BILL REQ. #:  S-3180.1 

Read first time 01/13/14.   Referred to Committee on Agriculture, Water & Rural Economic Development.

     AN ACT Relating to industrial hemp; adding a new chapter to Title 15 RCW; and prescribing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The purpose of this chapter is to permit the development in Washington of an industrial hemp industry and to ensure that production of industrial hemp is in compliance with state law and federal guidelines concerning the implementation of Initiative Measure No. 502.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Director" means the director of the department of agriculture.
     (2) "Grower" means any person or business entity licensed under this chapter by the director as an industrial hemp grower.
     (3) "Hemp products" includes all products made from industrial hemp including, but not limited to, cloth, cordage, fiber, food, fuel, paint, paper, particle board, plastics, seed, seed meal and seed oil for consumption, and certified seed for cultivation if the seeds originate from industrial hemp varieties.
     (4) "Industrial hemp" means all parts and varieties of the plant cannabis sativa, whether growing or not, that contain a tetrahydrocannabinol concentration of one percent or less by weight and are cultivated or possessed by a licensed grower in compliance with this chapter.
     (5) "Records" means all commercial documents related to the production of industrial hemp, including accounts, correspondence, declarations, purchase orders, registers, seed invoices, and tetrahydrocannabinol concentration analysis reports, including all documentation required under this chapter and by any other state law regarding the growing and cultivation of industrial hemp.
     (6) "Tetrahydrocannabinol" or "THC" means synthetic equivalents of the substances contained in the plant, or in the resinous extractives of, cannabis, or synthetic substances, derivatives, and their isomers with similar chemical structure and pharmacological activity.

NEW SECTION.  Sec. 3   Industrial hemp is an agricultural product which may be grown, produced, processed, possessed, and commercially traded in the state pursuant to the provisions of this chapter.

NEW SECTION.  Sec. 4   (1) Any person or business entity wishing to engage in the production of industrial hemp must be licensed as an industrial hemp grower by the director. A license from the director authorizes industrial hemp production only at a site or sites as specified by the license.
     (2) A license from the director is valid for twenty-four months and may be renewed, but may not be transferred. An application for a license must be filed with the director by January 1st, and a license granted by the director must be issued by February 1st of the same calendar year.
     (3) To qualify for a license from the director, an applicant shall demonstrate to the satisfaction of the director, in a manner prescribed by the director, that the applicant intends to and is capable of growing industrial hemp and has adopted methods to ensure its safe production, which at a minimum include:
     (a) Furnishing the director with an affirmation that the grower is now and will continue to be in compliance with all state law regulating the planting and cultivation of hemp;
     (b) Furnishing the director with a guaranteed irrevocable letter of credit or a surety bond executed by a surety company authorized to transact business in this state, in the sum of not less than two thousand dollars. Any resident of this state injured by a harmful act of the licensee, the licensee's agents, servants, or operators has a cause of action in his or her own name, on the bond of the licensee, for the damage sustained. However, the aggregate liability of the surety to all residents of this state may in no event exceed the principal amount of the bond;
     (c) Securing the supply of all industrial hemp seed obtained for planting in compliance with this chapter;
     (d) Ensuring the integrity of the industrial hemp crop while it is in the field, which includes filing with the director the location and acreage of all parcels sown and other field reference information as may be required by the director;
     (e) Ensuring that all parts of the industrial hemp plant not entering the stream of commerce as hemp products, such as flowers and leaves, are destroyed or recycled where the industrial hemp is grown;
     (f) Agreeing to the provisions of section 6 (2) and (3) of this act regarding inspections by the director; and
     (g) Maintaining records that reflect compliance with the provisions of this chapter and with all other state law regulating the planting and cultivation of hemp.
     (4) Every grower shall maintain all production records for at least three years at the production site.

NEW SECTION.  Sec. 5   (1) The director shall be the sole source and supplier of seed for use in industrial hemp production in the state. The director shall by rule adopt measures to secure all hemp seed under the control of the director and to ensure that all hemp seed supplied to and used by growers is of only those varieties that meet the THC limitations of this chapter.
     (2) A grower may only use hemp seed obtained exclusively from the director.

NEW SECTION.  Sec. 6   (1) The director shall administer and enforce the provisions of this chapter.
     (2) The director is authorized to investigate compliance with this chapter, and shall have access, subject to the provisions of subsection (3) of this section, to all land, buildings, or places where industrial hemp is grown, kept, stored, or handled, and to all records relating to hemp production. The director may take samples of up to one-tenth of one percent of the industrial hemp crop of a grower, to test the crop THC content to ensure compliance with this chapter and to provide a basis for sanctions or suspension of a grower out of compliance. The director may make copies of any records.
     (3) The director shall have access to the properties and records specified in subsection (2) of this section during regular business hours upon the consent of the grower, or when the director has substantial justification to believe that any grower who is licensed under this chapter is otherwise in violation of this chapter or rules adopted under it.
     (4) The director shall adopt rules to implement this chapter.

NEW SECTION.  Sec. 7   (1) The director may deny, suspend, revoke, or refuse to renew the license of any grower that:
     (a) Makes a false statement or misrepresentation on an application for a license or renewal of a license;
     (b) Fails to comply with or violates any provision of this chapter or any rule adopted under it; or
     (c) Fails to take any action required by the director under the provisions of this chapter.
     (2) Revocation or suspension of a license may be in addition to any criminal penalties or fines imposed on a grower under other state law.

NEW SECTION.  Sec. 8   (1) A fee shall be charged by the director for each license granted to a grower under this chapter. The fee amount charged for the first growing season shall be ten dollars per acre of land under cultivation. After the first growing season, the director shall recommend a fee amount to the legislature for its approval, to be used beginning with the growing season following the first growing season. All fee revenue must be deposited in the industrial hemp account created in section 9 of this act.
     (2) The director shall by rule establish hemp seed prices to be charged growers under provisions of section 5 of this act. All proceeds of seed sales must be deposited in the industrial hemp account created in section 9 of this act.

NEW SECTION.  Sec. 9   (1) The industrial hemp account is created in the Washington publicly owned trust created in RCW 43.--.-- (section 3, chapter . . . (Senate Bill No.. . . (S-3179/14), Laws of 2013 3rd sp. sess.). All receipts from fees from section 8 of this act must be deposited into the account. Revenues generated from the account may be reinvested into the Washington publicly owned trust as equity capital as determined by the Washington publicly owned trust commission. Other funds in the account, the amount of which shall be determined by the commission as not necessary for the growth and operations of the Washington publicly owned trust, may be spent only after appropriation.
     (2) If the Washington publicly owned trust is not established by July 1, 2014, the industrial hemp account is created in the state treasury. All receipts from fees from section 8 of this act must be deposited into the account. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for the purposes of defraying the cost of implementing this chapter.

NEW SECTION.  Sec. 10   (1) Washington State University is authorized to undertake research of industrial hemp production in the state, after receiving a license to grow hemp from the director. The director may waive fee requirements. The director shall oversee the university research, which shall be mutually agreed upon by the director and the university, and which must include:
     (a) Industrial hemp test plots, to assess optimum soils and other growing conditions;
     (b) Analysis of minimum THC levels obtainable in industrial hemp production; and
     (c) Analysis of market economic conditions affecting the development of an industrial hemp industry in the state.
     (2) The director and Washington State University shall cooperatively seek funds from both public and private sources to implement this section.
     (3) By January 15, 2015, and annually thereafter, Washington State University shall report on the status of research authorized by this section, including progress in securing funding for it, to the relevant committees of the legislature with jurisdiction over agricultural activities.

NEW SECTION.  Sec. 11   By January 15th of each year, the director must report to the relevant committees of the legislature with jurisdiction over agricultural activities regarding implementation of this chapter and on the commercialization of industrial hemp in this state and elsewhere in the world, and recommend any changes to this chapter deemed appropriate.

NEW SECTION.  Sec. 12   Sections 1 through 11 of this act constitute a new chapter in Title 15 RCW.