HB2278

SECTION 1. The purpose of this Act is to establish a program for the production of hemp in the State.

SECTION 2. Chapter 141, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . HAWAII HEMP PRODUCTION PROGRAM

§141-A Definitions. As used in this part:

"Cannabis" means the genus of flowering plants in the family Cannabaceae. For the purposes of this part, cannabis refers to any form of the plant where the delta-9 tetrahydrocannabinol concentration on a dry weight basis has not yet been determined.

"Chairperson" means the chairperson of the board of agriculture or their designee.

"Corrective action plan" means a plan established by the department of agriculture for a licensed hemp producer to correct a negligent violation or non-compliance with a hemp production plan and this part.

"Daycare" means a place of daytime training, supervision, recreation, and or medical services for children of preschool age, for the disabled, or for the elderly.

"Decarboxylated" means the completion of the chemical reaction that converts delta-9 tetrahydrocannabinol's acids (THCA) into delta-9 tetrahydrocannabinol. The decarboxylated value may be calculated using a conversion formula that sums delta-9 tetrahydrocannabinol and eighty-seven and seven tenths (87.7) per cent of THCA.

"Delta-9 tetrahydrocannabinol" or "THC" is the primary psychoactive component of cannabis.

"Department" means the department of agriculture.

"Dry weight basis" refers to a method of determining the percentage of a chemical in a substance after removing the moisture from the substance.

"Entity" means a corporation, joint stock company, association, limited partnership, limited liability partnership, limited liability company, irrevocable trust, estate, charitable organization, or other similar organization, including any such organization participating in the hemp production as a partner in a general partnership, a participant in a joint venture, or a participant in a similar organization.

"Executive officer" means a president, chairperson of an executive committee, senior officer responsible for the applicant or licensee's business, chief financial officer, chief operating officer, or any other person who performs similar functions related to the licensee or applicant.

"GPS coordinates" means a location designated through a global system of navigational satellites used to determine the precise ground position of a place or object.

"Handle" refers to the actions of cultivating or storing hemp plants or hemp plant parts prior to the delivery of such plant or plant part for further processing. In cases where cannabis plants exceed the acceptable hemp THC level, handle may also refer to the disposal of those plants.

"Hemp" means cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9-tetrahydrocannabinol concentration of not more than 0.3 per cent on a dry weight basis, as measured post-decarboxylation or by other similarly reliable method. "Hemp" as used in this part does not include hemp products.

"Hemp product" means a product containing hemp, or any product derived from, or made by, processing hemp, including but not limited to consumables, cosmetics, personal care products, food intended for animal or human consumption, supplements, cloth, cordage, fiber, fuel, paint, paper, particleboard, plastics, and any product containing one or more hemp-derived cannabinoids such as cannabidiol that:

(1) Does not include any living hemp plants, viable seeds, leaf materials, or floral materials; and

(2) Has a delta-9-tetrahydrocannabinol concentration of not more than 0.3 per cent on a dry weight basis, as measured post-decarboxylation or by other similarly reliable method.

"Key participants" means a person or group of persons acting in concert who exercises control over or has a twenty-five per cent ownership interest or more in an applicant or licensee under this chapter, such as an owner or partner in a partnership. A key participant also includes persons in a corporate entity at executive levels including managers and executive officers. This does not include management such as farm, field, or shift managers.

"Lot" refers to a contiguous area in a field, greenhouse, or indoor growing structure containing the same variety or strain of cannabis throughout.

"Licensed land area" means a contiguous parcel or tract of land authorized by the department for the production of hemp.

"Negligence" means failure to exercise the level of care that a reasonably prudent person would exercise in complying with the regulations set forth under this part.

"Licensee" means a person or entity authorized to grow hemp under the terms established in this part.

"Playground" means any public outdoor facility, including any parking lot appurtenant thereto, that is intended for recreation, with any portion thereof containing three or more separate apparatus intended for the recreation of children, including but not limited to sliding boards, swing sets, and teeterboards.

"Post-decarboxylation" means testing methodologies for THC concentration levels in hemp, where the total potential delta-9-tetrahydrocannabinol content, derived from the sum of the THC and THCA content, is determined and reported on a dry weight basis.

"Processor" means an individual or entity authorized by the State of Hawaii if in the State or another receiving state if applicable to receive harvested hemp from a licensed producer for the purpose of transformation of the harvested hemp into a hemp product.

"Produce" refers to the propagation or cultivation of hemp.

"Producer" means a person or entity with a share in a hemp crop and shares in the risk or production of hemp under the program.

"Program" means the Hawaii hemp production program.

"School" means any public or private preschool, kindergarten, elementary, intermediate, middle, secondary, or high school.

"State" means the State of Hawaii unless specified otherwise.

"Store" is part of the term "handle" under this part and means to deposit harvested hemp in a storehouse, warehouse, or other identified location within the producer's licensed land area prior to delivery to a recipient for further processing.

"USDA" means the United States Department of Agriculture.

"Varietal" means a group of plants or an individual plant that exhibits distinctive observable physical characteristics or has a distinct genetic composition and includes viable seeds and a plant or plant part that can be utilized to grow a new plant.

§141-B Hawaii hemp production program. (a) There is established within the department the Hawaii hemp production program.

(b) The department shall administer hemp production licensure and regulation, pursuant to this part.

(c) No person or entity shall produce hemp in the State unless the person or entity has a valid license issued by the department pursuant to this part.

§141-C License applicants. (a) If the applicant is an individual, the application shall include supporting documentation to establish that the individual:

(1) Is not less than twenty-one years of age;

(2) Has been a legal resident of the State of Hawaii for not less than three years preceding the date of application;

(3) Has no felony convictions related to a controlled substance under state or federal law in the ten years immediately preceding the date of submission of the application;

(4) Has a Hawaii tax identification number; and

(5) Has a federal employer identification number.

(b) If the applicant is an entity, the application shall include supporting documentation to establish that the entity:

(1) Is organized under the laws of the State of Hawaii;

(2) Has a Hawaii tax identification number;

(3) Is registered with the business registration division of the Hawaii department of commerce and consumer affairs to do business in this State;

(4) Has a federal employer identification number;

(5) Is not less than fifty-one per cent held by Hawaii legal residents or entities wholly controlled by Hawaii legal residents who have been Hawaii legal residents for not less than three years immediately preceding the date the application was submitted; and

(6) Is composed of key participants each of whom has had no felony convictions related to a controlled substance under state or federal law in the ten years immediately preceding the date of submission of the application.

(c) Each applicant, including an individual applicant and all key participants of an entity applicant, shall be subject to background checks conducted by the department or its designee, including but not limited to criminal history records checks in accordance with section 846-2.7. The person undergoing the background check shall provide written consent and all applicable processing fees to the department or its designee to conduct the criminal history record checks.

(d) Pursuant to, and in accordance with, section 846-2.7, the department or its designee is authorized to conduct state and national criminal history record checks on all license applicants, including an individual applicant and all key participants of an entity applicant, and participate in the rap back program, for the purpose of determining suitability or fitness for a license under this part.

(e) If an individual or one or more of an applying entities' key participants had a hemp production license revoked or non-renewed due to a violation, whether as an individual or as a key participant of an entity, the individual or applying entity is ineligible for a license under the program for a period of five years from the date of the revocation or nonrenewal.

(f) Any person convicted of a felony related to a controlled substance under state or federal law is prohibited from producing hemp for ten years following the date of conviction.

§141-D License applications. (a) An individual or entity that intends to produce hemp in the State shall apply to the department for a license on an application form prescribed by the department.

(b) The application form shall request information necessary to verify that applicants meet the required qualifications pursuant to section 141-C. Applicants shall provide, at a minimum, the following information:

(1) The exact name of the applicant, any fictitious or trade name used by the applicant in the conduct of its business, and the location of the applicant's business records;

(2) If the applicant is an individual, the applicant's mailing address, phone number, and email address;

(3) If the applicant is a business entity: the address of the principal business location, full name and title of key participants, phone number, an email address, and federal employer identification number of the business entity;

(4) Disclosure of any pending or final suspension, revocation, or other enforcement action by any state or governmental authority for the five-year period prior to the date of the application;

(5) The legal description of the proposed licensed land area on which the hemp will be produced and stored incident to production as applicable;

(6) The GPS coordinates in decimal degrees from the central most point of the proposed licensed land area on which the hemp will be produced and stored incident to production as applicable;

(7) Certification that the proposed licensed land area is under the legal control of the applicant and that the applicant has the authority to produce and store hemp incident to production as applicable on the proposed licensed land area;

(8) Certification that applicable zoning or land use restrictions allow for the production of hemp and storage incident to the production of hemp on the proposed licensed land area;

(9) Certification that the licensee shall indemnify, hold harmless, and release forever the State and its departments, agencies, officers, employees, and agents of any kind from all liability claims arising out of the licensees' actions involving the production of hemp;

(10) Certification that the applicant and key participants of the applicant have not personally nor as a key participants of an entity previously had a license or equivalent authorization to produce hemp revoked, or non-renewed under any state, tribal, or USDA hemp production program or hemp pilot program; and

(11) Any other information required by the department.

(c) In addition to the application form, the applicant shall submit a non-refundable application fee set by the department by certified or cashier's check. If, for any reason, the application fee is not submitted with the application, or not available for deposit, the application for a license shall be deemed void and the department shall inform the applicant in writing that its application has been rejected.

(d) If an applicant submits an application form in which all required information is not complete and valid, the application shall not be granted.

(e) Any person found to have made any fraudulent or false statement or misrepresentation in the information submitted in the person's application or in violation of this chapter will be ineligible to participate in the program, shall be subject to denial of an application or immediate revocation of a license, and may be referred to law enforcement.

§141-E Licensing. (a) If the department determines that all requirements for a license are satisfied, the department may offer a license agreement to the applicant. The license agreement shall set forth the terms and conditions for participation in the program. Failure to comply with any of the terms and conditions of the license agreement and this part shall constitute grounds for the department to impose the penalties and sanctions set forth in section 141-M.

(b) Within seven days of being offered a license agreement, a nonrefundable license fee shall be submitted to the department by certified or cashier's check or the department shall revoke its offer of the license agreement unless the department, in its sole discretion and for good cause shown, decides otherwise.

(c) Upon the receipt of a properly executed license agreement and the license fee, the department shall issue a license authorizing the applicant to produce hemp in accordance with the terms and conditions of the license agreement.

(d) A license shall be valid for three years from the date of issuance subject to the payment of an annual license fee prior to the beginning of each license year. Prior to the expiration of a license, within a time set by the department, a licensee may apply to renew the license, subject to any renewal requirements and renewal fees set by the department.

(e) Licenses shall not be transferrable.

(f) If a licensed entity's key participants change or the licensed entity is sold or otherwise transferred to new key participants, the licensed entity shall submit a request to the department for approval at least thirty days prior to any change, sale, or transfer. Any request shall include information sufficient to establish the new key participants meet all the requirements under this part and shall have had no felony controlled substance convictions within the last ten year preceding the date of transfer. The department may deny a request if it deems any key participant has failed to meet all the requirements under this part.

§141-F Tracking. (a) The department shall establish, maintain, and control a computer software tracking system that shall have real time, twenty-four-hour access to the data of all licensees.

(b) The computer software tracking system shall collect data relating to, at a minimum:

(1) The total amount of cannabis or hemp in possession of a licensee from either seed or immature plant state, including all plants that are derived from cuttings or cloning, until the cannabis or hemp is harvested or destroyed;

(2) The amount of waste produced by each harvest or disposal process; and

(3) The transport of hemp between a licensee and an authorized processor, including the identity of the person transporting the hemp, and the make, model, and license number of the vehicle being used for the transport.

(c) The procurement of the computer software tracking system established pursuant to this section shall be exempt from chapter 103D; provided that:

(1) The department shall publicly solicit at least three proposals for the computer software tracking system; and

(2) The selection of the computer software tracking system shall be approved by the chairperson of the department.

(d) The department may establish fees necessary to implement, operate, and maintain the computer software tracking system.

(e) A licensee shall purchase, operate, and maintain a computer software tracking system that shall interface with the department's computer software tracking system.

§141-G Confidential information. (a) The following information relating to a licensee or applicant for a license that is in the department's possession for the purposes of this part shall be considered confidential and shall not be made available to the public unless authorized by the licensee or applicant; provided that the information shall be made available to any law enforcement agency or officer, third party authorized by the state to test and sample cannabis for the purposes of this program, the USDA, and another Hawaii state agency:

(1) Information identifying the legal address and GPS coordinates of the locations of licensed land areas;

(2) Information obtained about an individual as a result of a criminal history record check;

(4) Any financial data received from an applicant or licensee; and

(3) Data collected by the department's computer software tracking system.

§141-H Information sharing and collection. Notwithstanding section 141-G, licensees shall be required to report the following information to the department to be shared with the USDA:

(a) Hemp crop acreage;

(b) Total acreage of hemp planted, harvested, and disposed;

(d) Street address of the licensed land area;

(e) GPS coordinates of each lot or greenhouse where hemp will be produced;

(f) Acreage of greenhouse or indoor square footage dedicated to the production of hemp; and

(g) Any other information required by the department or USDA.

§141-I Licensed land areas. (a) Licensees shall be authorized to produce hemp only within the licensed land area approved by the department in the licensees' license. The licensed land area approved by the department may be less than the acreage proposed in the licensees' application.

(b) A licensee shall not store or produce hemp outside of its licensed land area.

(c) A licensee shall not handle or possess hemp outside of its licensed land area except for the purpose of transportation to an authorized processor or to another licensee's licensed land area as authorized by the department.

(d) A licensed land area, as described in a license, shall not be modified in any way without the prior written approval of the department.

(e) The production of hemp in accordance with this part shall be limited to lands situated within the state agricultural land district.

(f) No land area shall be licensed for hemp production within 1,000 feet of the real property comprising a playground, school, state park, state recreation area, residential neighborhood, hospital, or daycare.

(g) A licensed land area shall not exceed forty acres; however, the chairperson may authorize a licensed land area greater than forty acres if hemp in the licensed land area is to be produced solely for one or more of the following purposes:

(1) Hemp fiber;

(2) Hemp hurd;

(3) Hemp grain; or

(4) Phytoremediation.

§141-J Transport. (a) A licensee shall not transport hemp outside of the licensed land area; provided that a licensee may transport hemp to an authorized processor or to another licensee's licensed land area as authorized by the department.

(b) The department and law enforcement may require movement reports, inspections, sampling, or testing, and may impose other conditions or restrictions on the transport of hemp.

§141-K Inspection, sampling, testing. (a) All licensees shall allow federal, state, and county law enforcement authorities to inspect the records, licensed land area, equipment, facilities, and areas incident to the production or storage of hemp to verify compliance with the requirements of this part, and to sample and test cannabis plants, plant materials, and seeds possessed under the license.

(b) The department, law enforcement, and third party agents authorized by the department may enter during business hours upon any licensed land area or place of business associated with the license to inspect the records, licensed land area, equipment, facilities, and areas incident to the production or storage of hemp to verify compliance with the requirements of this part, and to sample and test any cannabis plants, plant materials, or seeds.

(c) An authorized representative of the licensee or the licensee shall be present at the growing site during sample collection.

(d) Licensees shall pay the department or third-parties authorized by the department for the performance of inspections of a licensee's licensed land area and records to ensure compliance with the license, and for sample collection and testing of cannabis plants, plant materials, or seeds for the purposes of this part.

(e) The department shall establish sample collection protocols that shall be used for the purpose of collecting representative amounts of cannabis from licensed land areas for testing to measure delta-9-tetrahydrocannabinol concentration. The protocols must adhere to USDA's sampling guidelines for hemp growing.

(f) The department shall establish laboratory standards and testing protocols that shall be used to determine delta-9-tetrahydrocannabinol concentration measured post decarboxylation or by other similarly reliable methods. The protocols must adhere to USDA standards of performance for detecting THC concentration including measurement of uncertainty.

§141-L Disposal of non-compliant plants. (a) If a producer has produced cannabis exceeding the acceptable hemp THC level, the material must be disposed of in accordance with the law. The material must be collected by or destroyed under the supervision of a person authorized under the law to handle marijuana, such as a Drug Enforcement Agency registered reverse distributor, or a duly authorized federal, state, or local law enforcement officer. The licensee shall be responsible for the cost of disposal.

(b) USDA shall be notified of non-compliant plants and subsequent disposals as necessary.

§141-M Revocation and suspension of licenses; other penalties. (a) In addition to any other actions authorized by law, the department may deny, revoke, or suspend any license applied for or issued by the department in accordance with this part, and to fine or otherwise discipline a licensee for any cause authorized by law, including but not limited to the following:

(1) Procuring a license through fraud, misrepresentation, or deceit;

(2) Violation of any of the provisions of this chapter or the rules adopted thereto;

(3) Failure to comply with a department order;

(4) Making a false statement on any document submitted or required to be filed by this chapter, including furnishing false or fraudulent material information in any application;

(5) Refusal or failure to fully cooperate and assist the department or authorized third party with any inspection, sampling, or testing process;

(6) Failure to provide any information required by the department pursuant to this part;

(7) Providing false, misleading, or incorrect information to the department by any means, including in any application, report, record, or inspection;

(8) Cultivating hemp that when tested is shown to have a delta-9 tetrahydrocannabinol concentration greater than 0.3 per cent on a dry weight basis;

(9) Harvesting cannabis prior to sample collection and testing;

(10) Handling, processing, or putting into the stream of commerce any cannabis from a lot where the acceptable THC level is noncompliant with the threshold for hemp;

(11) Commingling the hemp or cannabis plant material from one lot with the hemp plant material from other lots.

(12) Failure to pay any fee assessed by the department or third-party inspector or laboratory authorized by the department; or

(13) Failure to comply with any other applicable federal, state, or county law, ordinance, rule, or regulation.

(b) For any violation of this part, including any rule adopted pursuant thereto, the department may impose civil penalties up to $1,000 for each separate offense. Each day or instance of a violation shall constitute a separate offense.

(c) The department may issue immediate temporary cease and desist orders as necessary to prevent immediate harm to the public.

(d) If the department revokes or suspends a license under this section, the licensee shall not sell, transfer, or otherwise dispose of any hemp owned by or in the possession of the licensee.

(e) A licensee whose license has been revoked in accordance with this part shall be ineligible for a new license under the program for a period of five years from the date of revocation.

(f) All proceedings for denial, suspension, fine, or revocation of a license on any ground specified in subsection (a) shall be conducted pursuant to chapter 91, including the right to judicial review.

§141-N Corrective action plans. (a) Notwithstanding section 141-M, if the department, in its sole discretion, determines that a licensee has negligently violated this part, or any rules adopted pursuant thereto, the department shall require the licensee to comply with a corrective action plan established by the department to correct the violation, which may include disposal of a hemp crop, plant, plant material, or seed, whether growing or not, and the products derived from those plants; provided that failure to fully comply with a corrective action plan established by the department shall constitute a violation.

(b) Hemp producers do not commit a negligent violation if they use reasonable efforts to grow hemp and the plant produced has a THC concentration less than 0.5 per cent on a dry weight basis.

(c) A producer who negligently violates this part, or any rules adopted pursuant thereto, three times in a five-year period will be ineligible to produce hemp for a period of five years from the date of the third violation.

(d) If it is determined by the department, in its sole discretion, that a violation was committed with a culpable mental state greater than negligence, the department shall immediately report the license applicant, licensee, or producer to the United States Attorney General, USDA, and the state attorney general, and the department may take any other action it deems necessary including summary suspension or revocation of a license.

§141-O Affirmative defense. (a) A licensee or an employee of a licensee that is licensed under this part may assert the cultivation and possession of hemp as an affirmative defense to any prosecution involving marijuana under section 712-1247, 712-1248, 712-1249, 712-1249.4, or 712-1249.5. A defendant may assert the affirmative defense that the defendant or defendant's employer:

(1) Possessed and was in compliance with a valid hemp production license issued by the department pursuant to this part;

(2) Planted hemp varieties of cannabis that are allowed by the department within a licensed land area pursuant to this part; and

(3) The produced cannabis developed into plants with a delta-9 tetrahydrocannabinol concentration of more than 0.3 percent, but less than 3 per cent, on a dry weight basis.

(b) This affirmative defense applies only to the production and possession of marijuana within a licensed land area, but it does not extend to the sale or distribution of marijuana.

§141-P Rulemaking. (a) The department shall adopt rules pursuant to chapter 91 to effectuate the purposes of this part, which shall include but not be limited to:

(1) Procedures for inspection by the department or its agents of licensee records and licensed land areas licensed pursuant to this part;

(2) Laboratory standards related to the sampling and testing of hemp and hemp products;

(3) Certification requirements for labs conducting testing of hemp and hemp products;

(4) Limitations on the number of licenses issued per year;

(5) Criteria and standards for the consideration and selection of qualified licensees;

(6) Rules related to licensed land areas, including acreage limits, modifications of licensed land areas, divisions between breeding and nursery activities, and indoor cultivation;

(7) Rules related to the transportation of hemp;

(8) Specific requirements regarding reports and records required from each licensee licensed pursuant to this part;

(9) Rules related to the purchase and sale of varietals by licensees and varietal usage in the program, including prohibiting the usage of certain varietals, conditionally allowing the usage of certain varietals, or approving varietals for usage;

(10) Rules related to the number of licenses that an entity may hold in the program, with entities limited to a maximum of one license on each island;

(11) A fee structure for the submission of applications, initial licenses, and renewal of licenses;

(12) A fee structure for licensed land area modification fees;

(13) A fee structure for the inspection of licensees and for the sampling, and testing of hemp and hemp products;

(14) A fee structure for criminal history record checks;

(15) A fee structure as necessary to implement, operate, and maintain the computer software tracking system;

(16) The disposal or destruction of unwanted or unused hemp crops, plants, plant materials, seeds whether growing or not, and hemp products derived from those plants, including a fee structure;

(17) The disposal of hemp crops, plants, plant materials, or seeds, whether growing or not, found to be in violation of this part, and products derived from those plants including a fee structure;

(18) The establishment of a range of penalties for violations of this part or rules adopted pursuant to this part;

(19) Requirements regarding transportation requests and conditions related to the transportation of hemp and products derived from hemp; and

(20) Any other rules necessary to carry out this part.

(b) The department shall adopt interim rules, which shall be exempt from chapters 91 and 201M, to effectuate the purposes of this part; provided that the interim rules shall remain in effect until July 1, 2025, or until rules are adopted pursuant to subsection (a), whichever occurs sooner.

(c) The department may amend the interim rules, and the amendments shall be exempt from chapters 91 and 201M, to effectuate the purposes of this chapter; provided that any amended interim rules shall remain in effect until July 1, 2025, or until rules are adopted pursuant to subsection (a), whichever occurs sooner.

§141-Q Hawaii hemp production program special fund; established. (a) There is established within the state treasury the Hawaii hemp production program special fund, into which shall be deposited:

(1) Appropriations made by the legislature to the special fund;

(2) Other grants and gifts made to the fund;

(3) Any income and capital gains earned by the fund; and

(4) Any fees or fines collected by the department pursuant to this part.

(b) Moneys in the Hawaii hemp production program special fund shall be used by the department for the following purposes:

(1) To establish and regulate a system of licensed hemp cultivators in the State;

(2) To fund positions and operating costs authorized by the legislature; and

(3) For any other expenditure necessary, consistent with this part, to implement the program.

§141-R Resource certification. The department has the authority to take reasonable actions to ensure it can certify and maintain a certification that it has the resources and personnel necessary to carry out procedures for hemp production as required by this part."

SECTION 3. Chapter 328, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . HAWAII HEMP PROCESSORS

§328-A Definitions. As used in this part:

"Applicant" means the person applying to register as a hemp processor under this chapter.

"Cannabinoids" means a group of twenty-one carbon compounds present in the genus cannabis. Cannabinoids includes their analogs and transformation products.

"Cannabis" means the genus of the flowering plant in the family Cannabaceae. For the purpose of this part, cannabis refers to any form of the plant where the delta-9 tetrahydrocannabinol concentration on a dry weight basis has not yet been determined.

"Delta-9 tetrahydrocannabinol" or "THC" means the primary psychoactive component of cannabis.

"Decarboxylated" means the completion of the chemical reaction that converts tetrahydrocannabinol-acid into delta-9-tetrahydrocannabinol. The decarboxylated value may also be calculated using a conversion formula that sums delta-9-tetrahydrocannabinol and eighty-seven and seven tenths (87.7) percent of tetrahydrocannabinol-acid.

"Department" means the department of health.

"Director" means the director health.

"Enclosed indoor facility" means a permanent, stationary structure with a solid floor, rigid exterior walls that encircle the entire structure on all sides, and a roof that protects the entire interior area from the elements of weather. Nothing in this definition shall be construed to relieve the registered applicant from the applicant’s duty to comply with all applicable building codes and regulations.

"Hemp" means Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9-tetrahydrocannabinol concentration of not more than 0.3 per cent on a dry weight basis, as measured post-decarboxylation or by other similarly reliable methods.

(1) Does not include any living Hemp plants, viable seeds, leaf materials, or floral materials; and

(2) Has a delta-9-tetrahydrocannabinol concentration of not more than 0.3 per cent on a dry weight basis, as measured post-decarboxylation or other similarly reliable methods.

"Hemp processor" means a person processing hemp to manufacture a hemp product.

"Key participants" means a person or group of persons acting in concert who exercises control over or has a twenty-five per cent ownership interest or more in a firm, corporation, partnership, association, or any form of business or legal entity, such as an owner or partner in a partnership. A key participant also includes persons in a corporate entity at executive levels including managers and executive officers. This does not include management such as facility managers, shift managers, or employees.

"Person" means an individual, firm, corporation, partnership, association, or any form of business or legal entity.

"Processing" means making a transformative change to the hemp plant following harvest by converting an agricultural commodity into a hemp product.

"Synthetic cannabinoid" means a cannabinoid that is (1) produced in a laboratory, whether from chemicals or from biological agents including but not limited to yeast and algae; and (2) not derived from the genus cannabis. This includes biosynthetic cannabinoids.

"State" means the State of Hawaii.

§328-B Hemp processing; sale; labelling. (a) No person shall process hemp without being registered by the department as a hemp processor pursuant to this part and any rules adopted pursuant thereto.

(b) Hemp shall only be processed, and all hemp for processing shall be stored, within an enclosed indoor facility that has been secured to prevent unauthorized entry.

(c) Hemp shall not be processed within 1,000 feet of an existing playground, school, state park, state recreation area, residential neighborhood, hospital, or daycare.

(d) Hemp shall not be processed using butane or any other method the department determines poses a risk to health and safety.

(e) Any person, including all key participants of an entity, convicted of a felony related to a controlled substance under state or federal law is prohibited from processing hemp for 10-years following the date of conviction.

(f) Any person, including all key participants of an entity, may be subject to background checks conducted by the department or its designee, including but not limited to criminal history records checks in accordance with section 846-2.7. The person undergoing the background check shall provide written consent and all applicable processing fees to the department or its designee to conduct the criminal history record checks.

(g) Pursuant to, and in accordance with, section 846-2.7, the department or its designee is authorized to conduct state and national criminal history record checks on any person, including all key participants of an entity, and participate in the rap back program, for the purpose of determining suitability or fitness for registration under this part.

(h) No person shall sell, hold, offer or distribute for sale, hemp products without a label prescribed by the department identifying the hemp product has been tested and satisfies the criteria for quality control established by the department pursuant to this part.

(i) No person shall sell, hold, offer, or distribute for sale, any food into which a cannabinoid, synthetic cannabinoid, or other hemp product has been added.

§328-C Hemp processor registry. (a) The department shall create a registry for hemp processors.

(b) No person shall process hemp in the State unless the person is registered by the department pursuant to this part.

(c) A person who intends to process hemp in the State shall apply to the department for registration on an application form created by the department.

(d) The applicant shall provide, at a minimum, the following information:

(1) The applicant's name, mailing address, and phone number in Hawaii;

(2) The legal description of the land on which the hemp is to be processed or stored;

(3) A description of the enclosed indoor facility where hemp processing will occur;

(4) Documentation that the indoor facility and planned hemp processing operation, comply with all zoning ordinances, building codes, and fire codes;

(5) Certification that the applicant, including all key participants of an entity, has had no felony convictions related to a controlled substance under state or federal law in the ten years immediately preceding the date of submission of the application;

(6) A copy of a certificate of registration from the department of public safety narcotics enforcement division for the manufacture of delta-9 tetrahydrocannabinol as a byproduct of any hemp processing. A certificate from the narcotics enforcement division shall not issue until the department has certified that the processor otherwise meets the requirements of registration under this part; and

(7) Any other information required by the department.

(e) In addition to the application form, each applicant shall submit a non-refundable application fee established by the department. If the fee does not accompany the application, the application for registration shall be deemed incomplete.

(f) Any incomplete application shall be denied.

(g) Upon the department receiving a complete and accurate application, and remittal of the application fee, the applicant shall be sent a notice that it is registered to process hemp in the State.

(h) No person shall process hemp without receiving a notice that it is registered to process hemp in the State.

(i) All hemp processors shall allow federal, state, or local authorities to inspect, sample and test the hemp processing area, plants, plant materials, seeds, equipment, or facilities incident to the processing or storage of hemp.

(j) Any member of the department, or any agent or third party authorized by the department, may enter at reasonable times upon any private property in order to inspect, sample, and test the hemp processing area, hemp products, plants, plant materials, seeds, equipment, facilities incident to the processing or storage of hemp, or records.

(k) The department may remove any person from the registry for failure to comply with any law or regulation. It is the responsibility of the hemp processor to make sure it is registered and legally allowed to process hemp and in compliance with any and all laws and regulations. The removal of a hemp processor from the registry shall be accompanied by a cease and desist order, any violation of which constitutes a violation of this part that may be enforced pursuant to section 328-F.

§328-D Rulemaking. (a) The department shall adopt rules pursuant to chapter 91 that include but are not limited to:

(1) Inspection and sampling requirements of any hemp or hemp products;

(2) Testing protocols, including certification by independent third-party laboratories, to determine delta-9-tetrahydrocannabinol concentration of hemp or hemp products and screen for contaminants;

(3) Reporting and record-keeping requirements;

(4) Assessment of fees for application, inspecting, sampling, and testing hemp processing;

(5) A procedure for the disposal of hemp or hemp products, found to be in violation of this chapter;

(6) Penalties for any violation; and

(7) Any other rules and procedures necessary to carry out this chapter.

(b) The department may adopt and amend interim rules, which shall be exempt from chapter 91 and chapter 201M, to effectuate the purposes of this part; provided that any interim rules shall only remain in effect until July 1, 2025, or until rules are adopted pursuant to subsection (a), whichever occurs sooner.

§328-E Laboratory standards and testing; certification. (a) The department shall establish and enforce standards for laboratory-based testing of the hemp products for content, contamination, and consistency; provided that in establishing these standards, the department shall:

(1) Review and consider the testing programs and standards utilized in other jurisdictions;

(2) Consider the impact of the standards on the retail cost of the product;

(3) Review and consider the testing programs and standards for pesticides under the regulations of the United States Environmental Protection Agency; and

(4) For the testing for microbiological impurities, consider the benefits of organically grown hemp that features the use of bacteria in lieu of pesticides.

(b) The department may certify laboratories that are qualified to test hemp products for quality control prior to sale.

(c) If a hemp processor obtains a laboratory result indicating that a sample of a batch of its hemp product does not meet the department's standards, the hemp processor, at its own expense, may have the same sample or a different sample from the same batch retested by the same laboratory or a different laboratory, both of which must be certified or otherwise approved by the department. If a retest at a different laboratory yields a different result, the department shall determine which result controls whether the batch may be approved for sale or whether further testing shall be required.

(d) Any hemp product that fails to meet the standard for testing and re-testing established by the department pursuant to this chapter shall be destroyed in a manner prescribed by the department in accordance with rules adopted pursuant to this chapter.

§328-F Enforcement; penalty. (a) Any person who violates this part or any rule adopted by the department pursuant to this part shall be fined not more than $10,000 for each separate offense. Any action taken to collect the penalty provided for in this subsection shall be considered a civil action. In addition to any other administrative or judicial remedy provided by this part, or by rules adopted pursuant to this part, the director may impose by order the administrative penalty specified in this section. Factors to be considered in imposing the administrative penalty include the nature and history of the violation and of any prior violation, and the opportunity, difficulty, and history of the violation and of any prior violation, and the opportunity, difficulty, and history of corrective action.

(b) For any judicial proceeding to recover an administrative penalty imposed by order or to enforce a cease and desist order against a hemp processor removed from the registry, the director may petition any court of appropriate jurisdiction and need only show that notice was given, a hearing was held or the time granted for requesting a hearing has expired without such a request, the administrative penalty was imposed or the hemp processor was removed from the registry, and that the penalty remains unpaid or the hemp processor continues to process hemp.

(c) Nothing in this part shall limit any other legal remedy, or limit any civil or criminal action, available under any other statute, rule, or ordinance.

§328-G Hawaii hemp processing special fund; established. (a) There is established within the state treasury the Hawaii hemp processing special fund into which shall be deposited:

(1) Appropriations made by the legislature to the special fund;

(2) Any income and capital gains earned by the fund; and

(3) Any fees or fines collected by the department pursuant to this part.

(b) Moneys in the Hawaii hemp processing special fund shall be used by the department for the following purposes:

(1) To establish and regulate a system of registering hemp processors in the State;

(2) To fund positions and operating costs authorized by the legislature;

(3) For any other expenditure necessary, consistent with this part, to implement the Hawaii hemp processing program."

SECTION 4. Section 329-1, Hawaii Revised Statutes, is amended as follows:

(1) By adding a new definition to be appropriately inserted and to read:

""Hemp" means all parts of the plant cannabis sativa L., whether growing or not, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not with a delta-9-tetrahydrocannabinol concentration of not more than 0.3 per cent on a dry weight basis, as measured post-decarboxylation or other similarly reliable methods."

(2) By amending the definition of "marijuana" to read:

"Marijuana" means all parts of the plant (genus) Cannabis 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] "Marijuana" does not include [~~the~~]:

(1) 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~~] that is incapable of germination[.];

(2) Hemp that is in the possession, custody, or control of a person or entity that holds a license issued by the Hawaii department of agriculture permitting that person or entity to produce hemp;

(3) Hemp that is in the possession, custody, or control of a person or entity that is authorized under state law to process hemp; or

(4) A product containing or derived from hemp, including but not limited to consumables, cosmetics, personal care products, food intended for animal or human consumption, supplements, cloth, cordage, fiber, fuel, paint, paper, particleboard, plastics, and any product containing one or more hemp-derived cannabinoids such as cannabidiol, that:

(A) Does not include any living hemp plants, viable seeds, leaf materials, or floral materials; and

(B) Has a delta-9-tetrahydrocannabinol concentration of not more than 0.3 per cent on a dry weight basis, as measured post-decarboxylation or other similarly reliable methods.

SECTION 5. Section 712-1240, Hawaii Revised Statutes, is amended as follows:

(1) By adding a new definition to be appropriately inserted and to read:

""Hemp" means all parts of the plant (genus) cannabis, whether growing or not, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, with a delta-9-tetrahydrocannabinol concentration of not more than 0.3 per cent on a dry weight basis, as measured post-decarboxylation or other similarly reliable methods."

(2) By amending the definition of "marijuana" to read:

"Marijuana" means all parts of the plant (genus) cannabis, whether growing or not, including the seeds and the resin, and every alkaloid, salt, derivative, preparation, compound, or mixture of the plant, its seeds or resin, except that, as used herein, "marijuana" does not include:

(1) Hashish, tetrahydrocannabinol, and any alkaloid, salt, derivative, preparation, compound, or mixture, whether natural or synthesized, of tetrahydrocannabinol[.];

(2) Hemp that is in the possession, custody, or control of a person or entity that holds a license issued by the Hawaii department of agriculture permitting that person or entity to produce hemp;

(3) Hemp that is in the possession, custody, or control of a person or entity that is authorized under state law to process hemp; or

(4) A product containing or derived from hemp, including any product containing one or more hemp-derived cannabinoids such as cannabidiol, that:

(A) Does not include any leaf materials, or floral materials; and

(B) Has a delta-9-tetrahydrocannabinol concentration of not more than 0.3 per cent on a dry weight basis, as measured post-decarboxylation or other similarly reliable methods.

(3) By amending the definition of "marijuana concentrate" to read:

"Marijuana concentrate" means hashish, tetrahydrocannabinol, or any alkaloid, salt, derivative, preparation, compound, or mixture, whether natural or synthesized, of tetrahydrocannabinol[.] except that, as used herein, "marijuana concentrate" does not include:

(1) Hemp that is in the possession, custody, or control of a person or entity that is authorized under state law to process hemp; or

(2) A product containing or derived from hemp, including any product containing one or more hemp-derived cannabinoids such as cannabidiol, that:

(A) Does not include any leaf materials, or floral materials; and

(B) Has a delta-9-tetrahydrocannabinol concentration of not more than 0.3 per cent on a dry weight basis, as measured post-decarboxylation or other similarly reliable methods.

SECTION 6. Chapter 141, part II, Hawaii Revised Statutes, is repealed on October 31, 2020. All licenses issued under chapter 141, part II, Hawaii Revised Statutes shall be valid until October 31, 2020, at which time all licenses issued under part II of chapter 141 shall expire.

SECTION 7. There is appropriated out of the general fund the sum of $1,195,144 or so much thereof as may be necessary for fiscal year 2020-2021, and the same sum or so much as may be necessary for fiscal year 2021-2022 to be allocated as follows:

(1) $92,000 for the establishment of one full-time equivalent (1.0 FTE) program manager position;

(2) $147,000 for the establishment of three full-time equivalent (3.0 FTE) general professional positions;

(3) $33,000 for the establishment of one full-time equivalent (1.0 FTE) office assistant position;

(4) $385,000 for the establishment of four full time equivalent (4.0 FTE) investigator positions and operating expenses to be expended by the department of public safety for the purposes of this act;

(5) $288,144 for the establishment of three (3 FTE) Food Safety Specialist positions; one (1 FTE) office assistant position; and one (1 FTE) accountant position to be expended by the department of health;

(6) $100,000 for the procurement and establishment of a data tracking system for the hemp production program; and

(7) $150,000 for the administrative costs of the program.

Unless otherwise specified, the sums appropriated shall be expended by the department of agriculture for the purposes of this Act.

SECTION 8. If any provision of this part is declared invalid or the applicability thereof to any person or circumstances is held invalid, the validity of the remainder of this part or the applicability thereof to other persons or circumstances shall not be affected thereby.

SECTION 9. In codifying the new sections added to chapters 141 and 328, Hawaii Revised Statutes, by this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating and referring to the new sections in this Act.

SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 11. This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

BY REQUEST

HOUSE OF REPRESENTATIVES	H.B. NO.	2278
THIRTIETH LEGISLATURE, 2020
STATE OF HAWAII