BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 676| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ VETO Bill No: SB 676 Author: Leno (D) Amended: 8/30/11 Vote: 21 SENATE AGRICULTURE COMMITTEE : 5-1, 4/5/11 AYES: Rubio, Berryhill, Evans, Vargas, Wolk NOES: Cannella NO VOTE RECORDED: La Malfa SENATE PUBLIC SAFETY COMMITTEE : 5-2, 4/26/11 AYES: Hancock, Calderon, Liu, Price, Steinberg NOES: Anderson, Harman SENATE APPROPRIATIONS COMMITTEE : 6-3, 5/16/11 AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg NOES: Walters, Emmerson, Runner SENATE FLOOR : 22-14, 5/31/11 AYES: Alquist, Corbett, De León, DeSaulnier, Evans, Hancock, Hernandez, Kehoe, Leno, Lieu, Liu, Lowenthal, Negrete McLeod, Pavley, Price, Rubio, Simitian, Steinberg, Vargas, Wolk, Wright, Yee NOES: Anderson, Blakeslee, Calderon, Cannella, Correa, Dutton, Emmerson, Fuller, Gaines, Harman, Huff, Strickland, Walters, Wyland NO VOTE RECORDED: Berryhill, La Malfa, Padilla, Runner ASSEMBLY FLOOR : 49-22, 9/7/11 - See last page for vote SENATE FLOOR : 26-13, 9/8/11 AYES: Alquist, Berryhill, Calderon, Corbett, De León, CONTINUED SB 676 Page 2 DeSaulnier, Emmerson, Evans, Hancock, Hernandez, Kehoe, Leno, Lieu, Liu, Lowenthal, Negrete McLeod, Padilla, Pavley, Price, Rubio, Simitian, Steinberg, Vargas, Wolk, Wright, Yee NOES: Anderson, Blakeslee, Cannella, Correa, Dutton, Fuller, Gaines, Harman, Huff, Runner, Strickland, Walters, Wyland NO VOTE RECORDED: La Malfa SUBJECT : Industrial hemp SOURCE : Hemp Industries Association Vote Hemp DIGEST : This bill creates an eight-year, four-county pilot project with respect to the cultivation and processing of industrial hemp. This bill (1) defines industrial hemp, as specified, (2) redefines marijuana to exclude industrial hemp, (3) allows the closely-regulated cultivation and processing of industrial hemp during the pilot period to conclude on January 1, 2020, (4) imposes a testing regimen to ensure program hemp has no psychoactive properties, (5) implements the pilot project in Imperial, Kern, Kings, and San Joaquin Counties, except as specified, and (6) requires the Attorney General and the Hemp Industries Association to submit reports to the Legislature by January 1, 2018, regarding the economic and law enforcement impacts of industrial hemp cultivation. Assembly Amendments remove Yolo County from the pilot project and makes changes to the laboratory testing and cultivation of industrial hemp. ANALYSIS : Existing law makes it a crime to engage in any of various transactions relating to "marijuana", as defined, except as otherwise authorized by law, such as the Medical Marijuana Program. Existing federal Drug Enforcement Administration (DEA) regulations provide that any product intended for human consumption containing any measurable quantity of tetrahydrocannabinol (THC) is illegal. In contrast, the CONTINUED SB 676 Page 3 Hemp Industries decision explicitly excludes nonpsychoactive hemp from the definition of marijuana. The federal government has declined to appeal that decision. This bill permits the cultivation of industrial hemp in California. Specifically, this bill: 1. Defines "industrial hemp" as an agricultural field crop of Cannabis sativa L. with no more than three-tenths of one percent THC (tetrahydrocannabinol) grown exclusively to produce the mature plant stalks and stalk products, oil or cake made from the seeds, and other by-products except the resin or flowering tops. 2. Clarifies that "industrial hemp" shall include the defined hemp products in the 2007 Harmonized Tariff Schedule of the United States. 3. Requires, except as specified, that before harvest, industrial hemp growers obtain a laboratory test report of randomly sampled dried flowering tops from a DEA registered laboratory identifying if the crop meets the California industrial hemp limit of no more than three-tenths of one percent and includes the Global Positioning System coordinates and total acreage of the crop. This report shall be retained by the grower for two years, and be made available to law enforcement officials or their designees upon request. 4. Provides for the destruction of the crop, as specified. 5. Prohibits the cultivation, production, or possession of resin, flowering tops, or leaves removed from the field and separate from the rest of the plant. The only exception to this prohibition is for the purposes of sampling for the required laboratory test of the flowering tops. Samples to perform the test shall be taken in the presence of, and shall be collected and transported only by, an employee or agent of a laboratory registered with the DEA. 6. Prohibits transportation or sale of any Cannabis sativa L. seed capable of germination across state borders except as permitted by federal law. CONTINUED SB 676 Page 4 7. Specifies that industrial hemp may only be grown for research or as an agricultural field crop. 8. Requires industrial hemp farmers to post signs identifying the crop, as specified. 9. Requires the destruction of hemp within 48 hours if the first laboratory test results indicate a THC content over 1%, and the destruction of the hemp within 45 days if a second laboratory test report indicates a THC content over 0.3%. 10.Requires the Attorney General and the Hemp Industries Association to submit economic and law enforcement impact reports to the Legislature by January 1, 2018. 11.Makes legislative declarations and findings on industrial hemp. 12.Provides that the pilot program applies only in Imperial, Kings, Kern, and San Joaquin, except when grown by an established agricultural institution. 13.Requires industrial hemp to be cultivated only from seeds imported in accordance with laws of the United States or from seeds grown in California from industrial hemp plants or grown from industrial hemp plants grown by an established agricultural research institution. 14.Sunsets on January 1, 2020. Background "Industrial hemp" or "hemp" refers to low-level psychoactive chemical THC varieties of Cannabis sativa L. For centuries, countless consumer and industrial products have been produced from hemp around the world. Despite its many uses, hemp is commonly lost in the shadow of its famous Cannabis relative "marijuana" most commonly used as a narcotic due to its high THC content. The government began to exercise control of the production of Cannabis plants beginning in 1937, with the federal CONTINUED SB 676 Page 5 Marijuana Tax Act. After World War II, competition from synthetic fibers and a growing anti-drug public resulted in the decline of hemp production. In 1970, the federal Controlled Substances Act tightly restricted all Cannabis plants regardless of THC content. This resulted in all hemp and hemp products being imported or manufactured from imported hemp. In 1998, Canada, a growing exporter of hemp to California, lifted their 50-year ban on industrial hemp cultivation. Farmers could grow hemp only after meeting specific registration requirements such as registering the location of each hemp field and certifying that the THC levels of the plant are not more than .3% of the weight of leaves and flowering parts. The DEA is the federal agency that determines if any industrial hemp production authorized by state statute is permitted, and enforces standards for the security conditions under which industrial hemp must be grown if permitted. In 2004, the United States Ninth Circuit Court ruled that hemp products could be sold legally in the U.S., overturning a DEA regulation attempting to ban all products from sale that contain any amount of THC. Since this ruling, the federal government has decided not to appeal this decision allowing hemp seed and oil products to be sold and consumed in the United States. Prior and Related Legislation AB 1017 (Ammiano), 2011-12 Session, would have made the penalty for the cultivation of marijuana an alternate felony/misdemeanor. The bill failed passage on the Assembly Floor. AB 684 (Leno, 2007), substantially similar to this bill, would have permitted the cultivation of industrial hemp in California under a pilot program in five counties - Butte, Imperial, Kings, Mendocino, and Yolo. The bill was vetoed by Governor Schwarzenegger. In his veto message, the Governor stated that hemp is still considered a cannabis plant regardless of its THC content and, therefore, illegal CONTINUED SB 676 Page 6 under federal law. Additionally, the Governor stated: "California law enforcement has expressed concerns that implementation of this measure could place a drain on their resources and cause significant problems with drug enforcement activities." AB 1147 (Leno, 2006), vetoed by Governor Schwarzenegger, would have permitted the cultivation of industrial hemp in California. In his veto message, the Governor stated that hemp is still considered a cannabis plant regardless of its THC content and, therefore, illegal under federal law. AB 388 (Strom-Martin, 2002 ), vetoed by Governor Davis, would have requested that the University of California assess the economic opportunities of specialty or alternative fiber crops, including industrial hemp, and report to the Legislature by January 1, 2004. HR 32 (Strom-Martin), 1999-2000 Session, would have resolved that "the domestic production of industrial hemp can help protect California's environment, contribute to the growth of the state economy, and be regulated in a manner that will not interfere with the enforcement of marijuana laws." Federal legislation introduced in 2005, 2007, and 2009, by Representative Ron Paul, excluded industrial hemp from the definition of marijuana. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Assembly Appropriations Committee, there would be a minor increase in revenues, likely less than $30,000 per year, for the Seed Services Program. The cost of the report would be minor and absorbable within existing DOJ resources. The DOJ indicates that there would not be a significant fiscal impact to them as a result of this bill. SUPPORT : (Verified 9/7/11) Hemp Industries Association (co-source) CONTINUED SB 676 Page 7 Vote Hemp (co-source) American Hemp Inc. Asher Hemp Gelato Azida, Inc. Business Alliance for Commerce in Hemp California Conference of Machinists California Certified Organic Farmers California State Grange California Teamsters Public Affairs Council Calyx Clothing Colorganics Inc. Community Alliance with Family Farmers Dash Hemp Santa Cruz Dr. Bronner's Magic Soaps Drug Policy Alliance Green Field Paper Company Hemp.com Hemp House Hemp Shield Hemp Technologies Hemp Traders High Grade Distribution Imperial County Farm Bureau Instituto Laboral De La Raza Jungmaven Ltd. Kern County Sheriff Kings County Sheriff Kings County Board of Supervisors Living Harvest Foods Nutiva Santa Barbara Hemp Santori Movement, Inc. Skin & Coat Supplement UFCW- Local 5 UFCW - Western States Conference OPPOSITION : (Verified 9/7/11) Association for Los Angeles Deputy Sheriffs California Narcotic Officers' Association California Peace Officers' Association California Police Chiefs Association Imperial County District Attorneys League of California Cities CONTINUED SB 676 Page 8 Riverside Sheriffs' Association ARGUMENTS IN SUPPORT : According to the author, "SB 676 is about job creation and allowing farmers to choose crops that suit their business needs and prospects. Preventing American farmers from cultivating industrial hemp has created a growing market for other countries to supply the state's food and personal care product manufacturers. The U.S. imports millions of pounds of hemp fiber, seed and oil. The current U.S. market for industrial hemp products is $400 million and growing at a rate of $26 million per year. Of the U.S.-based hemp product companies, more than 55 percent are based in California, many of which would expand their business if a local and more economical source of industrial hemp was available. These are our companies and our farmers should be able to supply them. "In addition to the economic opportunities, hemp is an environmentally-friendly and sustainable crop that reduces the use of chemicals and saves farmers money. Hemp requires little or no pesticides and herbicides, puts nutrients back into the soil and leaves the field virtually free of weeds making it an excellent rotational crop. As a source for paper, hemp produces more fiber per acre than timber and hemp matures in 90 days as opposed to the decades required for timber. Hemp can also be used for plywood-type building materials. Over time, hemp cultivation could allow us to meet an ever growing demand for paper products as well as the demand for building materials traditionally met by timber. "Industrial hemp, by definition, has no psychoactive properties and is distinct from marijuana; however, the bill has been carefully crafted to address concerns of law enforcement. The bill establishes a limited pilot program and hemp cultivation is permitted only as an agricultural field crop or in an established research setting. Upon request of law enforcement, farmers must show the lab report verifying that THC level of the crop meets the three-tenths of one percent THC standards. All crops that fail THC requirement or failure to meet other requirements outlined in the bill be considered marijuana under the law. Although they contain no psychoactive properties and have no legal commercial application, all industrial hemp CONTINUED SB 676 Page 9 flowering tops and leaves that are removed from the field of cultivation are still defined as marijuana in the bill. This ensures that in the event of a drug bust, law enforcement does not need to question if cannabis leaves are hemp or marijuana." ARGUMENTS IN OPPOSITION : According to the Association for Los Angeles Deputy Sheriffs, "Hemp is virtually indistinguishable from marijuana, and thus cultivation will seriously undermine the ability of law enforcement to enforce marijuana laws. Further SB 676 contravenes federal law (21 USC 802) and passage will create confusion to growers who may not understand they would be subject to federal prosecution even if growing hemp were permitted by state law. Creating physical or legal ambiguity is not good criminal justice policy?" GOVERNOR'S VETO MESSAGE: "I am returning Senate Bill 676 without my signature. This measure would establish a pilot program for the cultivation of industrial hemp in four counties in California. Federal law clearly establishes that all cannabis plants, including industrial hemp, are marijuana, which is a federally regulated controlled substance. Failure to obtain a permit from the U.S. Drug Enforcement Administration prior to growing such plants will subject a California farmer to federal prosecution. Although I am not signing this measure, I do support a change in federal law. Products made from hemp - clothes, food, and bath products - are legally sold in California every day. It is absurd that hemp is being imported into the state, but our farmers cannot grow it." ASSEMBLY FLOOR : 49-22, 9/7/11 AYES: Alejo, Allen, Ammiano, Atkins, Beall, Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, Brownley, Butler, Charles Calderon, Campos, Carter, Chesbro, Dickinson, Eng, Feuer, Fong, Fuentes, Galgiani, CONTINUED SB 676 Page 10 Gatto, Gordon, Hall, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mansoor, Mendoza, Mitchell, Monning, Norby, Portantino, Skinner, Smyth, Solorio, Swanson, Valadao, Wieckowski, Williams, Yamada, John A. Pérez NOES: Achadjian, Buchanan, Conway, Cook, Donnelly, Fletcher, Beth Gaines, Garrick, Grove, Hagman, Halderman, Harkey, Jeffries, Jones, Knight, Logue, Miller, Morrell, Nestande, Nielsen, Silva, Wagner NO VOTE RECORDED: Cedillo, Davis, Furutani, Gorell, Olsen, Pan, Perea, V. Manuel Pérez, Torres MEL:mw 1/4/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED