ARIZONA HOUSE OF REPRESENTATIVES

Fifty-sixth Legislature

Second Regular Session

 

HB 2679: regulation; hemp-derived products.

Sponsor: Representative Payne, LD 27

Committee on Regulatory Affairs

Overview

Revises findings and requirements for rulemaking, licensing, inspection, recordkeeping and enforcement for industrial hemp and hemp-derived products.

History

Industrial hemp production has been gradually legalized under federal and state law after years of being regulated as a controlled substance. Crucially, hemp crops must have a Delta-9 Tetrahydrocannabinol (THC) concentration of 0.3% or less (dry weight); otherwise, they are considered marijuana and classified as a Schedule 1 controlled substance (Public Law 113-79). The Agriculture Improvement Act of 2018 authorized the production of hemp and removed hemp and hemp seeds from the Drug Enforcement Administration's Schedule of Controlled Substances. This act also directed the U.S. Department of Agriculture (USDA) to issue regulations and guidance to implement a program for hemp production in the United States (Public Law 115-334). The U.S. Domestic Hemp Production Program was established the following year (84 Federal Register 58522). The program allows states and Indian Tribes to have primary regulatory authority over their hemp production if their programs meet certain requirements—including licensing, recordkeeping and monitoring for compliance—and are approved by the USDA. States and Indian tribes that choose not to operate their own programs or whose plans are not approved are subject to a federal plan issued by the Secretary of the USDA (7 C.F.R. Part 990).

Arizona established a regulatory program for commercial industrial hemp production and a pilot program for this crop in 2018. The Arizona Department of Agriculture (ADA) licenses those who grow, harvest, transport, and process hemp and certifies hemp seed in accordance with its rules. Additionally, the ADA can conduct inspections and collect samples for analysis (Laws 2018, Chapter 287). Arizona's Industrial Hemp Program received USDA approval and became effective in 2022.

Provisions

Legislative Findings (Sec. 2)

1.   States that the purpose of the bill is to allow commercial production of industrial hemp as authorized by federal law while maintaining strict control of marijuana.

2.   Authorizes industrial hemp propagation, production, harvesting, transporting, processing, manufacturing and retailing in the state pursuant to statute and the rules and orders adopted by the Director of the ADA (Director).

3.   Permits industrial hemp research to be conducted in the state under an exempt fee license issued by ADA so long as the industrial hemp produced does not enter the stream of commerce and is disposed of according to the rules and orders adopted by the Director, unless the hemp seed is produced under an exempt fee that complies with statute.

4.   Removes the following:

a)   pilot program approval and authorization for industrial hemp growth, research, cultivation and marketing; and

b)   authorization of hemp seed that is derived from previously authorized hemp seed.

Rulemaking

5.   Allows the Director to authorize qualified applicants to produce or manufacture industrial hemp. (Sec. 3)

6.   Directs ADA to use fees established by the Director to regulate hemp-derived products. (Sec. 3)

7.   Requires the Director to:

a)   oversee and prescribe requirements for the labeling and retail sale of hemp-derived products;

b)   use rulemaking to protect the health, safety and welfare of consumers;

c) ensure hemp-derived products are only sold and marketed to persons who are at least 21 years of age;

d)   prohibit hemp-derived products from resembling specified living things and objects;

e)   prohibit licensees from offering hemp-derived products that resemble food or drink products intentionally marketed to children;

f) ensure licensees' hemp-derived products are securely stored and not accessible to persons under 21 years of age;

g)   mandate that manufacturers include a website link that links to specified information on all hemp-derived product packaging; and

h)   require manufacturers to submit hemp-derived products offered for sale in this state to an independent third-party laboratory for the purposes of obtaining a specified certificate of analysis. (Sec. 3)

8.   Exempts ADA from rulemaking requirements for one year. (Sec. 9)

Licenses (Sec. 4)

9.   Requires a manufacturer or retailer of industrial hemp to obtain a license from ADA.

10.  Exempts applicants for retail licenses from providing proof of a fingerprint clearance card when establishing license eligibility.

11.  Removes the provision that a member of an Indian tribe may apply for a license pursuant to the same requirements prescribed by statute and making the member subject to the same licensing requirements.

Inspection & Recordkeeping

12.  Specifies that the state agricultural laboratory or a laboratory certified by the state agricultural laboratory may perform an official analysis of an industrial hemp site to ensure compliance with ADA rules. (Sec. 5)

13.  Allows the official analysis of a crop to determine the total Delta-9 THC concentration within an acceptable margin of error. (Sec. 5)

14.  Allows the total Delta-9 THC concentration to be calculated using a chromograph technique that uses heat to convert THC acid into THC or a liquid chromograph technique that uses a specified conversion. (Sec. 5)

15.  Removes the requirement that a licensed grower notify the ADA of the sale or distribution of any industrial hemp grown under the grower's license, the name and address of the person or entity receiving the industrial hemp, and the amount of industrial hemp sold or distributed. (Sec. 5)

16.  Entitles the Director or a designee to enter any public or private premises during regular business hours to access regulated products and records and evaluate compliance with ADA rules and statute. (Sec. 5)

17.  Authorizes the Director or a designee to collect a sample of any hemp-derived product for analysis by a qualified laboratory during any physical inspection of a licensee. (Sec. 5)

18.  Allows the Director to issue and enforce a written cease and desist order against an industrial hemp licensee that prohibits further manufacturing except on approval of the Director. (Sec. 6)

19.  Adds hemp-derived product to the list of crops and products that the Director is allowed to seize and destroy for noncompliance with its rules. (Sec. 6)

20.  Requires the Industrial Hemp Advisory Council (Council) to annually review all rules and orders adopted by the Director to ensure compliance with federal law. (Sec. 7)

21.  Instructs the Council to recommend statutory and rule changes to the Director that are necessary to comply with federal law. (Sec. 7)

22.  Makes the possession of an industrial hemp license or status as a designee or agent of a licensee an affirmative defense to any prosecution for the possession or cultivation of marijuana or narcotic drugs. (Sec. 8)

23.  Excludes the possession of an industrial hemp license as a defense to a charge of possession, sale, transportation or distribution of marijuana or narcotic drugs. (Sec. 8)

Miscellaneous

24.  Defines and redefines pertinent terms.  (Sec. 1)

25.  Makes technical and conforming changes. (Sec. 1-7)☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note

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29.                    HB 2679

30.  Initials DC/IG     Page 0 Regulatory Affairs

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