HB 172-INDUSTRIAL HEMP PRODUCTION LICENSES  5:13:34 PM CO-CHAIR JOSEPHSON announced that the final order of business would be HOUSE BILL NO. 172, "An Act relating to the regulation and production of industrial hemp; relating to industrial hemp pilot programs; providing that industrial hemp is not included in the definition of 'marijuana'; and clarifying that adding industrial hemp to food does not create an adulterated food product." REPRESENTATIVE DRUMMOND, speaking as prime sponsor of HB 172, urged for passage of the bill. 5:14:34 PM PATRICK FITZGERALD, Staff, Representative Harriet Drummond, Alaska State Legislature, speaking on behalf of Representative Drummond, prime sponsor, informed the committee HB 172 would define industrial hemp under AS 03.05.100 as "all parts and varieties of Cannabis sativa L. containing no more than 0.3 percent delta-9 tetrahydrocannabinol (THC)," which would classify hemp as a crop for the Division of Agriculture, Department of Natural Resources (DNR), and allow the cultivation of hemp products through a regulated pilot program. Section 7606 of the federal [Agricultural Act of 2014] allows industrial hemp to be grown through a pilot program, and over 30 states have taken advantage of the pilot program to explore domestic and international markets. Although hemp shares many similarities with marijuana, marijuana is used medically and recreationally due to its high concentration of delta 9 THC; however, under the classification within HB 172, hemp must have less than 0.3 percent delta 9 THC. Mr. Fitzgerald explained that the percentage of delta 9 THC is affected by how the plants are grown; for example, marijuana requires delicate care in order to produce a psychoactive effect. However, industrial hemp would be planted, cultivated, and harvested in a manner similar to that of wheat or barley, and thus have low THC concentrations as stipulated by the legislation. Hemp has been grown successfully in Alaska in the past, and the stock, seed, and roots are sold for industrial use. He concluded that the passage of HB 172 would incorporate a hemp crop into the state's economy, which would expand markets in multiple industries, create jobs, and raise state revenue. REPRESENTATIVE BIRCH asked why hemp cannot be grown now. MR. FITZGERALD responded that hemp is currently classified as a controlled substance through the Alcohol & Marijuana Control Office. In further response to Representative Birch, he said the bill will reclassify hemp with the Division of Agriculture - and not as a controlled substance - as long as the percentage of delta-9 THC remains below 0.3. In further response to Representative Birch, he said it is against the law to grow hemp as an industrial crop. 5:19:14 PM REPRESENTATIVE WESTLAKE questioned why a registrant would be required to retain sales records for three years. MR. FITZGERALD explained the records are to comply with the pilot program regulated by the federal Agricultural Act of 2014. REPRESENTATIVE DRUMMOND added that federal law also requires the hemp farmer register the global positioning system (GPS) coordinates of the crop location with the Division of Agriculture. 5:20:25 PM MR. FITZGERALD directed attention to a presentation entitled, "HB 172 - Industrial Hemp," included in the committee packet. He said the main points of the bill are: · allows the host of the pilot program the opportunity to grow, cultivate, transport, process, and market industrial hemp · changes the definition from the [Alcohol & Marijuana Control Office] to the Division of Agriculture · industrial hemp grows from the same plant as marijuana but they are two distinct strains made by differences in planting, habitat, cultivation, processing, and use · hemp is mainly used for industrial purposes such as textiles, farming, furniture, and livestock feed · the cropping of hemp that HB 172 would allow is strictly for industrial purposes and there is no intent to produce marijuana to be sold for recreational consumption · hemp has very low THC concentration, is versatile, and its product is mostly derived from stock fibers · marijuana has high THC concentration, requires specific growing conditions, and the product is extracted from the flower · any hemp products above 0.3 percent delta-9 THC would not be valid for production · farmers must register GPS coordinates of crop locations · licensing must be renewed annually · three years of records must be kept by registrant · introduction of industrial hemp to Alaska's economy would create jobs, spur revenue, and incorporate a growing industry · hemp products are produced from every part of the plant · rapid growth yields paper, textiles, and other products more efficiently than timber, and leaves a smaller footprint · hemp products come from seeds, stalk, leaves, and roots, but not the flower · hemp was successfully grown in Alaska in the early 1900's · HB 172 would benefit the state with economic expansion and career opportunities CO-CHAIR JOSEPHSON asked whether the bill would result in the production of value-added finished products or in shipping unfinished hemp out of the state. MR. FITZGERALD said the pilot program allows both; the crop could be marketed to local industries and the Division of Agriculture would be authorized to ship the crop out of state. CO-CHAIR JOSEPHSON asked about the current "culture surrounding hemp and the acceptance of it." 5:25:24 PM ROB CARTER, Program Manager, Plant Materials Center, Division of Agriculture, DNR, expressed his belief that nationally and internationally, industrial hemp is "gaining ground" after being outlawed in the U.S. since 1932; members of the agricultural community are interested in the crop as an addition to their farm management plans. REPRESENTATIVE PARISH directed attention to the fiscal note [Identifier: HB172-DNR-PMC-03-10-17] that anticipates 25 farms would apply for licenses, and asked for the locations of the farms. MR. CARTER said recently interest in farming hemp has been growing, and he has been contacted by potential applicants from Juneau, the Delta and Nenana regions, and the Matanuska-Susitna valley. REPRESENTATIVE PARISH asked for an estimate of how many people would be directly employed by the farms. MR. CARTER, based on his experience with farming, estimated a 5- 10 percent growth in agricultural workers; large growth would result if processing facilities opened and exports of raw industrial hemp and processed products began. REPRESENTATIVE JOHNSON directed attention to the bill on page 3, line 8, which read: (c) The department may adopt regulations to implement this section. REPRESENTATIVE JOHNSON asked what agency, department, or institution would issue the aforementioned regulations. 5:30:43 PM MR. CARTER opined the Division of Agriculture is best qualified to draft and complete the regulations. REPRESENTATIVE JOHNSON suggested the sponsor insert the regulatory agency in the bill. REPRESENTATIVE WESTLAKE related his interest in producing energy from biomass, noting that above the Arctic Circle willow regrows in about five years. He asked about the growth rate for hemp, and whether the crop could become a viable biomass product that could be used to bring down the cost of energy in villages. MR. FITZGERALD said the pilot program would determine the growth rate of hemp in each location. MR. CARTER added there is high potential; last year research in Sweden showed significant production of biomass [from hemp]: approximately 8,000 pounds per acre as a biodiesel fuel product - a traditional producer such as canola produces about 120 gallons of oil per acre - and hemp seeds produced over 300 gallons per acre, along with a byproduct of 3 to 3.5 tons of hemp meal supplement per acre. 5:34:21 PM BRYCE WRIGLEY, President, Alaska Farm Bureau, Inc., expressed amazement that the state recently voted to allow the production of marijuana, yet continues to apply restrictions on the production of hemp. Speaking from the prospective of farmers, he said farmers seek to produce any viable crop, and urged for passage of the bill. 5:36:14 PM SARA CHAMBERS, Acting Director, Juneau Office, Alcohol & Marijuana Control Office, Department of Commerce, Community & Economic Development, in response to Co-Chair Josephson, explained the Marijuana Control Board has not issued an opinion on HB 172 but anticipates that there would be a strong working relationship with the Division of Agriculture to draw jurisdictional lines between the sister agencies through regulations. CO-CHAIR TARR announced public testimony would be heard at a future meeting. [HB 172 was held over with public testimony open.]