86(R) HB 1325 - House Committee Report version

	86R25539 BEF-F

	By: King of Uvalde, Larson, Gutierrez,	H.B. No. 1325
	Rodriguez, Burrows, et al.

	Substitute the following for H.B. No. 1325:

	By: Meza	C.S.H.B. No. 1325

A BILL TO BE ENTITLED

AN ACT

relating to the production and regulation of hemp and products made

from hemp; requiring authorization to produce hemp; authorizing

penalties; authorizing fees.

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

SECTION 1. This Act may be cited as the Hemp Farming Act.

SECTION 2. (a) It is the policy of this state that hemp is a

viable agricultural crop and an agricultural commodity in this

state.

(b) It is the purpose of this Act to:

(1) promote cultivating and processing hemp and

develop new commercial markets for farmers and businesses through

the sale of hemp products;

(2) promote the expansion of this state's hemp

industry to the maximum extent permitted by law allowing farmers

and businesses to cultivate, handle, and process hemp and sell hemp

products for commercial purposes;

(3) encourage and empower research into hemp

production and hemp products at institutions of higher education

and in the private sector; and

(4) move this state and its citizens to the forefront

of the hemp industry.

SECTION 3. Section 12.020(c), Agriculture Code, is amended

to read as follows:

applicable penalty amounts are as follows:

Provision

Amount of Penalty

Chapters 13, 14A, 17, 18, 19, 41, 46, 61, 72, 73, 74, 76, 94, 95, 101, 102, 103, 125, 132,

Chapters 13, 14A, 17, 18, 19, 41, 46, 61, 72, 73, 74, 76, 94, 95, 101, 102, 103, 122, 125, 132,

and 134

not more than $5,000

Subchapters A, B, and C, Chapter 71

not more than $5,000

Chapter 14

not more than $10,000

Chapter 1951, Occupations Code

not more than $5,000

Chapter 153, Natural Resources

Code

not more than $5,000

Section 91.009

not more than $5,000.

SECTION 4. Title 5, Agriculture Code, is amended by adding

Subtitle F to read as follows:

SUBTITLE F. HEMP

CHAPTER 121. STATE HEMP PRODUCTION PLAN

Sec. 121.001. DEFINITION. In this chapter, "hemp" means

the plant Cannabis sativa L. and any part of that plant, including

the seeds of the plant and all derivatives, extracts, cannabinoids,

isomers, acids, salts, and salts of isomers, whether growing or

not, with a delta-9 tetrahydrocannabinol concentration of not more

than 0.3 percent on a dry weight basis.

Sec. 121.002. LEGISLATIVE INTENT. It is the intent of the

legislature that this state have primary regulatory authority over

the production of hemp in this state.

Sec. 121.003. DEPARTMENT RULES. (a) The department, after

consulting with the governor, attorney general, and Department of

State Health Services, shall adopt rules consistent with Chapter

122 providing:

(1) a practice to maintain relevant information

regarding land on which hemp is produced in this state, including a

legal description of the land, for a period of at least three

calendar years;

(2) a procedure for testing, using

post-decarboxylation, high-performance liquid chromatography, or

another similarly reliable method, the delta-9

tetrahydrocannabinol concentration of hemp produced in this state;

(3) a procedure for the effective disposal of plants,

whether growing or not, that are produced in violation of 7 U.S.C.

Chapter 38, Subchapter VII, and products derived from those plants;

(4) a procedure to comply with the enforcement

procedures described by 7 U.S.C. Section 1639p(e);

(5) a procedure for conducting annual inspections of,

at a minimum, a random sample of hemp producers to verify that hemp

is not produced in violation of 7 U.S.C. Chapter 38, Subchapter VII;

(6) a procedure for submitting the information

described in 7 U.S.C. Section 1639q(d)(2), as applicable, to the

secretary of the United States Department of Agriculture not later

than the 30th day after the date the information is received; and

(7) standards for certifying that this state has the

resources and personnel to carry out the practices and procedures

described by Subdivisions (1) through (6).

(b) The department shall adopt rules under Subsection (a)

that will, in substance, meet the requirements for approval as a

state plan under 7 U.S.C. Section 1639p.

Sec. 121.004. MEMORANDUM OF UNDERSTANDING WITH DEPARTMENT

OF STATE HEALTH SERVICES. The department and the Department of

State Health Services shall enter into a memorandum of

understanding that:

(1) recognizes the primary jurisdiction of the

Department of State Health Services over the processing,

manufacturing, packaging, transportation, sale, and use of

consumable hemp products in this state; and

(2) requires the department and the Department of

State Health Services to cooperate in the development of the state

hemp production plan required under this chapter.

Sec. 121.005. SUBMISSION OF STATE PLAN. (a) The

department, after consulting with the governor, attorney general,

and Department of State Health Services shall submit to the

secretary of the United States Department of Agriculture a state

plan for monitoring and regulating the production of hemp in this

state as provided by 7 U.S.C. Section 1639p.

(b) If the state plan submitted by the department is

disapproved by the secretary of the United States Department of

Agriculture, the department, after consulting with the governor,

attorney general, and Department of State Health Services, shall

amend the state plan as needed to obtain approval and submit an

amended plan.

assistance from the secretary of the United States Department of

Agriculture in developing the state plan.

CHAPTER 122. PRODUCTION OF HEMP

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 122.001. DEFINITIONS. In this chapter:

(1) "Commercial sale" means the sale of a product in

the stream of commerce at retail, at wholesale, or on the Internet.

(2) "Consumable hemp product" means a hemp product

that is:

(A) capable of being:

(i) ingested as a food intended for human or

animal consumption; or

(ii) applied topically to the body,

including a cosmetic or personal care product; or

(B) similar to a product listed under Paragraph

(A) and that contains one or more hemp-derived cannabinoids,

including cannabidiol.

(3) "Cultivate" means to plant, irrigate, grow, or

harvest a plant or crop.

(4) "Federally defined THC level for hemp" means a

delta-9 tetrahydrocannabinol concentration of not more than 0.3

percent:

(A) on a dry weight basis for hemp; or

(B) in a hemp product.

(5) "Handle" means to possess or store a hemp plant:

(A) on premises owned, operated, or controlled by

a hemp producer for any period of time; or

(B) in a vehicle for any period of time other than

during the actual transport of the plant from a premises owned,

operated, or controlled by a hemp producer to a premises owned,

operated, or controlled by another hemp producer.

(6) "Hemp" has the meaning assigned by Section

121.001.

(7) "Hemp producer" means a person authorized by the

department to cultivate, handle, or process hemp in this state.

(8) "Hemp product" means a finished product that does

not exceed the federally defined THC level for hemp, that is derived

from or made by processing a hemp plant or plant part, and that is

prepared in a form available for commercial sale. The term includes

cosmetics, personal care products, food intended for human or

animal consumption, cloth, cordage, fiber, fuel, paint, paper,

particleboard, plastics, and any product containing one or more

hemp-derived cannabinoids, including cannabidiol.

(9) "Independent testing laboratory" means a

laboratory certified by this state and accredited by an

accreditation body, including the American Association for

Laboratory Accreditation (A2LA) and Assured Calibration and

Laboratory Accreditation Select Services (ACLASS), in accordance

with International Organization for Standardization ISO/IEC 17025

or a comparable or successor standard.

(10) "Institution of higher education" has the meaning

assigned by Section 61.003, Education Code.

(11) "Plot" means a contiguous area in a field,

greenhouse, or indoor growing structure containing the same variety

or cultivar of hemp throughout the area.

(12) "Process" means to convert hemp into a marketable

form.

(13) "QR code" means a quick response machine-readable

code that can be read by a camera, consisting of an array of black

and white squares used for storing information or directing or

leading a user to additional information.

(14) "Smoking" means burning or igniting a substance

and inhaling the smoke.

Sec. 122.002. DEPARTMENT RULES AND PROCEDURES. The

department shall adopt rules and administrative procedures

necessary to implement this chapter.

Sec. 122.003. STATE HEMP PROGRAM ACCOUNT. (a) The state

hemp program account is an account in the general revenue fund

administered by the department.

(b) The account consists of:

(1) appropriations of money to the account by the

legislature;

(2) public or private gifts, grants, or donations,

including federal funds, received for the account;

(3) fees received under Section 122.053;

(4) interest and income earned on the investment of

money in the account;

(5) penalties collected under this chapter; and

(6) funds from any other source deposited in the

account.

grants, or donations from any source to administer and enforce this

chapter. Money received under this subsection shall be deposited

in the account.

(d) Money in the account may be appropriated only for the

administration and enforcement of this subtitle.

Sec. 122.004. INTERSTATE COMMERCE. To the extent of a

conflict between a provision of this chapter and a provision of

federal law involving interstate commerce, including a regulation

or an interpretation of federal law, federal law controls and

conflicting provisions of this chapter do not apply.

SUBCHAPTER B. STATE HEMP PROGRAM

Sec. 122.051. APPLICABILITY OF SUBCHAPTER TO HEMP PRODUCTS.

This subchapter does not apply to the possession, transportation,

or sale of hemp products or extracts, including products or

extracts containing one or more hemp-derived cannabinoids,

including cannabidiol.

Sec. 122.052. PROGRAM RULES. (a) The department shall

adopt rules to establish a state hemp program that:

(1) promotes the cultivating and processing of hemp

and the commercial sale of hemp products; and

(2) regulates hemp production in this state.

(b) In adopting rules under Subsection (a), the department

shall consult with:

(1) relevant public agencies; and

(2) private, nonprofit associations in the hemp

industry that promote standards, best practices, and

self-regulation in the production of hemp.

(1) establish requirements by which the department

authorizes an individual or business entity to participate in the

state hemp program as a hemp producer;

(2) prescribe the manner in which an institution of

higher education may participate in or be affiliated with the

program;

(3) prescribe sampling, inspection, certification,

and testing procedures to ensure that hemp plants cultivated,

handled, or processed in this state, and hemp products processed in

this state, do not exceed the federally defined THC level for hemp;

(4) provide due process consistent with Chapter 2001,

Government Code, including an appeals process, to protect hemp

producers from the consequences of imperfect test results; and

(5) prescribe enforcement procedures that are

consistent with 7 U.S.C. Section 1639p(e).

Sec. 122.053. FEES. (a) The department by rule shall set

and collect fees in amounts that are reasonable and necessary to

cover the costs of administering and enforcing the state hemp

program.

(b) Fees prescribed by the department under this section are

not refundable.

the state hemp program account under Section 122.003.

Sec. 122.054. DEPARTMENT AUTHORIZATION REQUIRED. (a)

Except as provided by this chapter, a person or the person's agent

may not cultivate, handle, or process hemp in this state or

transport hemp outside of this state unless the person is

authorized by the department under this section to participate in

the state hemp program as a hemp producer.

(b) A person seeking to participate in the state hemp

program as a hemp producer must apply to the department on a form

and in the manner prescribed by the department. The application

must be accompanied by:

(1) a legal description of each location where the

person intends to cultivate or process hemp and the global

positioning system coordinates for the perimeter of each location;

(2) written consent from the applicant or the property

owner if the applicant is not the property owner allowing the

department, the Department of Public Safety, and any other state or

local law enforcement agency to enter onto all premises where hemp

is cultivated, processed, handled, or stored to conduct a physical

inspection or to ensure compliance with this chapter and rules

adopted under this chapter;

(3) any fees required by the department to be

submitted with the application; and

(4) any other information required by department rule.

an application under this section meets the state hemp program

participation requirements prescribed by department rule, the

department shall authorize the person to participate in the program

as a hemp producer in the manner provided by department rule.

Sec. 122.055. LIMITATION ON PROGRAM PARTICIPATION. (a) A

person who is or has been convicted of a felony relating to a

controlled substance under state or federal law may not participate

in the state hemp program established under this subchapter or

produce hemp in this state under any other law for a period of at

least 10 years after the date of the person's conviction.

(b) A person who materially falsifies any information

contained in an application submitted to the department under

Section 122.054 may not participate in the state hemp program.

Sec. 122.056. ENFORCEMENT. (a) If the department

determines that a hemp producer has negligently violated this

chapter or a rule adopted under this chapter, the department shall

enforce the violation in the manner provided by 7 U.S.C. Section

1639p(e). A hemp producer is not subject to a civil or criminal

penalty under this subsection.

(b) If the department determines or suspects that a hemp

producer has violated this chapter or a rule adopted under this

chapter with a culpable mental state greater than negligence,

Subsection (a) does not apply and the department shall report the

hemp producer immediately to:

(1) the United States attorney general; and

(2) the attorney general of this state, who may:

(A) on behalf of the department, investigate the

violation and institute proceedings for injunctive or other

appropriate relief; or

(B) report the matter to an appropriate law

enforcement agency.

Sec. 122.057. SEED CERTIFICATION PROGRAM. (a) The

department shall establish a program to identify and certify seeds

confirmed to produce hemp. The department may authorize the

importation of hemp seed in accordance with state and federal law.

(b) The department may not certify a variety of hemp seed if

the seed is tested and confirmed to produce a plant that exceeds the

federally defined THC level for hemp. For purposes of this

subsection, the department may partner with a private entity or an

institution of higher education to test seed for the purpose of

certification under this section.

producers a list of hemp seeds certified by the department under

this section.

Sec. 122.058. USE OR DISPOSAL OF HARVESTED PLANTS. (a) If

the results of a test under Subchapter C performed on a sample show

the sample does not exceed the federally defined THC level for hemp,

the hemp producer may sell or use the plants represented by the

sample for any purpose allowed by law.

(b) If the results of a test under Subchapter C performed on

a sample show the sample exceeds the federally defined THC level for

hemp, the hemp producer shall immediately confer with the

department and in a manner approved by the department:

(1) have postharvest testing performed as provided by

Section 122.106 or other retesting provided by department rule;

(2) dispose of all hemp plants represented by the

sample; or

(3) if the department determines the plants

represented by the sample reached that concentration solely as a

result of negligence or acts beyond the control of the hemp

producer:

(A) trim, extract, or separate the plants until

the remaining plants or plant parts do not exceed the federally

defined THC level for hemp and dispose of the noncompliant plants or

plant parts in a manner approved by the department;

(B) transfer the plants to an appropriately

licensed person to process into a product that does not exceed the

federally defined THC level for hemp and dispose of any remaining

parts of the plants in a manner approved by the department; or

with federal regulations adopted under 7 U.S.C. Chapter 38,

Subchapter VII.

SUBCHAPTER C. TESTING

Sec. 122.101. TESTING REQUIRED. (a) The department by rule

shall establish a program for the random testing of hemp plants to

determine the delta-9 tetrahydrocannabinol concentration of a

representative sample of hemp plants from the plot where the plants

are grown.

(b) Testing under this subchapter must be conducted using

post-decarboxylation, high-performance liquid chromatography, or

another similarly reliable method prescribed by department rule.

Sec. 122.102. PREHARVEST TESTING REQUIRED. A hemp producer

may not harvest a hemp plant unless the delta-9

tetrahydrocannabinol concentration of a representative sample of

hemp plants from the plot where the plant is grown is collected and

tested using post-decarboxylation, high-performance liquid

chromatography, or another similarly reliable method in the manner

required by this subchapter.

Sec. 122.103. REPRESENTATIVE SAMPLE. (a) For purposes of

Section 122.102, a representative sample of hemp plants from a plot

consists of cuttings taken from at least five plants throughout the

plot.

(b) A laboratory performing testing under this subchapter

shall homogenize all the cuttings in the sample and test the delta-9

tetrahydrocannabinol concentration of a random sample of the

homogenized material.

Sec. 122.104. SAMPLE COLLECTION. (a) A hemp producer shall

notify the department at least 20 days before the date the hemp

producer expects to harvest hemp plants in the manner prescribed by

department rule.

(b) A sample must be collected by the department or another

entity described by Section 122.105(a).

procedures for a person who collects a sample to submit the sample

to the testing laboratory selected by the license holder.

Sec. 122.105. TESTING LABORATORY. (a) Subject to

Subsection (b), testing required by this subchapter must be

performed by:

(1) the department;

(2) an institution of higher education; or

(3) an independent testing laboratory.

(b) To perform the testing required by this subchapter, a

laboratory described by Subsection (a) must be accredited by an

accreditation body in accordance with International Organization

for Standardization ISO/IEC 17025 or a successor standard.

Subsection (a) to perform preharvest or postharvest testing of a

sample taken from the hemp producer's plot. A hemp producer shall

pay the costs of sample collection and testing in the amount

prescribed by the laboratory selected by the hemp producer.

(d) The department shall recognize and accept the results of

a test performed by an institution of higher education or an

independent testing laboratory described by Subsection (a). The

department shall require that a copy of the test results be sent by

the institution of higher education or independent testing

laboratory directly to the department and the hemp producer.

(e) The department shall notify the hemp producer of the

results of the test not later than the 14th day after the date the

sample was collected under Section 122.104 or the date the

department receives test results under Subsection (d).

Sec. 122.106. POSTHARVEST TESTING. (a) The department by

rule shall allow a hemp producer to have postharvest testing

performed on a representative sample of plants from a plot if the

results of a preharvest test exceed the federally defined THC level

for hemp.

(b) A hemp producer requesting postharvest testing shall

pay the costs of the testing before a testing laboratory selected by

the hemp producer under Section 122.105 performs the test.

or fails to pay the postharvest testing fee not later than the 15th

day after the date the hemp producer is notified of the results of

the preharvest test, the results of the preharvest test are final.

(d) A hemp producer shall retain control over harvested

plants until the hemp producer receives:

(1) written notice of preharvest or postharvest

testing results indicating the plants do not exceed the federally

defined THC level for hemp; or

(2) a shipping manifest by the department under

Section 122.154.

Sec. 122.107. SHIPPING DOCUMENTATION FOR TEST SAMPLES. The

department shall issue documentation to an entity authorized to

collect samples of plants for testing that authorizes the

transportation of those samples from the place of collection to a

testing laboratory.

SUBCHAPTER D. HEMP PRODUCTS

Sec. 122.151. PROCESSING OR MANUFACTURING HEMP PRODUCTS.

(a) Except as provided by Subsection (b), a state agency may not

prohibit a person who processes or manufactures a product regulated

by the agency from applying for or obtaining a permit or other

authorization to process or manufacture the product solely on the

basis that the person intends to process or manufacture the product

with hemp.

(b) A state agency may not authorize a person to process or

manufacture a hemp product for smoking.

Sec. 122.152. HEMP-DERIVED ADDITIVES. Notwithstanding any

other law, derivatives of hemp, including hemp-derived

cannabidiol, may be added to cosmetics, personal care products, and

products intended for human or animal consumption, and the addition

is not considered an adulteration of the products.

Sec. 122.153. PACKAGING AND LABELING REQUIREMENTS. (a)

Before a consumable hemp product may be distributed or sold, the

product must be packaged and labeled with the following

information:

(1) batch identification number;

(2) batch size;

(3) batch date;

(4) batch number;

(5) product name;

(6) total quantity produced;

(7) an Internet link for downloading a certificate of

analysis for the product;

(8) the name of the product's manufacturer; and

(9) a certification that the product does not exceed

the federally defined THC level for hemp, including precursors.

(b) The label required by Subsection (a) may be in the form

of:

(1) a uniform resource locator (URL) for the

manufacturer's Internet website that provides the information

required by that subsection; or

(2) a QR code or other bar code that may be scanned and

that leads to the information required by that subsection.

Sec. 122.154. SHIPPING CERTIFICATE OR MANIFEST. (a) The

department shall develop a shipping certificate or cargo manifest

that the department may issue to a hemp producer in connection with

the transportation of hemp or hemp products.

(b) A certificate or manifest under Subsection (a) must

include a unique identifying number for the shipment and the

department's contact information to allow law enforcement during a

roadside inspection of a motor vehicle transporting the shipment to

verify that the shipment consists of hemp or hemp products produced

in compliance with this chapter.

Sec. 122.155. POSSESSION, TRANSPORTATION, AND SALE OF HEMP

PRODUCTS. (a) Notwithstanding any other law, a person may possess,

transport, sell, and purchase legally produced hemp products in

this state.

(b) The department by rule must provide to a retailer of

hemp products fair notice of a potential violation concerning hemp

products sold by the retailer and an opportunity to cure a violation

made unintentionally or negligently.

Sec. 122.156. RULES RELATED TO SALE OF HEMP PRODUCTS. The

department, in consultation with the Department of State Health

Services, shall adopt rules to regulate the sale of hemp products

that reflect the following principles:

(1) hemp-derived cannabinoids, including cannabidiol,

are not considered controlled substances or adulterants;

(2) products containing one or more hemp-derived

cannabinoids, such as cannabidiol, intended for ingestion are to be

considered foods, not controlled substances or adulterated

products;

(3) hemp products must be packaged and labeled in the

manner provided by Section 122.153; and

(4) the processing or manufacturing of a hemp product

for smoking is prohibited.

Sec. 122.157. RETAIL SALE OF OUT-OF-STATE HEMP PRODUCTS.

(a) Retail sales of hemp products manufactured or processed

outside of this state may be made in this state when the products

and the hemp used in the products were processed and cultivated

legally in another state or jurisdiction that has the same or

substantially similar requirements for processing hemp products or

cultivating hemp as provided by this chapter.

(b) The department shall maintain a list of states or other

jurisdictions described by Subsection (a).

Sec. 122.158. TRANSPORTATION AND EXPORTATION OF HEMP

PRODUCTS OUT OF STATE. Hemp products may be legally transported

across state lines and exported to foreign jurisdictions in a

manner that is consistent with federal law and the laws of

respective foreign jurisdictions.

SUBCHAPTER E. ENFORCEMENT; PENALTIES

Sec. 122.201. PENALTY SCHEDULE. (a) The department by rule

shall adopt a schedule of sanctions and penalties for violations of

this chapter and rules adopted under this chapter that does not

conflict with 7 U.S.C. Section 1639p(e).

(b) A penalty collected under this chapter must be deposited

in the state hemp program account under Section 122.003.

Sec. 122.202. ADMINISTRATIVE PENALTY. The department may

impose an administrative penalty or other administrative sanction

for a violation of this chapter or a rule or order adopted under

this chapter, including a penalty or sanction under Section 12.020

or 12.0201.

SECTION 5. Sections 481.002(5) and (26), Health and Safety

Code, are amended to read as follows:

(5) "Controlled substance" means a substance,

including a drug, an adulterant, and a dilutant, listed in

Schedules I through V or Penalty Group 1, 1-A, 2, 2-A, 3, or 4. The

term includes the aggregate weight of any mixture, solution, or

other substance containing a controlled substance. The term does

not include hemp, as defined by Section 121.001, Agriculture Code,

or the tetrahydrocannabinols in hemp.

(26) "Marihuana" means the plant Cannabis sativa L.,

whether growing or not, the seeds of that plant, and every compound,

manufacture, salt, derivative, mixture, or preparation of that

plant or its seeds. The term does not include:

(A) the resin extracted from a part of the plant

or a compound, manufacture, salt, derivative, mixture, or

preparation of the resin;

(B) the mature stalks of the plant or fiber

produced from the stalks;

(D) a compound, manufacture, salt, derivative,

mixture, or preparation of the mature stalks, fiber, oil, or cake;

[or]

(E) the sterilized seeds of the plant that are

incapable of beginning germination; or

(F) hemp, as that term is defined by Section

121.001, Agriculture Code.

SECTION 6. (a) Not later than the 90th day after the

effective date of this Act, the Department of Agriculture shall

adopt rules under Section 121.003, Agriculture Code, as added by

this Act, and submit for approval a state plan to the secretary of

the United States Department of Agriculture as provided by Section

121.005, Agriculture Code, as added by this Act.

(b) The Department of Agriculture shall submit amended

state plans as provided by Section 121.005(b), Agriculture Code, as

added by this Act, as necessary until the plan is approved.

SECTION 7. (a) Not later than January 1, 2020, the

Department of Agriculture shall adopt rules and procedures

necessary to implement Chapter 122, Agriculture Code, as added by

this Act.

(b) Not later than the 30th day after the date on which rules

and procedures are adopted under Subsection (a) of this section,

the Department of Agriculture shall begin authorizing

participation in the state hemp program established under Chapter

122, Agriculture Code, as added by this Act.

SECTION 8. This Act takes effect immediately if it receives

a vote of two-thirds of all the members elected to each house, as

provided by Section 39, Article III, Texas Constitution. If this

Act does not receive the vote necessary for immediate effect, this

Act takes effect September 1, 2019.