
SENATOR STEVENS replied that would be valuable.                                                                                 
SENATOR HUGHES requested the committee hear from David Schade.                                                                  
2:32:45 PM                                                                                                                    
DAVID  SCHADE,  Director,   Division  of  Agriculture,  expressed                                                               
appreciation  for the  work that  the sponsor  and Mr.  Whitt had                                                               
done to facilitate an industrial  hemp program in Alaska. He said                                                               
he had worked on this since  becoming the director two years ago.                                                               
He related that  the pilot program has  117 retail registrations,                                                               
and it continues to move forward.                                                                                               
Supplementing earlier discussion, he  explained that the division                                                               
has worked  hard to stay  within the federal guidelines,  so they                                                               
are  able  to  operate  their  hemp program  on  a  national  and                                                               
international basis.  Because the 2018 Farm  Bill stipulates that                                                               
someone with a  controlled substance felony in the  last 10 years                                                               
cannot participate in the program,  the division requested a one-                                                               
year  delay in  the sunset  of  the pilot  program awaiting  this                                                               
change  in state  law. In  response  to the  question about  what                                                               
happens  if there  is  a  bad actor,  he  explained that  because                                                               
industrial  hemp is  a regulated  crop, applicants  must register                                                               
under the  USDA program or  the state program. Someone  who fails                                                               
to follow the guidelines will  lose their registration and be out                                                               
of business.                                                                                                                    
SENATOR STEVENS asked if he  agreed that removing Section 2 would                                                               
put the state  out of compliance with the  federal government and                                                               
it would not qualify for a hemp program.                                                                                        
MR. SHADE replied that is correct.                                                                                              
2:35:57 PM                                                                                                                    
CHAIR COSTELLO held SB 27 in committee for future consideration.                                                                

Document Name Date/Time Subjects
SLAC GOV Appointee Connie Dougherty Board Application_Redacted.pdf SL&C 3/8/2021 1:30:00 PM
SLAC GOV Appointee Tina Taylor Board Application_Redacted.pdf SL&C 3/8/2021 1:30:00 PM
SLAC GOV Appointee Khitsana Sypakanphay Board Application_Redacted.pdf SL&C 3/8/2021 1:30:00 PM
SB 27 v. A.pdf SL&C 3/8/2021 1:30:00 PM
SB 27
SB 27 Sponsor Statement.pdf SL&C 3/8/2021 1:30:00 PM
SB 27
SB 27 v. A Sectional Analysis.pdf SL&C 3/8/2021 1:30:00 PM
SB 27
SB 27 Written Testimony Denali Hemp Company.pdf SL&C 3/8/2021 1:30:00 PM
SB 27
SB 27 Written Testimony Hemp for Healthcare in AK.pdf SL&C 3/8/2021 1:30:00 PM
SB 27
SB 27 Fiscal Note DNR.pdf SL&C 3/8/2021 1:30:00 PM
SB 27
SB 27 Amendment No. 1.pdf SL&C 3/8/2021 1:30:00 PM
SB 27
SB 87 v. A.PDF HL&C 4/12/2021 3:15:00 PM
SL&C 3/8/2021 1:30:00 PM
SB 87
SB 87 Transmittal Letter.pdf SL&C 3/8/2021 1:30:00 PM
SB 87
SB 87 v. A Sectional Analysis.pdf HL&C 4/12/2021 3:15:00 PM
SL&C 3/8/2021 1:30:00 PM
SB 87
SB 87 NAIC Credit for Reinsurance Model Law Briefing.pdf HL&C 4/12/2021 3:15:00 PM
SL&C 3/8/2021 1:30:00 PM
SB 87
SB 87 Fiscal Note 1.pdf HL&C 4/12/2021 3:15:00 PM
SL&C 3/8/2021 1:30:00 PM
SB 87