BILL ANALYSIS                                                                                                                                                                                                    

                                                                AB 1147
                                                                Page  1

        Date of Hearing:   April 27, 2005

                             Barbara S. Matthews, Chair
                     AB 1147 (Leno) - As Amended:  April 25, 2005
        SUBJECT  :  Industrial hemp: license for commercial purposes.

         SUMMARY  :  Authorizes the growing of industrial hemp in California  
        under specified conditions, for sale only within California.   
        Specifically,  this bill :  

        1)Creates new definitions for:

           a)   "Industrial hemp" as an oilseed and fiber crop of the family  
             Cannabis Sativa L, having no more than 3/10 of 1%  
             tetrahydrocannabinol and is grown wholly within California from  
             instate seed stock for the exclusive purpose of producing  

           b)   "Tetrahydrocannabinol" (THC) means the natural or synthetic  
             substance of cannabis, or chemicals and their isomers with  
             similar chemical structure and pharmacological activities.

        2)Requires anyone growing for commercial purposes industrial hemp to  
          comply with the following:

           a)   A grower shall file with the California Department of Food  
             and Agriculture (CDFA) documentation that: 1) the hemp seeds  
             are of a type and variety that have no more than 3/10 of 1% of  
             THC as tested and reported by a federal Drug Enforcement  
             Administration (DEA) approved laboratory; 2) that a contract to  
             grow hemp has been entered into; 3) describes the location and  
             acreage of a crop.  Requires this document be made available to  
             law enforcement upon request and restricts it from being  
             disclosed to the public under the state's Public Records Act.

           b)   Requires CDFA to adopt rules for the testing of industrial  
             hemp during the growing for levels of THC and for supervision  
             requirements during growing season and harvest.

           c)   Prohibits a grower from removing from operation any element  
             other than mature stalks, fiber, or viable seed for sale,  
             distribution, or introduction into commerce within California.

           d)   Prohibits a grower from selling or distributing mature  


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             stalks, fiber, or viable seed to anyone other than a primary  
             processor licensed under these provisions.

           e)   Requires growers to notify CDFA regarding the sale or  
             distribution of any seed or stalk grown by the person, and  
             disclose the name of any licensed primary processor to whom  
             viable seed had been sold.

           f)   Permits CDFA to contract with county agricultural  
             commissioner for their services.

        3)Requires any person desiring to operate as a processor of viable  
          industrial hemp seed or nonviable seed derivatives to apply to  
          CDFA for a license on a form prescribed by CDFA.

        4)Requires CDFA to adopt regulations for the issuance of licenses,  
          that criteria shall include but not be limited by the following:

           a)   Restricts permit holders [licensees] from selling or trading  
             viable hemp seed outside of the State of California.

           b)   Requires licenses to be renewed every two years.

           c)   Prohibits anyone with a prior criminal conviction to be  
             eligible for a license.

        5)Requires each person licensed as a primary processor to be subject  
          to the following requirements:

           a)   Requires licensed processors to render each seed into a  
             nonviable seed derivative. 

           b)   Requires licensee to test for THC levels of any derived  
             products by a DEA approved laboratory and report said test to  
             CDFA in a form and schedule under regulations adopted by CDFA. 

           c)   Prohibits hemp oil products grown in California, to have  
             trace amounts of THC in excess of 5 parts per million.

           d)   Prohibits hemp nut products grown in California, to have  
             trace amounts of THC in excess of 1.5 parts per million.

        6)Requires CDFA to assess all licensees a fee sufficient to cover  
          the cost of monitoring and testing.

        7)Authorizes the University of California (UC) to conduct research  


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          related to production and processing of industrial hemp as  

           a)   Requires one element of research be the development and  
             dissemination of technology important to the production and  
             utilization of commercial crop and livestock enterprises.

           b)   Requires the research to provide for the enhancement of the  
             quality of life, sustainability or production and protection of  
             the environment.

           c)   Permits the UC, as part of its research, to collect feral  
             hemp seed stock and develop appropriate adapted strains of  
             industrial hemp which contains less than 3/10 of 1% of THC.

           d)   Requires the UC to report its findings to CDFA.

        8)Adds the signed documents by "Industrial hemp" growers to the list  
          of documentation exempt from public disclosure due to the  
          confidentiality of proprietary information nature.

         EXISTING LAW  prohibits the growing or possessing of any "cannabis"  
        varieties, except as permitted by the DEA.  Federal statutes preempt  
        state authority to deal with industrial hemp by defining it as  
        "cannabis" which is the same as marijuana, and that THC is a Class 1  
        drug prohibiting its cultivation, sale or possession of any plant  
        containing any level of THC.  Recent ruling by the Ninth Circuit  
        Court of Appeals upheld the right for processors to import, possess  
        and process nonviable industrial hemp seed into products and upturn  
        DEA's interpretation of natural occurring THC being a Class I drug.  
        Specifically the court opinion stated:

             "Appellants manufacture, distribute, or sell comestible items  
             containing oil or sterilized seeds from "hemp" - a species of  
             plant within the genus Cannabis. They challenge two Drug  
             Enforcement Administration ("DEA") regulations that, taken  
             together, would ban the sale or possession of such items even  
             if they contain only non-psychoactive trace amounts of  
             tetrahydrocannabinols ("THC").  The DEA asserts that natural,  
             as well as synthetic, THC is included in Schedule I of the  
             Controlled Substances Act ("CSA").  We have previously held  
             that the definition of "THC" in Schedule I refers only to  
             synthetic THC, and that any THC occurring naturally within  
             Cannabis is banned only if it falls within the Schedule I  
             definition of "marijuana."  We reiterate that ruling here: in  
             accordance with Schedule I, the DEA's relevant rules and  


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             regulations may be enforced only insofar as they ban the  
             presence of marijuana or synthetic THC."

         FISCAL EFFECT  :  Unknown.  This bill is keyed fiscal by Legislative  

         COMMENTS  :  According to the author, this bill is needed since state  
        statute is silent on the growing of industrial hemp and the "U.S.  
        Government mistakenly categorized hemp with cannabis due to their  
        physical similarities and the fact that hemp contains THC."   
        Further, the federal government permits the manufacturing and sale  
        of hemp products of every kind.  Hemp has so little THC that it  
        physically cannot be used as an intoxicant and is 100% safe for  
        consumers.  Consumers can purchase hemp cloths and food products  
        throughout California.  

        Industrial hemp is a versatile commodity that can be used for paper,  
        clothing, rope, food products, biocomposite products that can  
        replace fiberglass and plastics, biofuel to produce ethanol, as well  
        as body care products.  Hemp contains essential amino acids and is  
        an alternative source of protein.  In fact, our nation's Declaration  
        of Independence is written on hemp paper.

        Statistics on hemp grown in Canada show the acreage has grown from  
        3,200 in 2001 to an estimated 10,000-15,000 in 2005.  It is grown  
        under dry land farming and irrigated environments needing similar  
        fertilizer requirements as corn and uses little pesticides as it  
        shades out competing weeds.

        The value of industrial hemp is in the stalks and seeds and not the  
        flowers as it is with marijuana.  Hemp growers need to have the  
        flowers pollinate which requires both the male and female plants in  
        a planning.  Marijuana growers remove the male plants in order to  
        prevent the pollination.  Any inadvertent commingling of industrial  
        hemp pollen with that of marijuana could cause problems for both  
        plantings.  The low THC hemp could be increased while the high THC  
        marijuana could be reduced, potentially to levels that would  
        eliminate the plants' street value.

        The Legislature has discussed the legalization of industrial hemp  
        previously (see "Related legislation below) with varied success.   
        The major difference from previous legislation is the recent U.S.  
        Ninth Court of Appeals decision filed in June of 2004 which upheld  
        the same court's ruling from earlier in 2004.  This decision upheld  
        the differentiation between industrial hemp and marijuana.  By  
        authorizing the planting and sale of industrial hemp along with the  


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        resulting products only within California, while it may be in  
        conflict with federal authority, AB 1147 could create the basis for  
        a lawsuit which would challenge that authority. 
         Related legislation  :  AB 388 (Strom-Martin) of 2002 requests the  
        University of California to assess the economic opportunities of  
        specialty or alternative fiber crops, including industrial hemp,  
        kenaf, and flax utilizing information from other states and  
        countries, and to report by January 1, 2004, to the Assembly  
        Committee on Agriculture and the Senate Agriculture and Water  
        Resources Committee.  This bill was vetoed by Governor Davis.

        AB 448 (Strom-Martin) of 2001 directed the CDFA, in consultation  
        with the Attorney General, to establish rules and regulations for  
        the licensure and growing of industrial hemp.  It provided  
        definitions and made it a crime to violate any provision of this  
        division.  The bill failed in Assembly Committee on Agriculture  
        Committee May 2001.

        HR 32 (Strom-Martin) of 1999 was passed by the Assembly on September  
        10, 1999 by a vote of 41-30.  HR 32 made legislative findings and  
        declarations regarding industrial hemp and suggested that the  
        Legislature take specific actions to encourage the production of  
        industrial hemp, and to consider actions to revise the legal status  
        of industrial hemp.




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          Alice's Mountain Market
          Alta Vista Growers 
          Burcaw Chiropractic
          California Certified Organic Farmers
          CDM Corp
          Center for Healing
          Dr. Bronner's Magic Soaps 
          Eagle Trust Union
          Environmental Wholesale Products
          Eco Goods
          French Meadow Bakery
          Heartsong Herbal Brewing Company
          Heavenly Low Carb
          Hemp Industries Association
          Hemp Sisters
          Hemp Traders 
          J. Ginsberg & Associates
          Knoll Farms
          Living Foods.Com
          Luvland Farms Lavender
          Malu Healthcare
          New Hope Natural Media
          North American Industrial Hemp Council, Inc. 
          Organic Consumers Association
          Organic Ad Advisors
          Rainforest Action Network
          Raw 4 Real
          Robinson's Health Products
          Salon Charisma
          Sierra Club California
          Sweetgrass Natural Fibers
          The City and County of San Francisco
          The Living Temple 
          Vote Hemp
          Whole Balance

          Responsible Citizens, Inc.


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                                                                Page  7


          Analysis Prepared by  :    Jim Collin / AGRI. / (916) 319-2084