Relating to hemp, including the regulation of hemp, providing for enforcement and the confiscation and destruction or disposal of certain property, providing for fees, making appropriations, including penalties, and providing implementation and effective date provisions

Sponsored by the House Appropriations (successor To Hf 733) (successor To Hsb 241) Committee

Topics:Agriculture State budget

Same legislation: SF 279, HSB 241, HF 733, SF 599, HF 754, HF 763

Write your legislators about itWhat changed before it passed

Official bill page Lobbyist declarations One-pager to print

Where it is now

Done: IntroducedFebruary 18, 2019
Done: SubcommitteeMarch 18, 2019
Done: House committeeMarch 21, 2019
Done: Passes the HouseApril 23, 2019
Skipped: Senate committeeSkipped
Done: Passes the SenateApril 15, 201949–1
Done: To the GovernorMay 6, 2019
Done: Signed into lawMay 13, 2019

SF 599 became law → The same legislation passed as SF 599, so this version was set aside. Go to SF 599 What’s a funnel?

What’s in it

OVERVIEW. This bill creates the “Iowa Hemp Act” under Title V, subtitle 4, of the Code regulating persons operating under licenses issued by the department of agriculture and land stewardship (DALS). The bill creates Code chapter 204 and authorizes the production of hemp under the DALS’ regulatory supervision when acting under the provisions of the Agriculture Improvement Act of 2018, Pub. L. 115-334 (2018 Farm Bill). The 2018 Farm Bill defines hemp as a species of Cannabis having a maximum concentration of delta-9 tetrahydrocannabinol (THC) that does not exceed three-tenths of percent.

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The 2018 Farm Bill authorizes states to assume primary regulatory authority over the production of hemp by submitting a state plan (plan) for approval by the United States department of agriculture (USDA) which has days to approve, disapprove, or amend the plan. The 2018 Farm Bill provides that state regulations may be more but not less stringent than the federal regulations. The provisions of the bill are also enforced by the department of public safety (DPS) which is designated as the chief criminal enforcement agency and local law enforcement agencies (local law enforcement). The bill also provides for the regulation of hemp products which are under the jurisdiction of other federal agencies. HEMP LICENSES AND FEES. DALS is required to accept and approve or disapprove applications for the issuance of a hemp license (license) on a one-year basis subject to renewal. A license covers a crop site which cannot exceed contiguous acres. DALS may issue any number of licenses to a single applicant. However, a person is prohibited from holding more than crop sites under all current licenses issued to the person. DALS must assess and collect hemp fees (fees) for the issuance of a license and for an annual fall inspection until June 30, 2022. After that date, fees are to be established by rule based on the amount required to administer and enforce the provisions of the bill. Moneys collected from the fees are to be deposited into a hemp fund (fund) which are appropriated to DALS for purposes of administering and enforcing these provisions. REGULATIONS. DALS is required to adopt rules regulating the production of hemp, and may adopt rules as necessary or desirable to administer and enforce the Code chapter. The bill allows a person to engage in the retail sale of hemp products; the addition of a hemp derivative to cosmetics, personal care products, and products intended for human or animal consumption; and the transport of hemp products within and through this state in accordance with federal law. The bill provides that under certain conditions, a person is not subject to a criminal offense for producing, possessing, using, harvesting, manufacturing, marketing, transporting, delivering, or distributing hemp produced on a licensee’s crop site. The bill requires that a person hold a certificate of crop inspection issued by DALS. INSPECTIONS AND TESTS. DALS is required to conduct an annual inspection of a licensee’s crop site and obtain a sample of plants that are part of the crop in order to conduct an official test. DPS or local law enforcement may also conduct an inspection of the crop site and conduct its own test. The bill provides that DALS, DPS, and local law enforcement may enter on a crop site and other associated places in order to conduct an inspection. ENFORCEMENT AND PENALTIES. DALS may suspend or revoke a hemp license for a number of causes, including for a violation of statute or rule. DALS may order the disposal of a crop produced on a licensee’s crop site if official test results indicate that a crop does not qualify as hemp. The disposal, including the crop’s destruction, must be at the licensee’s expense. A person who violates a provision of the bill is subject to a civil penalty of not less than $500 and not more than $2,500. DALS or the attorney general may apply to district court to obtain an injunction to enforce the bill’s provisions. DALS may establish a program to correct certain violations committed negligently by a licensee including producing a crop having a maximum THC concentration that does not exceed percent. CONTINGENT IMPLEMENTATION AND EFFECTIVE DATE. Generally, the bill’s provisions enacting Code chapter 204 are to be implemented when DALS certifies USDA has approved DALS’ state plan. The bill takes effect upon enactment, except for those provisions, including criminal offenses, which make enactment contingent upon implementation of Code chapter 204.

Changed since by amendments H-1285, H-1273, S-3160; see Amendments.

Full bill text · What changed before it passed¹

Fiscal note

Can’t be estimated Compare with other bills

AI summary Senate File 599 creates the Iowa Hemp Act to authorize the production and marketing of industrial hemp through the Department of Agriculture and Land Stewardship. The bill is estimated to increase expenditures for the Department of Agriculture and Land Stewardship and the Department of Public Safety in fiscal year 2020 and fiscal year 2021. Revenue from new license and inspection fees cannot be estimated because it is unknown how many people will participate in industrial hemp manufacturing.²

Read the fiscal note

Description

Senate File 599 creates the Iowa Hemp Act, which authorizes the production and marketing of industrial hemp in Iowa in compliance with federal law and will be administered by the Department of Agriculture and Land Stewardship (DALS). Department responsibilities include submitting a State plan to the United States Department of Agriculture (USDA), establishing license requirements, establishing industrial hemp fees, and establishing rules to implement the Iowa Hemp Act.

Senate File 599 also creates the Hemp Fund in the State Treasury, which will be managed by the DALS. Moneys deposited into the Hemp Fund will include fees collected by the DALS, appropriations from the General Assembly, and other revenue such as interest earned and federal funds.

Background

Industrial hemp and marijuana are different varieties of the Cannabis sativa L. plant. The differences between the two plants are their levels of tetrahydrocannabinol (THC) and their usage. Industrial hemp has THC levels of 0.1% to 0.4% of the total plant weight, while marijuana has THC levels of 4.0% to 7.0%. Industrial hemp is grown for commercial use, and the stalks and seeds are used for textiles, food, paper, building materials, and other products. Marijuana is grown for medicinal and recreational uses.

The federal Agricultural Act of 2014 legalized the possession and use of industrial hemp when the crop was part of a pilot program that was regulated by a state department of agriculture or part of a research program conducted by an institution of higher education. The federal Agriculture Improvement Act of 2018 removed industrial hemp from the list of controlled substances and allowed states to regulate industrial hemp production. The Bill specifies the DALS will develop and submit a State plan for industrial hemp production in Iowa and submit it to the USDA for approval.

Assumptions

Department of Agriculture and Land Stewardship:

The DALS will collect a license fee and an inspection fee for industrial hemp production. The license fee will be collected from persons wanting to produce industrial hemp, and the fee will be based on the number of acres planted. The Bill specifies that a licensed grower can grow a maximum of 40 acres. The license fee range includes:
$500 fee plus $5 per acre for a person growing five acres or less.
$750 fee plus $5 per acre for a person growing more than five acres but less than 10 acres.
$1,000 fee plus $5 per acre for person growing more than 10 acres.
An annual inspection fee of not more than $1,000 will also be charged by the DALS.
For estimating purposes, it is assumed that the DALS will submit a State plan for industrial hemp production and receive approval from the USDA by July 1, 2019.
Personnel costs for FY 2020 are estimated at $181,000 for 2.0 full-time equivalent (FTE) positions. This includes 1.0 FTE position for work in the laboratory and 1.0 FTE position that will work with industrial hemp growers in the field. The estimated costs are increased by 3.0% for FY 2021 to account for increased salary and other benefit expenditures.
Contract worker costs assume a worker will make $16 per hour and work 40 hours per week. This also assumes a contract worker will be needed for eight weeks.
Equipment for testing hemp samples is estimated at $71,000.
Required lab samples are estimated at 300 samples with a cost of $50 each.
A vehicle for inspection purposes is estimated at $30,000.
Mileage costs are estimated at 5,000 miles at $0.39 per mile.
The Bill also specifies the DALS can assess a civil penalty for disposing of a licensee’s crop. The civil penalty will be between $500 and $2,500. Any funds collected from civil penalties will be deposited into the General Fund.

Department of Public Safety:

In 2018, the Division of Criminal Investigation Laboratory analyzed over 7,600 cannabis items. Quantifying the level of THC involves different, more involved methods and instrumentation than currently used to identify marijuana. The DPS estimates the THC analysis will take three times longer than identifying marijuana. The DPS estimates it will need 3.0 additional Criminalistics FTE positions and three additional gas chromatography/flame ionization detector (GC/FID) instruments.

Personnel costs for FY 2020 are estimated at $251,000 for 3.0 FTE Criminalistics positions. The estimated costs were increased by 3.0% for FY 2021 to account for increased salary and other benefit expenditures.
The Department will need to purchase three additional testing instruments at a cost of $50,000 each.

Fiscal Impact

The estimated fiscal impact of SF 599 is an increase in expenditures to the DALS and the DPS budgets for FY 2020 and FY 2021. Table 1 shows the estimated expenditures related to the implementation of SF 599.

The revenue from the fees established in this Bill cannot be estimated, as it is unknown how many persons will participate in the manufacturing of industrial hemp. The other unknown factor is the cost to destroy crops that exceed the required THC levels, which cannot be estimated at this time.