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

Topics:State budget Crime & corrections Taxes

Same legislation: HSB 241, HF 733, SF 599, HF 754, HF 763, HF 781

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: SubcommitteeFebruary 18, 2019
Done: Senate committeeFebruary 20, 2019
Skipped: Passes the SenateContinued as SF 599
Next: House committee
Next: Passes the House
Next: To the Governor
Next: Signed into law

Became SF 599 → Its progress continues under the new number. 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.

Read the full explanation

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. 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 may adopt rules regulating the production, handling, transporting, or marketing of hemp which was produced on a licensee’s crop site. In addition, such hemp is not considered to be a controlled substance. Generally, production, possession, or distribution of a controlled substance is a criminal offense. The bill provides that new Code chapter 204 does not prohibit a person from producing, handling, transporting, marketing, or processing a hemp product. DALS is required to conduct an annual inspection of a licensee’s crop site and obtain a sample for official testing by a laboratory designated by DALS. In addition to an annual inspection, DALS may enter onto a crop site during reasonable hours to determine whether a licensee is acting in compliance with the bill’s requirements and may obtain a sample of the crop for official testing. ENFORCEMENT AND PENALTIES. 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. DALS may also suspend or revoke a license if the licensee fails to comply with a requirement of the bill. 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 are to be implemented when DALS certifies USDA has approved DALS’ state plan. APPROPRIATIONS. The bill appropriates moneys from the general fund of the state to DALS for deposit in the fund to take administrative actions, including the purchase of equipment, as deemed necessary or desirable by the department to carry out the bill’s provisions, including by preparing for the implementation of the bill. EFFECTIVE DATES. The bill takes effect upon enactment except for those provisions which make enactment contingent upon implementation of Code chapter 204 and those appropriating moneys to the fund which take effect on July 1, 2019.

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

Full bill text · What changed before it passed¹

Senate subcommittee

Named February 21, 2019. It hasn’t reported yet.

Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part

Fiscal note

Cost: up to $304,000 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.