BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 676 (Leno)
Hearing Date: 05/16/2011 Amended: 04/28/2011
Consultant: Jolie Onodera Policy Vote: Agriculture 5-1
Public Safety 5-2
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BILL SUMMARY: SB 676 would authorize an eight-year, five-county
pilot project with respect to the cultivation and processing of
industrial hemp. Specifically, this bill:
1) Defines "industrial hemp", as specified;
2) Revises the definition of marijuana to exclude
industrial hemp, as defined;
3) Allows the closely-regulated cultivation and processing
of industrial hemp during an eight-year pilot period that
would 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,
San Joaquin, and Yolo Counties;
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.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Enforcement Unknown; non-reimbursable local
costsLocal
DOJ reporting Minor, absorbable costs General
Seed revenue $25 in annual revenue to Seed
Special*Services Program
Seed labeling Unknown; potentially $20 - $40 Special*
complaints to CDFA per investigation
*Department of Food and Agriculture Fund
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STAFF COMMENTS:
Under existing law "marijuana" is defined as all parts of the
plant Cannabis sativa L., whether growing or not, the seeds,
resin extracted, and every compound, manufacture, salt,
derivative, mixture, or preparation of the plant, its seeds or
resin. Existing law exempts from the definition the mature
stalks of the Cannabis plant, fiber produced from the stalks,
oil or cake made from the seeds, other by-products of the stalks
and seeds, and sterile seed.
This bill would define "industrial hemp" as an agricultural
field crop that is limited to nonpsychoactive types of the plant
Cannabis sativa L. having no more than three-tenths of one
percent (0.3%) 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,
other by-products of the stalks and seeds, and sterile seed.
This bill revises the definition of "marijuana" to exclude
industrial hemp as defined unless the plant is cultivated or
processed for purposes not expressly allowed under the
provisions of this bill.
This bill requires growers of industrial hemp in the pilot
counties to grow their crops in acreages of not less than five
acres with adequate signage indicating the crop is industrial
hemp. Growers must obtain a laboratory test report issued by a
federal Drug Enforcement Administration (DEA)-registered
laboratory prior to harvest indicating the THC levels below the
required levels. Upon receipt of a first laboratory test report
indicating a percentage content of THC that exceeds one percent
or a second test report indicating a percentage content that
exceeds three-tenths of one percent, the hemp must be destroyed.
Laboratory tests are to be retained by the grower for two years,
be made available to law enforcement upon request and to any
person purchasing or obtaining raw hemp materials. The pilot
project will sunset on January 1, 2020.
The DOJ indicates the cost of reporting to the Legislature
incidents of industrial hemp being used to disguise marijuana
SB 676 (Leno)
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cultivation and court claims by persons that marijuana is
industrial hemp will be minor and absorbable.
Under existing law, the Department of Food and Agriculture
(CDFA) enforces the California Seed Law for agricultural seed,
and would subsequently provide enforcement for industrial hemp
seed once it is recognized as an agricultural crop. Seed
Services is responsible for investigating the false
representation of seeds that are not the variety stated on the
label so would likely be authorized to pursue a seed complaint
if/when an allegation is made that the planting seed contained
THC levels that are higher than the legal limits. To the extent
seed labeling issues arise from the hemp seed, there would be a
cost to CDFA to initiate the investigation, (exclusive of THC
content) which could result in costs of $20,000 - $40,000 per
complaint, offset to a degree by estimated annual seed revenue
of $25,000. It is unknown how many complaints might be filed,
but at least five complaints would need to be filed annually in
order to exceed the Suspense File threshold of $150,000 from a
special fund. CDFA indicates any complaints would be turned over
to federal law enforcement for investigation of a DEA permit
violation.
Prior Legislation. AB 1147 (Leno) 2006 would have permitted the
cultivation of industrial hemp in California. This bill was
vetoed by the Governor who stated in his veto message that hemp
is still considered a cannabis plant regardless of its THC
content, and therefore, illegal under federal law.
AB 684 (Leno) 2007 was substantially similar to the current bill
SB 676 and would have authorized a five-county pilot program for
the cultivation of industrial hemp in California. This bill was
vetoed by the Governor with the following message:
As I indicated last year, I appreciate and applaud the
Legislature's interest in actually expanding California's
economy; however, I am concerned about the impact of the
particular type of expansion that is being proposed. I recognize
and am proud of that fact that California is a national and
world leader in the production of high-quality agricultural
commodities. Our state has a rich agricultural environment and
we must strive to protect and promote farming, ranching and
agri-business in California, while preserving natural resources
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and protecting consumers.
Given these facts, I would like to support the expansion of a
new agricultural commodity in this State. Unfortunately, I am
very concerned that this bill would give legitimate growers a
false sense of security and a belief that production of
"industrial hemp" is somehow a legal activity under federal law.
Under federal law, all cannabis plants, regardless of variety or
THC content, are simply considered to be "marijuana", which is a
federally regulated controlled substance. Any person in the
United States that wishes to grow cannabis plants for any
purpose, including industrial purposes, must first obtain
permission and register with the U.S. Drug Enforcement
Administration (DEA). Failure to do so would be a violation of
federal law and could subject an individual to criminal
penalties.
In addition, 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. This is troubling given the needs in this state for
the eradication and prevention of drug production. For these
reasons, I am unable to sign this bill.