Senate File 279 - Introduced SENATE FILE 279 BY SHIPLEY , COURNOYER , SEGEBART , SCHULTZ , BEHN , SINCLAIR , ZAUN , EDLER , MILLER-MEEKS , SWEENEY , GUTH , BREITBACH , BROWN , ZUMBACH , JOHNSON , KOELKER , KAPUCIAN , ROZENBOOM , GREENE , KRAAYENBRINK , FEENSTRA , KINNEY , BISIGNANO , R. TAYLOR , T. TAYLOR , CELSI , LYKAM , QUIRMBACH , BOLKCOM , PETERSEN , RAGAN , MATHIS , J. SMITH , DANIELSON , WAHLS , and BOULTON A BILL FOR An Act relating to hemp, including the regulation of hemp, 1 providing for enforcement and the confiscation and 2 destruction or disposal of certain property, providing 3 for fees, making appropriations, including penalties, and 4 providing implementation and effective date provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 1744XS (6) 88 da/rn

S.F. 279 DIVISION I 1 IOWA HEMP ACT 2 Section 1. Section 189.1, subsection 1, Code 2019, is 3 amended to read as follows: 4 1. “Article” means food, commercial feed, agricultural seed, 5 commercial fertilizer, drug, pesticide, hemp, and paint, in the 6 sense in which they are defined in the various provisions of 7 this subtitle. 8 Sec. 2. NEW SECTION . 204.1 Short title. 9 This chapter shall be known as the “Iowa Hemp Act” . 10 Sec. 3. NEW SECTION . 204.2 Definitions. 11 As used in this chapter, unless the context otherwise 12 requires: 13 1. “Controlled substance” means the same as defined in 21 14 U.S.C. §§802 and 812, including as those sections are amended 15 in §12619 of the federal hemp law or as that phrase is defined 16 in Tit. IV, subtitle 1 of this Code. 17 2. “Conviction” means a conviction for an indictable offense 18 and includes a guilty plea, deferred judgment from the time of 19 entry of the deferred judgment until the time the defendant is 20 discharged by the court without entry of judgment, or other 21 finding of guilt by a court of competent jurisdiction. 22 3. “Crop site” or “site” means a single contiguous parcel 23 of agricultural land suitable for the planting, growing, or 24 harvesting of hemp, if the parcel does not exceed forty acres. 25 4. “Department” means the department of agriculture and land 26 stewardship. 27 5. “Federal hemp law” means that part of Tit. X of the 28 Agriculture Improvement Act of 2018, Pub. L. No. 115-334, that 29 authorizes hemp production according to a state plan approved 30 by the United States department of agriculture, as provided in 31 §10113 of that Act, amending the Agricultural Marketing Act 32 of 1946, 7 U.S.C. §1621 et seq., including by adding §§297A 33 through 297E. 34 6. “Hemp” means a plant that may be produced under federal 35 -1- LSB 1744XS (6) 88 da/rn 1/ 16

S.F. 279 hemp law, or another plant of the same genus to the extent 1 allowed under federal hemp law, if any such plant is produced 2 as part of a crop qualifying under section 204.8. 3 7. a. “Hemp product” means an item derived from or made by 4 processing hemp or parts of hemp. 5 b. “Hemp product” does not include hemp seed that is capable 6 of germination. 7 8. “Law enforcement agency” means the department of public 8 safety, an office of county sheriff, or a municipal police 9 department. 10 9. “Licensee” means a person who obtains a hemp license from 11 the department under this chapter. 12 Sec. 4. NEW SECTION . 204.3 State plan. 13 1. The department shall prepare a state plan to be 14 submitted to the United States secretary of agriculture under 15 the federal hemp law. Upon approval of the state plan, the 16 department shall assume primary regulatory authority over the 17 production of hemp in this state as provided in this chapter. 18 The department may submit any number of amended state plans 19 to the United States secretary of agriculture or any number 20 of amendments to a state plan approved by the United States 21 secretary of agriculture. 22 2. The department shall prepare the state plan, any amended 23 state plan, or amendment to an approved state plan, by adopting 24 rules pursuant to chapter 17A. The department may adopt the 25 rules on an emergency basis as provided in section 17A.4, 26 subsection 3, and section 17A.5, subsection 2, and the rules 27 shall be effective immediately upon filing unless a later date 28 is specified in the rules. 29 Sec. 5. NEW SECTION . 204.4 Hemp license —— requirements. 30 1. The department shall establish and administer a process 31 to receive, evaluate, and approve or disapprove applications 32 for a hemp license. 33 2. The department shall prepare and publish one or more 34 hemp license application forms. A completed application form 35 -2- LSB 1744XS (6) 88 da/rn 2/ 16

S.F. 279 submitted to the department shall contain all of the following: 1 a. The applicant’s full name and residence address. 2 b. A legal description and map of each crop site where the 3 applicant proposes to produce the hemp. 4 c. The number of crop acres to be used for hemp production. 5 d. The name of the hemp variety. 6 e. Any other information required by the department in order 7 to administer and enforce the provisions of this chapter. 8 3. The department may do all of the following: 9 a. Require that all or some licenses expire on the same 10 date. 11 b. Provide a different application form and requirements 12 relating to the submission, evaluation, and approval or 13 disapproval of an application for a renewed license consistent 14 with federal law. 15 4. An applicant shall not be issued a hemp license unless 16 the applicant agrees to comply with all terms and conditions 17 relating to the department’s regulation of a licensee. 18 5. A person may hold any number of licenses at the same 19 time. However, the person shall not hold a legal or equitable 20 interest in a licensed crop site, if the total number of acres 21 of all licensed crop sites in which the person holds all such 22 interests equals more than forty acres. 23 6. An initial license expires one year from the date of 24 issuance and may be issued on a renewal basis annually. The 25 department may require that a licensee apply for an amended or 26 new initial license if information contained in the existing 27 application is no longer accurate or is incomplete. 28 7. Information received on an application form shall be 29 maintained by the department for not less than three years. 30 8. The department shall disapprove the application of a 31 person for good cause, which shall include, but is not limited 32 to, any of the following: 33 a. The conviction of a felony within the prior ten years or 34 any conviction of a controlled substance offense within that 35 -3- LSB 1744XS (6) 88 da/rn 3/ 16

S.F. 279 same period, regardless of whether either type of conviction is 1 in this state or another state. 2 b. The revocation of a license under section 204.11, or 3 the revocation of a license, permit, registration, or other 4 authorization to produce hemp in any other state. 5 9. A license shall be suspended or revoked as provided in 6 section 204.11. 7 Sec. 6. NEW SECTION . 204.5 Hemp fees. 8 1. The department shall impose, assess, and collect the 9 following hemp fees: 10 a. A license fee which shall be paid by a person being 11 issued a hemp production license as provided in section 204.4. 12 b. An inspection fee which shall be paid by a licensee for 13 an inspection of a licensee’s crop site as provided in section 14 204.8. 15 2. a. For each license, the license fee shall be imposed 16 on an interim basis until June 30, 2022. The amount of the 17 license fee shall not be more than the following: 18 (1) Five hundred dollars plus five dollars per acre, for 19 each site that is five acres or less. 20 (2) Seven hundred and fifty dollars, plus five dollars per 21 acre, for each site that is more than five acres but less than 22 ten acres. 23 (3) One thousand dollars plus five dollars per acre, for 24 each site is more than ten acres. 25 b. For an annual inspection, an inspection fee shall be 26 imposed on an interim basis until June 30, 2022. The amount 27 of the inspection fee shall not be more than one thousand 28 dollars. The department, during the interim period, may charge 29 an additional inspection fee of not more than one thousand 30 dollars for each inspection of a licensee’s crop site, if the 31 inspection is conducted upon the request of the licensee. 32 c. This subsection is repealed on July 1, 2022. 33 3. a. The department shall adopt rules to establish hemp 34 fees for the issuance of a hemp production license pursuant to 35 -4- LSB 1744XS (6) 88 da/rn 4/ 16

S.F. 279 section 204.4. 1 b. The department shall adopt rules to establish hemp fees 2 for the annual inspection of a license pursuant to section 3 204.8. The rules may provide that the department charge an 4 additional inspection fee for each inspection of a licensee’s 5 crop site, if the inspection is conducted upon the request of 6 the licensee. 7 c. The total amount of hemp fees collected by the 8 department pursuant to this section shall not be more than the 9 department’s estimate of the total amount of revenues necessary 10 to administer and enforce the provisions of this chapter based 11 on the expected revenue collected from the hemp fees and the 12 costs to be incurred by the department in administering and 13 enforcing the provisions of this chapter for the succeeding 14 twelve-month period. 15 d. The department may establish different rates for any 16 category of hemp fees based on criteria determined relevant by 17 the department, which may include the number of acres of the 18 crop site and the type of license issued. 19 e. (1) The rules shall first take effect immediately after 20 the repeal of subsection 2. 21 (2) This paragraph “e” is repealed immediately after the 22 rules described in subparagraph (1) take effect. 23 4. The license fee and any annual inspection fee shall 24 be collected by the department at the time the hemp license 25 application is submitted. 26 5. Any hemp fee collected by the department under this 27 section shall be deposited in the hemp fund established 28 pursuant to section 204.6. 29 6. The department may refund all or any part of a hemp fee 30 collected under this section. 31 Sec. 7. NEW SECTION . 204.6 Hemp fund. 32 1. A hemp fund is established in the state treasury under 33 the management and control of the department. 34 2. The hemp fund shall include moneys collected by the 35 -5- LSB 1744XS (6) 88 da/rn 5/ 16

S.F. 279 department from hemp fees imposed and assessed under section 1 204.5 and moneys appropriated by the general assembly for 2 deposit in the hemp fund. The hemp fund may include other 3 moneys available to and obtained or accepted by the department, 4 including moneys from public or private sources. 5 3. Moneys in the hemp fund are appropriated to the 6 department and shall be used exclusively to carry out the 7 responsibilities conferred upon the department under this 8 chapter as determined and directed by the department, and 9 shall not require further special authorization by the general 10 assembly. 11 4. a. Notwithstanding section 12C.7, interest or earnings 12 on moneys in the hemp fund shall be credited to the hemp fund. 13 b. Notwithstanding section 8.33, moneys credited to the 14 hemp fund that remain unexpended or unobligated at the end of a 15 fiscal year shall not revert to any other fund. 16 Sec. 8. NEW SECTION . 204.7 Regulations. 17 1. The department may adopt rules regulating the 18 production, handling, transporting, or marketing of hemp 19 produced on a licensee’s crop site. The rules may provide 20 different requirements that apply to nonseed parts of hemp and 21 hemp seed, including the certification of hemp seed. 22 2. Notwithstanding any other provision of law to the 23 contrary, hemp is not a controlled substance if the hemp is or 24 was produced on a licensee’s crop site. 25 3. Nothing in this chapter prohibits a person from 26 producing, handling, transporting, marketing, or processing a 27 hemp product. 28 Sec. 9. NEW SECTION . 204.8 Annual inspection and official 29 test. 30 1. The department shall conduct an annual inspection of 31 a licensee’s crop site to determine if the crop produced at 32 the site qualifies as hemp under this section. The inspection 33 shall include obtaining a sample of plants that are part of the 34 crop and providing for an official test of that sample. The 35 -6- LSB 1744XS (6) 88 da/rn 6/ 16

S.F. 279 inspection shall be conducted as provided in section 204.9. 1 2. A licensee shall deliver a notice to the department 2 stating the expected harvest date for the crop produced at the 3 licensee’s crop site. The department must receive the notice 4 at least thirty days prior to the expected harvest date. The 5 department shall conduct an inspection of the site within 6 thirty days prior to the actual harvest date. The licensee 7 shall not harvest any portion of a crop produced at the site 8 unless the department notifies the licensee that the crop 9 qualifies as hemp pursuant to the results of an official test. 10 3. The official test shall be a composite test of the 11 plants obtained by the department from the licensee’s crop site 12 during an inspection and shall be conducted by the laboratory 13 designated by the department. The sample must have maximum 14 concentration of delta-9 tetrahydrocannabinol that does not 15 exceed three-tenths of one percent on a dry weight basis. The 16 laboratory’s official test results indicating that a sample 17 exceeds that percentage shall be conclusive evidence that the 18 crop produced at a site does not qualify as hemp. 19 Sec. 10. NEW SECTION . 204.9 Right of access. 20 1. The department, including an authorized inspector, 21 employee, or agent of the department, may enter onto a crop 22 site during reasonable hours to determine whether a licensee 23 is acting in compliance with the provisions of this chapter. 24 The department may also enter into any structure, other than a 25 dwelling, if the structure is located on or in close proximity 26 to the crop site, and the use of such structure is directly 27 related to the planting, growing, or harvesting of hemp, 28 including but not limited to a barn, machine shed, greenhouse, 29 or storage crib. 30 2. The department may obtain a sample of plants that are 31 part of the crop and provide for an official test of that 32 sample in the same manner as provided in section 204.8 even 33 though the department is not conducting an annual inspection. 34 The department shall not assess or collect a fee, other than a 35 -7- LSB 1744XS (6) 88 da/rn 7/ 16

S.F. 279 hemp fee as provided in section 204.5. 1 3. A person shall not prevent the department from 2 administering this section by any means, including but not 3 limited to any act, including a refusal to allow entry, 4 misrepresentation, omission, or concealment of facts. 5 4. The licensee shall not harvest any portion of a crop 6 produced at the crop site if the department has been prevented 7 from accessing the site under this section. 8 Sec. 11. NEW SECTION . 204.10 Order of disposal. 9 1. If a crop that is produced at a licensee’s crop site 10 does not qualify as hemp according to an official test 11 conducted pursuant to section 204.8, the department shall order 12 the disposal of the crop by destruction at the site or if 13 necessary require the crop to be removed to another location 14 for destruction. 15 2. The department may request assistance from a law 16 enforcement agency necessary to carry out this section. The 17 department upon request shall deliver any sample of the crop 18 to the law enforcement agency. 19 3. The licensee shall pay for all actual and reasonable 20 costs of the destruction. If the department assumes any of the 21 amount of costs, it may charge that amount to the licensee. 22 If the licensee fails to reimburse any of that amount to the 23 department, the department may report the amount to the county 24 treasurer. The amount shall be placed upon the tax books, 25 and collected with interest and penalties after due, in the 26 same manner as other unpaid property taxes. The county shall 27 reimburse the department within thirty days from the collection 28 of the property taxes. 29 4. To the extent allowed by applicable federal law, the 30 department may provide for the disposal of the mature stalks 31 of the crop confiscated by the department for the licensee’s 32 on-farm use and at the licensee’s expense. 33 Sec. 12. NEW SECTION . 204.11 Disciplinary action. 34 1. The department may suspend or revoke the license obtained 35 -8- LSB 1744XS (6) 88 da/rn 8/ 16

S.F. 279 under section 204.4 by a person who does any of the following: 1 a. Provides false or misleading information to the 2 department under this chapter, including by submitting a false 3 application. 4 b. Fails to comply with or violates any provision of this 5 chapter, including a rule adopted by the department or a 6 condition of an application for the issuance of a license. 7 c. Fails to comply with an order issued by the department 8 under this chapter. 9 2. The suspension or revocation of a license is in addition 10 to an order of disposal under section 204.10; the imposition of 11 a civil penalty under section 204.12, subject to the provisions 12 of section 204.14; or the imposition of any other civil or 13 criminal penalty authorized under state law, subject to the 14 provisions of section 204.14. 15 Sec. 13. NEW SECTION . 204.12 Civil penalties. 16 1. A person who violates a provision of this chapter is 17 subject to a civil penalty of not less than five hundred 18 dollars and not more than two thousand five hundred dollars. 19 The department shall assess and collect the civil penalty. 20 Each day that a continuing violation occurs may be considered a 21 separate offense. 22 2. Notwithstanding subsection 1, a civil penalty shall not 23 be assessed against a licensee for a violation that results 24 in the disposal of the licensee’s crop under section 204.10, 25 if the department obtains a sample of the crop produced on 26 the licensee’s crop site and the official test results of the 27 sample conducted pursuant to section 204.8 indicates a maximum 28 concentration of delta-9 tetrahydrocannabinol not in excess of 29 two percent on a dry weight basis. 30 3. All civil penalties collected under this section shall be 31 deposited into the general fund of the state. 32 Sec. 14. NEW SECTION . 204.13 Injunctive relief. 33 The department or the attorney general acting on behalf of 34 the department may apply to the district court for injunctive 35 -9- LSB 1744XS (6) 88 da/rn 9/ 16

S.F. 279 relief in order to restrain a person from acting in violation 1 of this chapter. In order to obtain injunctive relief, the 2 department shall not be required to post a bond or prove the 3 absence of an adequate remedy at law unless the court for 4 good cause otherwise orders. The court may order any form 5 of prohibitory or mandatory relief that is appropriate under 6 principles of equity, including but not limited to issuing a 7 temporary or permanent restraining order. 8 Sec. 15. NEW SECTION . 204.14 Negligent violations. 9 1. a. The department may find that a licensee has 10 negligently violated a provision of this chapter by doing any 11 of the following: 12 (1) Completing an application for a license without 13 providing a legal description of the crop site pursuant to 14 section 204.4. 15 (2) Failing to renew a license or obtain a license for a new 16 crop site pursuant to section 204.4. 17 (3) Producing a crop on the licensee’s crop site with a 18 maximum concentration of delta-9 tetrahydrocannabinol in excess 19 of three-tenths of one percent according to the results of an 20 official test conducted of a sample obtained from the crop site 21 pursuant to section 204.8. 22 b. In making its finding under paragraph “a” , the 23 department must determine that the licensee acted with a 24 culpable mental state of negligence. It is conclusively 25 presumed that a licensee acted with a culpable mental state 26 greater than negligence, if the department obtains a sample 27 of a crop produced on the licensee’s crop site and the 28 official test results of the sample conducted pursuant to 29 section 204.8 indicates a maximum concentration of delta-9 30 tetrahydrocannabinol in excess of two percent on a dry weight 31 basis. 32 c. If the department determines a licensee violated this 33 chapter with a culpable mental state greater than negligence, 34 the department shall immediately report the licensee to the 35 -10- LSB 1744XS (6) 88 da/rn 10/ 16

S.F. 279 county attorney and the attorney general, who shall take action 1 as the facts and circumstances warrant. The department shall 2 also report the licensee to the United States attorney general 3 to the extent required by the federal hemp law. 4 2. The department may establish a negligent violation 5 program. The purpose of the program is to allow a 6 participating licensee who has negligently violated a provision 7 of this chapter as described in subsection 1 to comply with a 8 corrective plan established by the department to correct each 9 negligent violation, including by providing for all of the 10 following: 11 a. A reasonable date, established by the department, for the 12 licensee to correct any cause for the violation. 13 b. That the licensee periodically report to the department 14 evidence that the licensee is complying with the requirements 15 of this chapter. The licensee shall submit a report to the 16 department for at least two years from the date that the 17 licensee first participated in the program. 18 3. A licensee who is participating in the negligent 19 violation program shall not be subject to criminal enforcement 20 action by the state, or the imposition of criminal or civil 21 penalties, including as provided in section 204.12. 22 4. A licensee who negligently violates a provision of this 23 chapter more than three times in any five-year period shall be 24 ineligible to be issued a license pursuant to section 204.4 25 for a period of five years beginning on the date of the third 26 violation. 27 5. A licensee convicted of a felony relating to a controlled 28 substance before, on, or after the implementation date of this 29 chapter shall be ineligible to produce hemp under this chapter 30 for a ten-year period following the date of conviction. 31 6. Any person who materially falsifies any information 32 contained in an application to participate in the negligent 33 violation program shall be ineligible to participate in the 34 program. 35 -11- LSB 1744XS (6) 88 da/rn 11/ 16

S.F. 279 Sec. 16. NEW SECTION . 204.15 Statutory construction. 1 Nothing in this chapter shall be construed or applied to be 2 less stringent than required under the federal hemp law. 3 Sec. 17. CONTINGENT IMPLEMENTATION. 4 1. Except as provided in subsection 2, the provisions of 5 chapter 204, as enacted in this division of this Act, shall 6 only be implemented, including administered and enforced, by 7 the department of agriculture and land stewardship beginning on 8 the publication date of the edition of the Iowa administrative 9 bulletin that includes a statement by the secretary of 10 agriculture of the department of agriculture and land 11 stewardship certifying that the United States department of 12 agriculture has approved a state plan as described in section 13 204.3, as enacted in this division of this Act. The department 14 shall forward a copy of the statement to the Iowa Code editor 15 prior to publication. 16 2. Section 204.3 and this subsection shall be implemented on 17 the effective date of this Act. 18 Sec. 18. EFFECTIVE DATES. 19 1. Except as provided in subsection 2, this division of this 20 Act, being deemed of immediate importance, takes effect upon 21 enactment. 22 2. The amendment to section 189.1, as enacted in this 23 division of this Act, shall become effective upon the date of 24 implementation of chapter 204 as described in subsection 1 of 25 the section providing for contingent implementation of that 26 chapter, as enacted in this division of this Act. 27 DIVISION II 28 COORDINATING AMENDMENTS 29 Sec. 19. NEW SECTION . 317.1D Hemp production. 30 This chapter does not apply to a plant or any part of the 31 plant qualifying as hemp, if the hemp is produced on a crop 32 site regulated by the department of agriculture and land 33 stewardship under chapter 204. 34 Sec. 20. NEW SECTION . 453B.17 Exception —— hemp. 35 -12- LSB 1744XS (6) 88 da/rn 12/ 16

S.F. 279 This chapter does not apply to a plant or any part of 1 the plant qualifying as hemp, if the hemp is produced or 2 was produced on a crop site regulated by the department of 3 agriculture and land stewardship under chapter 204. Nothing 4 in this chapter applies to a person producing, handling, 5 transporting, marketing, or processing a hemp product as 6 defined in section 204.2. 7 Sec. 21. CONTINGENT EFFECTIVE DATE. Sections 317.1D 8 and 453B.17, as enacted in this division of this Act, shall 9 become effective upon the date of implementation of chapter 10 204 as described in subsection 1 of the section providing for 11 the contingent implementation of that chapter, as enacted in 12 division I of this Act. 13 DIVISION III 14 APPROPRIATIONS 15 Sec. 22. HEMP FUND —— 2019-2020. There is appropriated from 16 the general fund of the state to the department of agriculture 17 and land stewardship for the fiscal year beginning July 1, 18 2019, and ending June 30, 2020, the following amount, or so 19 much thereof as is necessary, to be used for the purposes 20 designated: 21 1. For deposit in the hemp fund created in section 204.6 to 22 be used as provided in that section: 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 303,750 24 2. Notwithstanding subsection 1 of the section providing 25 for the contingent implementation of division I, as enacted 26 in this Act, moneys in the hemp fund are appropriated to the 27 department to take all administrative actions, including the 28 purchase of equipment, as deemed necessary or desirable by the 29 department to prepare for the implementation of chapter 204 as 30 enacted in division I of this Act. After the implementation 31 date as provided in that subsection, the department may expend 32 moneys in the hemp fund as provided in section 204.6. 33 Sec. 23. HEMP FUND —— 2020-2021. There is appropriated from 34 the general fund of the state to the department of agriculture 35 -13- LSB 1744XS (6) 88 da/rn 13/ 16

S.F. 279 and land stewardship for the fiscal year beginning July 1, 1 2020, and ending June 30, 2021, the following amount, or so 2 much thereof as is necessary, to be used for the purposes 3 designated: 4 1. For deposit in the hemp fund created in section 204.6 to 5 be used as provided in that section: 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 208,500 7 2. Notwithstanding subsection 1 of the section providing 8 for the contingent implementation of division I, as enacted 9 in this Act, moneys in the hemp fund are appropriated to the 10 department to take all administrative actions, including the 11 purchase of equipment, as deemed necessary or desirable by the 12 department to prepare for the implementation of chapter 204 as 13 enacted in division I of this Act. After the implementation 14 date as provided in that subsection, the department may expend 15 moneys in the hemp fund as provided in section 204.6. 16 EXPLANATION 17 The inclusion of this explanation does not constitute agreement with 18 the explanation’s substance by the members of the general assembly. 19 OVERVIEW. This bill creates the “Iowa Hemp Act” under Title 20 V, subtitle 4, of the Code regulating persons operating under 21 licenses issued by the department of agriculture and land 22 stewardship (DALS). The bill creates Code chapter 204 and 23 authorizes the production of hemp under the DALS’ regulatory 24 supervision when acting under the provisions of the Agriculture 25 Improvement Act of 2018, Pub. L. No. 115-334 (2018 Farm Bill). 26 The 2018 Farm Bill defines hemp as a species of Cannabis having 27 a maximum concentration of delta-9 tetrahydrocannabinol (THC) 28 that does not exceed three-tenths of 1 percent. The 2018 Farm 29 Bill authorizes states to assume primary regulatory authority 30 over the production of hemp by submitting a state plan (plan) 31 for approval by the United States department of agriculture 32 (USDA) which has 60 days to approve, disapprove, or amend the 33 plan. The 2018 Farm Bill provides that state regulations may 34 be more but not less stringent than the federal regulations. 35 -14- LSB 1744XS (6) 88 da/rn 14/ 16

S.F. 279 HEMP LICENSES AND FEES. DALS is required to accept and 1 approve or disapprove applications for the issuance of a hemp 2 license (license) on a one-year basis subject to renewal. A 3 license covers a crop site which cannot exceed 40 contiguous 4 acres. DALS may issue any number of licenses to a single 5 applicant. However, a person is prohibited from holding more 6 than 40 crop sites under all current licenses issued to the 7 person. DALS must assess and collect hemp fees (fees) for the 8 issuance of a license and for an annual fall inspection until 9 June 30, 2022. After that date, fees are to be established by 10 rule based on the amount required to administer and enforce the 11 provisions of the bill. Moneys collected from the fees are to 12 be deposited into a hemp fund (fund) which are appropriated 13 to DALS for purposes of administering and enforcing these 14 provisions. 15 REGULATIONS. DALS may adopt rules regulating the 16 production, handling, transporting, or marketing of hemp which 17 was produced on a licensee’s crop site. In addition, such hemp 18 is not considered to be a controlled substance. Generally, 19 production, possession, or distribution of a controlled 20 substance is a criminal offense. The bill provides that new 21 Code chapter 204 does not prohibit a person from producing, 22 handling, transporting, marketing, or processing a hemp 23 product. DALS is required to conduct an annual inspection of a 24 licensee’s crop site and obtain a sample for official testing 25 by a laboratory designated by DALS. In addition to an annual 26 inspection, DALS may enter onto a crop site during reasonable 27 hours to determine whether a licensee is acting in compliance 28 with the bill’s requirements and may obtain a sample of the 29 crop for official testing. 30 ENFORCEMENT AND PENALTIES. DALS may order the disposal of 31 a crop produced on a licensee’s crop site if official test 32 results indicate that a crop does not qualify as hemp. The 33 disposal, including the crop’s destruction, must be at the 34 licensee’s expense. DALS may also suspend or revoke a license 35 -15- LSB 1744XS (6) 88 da/rn 15/ 16

S.F. 279 if the licensee fails to comply with a requirement of the bill. 1 A person who violates a provision of the bill is subject to a 2 civil penalty of not less than $500 and not more than $2,500. 3 DALS or the attorney general may apply to district court to 4 obtain an injunction to enforce the bill’s provisions. DALS 5 may establish a program to correct certain violations committed 6 negligently by a licensee including producing a crop having a 7 maximum THC concentration that does not exceed 2 percent. 8 CONTINGENT IMPLEMENTATION AND EFFECTIVE DATE. Generally, 9 the bill’s provisions are to be implemented when DALS certifies 10 USDA has approved DALS’ state plan. 11 APPROPRIATIONS. The bill appropriates moneys from the 12 general fund of the state to DALS for deposit in the fund 13 to take administrative actions, including the purchase of 14 equipment, as deemed necessary or desirable by the department 15 to carry out the bill’s provisions, including by preparing for 16 the implementation of the bill. 17 EFFECTIVE DATES. The bill takes effect upon enactment 18 except for those provisions which make enactment contingent 19 upon implementation of Code chapter 204 and those appropriating 20 moneys to the fund which take effect on July 1, 2019. 21 -16- LSB 1744XS (6) 88 da/rn 16/ 16