SB 8-INDUSTRIAL HEMP PRODUCTION LICENSES  3:32:13 PM CHAIR GIESSEL announced SB 8 [version 29-L/S028|A] to be up for consideration. 3:32:17 PM MATT MOSER, staff to Senator Ellis, sponsor of SB 8, explained that industrial hemp has been cultivated by humans for thousands of years. The Declaration of Independence and the Constitution were both written on hemp papers. It is ironic that a crop so important to American history is still illegal today. He said 19 states have embraced pilot studies on hemp production across the country and it is, in fact, an issue with which to fight federal overreach. It is also an issue that brings Republicans and Democrats together, which is what drew Senator Ellis to the issue originally. He said that Kentucky Senators Mitch McConnell and Rand Paul have introduced the Industrial Hemp Farming Act that has numerous co-sponsors. 3:34:25 PM MR. MOSER provided a sectional analysis of SB 8 as follows: Section 1 adds a new section to Title 3 entitled Industrial Hemp and defining it as an agricultural crop in Alaska. It establishes a license procedure in the Department of Natural Resources (DNR) that allows a licensed hemp producer to plant, grow, harvest, process, possess, sell or buy industrial hemp. It also requires the DNR to adopt regulations. Language on page 2, line 6, says a licensed industrial hemp grower must document and file verification that hemp seeds they have used are certified and document to have less than .3 percent tetrahydrocannabinol (THC), the psycho active ingredient in recreational marijuana. Language on page 2, line 19, sets this definition in statute. Section 2 on page 2, line 21, creates an affirmative defense to prosecution for a properly licensed hemp grower. Section 3 on page 3, line 4, allows the Department of Public Safety (DPS) to conduct a national criminal history record check, something that other states have included in their statutes. Section 4 on page 3, line 6, states that a properly licensed producer of industrial hemp is not required to be licensed as a marijuana establishment. 3:37:40 PM SENATOR STOLTZE asked why there has to be a criminal history registry record check if hemp is a benign substance. MR. MOSER answered that the sponsor agrees that it is probably not necessary, but that component of the bill used model legislation from other states. 3:38:46 PM SENATOR WIELECHOWSKI said it is still considered a controlled substance by the federal government and asked if he would be arrested for eating a hemp granola bar. MR. MOSER answered that hemp products across the United States are growing by double digits every year, but right now the U.S. is an importer of industrial hemp raw materials from China and Canada. So, the feds won't interfere with his snack. SENATOR MICCICHE asked if Alaska has right growing conditions and soils to grow it. MR. MOSER answered that there are a number of different opinions. He found information about hemp growing in Northern Russia, and British Columbia has a white paper about hemp production in Canada. 3:40:33 PM SCOTT HENDRICK, Program Director, National Conference of State Legislature (NCSL), Denver, Colorado, said the NCSL is a bipartisan organization that presents research and analysis to state legislatures and doesn't take positions on issues debated in the states. His purpose today was to provide information on how other states have handled this issue. He said that the increasing number of industrial hemp discussions are driven by the inclusion of a provision in the 2014 Federal Farm bill that authorizes states to pursue industrial hemp pilot projects through their universities or Departments of Agriculture. Some states have passed legislation to promote the industrial hemp industry prior to the federal law changes last year. To date, 22 states have passed laws on industrial hemp; 7 states - Delaware, Hawaii, Illinois, Michigan, Nebraska, New York and Utah - have laws establishing hemp research programs usually administered by a state agency or university. Connecticut and New Hampshire have passed laws to study industrial hemp. Thirteen other states - California, Colorado, Indiana, Kentucky, Maine, Montana, North Dakota, Oregon, South Carolina, Tennessee, Vermont, Virginia, and West Virginia - have passed laws to establish a commercial industrial hemp program similar to what is being considered in SB 8. Some of these states will not start issuing licenses until they are granted waivers from the Drug Enforcement Agency (DEA) or until changes are made to federal law. So, some states have laws on the books, but they aren't being acted upon now. Several states, such as Washington and Colorado, are moving forward with their commercial hemp programs. He would focus his remarks on these types of laws and how they compare to the language in SB 8. MR. HENDRICK said several other policy options adopted by other states were not included in the legislation. He said SB 8 is very representative of industrial hemp program laws enacted in other states. It defines industrial hemp, establishes a licensing scheme with regulatory requirements for growers, provides for inspection and oversight, and grants an affirmative defense for prosecution under state substance control laws. Other states have general addressed these areas, too. SB 8's definition is in line with other states' definition. Some states have also chosen to include in their definition that the plant must have a "Delta-9" THC concentration of not more than 0.3 percent and many specify that the THC limits are "on a dry weight basis." MR. HENDRICK said the licensing scheme in SB 8 is similar to other states' laws. However, section (1)(c) doesn't require GPS coordinates or a map of the growing area for the growing areas as other states have required. Indiana and Kentucky prohibit anyone who has been convicted of a drug related offense in the last 10 years from obtaining a growers license. Some states require written consent with the license application that explicitly allows access to the growing property for testing and inspections. Some states set terms for licenses stating that they are only valid for a certain time period, usually 1-3 years. Oregon's law states that a license is a personal privilege and not transferrable. 3:45:48 PM Regulatory requirements in section (1)(d) have a provision for the licensee to provide documentation that seeds planted are of a type and variety certified to grow industrial hemp having no more than 0.3 percent THC. Other states have more detailed seed certification requirements in statute; for example, California's law establishes an approved list of seed types and Colorado's law formally establishes a seed certification program. Some states have slightly different regulatory requirements for seed growers as opposed to those growing the crop, itself. The requirements for the seed growers relate to inspection, keeping records of who they sell to, preserving those records for a certain time period, and requirements as the amount and type of inventory they can hold at any one time. MR. HENDRICK said SB 8 would also require the licensee to share with the state any contracts to grow industrial hemp. This is a small difference from others, but Colorado actually requires proof of a contract before a license can be issued. Most of the other regulatory requirements closely align with language in other states. He said some state laws have more detailed oversight for things like how inspections and testings can take place and what to do if test samples come back with THC amounts higher than lawfully acceptable. 3:47:21 PM Section 2 of SB 8 provides an affirmative defense for prosecution under the Controlled Substance laws. Some states, such as Colorado, extended this protection to include people who are processing, selling or otherwise distributing industrial hemp grown by a person who is registered under their law. In Montana, in order for the defense to apply, the licensee must "have valid applicable controlled substances registrations with the U.S.DEA." 3:48:01 PM MR. HENDRICK said additional policy options that other states have adopted are create a board or advisory committee to advise on laws, regulations, enforcement and budgetary matters. Some have adopted detailed seed registration certification programs. Some specifically set up an industrial hemp fund to support the program. Money going into these funds usually includes registration or licensing fees. Some states specifically authorize grants from foundations or private individuals. Colorado uses a portion of its revenues from marijuana sale taxes to support the industrial hemp fund, as well. 3:48:59 PM In terms of penalties, some states authorize civil penalties of up $2,500 per violation and some have minimum acreage requirements, usually 5 acres or greater for growers of the crop and 2.5 acres or more for seed cultivators. MR. HENDRICK said some states have considered the transportation of hemp away from the growth site and require agents transporting the harvest to carry the licensing documentation with them. California requires sample testing of industrial hemp crops immediately before the harvest. SENATOR STOLTZE asked if individual states does its own seed, soil and product certification. MR. HENDRICK replied that some states haven't established a seed certification program and some have. SENATOR STOLTZE said he was more concerned about the levels of drug content. MR. HENDRICK replied that the level of drug content is set at the same amount as for the crop, itself. SENATOR STOLTZE asked if each state is responsible for conducting those tests. MR. HENDRICK answered yes. SENATOR STOLTZE asked to determine fiscal impact, if the federal government is able to render any assistance for certification as with other agricultural products. MR. HENDRICK answered he wasn't aware of any federal assistance. SENATOR MICCICHE said it seems like the background checks seems a little extreme if it doesn't have potential for abuse and asked him to explain why. 3:53:06 PM MR. HENDRICK answered that he couldn't speak to why, but he had heard someone say that allowing industrial hemp might be a way for people to grow marijuana in those plots. It could be that industrial hemp is still considered to be a controlled substance on a federal level. 3:54:15 PM SENATOR MICCICHE asked at what point would a controlled substance not require control. MR. HENDRICK answered that he wasn't sure, because he wasn't an expert on federal law. The states have definitions for the industrial hemp plant and some define industrial hemp products separately from the plant. Zero levels of THC wouldn't be an issue. SENATOR STOLTZE asked about possible federal assistance with marketing and other facets of the agricultural community. MR. HENRICK responded that he would look into what federal assistance is available. SENATOR STOLTZE added "or prohibited." 3:56:31 PM LARRY DEVILBISS, Mayor, Mat-Su Borough, Palmer, Alaska, said he is a farmer and knows that the industrial hemp will not be confused visually with a marijuana plant. They are not remotely alike. He didn't think it had a massive commercial potential for Alaska, but it probably has a niche value. The seed is available at places like Costco and he has one 92 year old constituent who credits his health all to hemp and has a bible verse to support it. 4:00:04 PM BRYCE WRIGLEY, President, Alaska Farm Bureau (AFB), Delta Junction, Alaska, supported SB 8. He said the two crops of hemp and marijuana are significantly different. Hemp is a very versatile crop providing fiber and oil that can be used in a wide range of products in the health food world. In fact hemp seeds are considered a super food with up to 20 percent protein. The U.S. imports $2 billion worth of hemp products per year and it seems that if the products are safe to import, they could also be safely grown here. The low level of THC contained in industrial hemp provides the necessary safeguards to the public health. MR. WRIGLEY said it isn't clear whether industrial hemp can be grown to maturity here, so that the desired products could be processed into suitable items. The development of hemp varieties with the required low THC concentration, the short season and other desirable traits is the proper purview of the University of Alaska Fairbanks as it is a land grant university with land facilities in different areas of the state to provide a wide range of trial locations. He stressed that it is important to conduct this research in a controlled manner by legitimate researchers who can evaluate the traits, measure the THC levels and screen for unintended risks. Even if no varieties are found that can mature in Alaska's latitude there is promise for industrial hemp as a cover crop for green manure or for weed suppression. The proper methods for determining whether this is a good opportunity for Alaskan farmers is for UAF to do the research and pass the breeder seed through the Plant Material Center to individual farmers to grow. 4:02:24 PM SENATOR STOLTZE asked if the Farm Bureau officially endorsed growing hemp in the past. MR. WRIGLEY replied this week is the first time it came before the AFB and they endorsed SB 8 officially. SENATOR COSTELLO asked how large of an industry hemp would be and if any farmers had expressed interest in growing it. MR. WRIGLEY answered that he hadn't heard of anyone wanting to grow it. It has maturity issues in Alaska's latitude. Alaska struggles with rotational crops being limited particularly in the north as to what can be rotated with barley and grains. There are possibilities that hemp could provide a green manure crop or a method of suppressing weeds because it grows very densely. SENATOR COSTELLO asked if the research should be done by UAF or individual farmers. MR. WRIGLEY replied that his strong recommendation would be to do it through UAF, because they have the capability of evaluating various aspects of hemp as a crop and determining what varieties would be the best, THC levels and things like that. It would helpful to have the University provide that research first, because accredited and land grant universities were established to provide that service. The information was meant to be disseminated through cooperative extension and the Plant Material Center was tasked with growing those crops as they were determined to be viable. He thought it was important to reestablish the importance of the University in that process. 4:06:18 PM SENATOR STOLTZE asked if the hemp plant could become invasive. MR. WRIGLEY answered that it can, but it is spread by speed. One hopes if it can mature here that it would be managed properly and that the plant would be harvested before mature seed setting. That is another compelling reason to involve the University. CHAIR GIESSEL thanked him for his testimony and opened public testimony. 4:07:49 PM JIM SYKES, representing himself, Palmer, Alaska, supported SB 8. He is also a member of the Mat-Su Borough Assembly, but is not speaking for them, but they were okay with the Mayor's testimony earlier. The idea of putting a THC dry weight and allowing for inspection at any time of a crop and testing is important, especially with medical and recreational marijuana. 4:10:01 PM FRANK TURNEY, representing himself, Fairbanks, Alaska, supported SB 8. He said the real terminology is cannabis, not marijuana that has been used as a racist tool against blacks and minorities, has been grown for medicinal and industrial uses for 10,000 years. Cannabis sativa L is grown for industrial production like fiber and oils; cannabis sativa is grown for medicinal and recreational uses. Unlike other biomass that need a lot of water, but hemp needs just a little bit of water and a little bit of sunshine: 10 tons per acre for three or four months growing time and 50,000 products can be made out of it. People worry about sterilizing the seed, but now a hemp vodka named Purgatory is being made in Wasilla; it is authorized by the DEA and certified by the State of Alaska. They get their seeds sterilized from Canada. Industrial hemp should be grown in Alaska. 4:12:41 PM SENATOR STOLTZE asked why the department needs the fiscal note. FRANCI HAVEMEISTER, Director, Division of Agriculture, Department of Natural Resources (DNR), Anchorage, Alaska, replied that the fiscal note is strictly to write the regulations for this crop. That would allow the industry to move forward and possibly start production of the crop. 4:14:50 PM SENATOR STOLTZE noted there were zero out-year costs and asked if this becomes an industry what additional costs would be involved. MS. HAVEMEISTER answered that the department would be the licensing agency as well as the regulator. SENATOR STOLTZE said when he had the commercialization of marijuana bill in the State Affairs Committee he was troubled, because of the division's role which included making agriculture revolving loan funds and seed certification, storage and enhanced security, and a whole myriad of costs for which it is not doing now had a zero fiscal note saying that hemp was the Division of Commerce's problem. He didn't see the difference. MS. HAVEMEISTER replied that the difference between this bill and the one on marijuana is that this language and hemp production would be allowed through the Farm bill and it is written into the Farm Bill that the Divisions of Agriculture and the Universities can be involved in research. 4:17:33 PM SENATOR STOLTZE asked who in her division would be responsible for certification and THC testing. MS. HAVEMEISTER replied that at this time the Division of Agriculture doesn't have capability to do the THC tests. If funding were to come through, it potentially could be done through them. SENATOR STOLTZE said he wasn't asking if funding was coming through; legislation is coming through and it has implications for funding. He didn't want to pass the bill and then see the need for funding. He was disappointed that he wasn't getting answers. CHAIR GIESSEL pointed out that the bill will go to the Finance Committee as well as the Judiciary Committee. Seeing no further comments, she left public testimony open and held SB 8 in committee.