BILL ANALYSIS AB 1147 Page 1 Date of Hearing: January 10, 2006 Counsel: Kimberly Horiuchi ASSEMBLY COMMITTEE ON PUBLIC SAFETY Mark Leno, Chair AB 1147 (Leno) - As Amended: January 5, 2006 SUMMARY : Clarifies the definition of "marijuana" contained in the Uniformed Controlled Substance Act (CSA) to exclude industrial hemp. Specifically, this bill : 1)Defines "industrial hemp" as an agricultural field crop limited to the non-psychoactive varieties of the of the plant Cannabis sativa L., having no more than three-tenths of 1% tetrahydrocannabinol contained in the dry flowering tops and cultivated from seeds originating in California, and processed exclusively for the purpose of producing the mature stalks of the plant and by-products of the stalk and seed. 2)States that nothing in this section shall be construed to authorize the cultivation, production, or possession of resin, flowering tops, or leaves that have been removed from the field of cultivation and separated from the other constituent parts of the industrial hemp plant. 3)Prohibits the transportation and/or sale of a seed capable of germination across state lines of any variety of Cannabis sativa L and any cultivation of the industrial hemp plant that is not grown in a research setting or as an agricultural field crop. EXISTING LAW : 1)Provides that "marijuana" is all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds or resin. It does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted AB 1147 Page 2 there from), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. (Health & Safety Code Section 11018.) 2)States that except as authorized by law, every person who possesses any concentrated cannabis shall be punished by imprisonment in the county jail for a period of not more than one year, by a fine of not more than $500, by both such fine and imprisonment, or shall be punished by imprisonment in the state prison. [Health & Safety Code Section 11357(a).] 3)States that except as authorized by law, every person who possesses not more than 28.5 grams of marijuana, other than concentrated cannabis, is guilty of a misdemeanor and shall be punished by a fine of not more than $100). Notwithstanding other provisions of law, if such person has been previously convicted three or more times of an offense described in this subdivision during the two-year period immediately preceding the date of commission of the violation to be charged, the previous convictions shall also be charged in the accusatory pleading; if found to be true by the jury upon a jury trial or by the court upon a court trial or if admitted by the person, the provisions of existing law shall be applicable to him or her, and the court shall divert and refer him or her for education, treatment, or rehabilitation, without a court hearing or determination or the concurrence of the district attorney, to an appropriate community program which will accept him or her. If the person is so diverted and referred he or she shall not be subject to the fine specified in this subdivision. If no community program will accept him or her, the person shall be subject to the fine specified in this subdivision. In any case in which a person is arrested for a violation of this subdivision and does not demand to be taken before a magistrate, such person shall be released by the arresting officer upon presentation of satisfactory evidence of identity and giving his or her written promise to appear in court, as provided in existing law, and shall not be subjected to booking. [Health & Safety Code Section 11357(b).] 4)States that except as authorized by law, every person who possesses more than 28.5 grams of marijuana, other than concentrated cannabis, shall be punished by imprisonment in the county jail for a period of not more than six months, by a fine of not more than $500, or by both such fine and imprisonment. [Health & Safety Code Section 11357(c).] AB 1147 Page 3 5)States that except as authorized by law, every person 18 years of age or over who possesses not more than 28.5 grams of marijuana, other than concentrated cannabis, upon the grounds of, or within, any school providing instruction in Kindergarten or any of Grades 1 through 12 during hours the school is open for classes or school-related programs is guilty of a misdemeanor and shall be punished by a fine of not more than $500, by imprisonment in the county jail for a period of not more than 10 days, or both. [Health & Safety Code Section 11357(d).] 6)Provides that every person who possesses for sale any marijuana, except as otherwise provided by law, shall be punished by imprisonment in the state prison. (Health & Safety Code Section 11359.) FISCAL EFFECT : Unknown COMMENTS : 1)Author's Statement : According to the author, "While hemp fiber, oil and non-viable seed are used by many sectors of the economy for a variety of purposes, the Federal Government restricts the growing of hemp and the sale of viable hemp seed." "In 1937, the United States Government mistakenly categorized hemp with marijuana due to their physical similarities and the fact that hemp contains THC (although hemp contains only a negligible amount of the chemical). Hemp has so little THC that it physically cannot be used as an intoxicant and is 100% safe for the consumer. Because hemp has no psychoactive properties, the Federal Government has allowed hemp products of every kind to be manufactured and sold in the United States. Californians can buy hemp clothing and food products in stores throughout the state, but state law is silent on the legality of growing hemp in California for in-state commerce." 2)Industrial Hemp Defined : According to information provided by the author, "Hemp is a crop grown and processed throughout the world for paper, clothing, canvas, rope, food products and many other commercial uses. Hemp is used by the automobile industry as reinforcement fiber in "biocomposites" - press-molded or injection molded parts used in doors panels, AB 1147 Page 4 boot liners etc., where they are replacing fiberglass composites or more expensive plastics. Hemp is used in foods such as bread, energy bars, waffles, granola, coffee, beer, veggie burgers, pretzels, salad dressings, and many food products. Hemp seed oil is an excellent replacement for unhealthy fats in foods due to its excellent balance of the essential fatty acids linoleic acid (omega-6) and alpha-linolenic acid (omega-3). Consuming the right balance of essential fatty acids found in hemp seed oil offers significant health benefits, including an improved HDL/LDL cholesterol ratio and reducing the symptoms of dermatitis, rheumatoid arthritis and other inflammatory diseases, as well as improving and optimizing development in infants. "Hemp is used in body care products such as lotions, lip balms, conditioners, shampoos, and soaps. Hemp also may be used as biofuel in the production of ethanol, a plant-based gasoline additive and replacement. The Declaration of Independence was actually written on hemp paper and hemp has a long history of commercial use and cultivation in California and the United States." 3)Other States and Federal Government Attempt to Allow Industrial Hemp : Several other states and the Federal Government have attempted to pass legislation allowing the commercial and personal growth and development of industrial hemp. The substance of the proposed legislation has varied, but six states (Hawaii, Kentucky, Maine, Montana, North Dakota and Virginia) have all removed barriers to the growth of hemp. However, those states that have passed legislation have limited growth for research purposes only and have not sought to redefine criminal marijuana sections. Currently, Hawaii is the only state that has permission from the Drug Enforcement Administration to grow industrial hemp on a one-quarter acre of government land and under 24 hours of maximum security. [See generally, www.votehemp.com/legislation .] California attempted to pass its own hemp research bill in 2002. AB 388 (Strom-Martin), of the 2001-2002 Legislative Session, requested that the University of California conduct a study of the economic opportunities associated with the production of alternative fiber crops, including industrial hemp, flax and kenaf. However, Gray Davis vetoed AB 388 in September of 2002 stating, "There are a number of significant concerns regarding the legality of producing industrial hemp in the United AB 1147 Page 5 States. The United States Department of Agriculture concluded that 'legal issues currently preclude research into the viability of industrial hemp fiber production in the United States.' In addition, the Drug Enforcement Administration applies the same strict controls to industrial hemp as it does to marijuana. That is, it is a Schedule I Controlled Substance under federal law." This past year, House Representatives Ron Paul (R-TX) and George Miller (D-CA) attempted to amend the Federal Controlled Substances Act by excluding industrial hemp from the definition of marijuana. [109 H.R. 3037 is currently still pending in House Energy and Commerce Committee.] This bill also seeks to exclude industrial hemp from the definition of marijuana although it seems likely that such a change is pre-empted by the current federal definition of marijuana. 4)Is Removing Industrial Hemp from the Definition of Marijuana Preempted by Federal Law ? The federal Controlled Substance Act of 1970 defined five schedules of narcotics based on medical uses and the likelihood of addiction. [21 USCS 801-844.] The Act defines marijuana as "all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin. Such term does not include the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted there from), fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination." [21 USCS 802(16)] California has also adopted this definition. (See Health & Safety Code Section 11018.) The issue is whether the State of California can redefine "marijuana" differently than federal statute. A significant way in which the Federal Government regulates state conduct is through the interstate commerce clause. The United States Constitution states that of the powers granted to Congress is "[the power] [t]o regulate commerce with foreign nations, and among the several states, and with the Indian Tribes". [United State Constitution Article I, Section 8.] The United States Supreme Court has stated that the Congress is within its right to supersede state drug laws because even intrastate manufacturing and sales affects a national and international AB 1147 Page 6 drug trade that poses a risk to the United States as a whole. [21 USCS 801, Gonzales vs. Raich (2004) 125 S.Ct. 3195.] The Federal Government may use the interstate commerce clause to affect state law if the activity regulates the use of the channels of interstate commerce, the instrumentalities of interstate commerce, and activities that substantially affect interstate commerce. [ Lopez v. United States (1995) 514 US 549.] In viewing those factors, the court has held that if legislators have a rational basis for believing that a regulation affects interstate commerce and the means chosen are reasonable and appropriate, congressional action will probably be deemed a fair use of the interstate commerce clause. [ Heart of Atlanta of Atlanta Motel vs. United States (1964) 379 U.S. 241 and Katzenbach vs. McClung (1964) 379 U.S. 294.] There are two analogous cases that might shed light on whether the State of California may amend its marijuana statute in manner different than the federal statute. First, in Wickard vs. Filburn , the Supreme Court held that the Agricultural Adjustment Act of 1938 which permitted the Secretary of Agriculture to regulate the growth and consumption of wheat on every farm in the United States. The Court reasoned that even one farmer's growth and consumption because of the "cumulative effect" each farmer might have on the overall wheat industry and, hence, the national economy. [ Wickard vs. Filburn (1942) 317 U.S. 111.] Second, is Gonzales vs. Raich and related cases relating to medical marijuana. In late 2004, the United States Supreme Court, relying heavily on the aforementioned Wickard case, held that California could not exempt marijuana for medicinal purposes from the criminal possession statute. The court based its ruling on the idea that use of "any commodity, be it wheat or marijuana, has a substantial effect on the supply and demand in the national market for that commodity." [ Raich at 2208.] Vote Hemp, a non-profit organization involved in the efforts to legalize hemp, argues that federal law does not preempt hemp specifically. In its letter of support, Vote Hemp argues, "This bill in the form in which, we understand, will be presented in Committee would amend the Health and Safety Code AB 1147 Page 7 to exclude from the definition of 'marijuana', 'industrial hemp' which would be defined as the plant Cannabis sativa having no more than 3/10 of 1% THC, cultivated from seed originating within California, and cultivated and processed exclusively for the purposes of producing hemp fiber, sterilized seed and seed oil. It would be unlawful to remove the resin, flowering tops or leaves of the Cannabis plant from the field of cultivation, and as well as to sell or transport industrial hemp seed that is capable of germination across state borders." "The concern about federal pre-emption, of course, is based on the definition of 'marihuana' under the federal Controlled Substances Act as including 'all parts of the plant Cannabis sativa L., whether growing or not . . . . ' [2 U.S.C. 802(16).] While industrial hemp is a specially bred, non-psychoactive variety of the species Cannabis sativa L., the plant still belongs to that species. "On the other hand, the Controlled Substances Act definition of "marihuana" specifically excludes hemp stalk, fiber, seed and oil: 'Such term [marihuana] does not include the mature stalks of such plant, fiber produced from such stalks, oil or cake made from seeds of such plant, any other compound . . . or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil or cake, or the sterilized seed of such plant which is incapable of germination.' [2 U.S.C. 802(16).] "By reason of this specific exclusion, it is currently lawful under federal law - and has been for almost 70 years - to import into the United States, sell within the United States and make and sell products made from, the excluded parts of the Cannabis plant - i.e., hemp fiber, stalk, seed and oil. The question is whether federal law would automatically prohibit the growing of industrial hemp plants under state law - as contemplated by this bill - in a way that allows only the excluded, i.e., federally permissible, parts of the Cannabis plant to enter any commerce at all. That is, under this bill, as we understand its operation, no part of the Cannabis plant could leave a farmer's field other than the excluded parts of the plant." "The courts have never before confronted such a state law regime for licensing and regulating the cultivation of industrial AB 1147 Page 8 hemp. The basic legal framework in which such a regime would be analyzed consists of the following elements: (b It is not completely settled whether the low-THC, industrial hemp variety of the Cannabis sativa L. plant itself is a Schedule I substance under the CSA. The United States Court of Appeals for the First Circuit has answered that question in the affirmative. [ New Hampshire Hemp Council, Inc. v Marshall , 203 F.3d 1 (1st Cir.), cert. denied, 531 U.S. 828 (2000).] However, the United States Court of Appeals for the Eighth Circuit just heard oral argument in the case of United States v. White Plume , Nos. 05-1654 et al., (8th Cir., argued and submitted Dec. 12, 2005); during that argument, two of the judges indicated that they would not necessarily accept that Congress intended to allow hemp seed, oil, fiber and stalk to be imported, used and processed in the United States but not allow the hemp plants themselves to be grown. b) As noted above, the CSA does not cover - and the Drug Enforcement Administration cannot regulate, that is, it cannot ban the possession, importation or sale of - the exempted parts of the plant, i.e., sterilized hemp seed, oil, stalk and fiber. [ Hemp Indus. Ass'n v. DEA , 357 F.3d 1012 (9th Cir. 2004).] 'Congress knew what it was doing, and its intent to exclude non-psychoactive hemp from regulation is entirely clear.' (Id. at 1018.) 'DEA cannot regulate naturally-occurring THC not contained within or derived from marijuana - i.e., non-psychoactive hemp products - because non-psychoactive hemp is not included in Schedule I.' [Id. (emphasis in original).] (c In order to control the interstate market in marijuana, Congress has the power, under the Commerce Clause, to regulate the intrastate cultivation and possession of the regulated parts of the Cannabis plant, regardless of any effort by the state to legalize such intrastate cultivation or possession for any purpose. [ Gonzales v. Raich , 125 S. Ct. 2195 (2005).] In Raich , the Supreme Court, first, re-affirmed a general principle of Commerce Clause jurisprudence that Congress has the power to regulate activities that 'substantially affect' interstate commerce and that even a purely local activity, and even one that is not commercial by its nature, 'may still, whatever its AB 1147 Page 9 nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce.' [125 S. Ct. at 2205-06, quoting Wickard v. Filburn , 317 U.S. 111, 125 (1942).]" "The Raich Court then invoked the holding of the Wickard decision as the principal precedent for upholding Congress's power to regulate intrastate production of a regulated commodity. In Wickard , a farmer challenged the federal program setting quotas on raising wheat on the grounds that the only wheat he was growing would actually be consumed on the very farm on which he was growing it. The Court ruled that federal law could, nevertheless, regulate and restrict that farming operation, because even home-grown wheat -multiplied by every farm that might grow wheat only for home consumption - could have a significant effect on the interstate wheat market." "The Court reasoned that even if the farmer's 'activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce, and this irrespective of whether such effect is what might at some earlier time have been defined as 'direct' or 'indirect.' (317 U.S. at 125.) In this case, the Court found, that the farmer's 'own contribution to the demand for wheat may be trivial by itself is not enough to remove him from the scope of federal regulation where, as here, his contribution, taken together with that of many others similarly situated, is far from trivial.' (Id. at 127.)" "In Raich , the Court found that the Wickard case established the principle that 'Congress can regulate purely intrastate activity that is not itself 'commercial, in that it that is not produced for sale, if it concludes that failure to regulate that class of activity would undercut the regulation of the interstate market in that commodity.' (125 S. Ct. at 2206.) The Court then reasoned that: "Here, too, Congress had a rational basis for concluding that leaving home-consumed marijuana outside federal control would similarly affect price and market conditions. . . . The parallel concern making it appropriate to include marijuana grown for home consumption in the CSA is the likelihood that the high demand in the interstate market will draw such AB 1147 Page 10 marijuana into that market. While the diversion of homegrown wheat tended to frustrate the federal interest in stabilizing prices by regulating the volume of commercial transactions in the interstate market, the diversion of homegrown marijuana tends to frustrate the federal interest in eliminating commercial transactions in the interstate market in their entirety. In both cases, the regulation is squarely within Congress' commerce power because production of the commodity meant for home consumption, be it wheat or marijuana, has a substantial effect on supply and demand in the national market for that commodity. [Id. at 2207 (emphasis added).]" 5)Arguments in Support : Vote Hemp states, "A strong argument can be made that the state law enacted by this bill would not be federally pre-empted. The key distinction between the state law that would be enacted by this bill and the laws at issue in the cases dealing with congressional power to regulate particular activity (including Wickard and Raich ) is that, in the case of this bill, the only subjects of the commerce - the only products that could enter interstate or intrastate commerce, or affect interstate commerce - are actually ones which Congress has chosen not to regulate: the exempt parts of the plant, including hemp stalk; fiber; sterilized seed and oil. There is no possibility here that 'the high demand in the interstate market' could 'draw such marijuana into that market.' The flowers of the hemp form of cannabis are useless as a drug, and are not fungible/substitutable for drug marijuana, so there is no 'pull' from the interstate (or intrastate for that matter) marijuana market - under this bill, under state law, no non-exempt parts of the plant could leave the farmer's premises. "Based on the above framework, the argument would be that even if Congress intended to ban the possession or sale of any species of the Cannabis sativa plant, regardless of THC content, i.e., including industrial hemp plants, as one court held in New Hampshire Hemp Council, supra , for three reasons, Congress could not have intended that the CSA would cover the situation in which the plants themselves would be grown in-state, under state law and supervision, in such a way that neither the plants nor any of the regulated parts of the plant could enter commerce of any kind." "First, Congress's own findings in the CSA, read together with AB 1147 Page 11 the legislative history of the Act, suggest that Congress did not intend to preclude a state regulated regime in which only the non-regulated parts of the plant would enter commerce at all. As the Court observed in New Hampshire Hemp Council , 'While in 1937 Congress had indicated in legislative history that production for industrial uses would be protected . . . we can find no indication that Congress in 1970 [in enacting the CSA] gave any thought to how its new statutory scheme would affect such production.' (203 F.3d at 7.) To be sure, Congress did not take any steps to exclude any non-psychoactive type of Cannabis plant from the definition of 'Marihuana,' the Court found: 'The difficulty is that Congress' main vehicle for protecting industrial-use plant production in 1937 was . . . the complex scheme of differential tax rates[,] . . . the regime that was drastically modified in 1970 in favor of a broad criminal ban . . . a ban which read literally embraces production of cannabis sativa plants regardless of use.' (Id.) "But that does not answer the question of what Congress intended as to purely intrastate, state-regulated production of Cannabis plants - themselves covered by the CSA - that would not result in any regulated part of the plant entering commerce. Did Congress intend to exclude state regulation in that situation? In enacting the CSA, Congress made specific findings as to the need to regulate intrastate transactions: (3 ' . . . Incidents of the traffic which are not an integral part of the interstate or foreign flow, such as manufacture, local distribution and possession, nonetheless have a substantial and direct effect upon interstate commerce because: (3? 'After manufacture, many controlled substances are transported in interstate commerce; (3? 'Controlled substances distributed locally usually have been transported in interstate commerce immediately before their distribution; and, (3? 'Controlled substances possessed commonly flow through interstate commerce immediately prior to such possession. AB 1147 Page 12 (4 'Local distribution and possession of controlled substances contribute to swelling the interstate traffic in such substances. (5) 'Controlled substances manufactured and distributed intrastate cannot be differentiated from controlled substances manufactured and distributed interstate. Thus, it is not feasible to distinguish in terms of controls between controlled substances manufactured and distributed interstate and controlled substances manufactured and distributed intrastate . . . . [21 U.S.C. Section 801(3), (4) and (5)].' "Not one of these findings applies to the situation in which intrastate industrial hemp is grown and processed in such a way that no regulated part of the plant enters commerce. In that situation, no controlled substance enters either intrastate or interstate commerce, either before or after production of the hemp seed, oil, stalk and fiber. No Cannabis plant, or any regulated part of the plant, will have been transported in, or flowed through, interstate commerce, assuming feral hemp seed from within California is used, as required by this bill. There is no possibility of local growing of industrial hemp, regulated by the state, contributing to increasing the supply of controlled parts of the plant, either within the state or in interstate commerce. And it is easy to differentiate the controlled substance grown intrastate from what enters interstate commerce - only items that Congress specifically intended not to regulate. Congress's own findings, then suggest that Congress may well have not intended to preclude state regulation of intrastate cultivation of industrial hemp that does not result in any regulated part of the plant entering commerce at all. "Second, Congress has clearly decided to allow the non-regulated parts of the plant to enter foreign commerce, that is, to be imported directly into the United States. Why would Congress intend to allow someone in Canada to grow Cannabis and import the non-regulated parts of the plant into Washington State but not allow someone in California to grow Cannabis and import the same non-regulated parts of the plant into Washington State through Oregon? The answer is obvious: because the latter situation poses the risk of diversion of the regulated item AB 1147 Page 13 itself, the Cannabis plant including its regulated parts, into and within the United States. But would Congress still have intended to achieve this anomalous result where there is no such realistic risk by reason of state regulation? A strong argument can be made that the answer is no. "Third, to interpret the statute as reaching the subject activity - state-regulated intrastate industrial hemp cultivation where the regulated parts of the plant never enter commerce - would arguably result in an unconstitutional exercise of Congressional power - i.e., beyond what the Commerce Clause would allow. Certainly, Congress could choose to regulate hemp stalk, fiber seed and oil. But it has not. Congress having chosen not to regulate foreign or interstate commerce in that class of products, how could Congress then regulate intrastate activity that results only in putting that same class of products into commerce? Therein lays the critical distinction between this situation and Raich , with respect to congressional authority to regulate intrastate cultivation of Cannabis. As noted above, in Raich the Court held that regulation of home-grown marijuana for medical use 'is squarely within Congress' commerce power because production of the commodity meant for home consumption, be it wheat or marijuana, has a substantial effect on supply and demand in the national market for that commodity.' 125 S. Ct. at 2207. "Significantly, that is not true of cultivation of industrial hemp under strict state regulation. The only things that would be purchased or used, within or without California, are hemp stalk, fiber, sterilized seed and oil - which Congress has chose not to regulate. The manufacture and sale of hemp stalk, fiber, seed and oil in-state will, of course, affect interstate commerce in those items, but again, Congress has chosen not to restrict those items. It seems clear that this activity will not affect the interstate market for marijuana, in any way. The original seeds for in-state cultivation must come from feral plants, under the requirements set forth in this bill. No marijuana will be used as such, anywhere or any time. No 'controlled substance' can cross a state line - unlike the situation in Raich in which, once marijuana is in the hands of a medical user, it could be sold, AB 1147 Page 14 transported, exchanged, etc. And in this case, the 'illicit drug' - the regulated commodity, the industrial hemp plant - can easily be distinguished, with respect to origin, use, etc., from the articles that enter commerce, the hemp stalk, fiber, seed and oil. "For these reasons, a strong argument could be made that the in-state cultivation of industrial hemp under strict conditions allowing only the unregulated articles to enter commerce, cannot affect market supply or demand for marijuana and, indeed, does not affect interstate commerce at all, except in those articles Congress has chosen not to regulate. It could then be argued further that, having chosen not to regulate foreign or interstate commerce hemp stalk, fiber, seed and oil, Congress cannot exercise its Commerce Clause power to prevent the states from regulating activity that does nothing more than put these articles into commerce." REGISTERED SUPPORT / OPPOSITION : Support Vote Hemp (Sponsor) Board of Supervisors, City and County of San Francisco Community Alliance with Family Farmers Dr. Bronner's Magic Soaps Drug Policy Alliance Network Hemp Industries Association Nutiva Rainforest Action Network Sierra Club California Opposition None on file Analysis Prepared by : Kimberly Horiuchi / PUB. S. / (916) 319-3744