BILL REQ. #:  S-3540.1 

Read first time 01/17/14.   Referred to Committee on Agriculture, Water & Rural Economic Development.

     AN ACT Relating to industrial hemp; adding a new chapter to Title 15 RCW; creating new sections; providing a contingent effective date; and providing an expiration date.

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

NEW SECTION.  Sec. 1   The legislature intends to investigate the various economic opportunities and industrial uses associated with industrial hemp cultivation and production as a farm product in the state of Washington. Through conducting a study, the legislature intends to assess whether the state's growing conditions and economic potential are favorable for the production of industrial hemp so that growers and other businesses in Washington's agricultural industry may take advantage of this market opportunity. Furthermore, should the study find favorable growing conditions and a net-positive economic benefit associated with industrial hemp production, it is the intent of the legislature to permit the development of an industrial hemp industry in Washington and to ensure that production of industrial hemp is in compliance with state law.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Agribusiness" means the processing of raw agricultural products, including but not limited to timber and industrial hemp, or the performance of value-added functions with regard to raw agricultural products.
     (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, cultivated or possessed by a licensed grower, whether growing or not, that contain a tetrahydrocannabinol concentration of point three percent or less by weight, except that the THC concentration limit of point three percent may be exceeded for licensed industrial hemp seed research.
     (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 cannabis sativa, or in the resinous extractives of, cannabis, or synthetic substances, compounds, salts, or derivatives of cannabis sativa or chemicals and their isomers with similar chemical structure and pharmacological activity.

NEW SECTION.  Sec. 3   Industrial hemp is an agricultural product that may be grown, produced, possessed, and commercially traded in the state in accordance with this chapter.

NEW SECTION.  Sec. 4   (1)(a) The department shall establish a licensing program to allow persons to grow industrial hemp in the state of Washington as provided in this section.
     (b) The licensing program must include an industrial hemp grower license that allows any person or business entity to engage in the production of industrial hemp for any purpose.
     (c) A license authorizes industrial hemp propagation only on the land areas specified in the license.
     (d) A person with a prior felony drug conviction within ten years of applying for a license under this section is not eligible for the license.     
     (2) Any person seeking to grow industrial hemp shall apply to the department for the appropriate license on a form provided by the department. At minimum, the application must include:
     (a) The name and mailing address of the applicant;
     (b) The legal description and global positioning coordinates sufficient for locating the production fields used to grow industrial hemp;
     (c) A signed statement indicating whether the applicant has ever been convicted of a felony or misdemeanor;
     (d) Written consent allowing the department, if a license is ultimately issued to the applicant, to enter onto the premises on which the industrial hemp is grown to conduct physical inspections of industrial hemp planted and grown by the applicant, and to ensure compliance with this chapter;
     (e) Any other information required by the department; and
     (f) The payment of a nonrefundable application fee, in an amount set by the department and used to offset the cost of administering the licensure program.
     (3) A license from the department is valid for a period of one year from the date of issuance and may be renewed in successive years, but may not be transferred. Each annual renewal requires the payment of a license renewal fee.
     (4)(a) The department shall, by rule, establish the fee amounts required for license applications and license renewals allowed under this section.
     (b) All application and license renewal fees collected by the department shall be deposited in the industrial hemp account created in section 8 of this act.
     (5) All records, data, and information filed in support of a license application shall be considered proprietary and subject to inspection only upon the order of a court of competent jurisdiction.

NEW SECTION.  Sec. 5   (1) The department is responsible for monitoring the industrial hemp grown by any license holder, and must provide for random testing of the industrial hemp for compliance with THC levels and for other appropriate purposes at the cost of the license holder.
     (2) No more than two physical inspections per year may be conducted under this section unless a valid search warrant for an inspection has been issued by a court of competent jurisdiction.
     (3) All testing for THC levels must be performed as provided in this section and rules adopted pursuant to this section.
     (4) The department, by rule, shall establish necessary testing criteria and protocols for the purposes of this section.

NEW SECTION.  Sec. 6   (1) A person must obtain an industrial hemp grower license pursuant to section 4 of this act before planting or growing any industrial hemp in this state. An industrial hemp grower license holder who has planted and grown industrial hemp pursuant to a valid grower license may sell industrial hemp produced by the grower to any person engaged in agribusiness or other manufacturing for the purpose of processing or manufacturing that industrial hemp into hemp products.
     (2) A person granted an industrial hemp grower license must:
     (a) Maintain records that reflect compliance with the provisions of this chapter and with all other state laws regulating the planting and cultivation of hemp;
     (b) Retain all industrial hemp production records for at least three years at the production site;
     (c) Allow all land, buildings, or places where industrial hemp is grown, kept, stored, or handled, and all records relating to hemp production to be inspected by the department, the Washington state patrol, and other law enforcement officers;
     (d) Allow the department to 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 who is out of compliance with this chapter;
     (e) File with the department documentation indicating that the industrial hemp seeds planted were of a type and variety certified as meeting the THC limitations of this chapter;
     (f) Notify the department of the sale of any industrial hemp grown under the license and the names and addresses of the persons to whom the industrial hemp was sold; and
     (g) Provide the department with copies of any contracts between the licensee and any person to whom industrial hemp was sold.
     (3) The department must assist the grower with compliance with the requirements of this section.
     (4) Any person licensed to grow industrial hemp under this chapter may import and resell industrial hemp seed that has been certified as meeting the THC limitations of this chapter.

NEW SECTION.  Sec. 7   (1) The director or the director's designee may deny, suspend, revoke, or refuse to renew the license of any grower who:
     (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 this chapter; 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   The industrial hemp account is created in the state treasury. All receipts from fees collected under section 4 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. 9   The director shall adopt rules to implement this chapter.

NEW SECTION.  Sec. 10   Beginning January 15, 2016, and each January 15th thereafter, the department 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. 11   (1) Washington State University shall study the feasibility and desirability of industrial hemp production in Washington state. In conducting the study, the university shall gather information from agricultural and scientific literature, consulting with experts and the public, and reviewing the best practices of other states and countries worldwide regarding the development of markets for industrial hemp and hemp products. The study must include an analysis of:
     (a) The market economic conditions affecting the development of an industrial hemp industry in the state;
     (b) The estimated value-added benefit that Washington's economy would reap from having a developed industrial hemp industry in the state;
     (c) Whether Washington soils and growing conditions are appropriate for economically viable levels of industrial hemp production;
     (d) The agronomy research being conducted worldwide relating to industrial hemp varieties, production, and use; and
     (e) Other legislative acts, experiences, and outcomes around the world regarding industrial hemp production.
     (2)(a) The university shall report its findings to the legislature by January 14, 2015.
     (b) The report must include:
     (i) Recommendations for any legislative actions necessary to encourage and support the development of an industrial hemp industry in the state of Washington; and
     (ii) A statement of whether the net-positive economic benefits to the state through the establishment of an industrial hemp industry in Washington was identified.
     (3) The finding in the report regarding whether the net-positive economic benefits to the state through the establishment of an industrial hemp industry in Washington were identified must also be provided to the code reviser's office.
     (4) This section expires August 1, 2015.

NEW SECTION.  Sec. 12   (1) Sections 1 through 10 of this act take effect if there is a statement in the report under section 11 of this act that net-positive economic benefits to the state through the establishment of an industrial hemp industry in Washington were identified.
     (2) If the study in section 11 of this act identifies net-positive economic benefits to the state, the department must begin implementing the provisions of this chapter no later than June 1, 2015.

NEW SECTION.  Sec. 13   Sections 1 through 10 of this act constitute a new chapter in Title 15 RCW.