Legislature(2017 - 2018)BUTROVICH 205

02/13/2017 03:30 PM RESOURCES

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Audio Topic
03:30:11 PM Start
03:30:42 PM SB6
04:01:38 PM Overview: Alaska National Interest Lands Conservation Act
04:50:51 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 6 INDUSTRIAL HEMP PRODUCTION TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
+ Overview: The Alaska National Interest Lands TELECONFERENCED
Conservation Act
Department of Natural Resources
Department of Fish & Game
+ Bills Previously Heard/Scheduled TELECONFERENCED
               SB   6-INDUSTRIAL HEMP PRODUCTION                                                                            
                                                                                                                                
3:30:42 PM                                                                                                                    
CHAIR  GIESSEL  announced consideration  of  SB  6, sponsored  by                                                               
Senator Hughes.  In the  last meeting the  sponsor and  her staff                                                               
pointed out  that the bill  would need  some changes in  order to                                                               
more formally comply with recent changes in federal law.                                                                        
                                                                                                                                
3:31:27 PM                                                                                                                    
SENATOR COGHILL  moved to adopt  CSSB 6, labeled  30\LS0173\U, as                                                               
the working document.                                                                                                           
                                                                                                                                
CHAIR   GIESSEL  objected   for  purposes   of  explanation   and                                                               
discussion.                                                                                                                     
                                                                                                                                
3:31:54 PM                                                                                                                    
AKIS  GIALOPSOS,   staff  to  Senator  Giessel   and  the  Senate                                                               
Resources  Committee, Alaska  State Legislature,  Juneau, Alaska,                                                               
said  he would  review the  explanation of  changes in  Committee                                                               
Substitute (CS) for SB 6 from version A to version U.                                                                           
                                                                                                                                
3:32:34 PM                                                                                                                    
The first change is in the title on page 1, lines 1-4:                                                                          
     The bill  title is revised  to more clearly  define the                                                                    
     intent  and   the  subject  matter  addressed   in  the                                                                    
     previous  hearing that  includes adding  in the  titles                                                                    
     for the appropriate sections that  are discussed by Mr.                                                                    
     Whitt, particularly those  related to the establishment                                                                    
     of  pilot  programs,   separating  the  definition  and                                                                    
     change in statutes for  industrial hemp from marijuana,                                                                    
     and  also clarifying  that  adding  industrial hemp  to                                                                    
     food does not adulterate that food.                                                                                        
                                                                                                                                
The second  change is  still on  page 1, lines  6-14, and  all of                                                               
page 2:                                                                                                                         
     Adds  industrial hemp  as  an  agricultural product  to                                                                    
     Title  3.  It  further   establishes  the  Division  of                                                                    
     Agriculture within the DNR  as the regulatory authority                                                                    
     for  industrial  hemp,  lays out  minimum  registration                                                                    
     guidelines, and establishes  guidelines for seed, plant                                                                    
     and record retention by registered growers.                                                                                
                                                                                                                                
3:33:43 PM                                                                                                                    
The third change is found on page 3, lines 1-8:                                                                                 
     Adds language establishing industrial  hemp growth as a                                                                    
     pilot program  that only those  who have  registered at                                                                    
     an institution  of higher  learning may  participate in                                                                    
     (federal statutes Mr. Whitt  referenced in the February                                                                    
     8th  hearing). This  additional  language  is added  in                                                                    
     order  to  be   in  line  with  Section   7606  of  the                                                                    
     Agricultural Act of 2014.                                                                                                  
                                                                                                                                
3:34:13 PM                                                                                                                    
The next change on version U is found on page 3, lines 9-11:                                                                    
     Places the definition of industrial  hemp under Title 3                                                                    
     instead of  under Title  11 as it  was in  the original                                                                    
     bill (version  A). The  definition itself  is unchanged                                                                    
     and  matches  the definition  in  Section  7606 of  the                                                                    
     Agricultural Act of 2014.                                                                                                  
                                                                                                                                
Page 3, lines 12-21:                                                                                                            
     Language  added to  the bill  specifies  that under  AS                                                                    
     11.71.900,  industrial hemp  is not  marijuana, thereby                                                                    
     removing industrial  hemp from  the list  of controlled                                                                    
     substances.                                                                                                                
                                                                                                                                
The next change is also on page 3, lines 22-24:                                                                                 
     Adds  language to  exclude  food containing  industrial                                                                    
     hemp from adulterated foods under Title 17.                                                                                
                                                                                                                                
3:34:54 PM                                                                                                                    
The final  explanation for the  changes can  be found on  page 3,                                                               
lines 25-31, and on page 4, lines 1-2:                                                                                          
     At an earlier explanation of  changes he forgot a line:                                                                    
     language  is added  to  further  to exclude  industrial                                                                    
     hemp from marijuana definitions under Title 17.                                                                            
                                                                                                                                
3:35:57 PM                                                                                                                    
BUDDY WHITT,  Staff to Senator Hughes,  Alaska State Legislature,                                                               
Juneau, Alaska,  recapped that  in an  earlier hearing  the first                                                               
version of the bill needed to  be changed in order to comply with                                                               
federal law and that has been done with the CS.                                                                                 
                                                                                                                                
SENATOR  WIELECHOWSKI said  this  is a  "pretty dramatic  change"                                                               
from  the  first version  and  that  Alaska doesn't  comply  with                                                               
federal law on marijuana now, and  asked why we are worried about                                                               
doing it with hemp.                                                                                                             
                                                                                                                                
MR. WHITT answered  that there is a federal law  and it is pretty                                                               
clear what actually has to be  in statute in order to comply with                                                               
it. That  is the blueprint he  followed in order to  develop this                                                               
piece  of legislation.  The sponsor  tried  to draft  legislation                                                               
that will be successful while complying with federal law.                                                                       
                                                                                                                                
SENATOR  WIELECHOWSKI  said  it  is pretty  onerous  to  have  to                                                               
register,  list  global  positioning coordinates,  and  pay  fees                                                               
every year  to cover the  regulatory costs. This  entire industry                                                               
could be killed by setting the  costs so high that it would drive                                                               
these small businesses out of  business. It requires them to keep                                                               
records of hemp transfers for  three years, which sounds like big                                                               
government to  him. He asked  what it  will cost the  Division of                                                               
Agriculture to administer it.                                                                                                   
                                                                                                                                
3:38:45 PM                                                                                                                    
MR. WHITT answered  that a lot of the information  that is within                                                               
this  CS and  the  reason it  was  put together  has  to do  with                                                               
Federal Register,  Volume 81, 156,  which was produced  on August                                                               
12,   2016  by   the  U.S.   Department  of   Agriculture,  which                                                               
specifically laid out  the items that any state would  have to do                                                               
in order  to comply with federal  law. It's not for  him to judge                                                               
how onerous  the legislation is,  but it  is very clear  that the                                                               
Division  of   Agriculture  would  have  to   be  the  regulatory                                                               
authority and have  the powers to set those  regulations in order                                                               
to keep tabs on this new  growth industry. He deferred the second                                                               
part of Senator Wielechowski's question to Mr. Carter.                                                                          
                                                                                                                                
3:40:00 PM                                                                                                                    
ROB CARTER,  Manager, Alaska Plant  Material Center,  Division of                                                               
Agriculture,  Anchorage,  Alaska,  supported SB  6.  Even  though                                                               
there  may  be fees  and  the  bill  may  be onerous,  he  really                                                               
supports   it  professionally,   because   sticking  to   federal                                                               
guidelines   provides  longevity   and   sustainability  to   the                                                               
industrial hemp  in Alaska. The  fees are  $25-50/annually across                                                               
the country and  there is no intent to hurt  industry in terms of                                                               
fees. The  division plans  on making  this registration  a simple                                                               
process, an  application that  is designed by  the industry  so a                                                               
database  can be  maintained that  is more  or less  for consumer                                                               
protection and  protection of the  farmers, so that  when someone                                                               
drives  by and  sees an  industrial hemp  field, claims  it is  a                                                               
recreational   or  medical   marijuana   grow,   and  calls   law                                                               
enforcement,  the  department   has  registered  industrial  hemp                                                               
locations.                                                                                                                      
                                                                                                                                
He  believes that  the division  can  take this  workload on  and                                                               
maintain  it without  any  additional money  at  this time.  They                                                               
really can't  say what the fee  will be without knowing  how many                                                               
individuals are actually  going to partake, but  probably it will                                                               
be somewhere between $25-50, just  like grass and grain fees, and                                                               
have  a  certification  process  very  similar  to  the  one  for                                                               
potatoes. Their  goal is  to educate  before they  regulate these                                                               
folks and make  sure the state can have  a sustainable industrial                                                               
hemp industry.                                                                                                                  
                                                                                                                                
SENATOR WIELECHOWSKI asked  if he anticipates any new  hires as a                                                               
result of this legislation.                                                                                                     
                                                                                                                                
MR.  CARTER  answered  no;  they plan  to  take  this  additional                                                               
workload  on  with  current  staff. They  will  build  an  online                                                               
application as well  as a printable one that can  be sent in with                                                               
the payment.  A database will be  built in the first  year and be                                                               
evaluated on a year by year  basis. They want this industry to be                                                               
able to take off in the state  with a potential for export. A few                                                               
things in federal  regulation allow hemp products  to be exported                                                               
to other states and worldwide.                                                                                                  
                                                                                                                                
SENATOR WIELECHOWSKI  asked the  penalty for non-compliance  if a                                                               
person  doesn't  register,  pay  the  fee,  or  keep  appropriate                                                               
records.                                                                                                                        
                                                                                                                                
MR.  CARTER  answered  at  this  time  Section  1  (f)  says  the                                                               
department may issue  a stop-sell order or a  violation notice to                                                               
a  person who  is  producing industrial  hemp  without a  current                                                               
registration.  This is  how the  division  currently responds  to                                                               
certification  issues with  potato,  grass and  grains. They  can                                                               
issue a  stop sell  order that  has no penalty,  because it  is a                                                               
direct order. If  someone does not comply, it is  a civil Class 3                                                               
misdemeanor and a $500 fine.                                                                                                    
                                                                                                                                
3:44:28 PM                                                                                                                    
SENATOR WIELECHOWSKI  asked what  if a person  growing industrial                                                               
hemp  keeps records  of  who he  sells it  to,  then that  person                                                               
transfers it or  sells it, are they  allow to do that  or do they                                                               
have to keep records as well?                                                                                                   
                                                                                                                                
MR. CARTER  answered at this time  they are just looking  for the                                                               
initial  transaction. Normally,  agricultural  products have  one                                                               
buyer and after  that it is considered  a post-harvest, processed                                                               
product.                                                                                                                        
                                                                                                                                
SENATOR WIELECHOWSKI asked how these  requirements compare to the                                                               
requirements for people who grow  marijuana. Are they required to                                                               
register and  have a GPS and  keep track of all  the transfers of                                                               
their marijuana products?                                                                                                       
                                                                                                                                
MR.  CARTER answered  that industrial  hemp regulations  are very                                                               
burdensome from  an agricultural production standpoint;  the fees                                                               
are high  and borough or  municipal approval is needed,  but this                                                               
process is  simplified and is pretty  standardized for industrial                                                               
hemp nationwide.                                                                                                                
                                                                                                                                
3:46:23 PM                                                                                                                    
SENATOR  WIELECHOWSKI asked  if  someone would  be  able to  grow                                                               
industrial hemp in their backyard under this legislation.                                                                       
                                                                                                                                
MR. CARTER answered yes.                                                                                                        
                                                                                                                                
SENATOR  MEYER   agreed  with  Senator  Wielechowski   that  this                                                               
industry  has potential  and  has  a lot  of  good  uses, but  he                                                               
wonders if a  pilot program can be done with  a zero fiscal note.                                                               
It  seems that  it  would cost  something. He  asked  what a  fee                                                               
structure would  look like and if  it would be by  application or                                                               
based on the quantity produced.                                                                                                 
                                                                                                                                
MR. WHITT  answered the  Division of  Agriculture can  decide how                                                               
many registrants it  can handle with a zero fiscal  note, if they                                                               
choose to go  that way. In the future, language  says they "shall                                                               
be able to  charge a registration fee." If this  becomes a growth                                                               
industry, managing it might incur  more costs than can be handled                                                               
internally.                                                                                                                     
                                                                                                                                
3:48:54 PM                                                                                                                    
MR. CARTER said he knows it is  very unique for a state agency to                                                               
say it  can do  something without  a fiscal  note, but  the Plant                                                               
Material Center  works with agricultural industries  of all types                                                               
and  its  mission  is  to   support  and  encourage  agricultural                                                               
development in Alaska. They could  take on a registration process                                                               
with  current staffing,  but  if the  industry  becomes the  next                                                               
biggest thing  out of Alaska years  from now that won't  be true.                                                               
"Hobbling the industry  with high fees and lots  of regulation is                                                               
definitely not the way to get something up and growing."                                                                        
                                                                                                                                
SENATOR MEYER said  Mr. Carter commented that  this product could                                                               
be  exported  and  asked  if  federal  regulations  allow  export                                                               
currently.                                                                                                                      
                                                                                                                                
MR. CARTER answered the 2014  Farm Bill, Section 7606, allows the                                                               
production  and  the trial  by  state  agricultural agencies  and                                                               
universities.  It  legalized  the   production  but  the  biggest                                                               
difficulty is  what to  do with  the product,  and the  Farm Bill                                                               
didn't  authorize  the  interstate   travel  of  industrial  hemp                                                               
products. But then there is  a little known "slip-through" within                                                               
the  Omnibus  Appropriations  Act  of  2016,  Section  736,  that                                                               
states:                                                                                                                         
                                                                                                                                
     No  federal funds  made available  by that  act or  any                                                                    
     other  act   may  be  used  to   prohibit  or  transfer                                                                    
     processing sales  of industrial  hemp that is  grown or                                                                    
     cultivated in accordance with  7606 of the Agricultural                                                                    
     Act of  2014 within or  outside the state in  which the                                                                    
     industrial hemp is grown.                                                                                                  
                                                                                                                                
So, without the federal government  really stepping in and saying                                                               
industrial hemp  can be grown; it  can be used and  processed and                                                               
it  can  be  shipped  interstate,   this  really  provides  legal                                                               
protections by  proxy for allowing  Alaska (and not  allowing the                                                               
feds  to prosecute  or use  any funds  to prosecute)  to produce,                                                               
process or sell  industrial hemp products. That is  how the other                                                               
states  - Kentucky,  Colorado, Maine,  Vermont, and  Idaho -  are                                                               
using interstate commerce for their industrial hemp products.                                                                   
                                                                                                                                
3:52:36 PM                                                                                                                    
SENATOR  MEYER  said  that  the  industrial  hemp  producers  are                                                               
required  to have  their hemp  tested for  THC content  and asked                                                               
where that is to be done. Alaska has only two testing centers.                                                                  
                                                                                                                                
MR. CARTER  answered that is correct  and one of the  good things                                                               
about  legalizing recreational  marijuana is  that that  industry                                                               
paved the way  for testing. So, for a nominal  fee through one of                                                               
these private agencies any individual  that is growing a cannabis                                                               
sativa  plant  can  have  it  tested  for  multiple  cannabinoids                                                               
including THC, CVA, CVD, and CVNs.                                                                                              
                                                                                                                                
SENATOR MEYER  asked if  the state  crime lab  could be  used for                                                               
testing,  as  well,  if  these   other  two  are  busy  with  the                                                               
recreational hemp.                                                                                                              
                                                                                                                                
MR. CARTER answered to his knowledge  they have the equipment - a                                                               
mass spectrometer and  a gas chromatographer - that  could do the                                                               
work,  but   he  didn't  know   about  their  workload   and  the                                                               
availability of employees.                                                                                                      
                                                                                                                                
SENATOR MEYER asked if the University  of Alaska is or could they                                                               
be involved.                                                                                                                    
                                                                                                                                
MR. CARTER  replied that  he couldn't  speak to  the University's                                                               
motives  and   practices  and  didn't  have   any  contact  about                                                               
industrial  hemp, but  the 2014  Farm  Bill allows  them to  take                                                               
part. However, in the past,  some universities have steered clear                                                               
of anything  with cannabis not  wanting to jeopardize  the amount                                                               
of federal funding that they do get just to help one industry.                                                                  
                                                                                                                                
3:55:12 PM                                                                                                                    
SENATOR WIELECHOWSKI said his concern  is that the industry would                                                               
be  so successful  in the  future  that more  employees would  be                                                               
needed and asked  if he would be  willing to cap fees  at $500 to                                                               
protect against over-charges and growing government.                                                                            
                                                                                                                                
MR.  WHITT said  that the  Judiciary Committee  would be  a great                                                               
place for that discussion.                                                                                                      
                                                                                                                                
3:56:37 PM                                                                                                                    
SENATOR  COGHILL  asked in  following  federal  rules, if  people                                                               
would be eligible for the federal or state revolving loan funds.                                                                
                                                                                                                                
3:57:20 PM                                                                                                                    
MR. WHITT said he would look into that for him.                                                                                 
                                                                                                                                
MR. CARTER added  that the agricultural revolving  loan fund that                                                               
is  administered  through  the  Division of  Agriculture  has  no                                                               
limitations  at this  time. It  is administered  by the  Board of                                                               
Agriculture and Conservation, but  a cannabis application has not                                                               
been submitted.                                                                                                                 
                                                                                                                                
CHAIR GIESSEL asked Mr. Keyes if he had any comments.                                                                           
                                                                                                                                
3:58:05 PM                                                                                                                    
ARTHUR KEYES,  Director, Division  of Agriculture,  Department of                                                               
Natural Resources  (DNR), Anchorage,  Alaska, replied  Mr. Carter                                                               
has said what needs to be said.                                                                                                 
                                                                                                                                
SENATOR HUGHES said the state is  required to have a database and                                                               
she tried to  keep it as simple as possible  and pointed out that                                                               
charging fees says "may" and she  was open to putting in a limit.                                                               
She just wants to give farmers one more economic opportunity.                                                                   
                                                                                                                                
4:00:53 PM                                                                                                                    
CHAIR GIESSEL removed  her objection and CSSB 6  was adopted. She                                                               
said she would hold SB 6  in committee with public testimony open                                                               
to allow time for the fiscal notes to be updated.                                                                               

Document Name Date/Time Subjects
SB 6-Version U.pdf SRES 2/13/2017 3:30:00 PM
SB 6
SB 6 -Sponsor Statement Version U.pdf SRES 2/13/2017 3:30:00 PM
SB 6
SB 6 - Sectional Analysis Version U.pdf SRES 2/13/2017 3:30:00 PM
SB 6
SB 6- Support- Colorado Dept of Agriculture Hemp Program Overview.pdf SRES 2/13/2017 3:30:00 PM
SB 6
SB 6- Support- Colorado Dept of Agriculture Hemp Regulations.pdf SRES 2/13/2017 3:30:00 PM
SB 6
SB 6- Explanation of Changes-Version U.pdf SRES 2/13/2017 3:30:00 PM
SB 6
SRES-ANILCA Presentation-DNR-DFG-2-13-17.pdf SRES 2/13/2017 3:30:00 PM
ANILCA
SB 6- Support-Fredenberg-2-13-17.pdf SRES 2/13/2017 3:30:00 PM
SB 6
SRES-CACFA Memo on ANILCA Sections.pdf SRES 2/13/2017 3:30:00 PM
ANILCA