BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  SB 566
          Author:   Leno (D), et al.
          Amended:  5/24/13
          Vote:     21

           
          SENATE AGRICULTURE COMMITTEE  :  5-0, 4/2/13
          AYES:  Galgiani, Cannella, Berryhill, Lieu, Wolk

           SENATE PUBLIC SAFETY COMMITTEE  :  7-0, 4/30/13
          AYES:  Hancock, Anderson, Block, De León, Knight, Liu, Steinberg

           SENATE APPROPRIATIONS COMMITTEE  :  7-0, 5/23/13
          AYES:  De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg


           SUBJECT  :    Industrial hemp

           SOURCE  :     Hemp Industries Association 
                      Vote Hemp


           DIGEST  :    This bill permits hemp to be grown in the state, upon  
          federal approval, by defining industrial hemp to be excluded  
          from the definition of marijuana.  Additionally, this bill  
          provides for cultivation practices, laboratory testing,  
          reporting requirements, and regulation.

           ANALYSIS  :    

          Existing federal and state law:

          1. Places controlled substances in five schedules, ranked by  
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             medical benefit and potential for abuse.  Schedule I  
             controlled substances are deemed to have no medical benefits  
             and a high potential for abuse.  

          2. Includes marijuana in Schedule I.  

          Existing federal law separately lists tetrahydrocannabinol (THC)  
          as a Schedule I substance.  Federal court decisions have held  
          that THC in Schedule I applies only to synthetic THC, because  
          "if naturally-occurring THC were covered under THC, there would  
          be no need to have a separate category for marijuana, ? which  
          contains naturally-occurring THC."  (Hemp Industries v. Drug  
          Enforcement Administration (2004) 357 F.3d 1012, 1015, quoting a  
          related case)  

          Existing state law:

          1. 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 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 therefrom), fiber,  
             oil, or cake, or the sterilized seed of the plant.

          2. Provides that cultivation of marijuana is a felony,  
             punishable by a prison term of 16 months, two years or three  
             years and a fine of up to $10,000.  

          This bill:

           1. Defines "industrial hemp" as follows:

             A.    An agricultural field crop limited to the  
                non-psychoactive varieties of the of the plant Cannabis  
                sativa L., and the seeds produced therefrom;

             B.    Industrial hemp shall have no more than 3/10 of 1%  
                (0.3%) THC contained in the dry flowering tops; and

             C.    Industrial hemp shall be cultivated and processed  

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                exclusively for the purpose of producing the mature stalks  
                of the plant and by-products of the stalk and seed,  
                including oil or cake made from seeds, and other  
                preparations.

           2. Redefines "marijuana" to exclude industrial hemp when  
             cultivated or processed for defined purposes.

           3. Defines "industrial hemp" to mean a nonpsychoactive type of  
             the plant Cannabis sativa L. that contains no more than 0.3%  
             THC contained in the flowering tops, and cultivated and  
             processed exclusively for the purpose of producing the mature  
             stalks of the plant, fiber produced from the stalks, oil or  
             cake made from the seeds of the plant, or for other defined  
             purposes.

           4. States findings, declarations, and intent of the Legislature  
             in regards to industrial hemp. 

           5. Creates a new division for hemp under the Food and  
             Agriculture Code. 

           6. Provides for cultivation requirements, minimum acreage,  
             signage, and various plant cultivation prohibitions to allow  
             visual differentiation between hemp and marijuana fields,  
             with exceptions.

           7. Includes industrial hemp, hemp seed, oil, yarn, and woven  
             fabrics as products imported under the Harmonized Tariff  
             Schedule of the United States of the U.S. International Trade  
             Commission.

           8. Provides that a person who grows industrial hemp and is not  
             an established agricultural research institution or seed  
             breeder required to abide by specified sampling and  
             laboratory testing procedures.  

           9. Requires that laboratory test reports be issued by a  
             laboratory registered with the federal Drug Enforcement  
             Administration (DEA) and such reports state the percentage  
             content of THC, the date and location of samples taken, the  
             Global Positioning System coordinates, and total crop  
             acreage.


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           10.Requires that laboratory test reports be marked with the  
             appropriate test result, as specified.  A "passed" result is  
             a THC level at or below 0.3% content in a random sample of  
             the industrial hemp grown.  

           11.Requires the testing laboratory to provide not less than 10  
             original signed copies of the report for the farmer.   
             Requires the farmer to retain at least one copy of this  
             report for a minimum of two years and to make copies  
             available to law enforcement and to each person purchasing,  
             transporting, or otherwise obtaining hemp plant materials.

           12.Provides that industrial hemp be destroyed if laboratory  
             testing indicates THC content greater than 0.3%.  

           13.Provides that a person who grows hemp with THC content  
             greater than 0.3% not be prosecuted for cultivation or  
             possession of marijuana.

           14.Defines "established agricultural research institution" and  
             "seed breeder" as follows:

             A.    An "established agricultural research institution" is a  
                public or private institution or organization that  
                maintains land for agricultural research, including  
                colleges, universities, agricultural research centers, and  
                conservation research centers.

             B.    A "seed breeder" is an individual or public or private  
                institution or organization that develops viable  
                industrial hemp seed for sale or research.

           15.Prohibits the possession of hemp resin, flowering tops, or  
             leaves, except as necessary to conduct laboratory testing.

           16.Requires the following reports by January 1, 2019, or within  
             five years after hemp agriculture is approved under federal  
             law:

             A.    The Attorney General shall report to the Legislature  
                any incident where marijuana is falsely claimed to be  
                hemp, or where hemp cultivation is used to disguise  
                marijuana cultivation.


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             B.    The Hemp Industries Association shall also provide a  
                report on the economic impacts of industrial hemp  
                cultivation.

           17.Is not operative unless authorized under federal law.

           Background
           
           Congressional Research Service (CRS) report  .  In 2012, CRS  
          issued a report titled "Hemp as an Agricultural Commodity."   
          This report describes the current state of hemp in the U.S.,  
          including production and use, legal status, and legislative  
          activity.  CRS reports that "although marijuana is also a  
          variety of cannabis, it is genetically distinct from industrial  
          hemp and is further distinguished by its use and chemical  
          makeup."  The report continues that "nine states have legalized  
          the cultivation and research of industrial hemp, including  
          Hawaii, Kentucky, Maine, Maryland, Montana, North Dakota,  
          Oregon, Vermont, and West Virginia.  However, because federal  
          law still prohibits cultivation, a grower still must get  
          permission from the DEA in order to grow hemp or face the  
          possibility of federal charges or property confiscation, despite  
          having a state-issued permit."  

           Prior Legislation
           
          AB 388 (Strom-Martin, 2002) would have requested the University  
          of California to assess the economic opportunities of specialty  
          or alternative fiber crops, including industrial hemp, and  
          report to the Legislature by January 1, 2004.  The bill was  
          vetoed by Governor Davis.

          AB 448 (Strom-Martin, 2001) would have authorized the Secretary  
          of Department of Food and Agriculture (DFA) to issue licenses to  
          cultivate hemp for commercial purposes.  The bill failed passage  
          in the Assembly Agriculture Committee,

          AB 1147 (Leno, 2006) would have permitted the cultivation of  
          industrial hemp in California.  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 under federal law. 

          AB 684 (Leno, 2007) would have permitted the cultivation of  

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          industrial hemp in California under a pilot program in four  
          counties.  The bill was vetoed by Governor Schwarzenegger.  In  
          his veto message, the Governor stated 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.

          SB 676 (Leno, 2011) would have permitted the cultivation of  
          industrial hemp in California under a pilot program in four  
          counties.  The bill was vetoed by Governor Brown.  In his veto  
          message, the Governor stated that hemp is still a federally  
          regulated controlled substance, although it is absurd that hemp  
          is being imported into the state, but our farmers cannot grow  
          it.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

          According to the Senate Appropriations Committee, DFA estimates  
          likely minor costs.  The Seed Services Program is funded on a  
          fee-for-service basis; thus, hemp seeds would be treated as  
          another kind of seed that has to be labeled in accordance to the  
          seed law.  The planting of marijuana amongst hemp could lead to  
          more allegations of bad seed and hence seed complaints that are  
          costly for DFA to investigate and administer.  However, this  
          likelihood is unknown. 

          Additionally, the Department of Justice would incur a one-time,  
          potentially significant General Fund cost to meet this bill's  
          reporting requirements.

           SUPPORT  :   (per Senate Agriculture Committee analysis of 4/1/13  
          - unable to reverify at time of writing)

          Hemp Industries Association (co-source)
          Vote Hemp (co-source)
          American Civil Liberties Union of California
          Business Alliance for Commerce in Hemp
          California Certified Organic Farmers
          California State Grange
          California State Sheriffs' Association
          California Teamsters Public Affairs Council
          Colorganics, Inc.
          Dash Hemp

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          Datsusara
          Dr. Bronner's Magic Soaps
          Drug Policy Alliance
          Ecological Farming Association
          Hempsteads
          Hempy's, Inc.
          Humboldt Traders
          Instituto Laboral de la Raza
          Jungmaven Ltd.
          Kings County Sheriff David S. Robinson
          Knoll Farms
          Lafe's Natural BodyCare
          Nutiva, Inc.
          Planning and Conservation League
          Santa Barbara Hemp Company
          The Living Temple
          United Food and Commercial Workers 8 - Golden State
          United Food and Commercial Workers, Western States Council
          US Hemp Oil Inc.

           OPPOSITION  :    (per Senate Agriculture Committee analysis of  
          4/1/13 - unable to reverify at time of writing)

          California Narcotic Officers' Association
          California Police Chiefs Association

           ARGUMENTS IN SUPPORT  :    According to the author, this bill "is  
          necessary to prepare California farmers to grow industrial hemp  
          immediately following federal approval.  The bill will allow  
          California farmers to take advantage of this economic  
          opportunity and more quickly meet the demands of California  
          businesses and manufacturers for a local source for raw hemp  
          material." 
           
          According to the author and sponsors, "the annual United States  
          retail market for hemp products has grown steadily since 1990 to  
          approximately $500 million in 2012, increasing at a rate of  
          about $26 million annually."  

           ARGUMENTS IN OPPOSITION  :    According to the opponents, "this  
          bill will undermine law enforcement efforts to curtail marijuana  
          cultivation and will result in significantly increased costs in  
          connection with the prosecution of marijuana trafficking cases."  
           Additionally, the opponents state, "the impact of legalizing  

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          hemp will be that marijuana cultivators will be able to  
          camouflage their illegal grows with a perimeter of same sex hemp  
          plants.  Effectively, this will require law enforcement to test  
          plants for THC content before taking any action."  

          According to the opponents, "since the state crime labs  
          currently are not equipped to test for THC content, they will  
          either have to incur the costs of gearing up for this function,  
          or local agencies will have to incur the additional costs of  
          finding a private lab to conduct testing? The increased costs  
          for marijuana trafficking prosecutions are incalculable."  

          Additionally, the opponents state, "Dr. Vantreese-Askren, who is  
          recognized as the nation's leading authority on the economics of  
          hemp cultivation, is dubious about the viability of a hemp  
          cultivation industry in the United States because American hemp  
          farmers would be unable to compete with the heavily subsidized  
          Chinese and European cultivation industries."


          JL:k  5/25/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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