The Agriculture Improvement Act of 2018 (2018 Farm Bill) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (CSA) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (USDA) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA.

In April 2018, Alaska enacted Senate Bill 6 (SB 6), “An Act Relating to the Regulation and Production of Industrial Hemp.” SB 6 was passed before the 2018 Farm Bill, in compliance with the 2014 Farm Bill. Under SB 6, “industrial hemp” is defined as “all parts and varieties of the plant Cannabis sativa L. containing not more than 0.3 percent delta-9-tetrahydrocannabinol.” SB 6 defines “cannabidiol” oil as the “viscous liquid concentrate of cannabidiol extracted from the plant (genus) Cannabis containing not more than 0.3 percent delta-9-tetrahydrocannabinol.” SB 6 does not address the processing of industrial hemp into Hemp-CBD products

The Alaska Department of Natural Resources (“DNR”), which is a part of the Alaska Division of Agriculture, has regulatory authority over industrial hemp. According to the Alaska Journal, Alaska’s hemp program has been off to a slow start as DNR took time to work with law enforcement to come up with a regulatory plan for hemp.

On May 31, 2019, DNR issued proposed industrial hemp rules.  These rules are extremely detailed and are not yet final. This post will summarize some of the highlights including cultivation, processing, sales, and hemp-derived products. The proposed rules also provide a detailed outline of industrial hemp transportation and testing, including procedures for quarantining and destroying non-compliant hemp and hemp products.

Under proposed rules, DNR will issue three “classes of industrial hemp registration for participation in the [Alaska Industrial Hemp Pilot Program],” for growers, processors and retailers.

Grower registration. A registered grower may grow, store, and transport industrial hemp. A grower may also sell raw industrial hemp to another grower or to a processor or sell industrial hemp “to persons who are not required to be registered by this chapter, including consumers in the state, if the hemp will not be further processed[.]”  A grower cannot sell industrial hemp that has been processed unless it holds a processor registration as well. Growers must retain records of the source of all industrial hemp seeds and propagules. Industrial hemp cultivation is only allowed in a registered “grow area,” which cannot be a residence and cannot be within 3,230 feet of a marijuana grow. Growers must submit planting report to DNR 30 days after planting or replanting hemp seeds and propagules. Pesticides are only to be applied by an Alaska Department of Environmental Conservation certified applicator. Growers cannot harvest hemp until it has been tested by DNR unless DNR gives express permission allowing a post-harvest test. In either scenario, industrial hemp must be tested before a grower may sell it.

Processor registration. A registered processor may process industrial hemp in its raw form into any other form or product. Processors may purchase, store, and transport raw hemp. Processors may sell processed hemp or hemp products to retailers. Processors must comply with all applicable health and safety standards.  Processors may only create hemp-based extracts using the following methods:

• Non-hydrocarbon extractions, including: cold or hot potable water filtration; isopropyl alcohol or isopropanol; ethyl alcohol or ethanol; carbon dioxide; dry ice; or dry shifting or sieve.
• Hydrocarbon extractions, including: n-butane; isobutene; propane; or heptane.

Processors may only use solvents in the extraction process that are food grade or at least 99% pure. and Solvent-based extraction must be “completed in a commercial, professional grade, closed loop system capable of recovering the solvent used for extraction.”

Processed hemp products intended for human or animal consumption must be tested for cannabinoid concentration and profile, residual solvents, microbials, pesticides, and heavy metal concentrations. Testing must be performed by DNR or a testing facility authorized by DNR. Processors must retain records and prepare an annual report on the quantity of industrial hemp processed, identification of lot and batch numbers processed, disposition of all raw and processed industrial hemp, and records of all persons who received all raw or processed industrial hemp.

Retailer registration. A registered retailer may sell processed industrial hemp or industrial hemp products to consumers. In addition, retailers may import, store, and transport processed industrial hemp and industrial hemp products. Retailers must ensure that all products are labeled properly and must display a placard from DNR showing that it is a registered retailer. When applying for registration, a retailer applicant must provide a description of the type of store or operations of the retailer, a location or list of locations where industrial hemp will be offered for retail sale, and a list of products intended for sale. Like processors, retailers must keep records and submit annual reports to DNR.

Hemp Product Endorsement. In addition to registering growers, processors and retailers, DNR is also imposing regulations on all hemp products in Alaska. DNR must endorse “any hemp product processed beyond its raw form” that is intended for human or animal consumption before it is “transported in the state or offered with or without compensation to a consumer.” Retailers and processors can apply for an endorsement on an application provided by DNR.  Endorsement applicants must provide the following:

1. A color copy of the product’s proposed label;
2. A copy of the laboratory test results of each product or batch of product;
3. A copy of the processor’s DNR registration under or a copy of the processor’s registration or license from other states or qualifying entities that have implemented an industrial hemp pilot under the 2014 Farm Bill;
4. A copy of the terpene analysis if required under the proposed rules; and
5. An endorsement fee.

No processed industrial hemp product intended for human or animal consumption may contain more than 50 milligrams of delta-9 THC per individual product. Such products must also include the following items on their label:

1. The product name;
2. A batch and lot number for the product;
3. An expiration date;
4. The total quantity of the product by weight or volume;
5. The serving size or recommended dose;
6. A list of all ingredients;
7. A statement that the product has not been approved by the Food and Drug Administration or the Alaska Department of Environmental Conservation.
8. The industrial hemp pilot program from which the hemp originated;
9. The industrial hemp pilot program that authorized the processing or testing of the industrial hemp in the product; and
10. If the product conducts any delta-9-THC, the statement “warning: contains THC”.

Bottom Line. At this time, it is unclear when the DNR will start issuing registrations or will start endorsing products.

The most striking thing about the new rules is the endorsement and registration required for the sale of hemp products intended for human consumption, which almost certainly includes Hemp-CBD. On June 20, 2019, the DNR updated a “Questions and Answers” page on its website which indicates the scope of this registration:

Q: Are big stores such as GNC, Natural Pantry, all the gas stations going to have to get retail
licenses?
A: Yes. Except for a grower or processor selling raw industrial hemp, all retail sales of hemp and hemp products will require retail registration.

This may preclude the online sale of consumable Hemp-CBD in Alaska as retailer applicants must list the locations where they will sell hemp products and display a placard from DNR in their stores. Online retailers who sell directly to consumers won’t be able to comply with these location-based requirements.

Finally, these rules are focused solely on the 2014 Farm Bill and make no reference to the 2018 Farm Bill. That may need to change as a majority of states are going to be operating under the 2018 Farm Bill next year.

Interested stakeholders should carefully review these rules if they want to make any changes.  DNR will be accepting public comments on the rules until 5:00 PM on Tuesday July 3rd, 2019. Comments can be submitted by email to industrialhemp@alaska.gov or online at  http://notice.alaska.gov/, and using the comment link

Credit: Harris Bricken | Canna Law Blog

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