ALASKA STATE LEGISLATURE  SENATE JUDICIARY STANDING COMMITTEE  March 13, 2017 1:34 p.m. MEMBERS PRESENT Senator John Coghill, Chair Senator Mia Costello Senator Kevin Meyer Senator Pete Kelly Senator Bill Wielechowski MEMBERS ABSENT  All members present COMMITTEE CALENDAR  HOUSE BILL NO. 77 AM "An Act making corrective amendments to the Alaska Statutes as recommended by the revisor of statutes; and providing for an effective date." - MOVED HB 77 AM OUT OF COMMITTEE HOUSE BILL NO. 104 "An Act relating to collecting information about civil litigation by the Alaska Judicial Council; repealing Rule 41(a)(3), Alaska Rules of Civil Procedure, and Rules 511(c) and (e), Alaska Rules of Appellate Procedure; and providing for an effective date." - MOVED HB 104 OUT OF COMMITTEE SENATE BILL NO. 6 "An Act relating to industrial hemp; and relating to controlled substances." - HEARD & HELD PREVIOUS COMMITTEE ACTION  BILL: HB 104 SHORT TITLE: REPEAL COLLECTION OF CIVIL LITIG. INFO SPONSOR(s): JUDICIARY 02/03/17 (H) READ THE FIRST TIME - REFERRALS 02/03/17 (H) JUD 02/22/17 (H) JUD AT 1:30 PM GRUENBERG 120 02/22/17 (H) Moved HB 104 Out of Committee 02/22/17 (H) MINUTE(JUD) 02/24/17 (H) JUD RPT 4DP 2NR 02/24/17 (H) DP: KOPP, KREISS-TOMKINS, FANSLER, CLAMAN 02/24/17 (H) NR: EASTMAN, REINBOLD 02/27/17 (H) TRANSMITTED TO (S) 02/27/17 (H) VERSION: HB 104 03/01/17 (S) READ THE FIRST TIME - REFERRALS 03/01/17 (S) JUD 03/10/17 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg) 03/10/17 (S) Heard & Held 03/10/17 (S) MINUTE(JUD) 03/13/17 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg) BILL: HB 77 SHORT TITLE: 2017 REVISOR'S BILL SPONSOR(s): RULES BY REQUEST OF LEGISLATIVE COUNCIL 01/25/17 (H) READ THE FIRST TIME - REFERRALS 01/25/17 (H) JUD 02/06/17 (H) JUD AT 1:30 PM GRUENBERG 120 02/06/17 (H) Moved HB 77 Out of Committee 02/06/17 (H) MINUTE(JUD) 02/08/17 (H) JUD RPT 5DP 2NR 02/08/17 (H) DP: KOPP, KREISS-TOMKINS, FANSLER, LEDOUX, CLAMAN 02/08/17 (H) NR: EASTMAN, REINBOLD 02/15/17 (H) TRANSMITTED TO (S) 02/15/17 (H) VERSION: HB 77 AM 02/17/17 (S) READ THE FIRST TIME - REFERRALS 02/17/17 (S) JUD 03/10/17 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg) 03/10/17 (S) Heard & Held 03/10/17 (S) MINUTE(JUD) 03/13/17 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg) BILL: SB 6 SHORT TITLE: INDUSTRIAL HEMP PRODUCTION SPONSOR(s): HUGHES 01/09/17 (S) PREFILE RELEASED 1/9/17 01/18/17 (S) READ THE FIRST TIME - REFERRALS 01/18/17 (S) RES, JUD 02/08/17 (S) RES AT 3:30 PM BUTROVICH 205 02/08/17 (S) Heard & Held 02/08/17 (S) MINUTE(RES) 02/13/17 (S) RES AT 3:30 PM BUTROVICH 205 02/13/17 (S) Heard & Held 02/13/17 (S) MINUTE(RES) 02/15/17 (S) RES AT 3:30 PM BUTROVICH 205 02/15/17 (S) Moved CSSB 6(RES) Out of Committee 02/15/17 (S) MINUTE(RES) 02/17/17 (S) RES RPT CS 5DP 1NR NEW TITLE 02/17/17 (S) DP: GIESSEL, HUGHES, COGHILL, VON IMHOF, MEYER 02/17/17 (S) NR: STEDMAN 02/17/17 (S) FIN REFERRAL ADDED AFTER JUD 02/20/17 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg) 02/20/17 (S) Heard & Held 02/20/17 (S) MINUTE(JUD) 02/22/17 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg) 02/22/17 (S) Heard & Held 02/22/17 (S) MINUTE(JUD) 03/13/17 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg) WITNESS REGISTER LISA KIRSCH, Assistant Revisor Legislative Legal Counsel Legislative Legal Services Legislative Affairs Agency POSITION STATEMENT: Answered questions related to HB 77. LIZZIE KUBITZ, Staff Representative Matt Claman Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Sponsor of HB 104 SARAH BADTEN, representing herself Anchorage, Alaska POSITION STATEMENT: Testified in support of HB 104. KENNETH JACOBUS, representing himself and Anchorage Bar Association (ABA) Anchorage, Alaska POSITION STATEMENT: Testified in support of HB 104. LIBBY BAKALAR, Assistant Attorney General Civil Division Transportation Section Department of Law Juneau, Alaska POSITION STATEMENT: Provided information related to HB 104. JORDAN SHILLING, Staff Senator John Coghill Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Reviewed the changes between version R and version I of SB 6. BUDDY WHITT, Staff Senator Shelly Hughes Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Answered questions related to SB 6. ROB CARTER Plant Materials Center Division of Agriculture Department of Natural Resources (DNR) Palmer, Alaska POSITION STATEMENT: Answered questions related to SB 6. RONDA MARCY, CEO/Owner Alaska Hemp Industries Mat-Su, Alaska POSITION STATEMENT: Testified in support of SB 6. BRYAN ZAK, representing himself Homer, Alaska POSITION STATEMENT: Testified in supports of SB 6 CATHERINE ULMER, representing herself Homer, Alaska POSITION STATEMENT: Testified in support of SB 6. AARON RALPH, representing himself Anchorage, Alaska POSITION STATEMENT: Testified in support of SB 6. LARRY DEVILBISS, representing himself Palmer, Alaska POSITION STATEMENT: Testified in support of SB 6. SUZI TOWSLEY representing herself, Seward, Alaska POSITION STATEMENT: Testified in support of the original version of SB 6. SENATOR SHELLY HUGHES Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Sponsor of SB 6. ACTION NARRATIVE 1:34:11 PM CHAIR JOHN COGHILL called the Senate Judiciary Standing Committee meeting to order at 1:34 p.m. Present at the call to order were Senators Costello, Kelly, Meyer, and Chair Coghill. Senator Wielechowski arrived soon thereafter. HB 77-2017 REVISOR'S BILL  1:35:08 PM CHAIR COGHILL announced the consideration of HB 77. He asked if the committee had any questions for the revisor. 1:35:42 PM SENATOR WIELECHOWSKI joined the committee. SENATOR MEYER asked about the significance of changing the term "may" to "shall be permitted to" on page 25, Section 44. LISA KIRSCH, Assistant Revisor, Legislative Legal Counsel, Legislative Legal Services, Legislative Affairs Agency, explained that it corrects a poorly constructed sentence; "be permitted to" essentially means "may." SENATOR MEYER questioned why in Section 50 the word "department" is replaced with the full name, the "Department of Commerce, Community and Economic Development," whereas in Sections 52 and 53 the name "Department of Environmental Conservation" is replaced by the word "department." MS. KIRSCH explained that Section 54 defines "department" to mean the "Department of Environmental Conservation." That department is most frequently referenced in this section of statute, so it makes sense to switch the definition and refer to DEC by the single word "department" and write out the full name of DCCED in Section 50. SENATOR MEYER asked if anyone else will look at these proposed changes. MS. KIRSCH directed replied the Department of Law reviews the draft bill and then it is submitted to legislative drafting attorneys to review in the areas of law that they practice. Any problems are then reported to the revisor. CHAIR COGHILL noted the zero fiscal note. 1:40:09 PM SENATOR COSTELLO moved to report HB 77, labeled 30-LS0010\O.A, from committee with individual recommendations and attached fiscal note(s). 1:40:24 PM CHAIR COGHILL announced that without objection, HB 77am is reported from the Senate Judiciary Standing Committee. 1:40:40 PM At ease HB 104-REPEAL COLLECTION OF CIVIL LITIG. INFO  1:42:45 PM CHAIR COGHILL reconvened the meeting and announced the consideration of HB 104. He asked if there were questions for the sponsor's staff. 1:43:39 PM SENATOR WIELECHOWSKI asked if the bill is fundamentally the same as the one the committee heard last year. LIZZIE KUBITZ, Staff, Representative Matt Claman, Alaska State Legislature, sponsor of HB 104, confirmed that this legislation is the same as last year. CHAIR COGHILL opened public testimony on HB 104. 1:44:16 PM SARAH BADTEN, representing herself, said she practices law in Anchorage and has been filing out this form for 10 years. For the past two years she's been testifying to get the requirement repealed. It is a waste of time and money and is costly to her clients, which is unfair. Also, because she practices contract law, the information she provides skews the data on tort reform. 1:46:08 PM KENNETH JACOBUS, representing himself and the Anchorage Bar Association (ABA), testified in support of HB 104. He highlighted that the ABA annually adopts a resolution to do away with the civil case reporting requirements. He pointed out that just 13 percent of the required data is reported and that it will save the state money to drop the requirement. He said the House voted unanimously to pass this legislation and it would be a great service to the state, the bar and the people engaged in civil litigation for the Senate to do the same. 1:48:38 PM LIBBY BAKALAR, Assistant Attorney General, Civil Division, Transportation Section, Department of Law, Juneau, Alaska, offered to answer questions related to HB 104. CHAIR COGHILL asked how many reports the Department of Law files a year. MS. BAKALAR said she would follow up with the information, but the department does file a report according to the requirements under AS 09.68.130 after every civil case is settled. CHAIR COGHILL commented that the bill might result in cost savings. MS. BAKALAR said the department submitted a zero fiscal note and the clear benefit is that it would eliminate a task. Responding to a further question, she said the department doesn't have a formal position on HB 104. CHAIR COGHILL noted that Suzanne DiPietro was available to answer question. 1:50:54 PM CHAIR COGHILL closed public testimony on HB 104 and solicited a motion. 1:51:05 PM SENATOR COSTELLO moved to report HB 104, labeled 30-LS0393\D, from committee with individual recommendations and attached fiscal note(s). SENATOR WIELECHOWSKI disclosed that he is a member of the Alaska Bar Association. CHAIR COGHILL announced that without objection, HB 104 is reported from the Senate Judiciary Standing Committee. 1:51:58 PM At ease SB 6-INDUSTRIAL HEMP PRODUCTION  1:53:47 PM CHAIR COGHILL reconvened the meeting and announced the consideration of SB 6. He solicited a motion to adopt the proposed committee substitute (CS). 1:54:16 PM SENATOR COSTELLO moved to adopt the CS for SB 6, labeled 30- LS0173\I, as the working document. CHAIR COGHILL objected for an explanation of the changes. 1:54:34 PM JORDAN SHILLING, Staff to Senator John Coghill, Alaska State Legislature, reviewed the changes in SB 6, version I, speaking to the following document: Page 2, line 20 through page 3, line 8:   A new section is added to the bill under AS 03.05.010 regarding the powers and duties of the commissioner of natural resources. To this list of powers and duties is added, regulating industrial hemp. Under these duties, the commissioner will be required to specify approved sources and varieties of industrial hemp seed, require registered growers to test for THC content at the time of harvest, be authorized to conduct random testing of industrial hemp and provide information regarding general production practices including the establishment of isolation distances. This section also requires that the department submit a list of registered growers of industrial hemp to the marijuana control board and the department of public safety. The list also includes the expiration date of the registration. Page 3, lines 20 through 26:   A stop sale order shall be issued for any plant with a THC level over .3 percent and the commissioner shall notify the marijuana control board and the department of public safety when a stop sale order if issued. Page 5, lines 13 through 15   Industrial hemp produced under this section cannot be used to produce hashish, hashish oil or marijuana concentrates. Page 5, lines 16 and 17   Producing Industrial Hemp without a registration is a violation with a penalty of $500. Page 5, lines 26 through 31:   Registrants must possess proof of industrial hemp registration while transporting. Page 7, lines 20 through 23: Establishes a sunset date for this bill of June 30, 2022. 1:58:06 PM SENATOR WIELECHOWSKI asked if the entire bill is repealed in 2022. MR. SHILLING directed attention to Section 10 that basically repeals SB 6 in five years. It lists the [nine] sections in Title 3 and [one] section in Title 17 that will be entirely repealed in 2020. He noted that [AS 17.20.020(e)] relates to the definition of marijuana. CHAIR COGHILL added that the provisions is Sections 6 and 9 will automatically be repealed if the pilot program isn't reinstated. SENATOR WIELECHOWSKI asked where the definition for marijuana is found. MR. SHILLING explained that Sections 6 and 9 put brackets around the additional language regarding hemp and that language isn't deleted until 2022. He clarified that the definition of marijuana isn't deleted, just the extra reference to hemp. SENATOR WIELECHOWSKI asked if anyone who wants to grow industrial hemp in the next five years would have to go through this pilot program. MR. SHILLING answered yes. SENATOR COSTELLO asked if businesses that participate in the pilot program will need a business license. MR. SHILLING deferred the question to Buddy Whitt. 2:01:48 PM BUDDY WHITT, Staff, Senator Shelly Hughes, advised that business licensing requirements would be the same as any other business that operates in the state. SENATOR COSTELLO pointed out that business licenses are good for two years, so a business owner could have a license to conduct business for an additional year after the pilot program sunsets. MR. WHITT agree that could happen if the statute isn't reauthorized. SENATOR COSTELLO suggested the bill should anticipate that potential circumstance. MR. WHITT acknowledged the oversight and suggested further discussion. CHAIR COGHILL commented that a business license can be so general that a certification may not be useful. SENATOR COSTELLO observed that the language on page 2, lines 28- 29, seems broad. MR. WHITT responded that the language could be tightened with the chair's permission. 2:04:20 PM SENATOR WIELECHOWSKI said the language on page 4, lines 10-14, talks about fees that will be collected but he assumes none will be collected because the fiscal note is zero. MR. WHITT said he would have a revised fiscal note and an answer to the question before the next hearing. SENATOR WIELECHOWSKI pointed out the conflict in the admittedly old fiscal note. It shows zero costs through 2023 but the narrative says the cost of administering the registration program will be determined after the regulations are drafted. He also expressed interest in what is being authorized on page 2, lines 28-29. 2:06:26 PM MR. SHILLING said it was the chair's intent that the random testing be specific to delta-9-tetrahydrocannabinol. He acknowledged the benefit of tightening that language. SENATOR WIELECHOWSKI directed attention to the language regarding isolation distance on page 3, lines 3-5, and asked the intent on determining isolation distance. MR. WHITT noted that the chair's request in drafting this CS was to put the distances in statute instead of regulation. He deferred further explanation to Mr. Carter. CHAIR COGHILL asked Mr. Carter to address the question. 2:08:10 PM ROB CARTER, Division of Agriculture, Plant Materials Center, Palmer, Alaska, explained that isolation distances are set to maintain true type and quality for any crop that is produced for seed. In this context the isolation distance is to keep pollination solely within the industrial hemp crop to ensure that the progeny or seed that is produced stays below the .3 percent THC threshold. SENATOR WIELECHOWSKI asked what would happen if someone's home marijuana crop fell inside the isolation zone. MR. CARTER said it wouldn't create a problem and it wouldn't void the isolation distance because the crop wouldn't be to produce seed for further production. He added that globally there is greater concern that hemp would contaminate marijuana pollination that the reverse. SENATOR MEYER asked what happens to a crop that tests above the .3 percent THC threshold. MR. CARTER explained that the division issues a stop order if it identifies any crop that doesn't meet either state or federal regulations, and the product must be destroyed or made inviable. That is currently done at the discretion of the director or the commissioner. For industrial hemp it could be as simple as mowing the crop as long as it is made unmarketable and unusable. CHAIR COGHILL asked Mr. Shilling to review the provisions that address an industrial hemp crop that tests above the .3 percent THC threshold. MR. SHILLING directed attention to page 4, lines 25 and 29. An individual who has industrial hemp that is between .3 percent and 1 percent THC can recondition the crop, but a crop with a THC level above 1 percent must be destroyed. In any event, it is a violation to grow a crop of industrial hemp that has a THC level above the .3 percent threshold. CHAIR COGHILL asked Mr. Whitt to discuss the significance of the percentages. MR. WHITT explained that the USDA considers 0.3 percent THC the point at which there is no measurable effect on the body. Scientists consider 1.0 percent THC the point below which there is no chemical effect on the human body. CHAIR COGHILL asked if 1 percent is a recognized threshold in federal law. MR. WHITT offered to share the studies the federal government has conducted. 2:15:27 PM SENATOR MEYER expressed concern about effectively and safely destroying a crop that has a THC level above 1 percent. CHAIR COGHILL observed that it raises a question about the black market value. CHAIR COSTELLO referenced page 4, lines 21-22, and asked if the department plans to sell hemp seeds. CHAIR COGHILL asked Mr. Carter if that language has value. MR. CARTER replied the language does have value. He said because it can be very difficult to import hemp seeds, state agricultural departments have assumed a role in the importation to get the material across state lines for pilot programs. SENATOR COSTELLO voiced reservations about giving the department the ability to sell industrial hemp seed and questioned whether the department would inspect the seed it sells. MR. CARTER replied it is well known in the scientific community that the THC value in hemp seed is close to absolute zero. The Division of Agriculture Plant Materials Center already does certification and testing as it is the only internationally certified seed laboratory in Alaska. One of their missions is to support and promote agricultural industries in the state. In conjunction with the USDA and the University of Alaska Fairbanks they make and maintain foundation level seed for Alaska's agricultural industry. Every year they have a seed sale of native plants, grasses and grains for forage and feed that is sold around the state for agricultural and revegetation purposes. 2:20:29 PM CHAIR COGHILL opened public testimony on SB 6. 2:20:41 PM RONDA MARCY, CEO/Owner, Alaska Hemp Industries, Mat-Su, Alaska, testified in support of SB 6. She reviewed her educational accomplishments and certifications and explained that her company is trying to establish an industry to make hemp insulation. She is also interested in turning industrial hemp seed into fish food as a way of helping Alaska fisheries become stronger and healthier. She expressed disappointment that the bill this year establishes a five-year pilot program when 10 years could work just as well. She emphasized that Mr. Carter's statement that hemp growers won't be worried about marijuana that is grown nearby is not true. She maintained that marijuana would affect the THC content in a hemp crop and that there is no scientific distinction between a hemp seed and a marijuana seed. It is noteworthy that the green part of the hemp plant has a higher nutritional content than alfalfa and the seeds are packed with omega fatty acids. 2:25:06 PM BRYAN ZAK, representing himself, Homer, Alaska, stated that he supports SB 6, but his preference is to do away with the pilot program, separate it entirely from marijuana and identify industrial hemp as an agricultural product. A robust industrial hemp industry could help the economy of Alaska. 2:27:04 PM CATHERINE ULMER, representing herself, Homer, Alaska, testified in support of SB 6 but stated her preference for the original bill. She emphasized that Alaska needs an income-producing agricultural product like industrial hemp. It could be used in sustainable building projects and to manufacture rope. 2:28:09 PM AARON RALPH, representing himself, Anchorage, Alaska, testified in support of SB 6. Referring to earlier testimony, he opined that it would be more likely for hemp to cross pollinate with marijuana than the other way around. He also listed the analgesic and medical benefits of hemp. It is non-psychoactive. 2:30:12 PM LARRY DEVILBISS, representing himself, Palmer, Alaska, testified in support of SB 6. He stated that he is not an advocate of marijuana, but he does support industrial hemp. Speaking as a farmer, he opined that hemp will grow in Alaska but not for seed production so the question about cross pollination should not be an issue. He predicted that hemp would be grown primarily for feedstock for cattle. It shouldn't be much different than growing Timothy grass or Bromegrass. 2:32:48 PM SENATOR WIELECHOWSKI asked what the startup costs would be for an industrial hemp farm because that could be a deterrent if the program ends after five years. MR. DEVILBISS replied it wouldn't be much for someone who is already farming. He added that he was disappointed to see that this is just a pilot program, but the Division of Agriculture could subcontract to private farmers. CHAIR COGHILL said the idea for the pilot project was based on federal rules, but not necessarily the timeline. 2:34:57 PM SUZI TOWSLEY representing herself, Seward, Alaska, testified in support of SB 6 in its original form. Speaking as a business person and entrepreneur, she encouraged the legislature to make it as simple as possible to legally grow hemp. She expressed concern that the five-year sunset on the program makes startup costs prohibitive. She also highlighted the benefits of Cannabidiol (CBD) oil. CHAIR COGHILL explained that the bill is in the Judiciary Committee to look at the federal law and establish accountability measures. He asked the sponsor to speak to the timeline of the pilot program. 2:37:18 PM SENATOR SHELLY HUGHES, Alaska State Legislature, sponsor of SB 6, stated that she would like it to be as easy as possible for people to grow industrial hemp. As an agricultural crop it has potential to become livestock feed. Increasing the size of herds provides an opportunity increase the amount of Alaskan-grown beef and pork in local grocery stores. She noted that Mr. Carter is getting more calls each week from farmers who are seriously interested in growing hemp. CHAIR COGHILL asked about the timeline for the pilot program. SENATOR HUGHES voiced support for an extension and deferred further comment to Rob Carter. CHAIR COGHILL asked if the five-year timeline could be modified. MR. CARTER answered yes; no other states have a sunset clause for their pilot programs and the 2014 farm bill did not have a designated timeline. 2:41:07 PM CHAIR COGHILL asked at what level a marijuana plant becomes valuable for its THC effect. MR. CARTER advised that strains of cannabis sativa can have THC levels that range from 15 percent to arguably 30 percent. CHAIR COGHILL offered his understanding that hemp hasn't been grown in Alaska before. MR. CARTER clarified that the university had a successful program many years ago but there has been no research identifying the new cultivars that have been specifically bred for industrial hemp worldwide. From an agronomic standpoint it is unclear how the photo period, moisture, and poor soil in Alaska will affect the THC value or survivability. In any event, industrial hemp is cultivated and bred to keep the THC value at .3 percent or lower. The bill clearly outlines the process if the THC happens to rise above that level. He concluded, "I would think that if anyone was trying to game the system and tried to pass off industrial hemp with a 2 percent THC in the recreational market, they'd probably get laughed out of the store." 2:43:49 PM SENATOR KELLY asked if hemp has a higher calorie count than grass or hay. MR. CARTER said the early research indicates that the feed value of industrial hemp significantly surpasses Timothy grass, Bromegrass, and native plants. SENATOR WIELECHOWSKI asked if any other Alaskan agricultural products have similar requirements for the farmer: to register the product, have a GPS location on the farm, have random testing, pay for the testing, pay a fee to sell the product, and list the buyer. MR. CARTER answered no; seeds that are certified to meet federal labeling requirements have stricter guidelines but not to that extent. SENATOR WIELECHOWSKI asked if he knows whether the founding fathers had similar requirements when they grew and sold hemp. MR. CARTER said he'd be very surprised if they did. 2:46:43 PM CHAIR COGHILL restated that the bill was referred to this committee because of the longstanding relationship between hemp and marijuana, which is illegal under federal law. He stated that he would hold SB 6 in committee with public testimony open. 2:47:59 PM There being no further business to come before the committee, Chair Coghill adjourned the Senate Judiciary Standing Committee meeting at 2:47 p.m.