BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 566
                                                                  Page  1


          SENATE THIRD READING
          SB 566 (Leno)
          As Amended  August 27, 2013
          Majority vote 

           SENATE VOTE  :39-0  
           
           PUBLIC SAFETY       7-0         AGRICULTURE         7-0         
           
           ----------------------------------------------------------------- 
          |Ayes:|Ammiano, Melendez,        |Ayes:|Eggman, Olsen, Atkins,    |
          |     |Jones-Sawyer, Mitchell,   |     |Dahle, Pan, Quirk, Yamada |
          |     |Quirk, Skinner, Waldron   |     |                          |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           APPROPRIATIONS      16-1                                        
          
           ----------------------------------------------------------------- 
          |Ayes:|Gatto, Harkey, Bocanegra, |     |                          |
          |     |Bradford, Ian Calderon,   |     |                          |
          |     |Campos, Donnelly, Eggman, |     |                          |
          |     |Gomez, Hall, Holden,      |     |                          |
          |     |Linder, Pan, Quirk,       |     |                          |
          |     |Wagner, Weber             |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Bigelow                   |     |                          |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Allows the regulated cultivation and processing of  
          industrial hemp upon federal approval, as specified.   
          Specifically,  this bill  :

          1)Establishes the California Industrial Hemp Farming Act (Act).

          2)Defines "industrial hemp" as a fiber or oilseed crop, or both,  
            that is limited to nonpsychoactive types of the plant Cannabis  
            sativa L. and the seed produced therefrom, having no more than  
            three-tenths of 1% tetrahydrocannabinol (THC) contained in the  
            dried flowering tops, and that is 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 any other compound,  
            manufacture, salt, derivative, mixture, or preparation of the  








                                                                  SB 566
                                                                  Page  2


            mature stalks, except the resin or flowering tops extracted  
            therefrom, fiber, oil, or cake, or the sterilized seed of the  
            plant that is incapable of germination.

          3)Revises the definition of "marijuana" to clarify that it does  
            not include industrial hemp, as defined in this bill, except  
            where the plant is cultivated or processed for purposes not  
            expressly allowed.

          4)States that there is in the California Department of Food and  
            Agriculture (CDFA) an Industrial Hemp Advisory Board (Board)  
            and specifies who shall sit on the Board.

          5)States except when grown by an established agricultural  
            research institution or by a registered seed breeder  
            developing a new California seed cultivar, industrial hemp  
            shall only be grown if it is on the list of approved seed  
            cultivars.

          6)Provides guidelines on what shall be included in the list of  
            approved seed cultivars.

          7)States that, except for an established agricultural research  
            institution, and before cultivation, a grower of industrial  
            hemp for commercial purposes shall register with the  
            commissioner of the county in which the grower intends to  
            engage in industrial hemp cultivation.

          8)States that, except for an established agricultural research  
            institution, and before cultivation, a seed breeder shall  
            register with the commissioner of the county in which the seed  
            breeder intends to engage in industrial hemp cultivation.

          9)Specifies the application procedures for a seed breeder and a  
            grower of industrial hemp to register with the commissioner of  
            the county.

          10)Requires the County Agricultural Commissioner to transmit  
            information collected during the application process to CDFA.

          11)Requires CDFA to establish a registration fee and appropriate  
            renewal fee to be paid by growers of industrial hemp for  
            commercial purposes and seed breeders, not including an  
            established agricultural research institution, to cover the  








                                                                  SB 566
                                                                  Page  3


            costs of implementing, administering, and enforcing these  
            provisions.

          12)States that fees collected by the commissioners upon  
            registration or renewal shall be forwarded, according to  
            procedures set by CDFA, to the CDFA for deposit into the  
            Department of Food and Agriculture Fund to be used for the  
            administration and enforcement of these provisions. 

          13)States that, except when grown by an established agricultural  
            research institution or registered seed breeder developing a  
            new California seed cultivar, industrial hemp shall be grown  
            only as a densely planted fiber or oilseed crop, or both, in  
            acreages of not less than five acres at the same time, and no  
            portion of an acreage of industrial hemp shall include plots  
            of less than one contiguous acre. 

          14)Requires registered seed breeders, for purposes of seed  
            production, to only grow industrial hemp as a densely planted  
            crop in acreages of not less than two acres at the same time,  
            and no portion of the acreage of industrial hemp shall include  
            plots of less than one contiguous acre.

          15)Prohibits ornamental and clandestine cultivation, as well as  
            the pruning, culling, and tending of individual plants, of  
            industrial hemp. 

          16)Requires all plots to have adequate signage indicating they  
            are industrial hemp.

          17)Provides that industrial hemp shall include products imported  
            under the Harmonized Tariff Schedule of the United States  
            (2013) of the United States International Trade Commission.

          18)Requires, except when industrial hemp is grown by an  
            established agricultural research institution, a registrant  
            that grows industrial hemp under this Act to obtain a  
            laboratory test report indicating the THC levels of a random  
            sampling of the dried flowering tops of the industrial hemp  
            grown before the harvest of each crop as specified.

          19)Mandates, not later than January 1, 2019, or five years after  
            the provisions of this bill are authorized under federal law,  
            whichever is later, the Attorney General to report to the  








                                                                  SB 566
                                                                  Page  4


            Assembly and Senate Agriculture Committees and the Assembly  
            and Senate Public Safety Committees the reported incidents, if  
            any, of the following:

             a)   A field of industrial hemp being used to disguise  
               marijuana cultivation; or,

             b)   Claims in a court hearing by persons other than those  
               specifically exempted that marijuana is industrial hemp.

          20)States pursuant to existing law, this section related to the  
            Attorney Generals' report is repealed on January 1, 2023, or  
            four years after the date that the report is due, whichever is  
            later.

          21)Requires, not later than January 1, 2019, or five years after  
            the provisions of this bill are authorized under federal law,  
            whichever is later, the board, in consultation with the Hemp  
            Industries Association, to report the following to the  
            Assembly and Senate Agriculture Committees and the Assembly  
            and Senate Public Safety Committees:

             a)   The economic impacts of industrial hemp cultivation,  
               processing, and product manufacturing in California; and,

             b)   The economic impacts of industrial hemp cultivation,  
               processing, and product manufacturing in other states that  
               may have permitted industrial hemp cultivation.

          22)States that these provisions shall not become operative  
            unless authorized under federal law.

          23) Requires, if these provisions become operative, the Attorney  
            General to issue an opinion on the extent of authorization  
            under federal law and California law, the operative date of  
            those provisions, and whether federal law imposes any  
            limitations that are inconsistent with these provisions.

          24)States that the Attorney General shall post the opinion on  
            its Internet Web site.

          25)Makes various legislative declarations and findings on  
            industrial hemp.









                                                                  SB 566
                                                                  Page  5


           EXISTING 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 which is  
            incapable of germination.  

          2)States that except as otherwise provided by law, every person  
            who plants, cultivates harvests, dries, or processes, any  
            marijuana, or any part thereof, except as otherwise provided  
            by law, shall be punishable by imprisonment in the county jail  
            as specified.  

          3)States that except as otherwise provided by law, every person  
            that possesses marijuana for the purposes of sale shall be  
            punished by imprisonment in the county jail as specified.  

          4)Provides, 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 or by a fine of not more than $500, or by both such  
            fine and imprisonment, or shall be punished by imprisonment in  
            the county jail as specified. 

          5)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 an infraction punishable  
            by a fine of not more than $100.  

          6)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 or by  
            a fine of not more than $500, or by both such fine and  
            imprisonment.  

           EXISTING FEDERAL LAW  :








                                                                  SB 566
                                                                  Page  6



          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 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  
            therefrom), fiber, oil, or cake, or the sterilized seed of  
            such plant which is incapable of germination."  

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

          3)Lists marijuana as a schedule I controlled substance.  

          4)Lists THC as a separate schedule I substance.  As clarified by  
            case law, 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."  

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee:

          1)Minor, likely absorbable, costs to CDFA to support the  
            Industrial Hemp Advisory Board. 

          2)Minor, likely absorbable, costs to CDFA to establish and  
            maintain a list of approved seed varietals. 

          3)Unknown administrative costs, fully covered by fee revenue, to  
            county agricultural commissions to operate a registration  
            program and to implement and enforce the act.

          4)Costs of laboratory reports would be borne by registrants.

          5)Minor absorbable reporting costs to the Department of Justice.  










                                                                  SB 566
                                                                  Page  7


           COMMENTS  :   According to the author, "SB 566 will allow  
          California farmers to be one of the most prepared farmers in  
          America to grow hemp once the federal government allows it.   
          Industrial hemp is a variety of the species Cannabis sativa L.  
          that has no psychoactive qualities because it contains less than  
          three-tenths of one percent THC.  Even though it is a distant  
          cousin of marijuana, which ranges from three to 15 percent THC  
          content, industrial hemp is not a drug and it is not marijuana.

          "This bill creates jobs.  California companies account for over  
          50 percent of the revenues of the United States retail market  
          for hemp products which is approximately $500 million and  
          growing.  California hemp cultivation will create the need for  
          hemp seed and fiber processing facilities.  With so many  
          California-based hemp industry companies, investors will take  
          the opportunity to support the development of hemp processing  
          operations that would employ numerous Californians.  

          "Hemp is an extremely beneficial crop for farmers.  Because it  
          grows in dense groves, hemp is a smother crop that requires  
          little or no pesticides or herbicides.  Hemp is also a great  
          rotation crop as it leaves nutrients in the soil for the next  
          crop.

          "Because of the perceived similarity to marijuana, industrial  
          hemp has not been grown in United States since the 1950s;  
          however, the two are very different.  The industrial hemp plant  
          is a stalk similar to bamboo, has few branches, has been bred  
          for maximum production of seed, and grows to a height up to 16  
          feet.  It is planted in densities of 100 to 300 plants per  
          square yard.  Marijuana is a tropical variety of cannabis that  
          usually grows to a height of six feet and has been bred to have  
          many branches to maximize flowering and minimize seeding.   
          Unlike hemp, marijuana is planted with wide spaces between  
          plants to maximize flowering. 

          "Because this bill is operative only upon federal approval,  
          there are no conflicts with federal law.  Federal approval may  
          take several different forms including a federal administrative  
          waiver or a change in federal law.  The Industrial Hemp Farming  
          Act of 2013 (H.R. 525 and S. 359) has been introduced in both  
          houses of Congress with bipartisan support including strong  
          support from Senate Majority Leader Mitch McConnell and Senator  
          Rand Paul.  If the current federal legislation passes, the  








                                                                  SB 566
                                                                  Page  8


          federal government will defer to states to regulate hemp  
          cultivation.  

          "SB 566 provides the necessary framework, provisions and  
          regulations for California hemp cultivation.  Once federal  
          permission for cultivation is given, the Attorney General will  
          issue an opinion on the extent of federal approval and will note  
          whether federal law imposes any limitations that are  
          inconsistent with the provisions of this bill.  The Attorney  
          General will then post the opinion on their website.  From  
          there, the provisions of the bill outline the cultivation  
          requirements and restrictions.

          "Before planting, farmers must register with their County  
          Agricultural Commissioner and give basic information about the  
          cultivation plot location and what type of California Department  
          of Food and Agriculture-approved hemp they will grow.  In  
          addition, hemp must be grown in a minimum of five continuous  
          acres and farmers must post signage surrounding the field of  
          cultivation to indicate that industrial hemp is grown and not  
          anything else.  Similar requirements are in place in Canada and  
          have been effective in thwarting people from stealing crops.

          "This bill also contains a number of safeguards to ensure that  
          hemp crops meet the three-tenths of one percent THC.  Prior to  
          harvest, growers must obtain a laboratory test report from a  
          federal DEA registered laboratory documenting the THC content of  
          their crop, the size of the acreage, and its G.P.S. location.   
          Farmers must retain a copy of the test report for two years from  
          its date of sampling, make it available to law enforcement  
          officials upon request, and are required to provide a copy to  
          each person purchasing, transporting, or otherwise obtaining the  
          oil, fiber, or seed of the plant. If you do not pass the test,  
          you cannot sell your product.

          "SB 566 ensures that law enforcement will not be negatively  
          impacted.  Under the terms of this bill, all flowering tops of  
          the industrial hemp plant, which have no legal commercial  
          application, are not permitted if removed from the field of  
          cultivation.  Although hemp flowers have no psychoactive effect,  
          this relieves law enforcement of any need to distinguish hemp  
          from marijuana.  For these reasons, the bill enjoys the support  
          of the California State Sheriffs' Association.









                                                                  SB 566
                                                                  Page  9


          "Five years after federal approval, the Attorney General will  
          report to the Legislature on any law enforcement impacts of  
          industrial hemp cultivation and the Industrial Hemp Advisory  
          Board, which is in place to advise the Secretary of the  
          California Department of Food and Agriculture on issues related  
          to hemp, is also required to report to the Legislature regarding  
          the economic impacts of hemp cultivation.
           
          "All together, these provisions lay the necessary groundwork for  
          California farmers to be prepared for the federal government's  
          allowance of hemp cultivation and to quickly begin meeting the  
          needs and demands of California businesses and consumers.   
          Adding no cost to law enforcement efforts, industrial hemp will  
          provide a huge benefit to farmers, manufacturers, and the  
          environment and will create jobs."

          Please see the policy committee analysis for a full discussion  
          of this bill.
           

          Analysis Prepared by  :    Stella Choe / PUB. S. / (916) 319-3744 


                                                                FN: 0001984