86(R) HB 1325 - Senate Committee Report version



	By: King of Uvalde, et al.	H.B. No. 1325
	(Senate Sponsor - Perry, et al.)
	(In the Senate - Received from the House April 24, 2019;
	May 1, 2019, read first time and referred to Committee on
	Agriculture; May 13, 2019, reported adversely, with favorable
	Committee Substitute by the following vote: Yeas 4, Nays 0;
	May 13, 2019, sent to printer.)
Click here to see the committee vote

	COMMITTEE SUBSTITUTE FOR H.B. No. 1325	By: Perry

A BILL TO BE ENTITLED

AN ACT

relating to the production and regulation of hemp; requiring

occupational licenses; authorizing fees; creating criminal

offenses; providing civil and administrative penalties.

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

SECTION 1. 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 2. 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. STATE PLAN. (a) The department, after

consulting with the governor and attorney general, shall develop a

state plan to monitor and regulate the production of hemp in this

state. The plan must comply with:

(1) 7 U.S.C. Section 1639p;

(2) Chapter 122; and

(3) Chapter 443, Health and Safety Code.

(b) The department shall submit the plan developed under

Subsection (a) to the secretary of the United States Department of

Agriculture as this state's plan for monitoring and regulating the

production of hemp as provided by 7 U.S.C. Section 1639p.

by the secretary of the United States Department of Agriculture,

the department, after consulting with the governor and attorney

general, shall amend the plan as needed to obtain approval and

submit an amended plan.

(d) The department shall, as necessary, seek technical

assistance from the secretary of the United States Department of

Agriculture and other state agencies in developing the plan under

this section.

Sec. 121.004. RULES. The department may adopt any rules

necessary to implement and administer the state plan under Section

121.003.

CHAPTER 122. CULTIVATION OF HEMP

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 122.001. DEFINITIONS. In this chapter:

(1) "Cultivate" means to plant, irrigate, cultivate,

or harvest a hemp plant.

(2) "Governing person" has the meaning assigned by

Section 1.002, Business Organizations Code.

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

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

a license holder 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 license holder to:

(i) a premises owned, operated, or

controlled by another license holder; or

(ii) a person licensed under Chapter 443,

Health and Safety Code.

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

121.001.

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

assigned by Section 61.003, Education Code.

(6) "License" means a hemp grower's license issued

under Subchapter C.

(7) "License holder" means an individual or business

entity holding a license.

(8) "Nonconsumable hemp product" means a product that

contains hemp, other than a consumable hemp product as defined by

Section 443.001, Health and Safety Code. The term includes cloth,

cordage, fiber, fuel, paint, paper, particleboard, and plastics

derived from hemp.

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

greenhouse, or indoor growing structure containing the same variety

or cultivar of hemp throughout the area.

Sec. 122.002. LOCAL REGULATION PROHIBITED. A municipality,

county, or other political subdivision of this state may not enact,

adopt, or enforce a rule, ordinance, order, resolution, or other

regulation that prohibits the cultivation, handling,

transportation, or sale of hemp as authorized by this chapter.

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

hemp production 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 122.052;

(4) interest and income earned on the investment of

money in the account;

(5) penalties collected under this chapter other than

a civil penalty collected under Subchapter H; and

(6) funds from any other source deposited in the

account.

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

subtitle. Money received under this subsection shall be deposited

in the account.

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

department for the administration and enforcement of this subtitle.

Sec. 122.004. SEVERABILITY. (a) A provision of this

chapter or its application to any person or circumstance is invalid

if the secretary of the United States Department of Agriculture

determines that the provision or application conflicts with 7

U.S.C. Chapter 38, Subchapter VII, and prevents the approval of the

state plan submitted under Chapter 121.

(b) The invalidity of a provision or application under

Subsection (a) does not affect the other provisions or applications

of this chapter that can be given effect without the invalid

provision or application, and to this end the provisions of this

chapter are declared to be severable.

SUBCHAPTER B. POWERS AND DUTIES OF DEPARTMENT

Sec. 122.051. DEPARTMENT RULES AND PROCEDURES. (a) The

department shall adopt rules and procedures necessary to implement,

administer, and enforce this chapter.

(b) Rules adopted under Subsection (a) must:

(1) prescribe sampling, inspection, and testing

procedures, including standards and procedures for the calibration

of laboratory equipment, to ensure that the delta-9

tetrahydrocannabinol concentration of hemp plants cultivated in

this state is not more than 0.3 percent on a dry weight basis; and

(2) provide due process consistent with Chapter 2001,

Government Code, including an appeals process, to protect license

holders from the consequences of imperfect test results.

Sec. 122.052. FEES. (a) The department shall set and

collect:

(1) an application fee for an initial license in an

amount not to exceed $100;

(2) a license renewal fee in an amount not to exceed

$100;

(3) a participation fee for each location described by

Section 122.103(a)(1) and each location added after the application

is submitted in an amount not to exceed $100;

(4) a site modification fee for each change to a

location described by Section 122.103(a)(1) in an amount not to

exceed $500; and

(5) a collection and testing fee for each preharvest

test or postharvest test if performed by the department in an amount

not to exceed $300.

(b) A fee set by the department under this section may not

exceed the amount necessary to administer this chapter. The

comptroller may authorize the department to collect a fee described

by Subsection (a) in an amount greater than the maximum amount

provided by that subsection if necessary to cover the department's

costs of administering this chapter.

with the cultivation of hemp that is not listed in Subsection (a),

other than:

(1) a fee for the organic certification of hemp under

Chapter 18 or for participation in another optional marketing

program; or

(2) a fee for the certification of seed or plants under

Chapter 62.

(d) Fees collected by the department under this chapter are

not refundable and may be appropriated only to the department for

the purpose of administering this chapter.

Sec. 122.053. INSPECTIONS. (a) The department may

randomly inspect land where hemp is grown to determine whether hemp

is being cultivated in compliance with this chapter.

(b) The department may enter onto land described by Section

122.103(a)(1), conduct inspections, and collect and test plant

samples.

Section 122.052(a)(3), the department shall pay the cost of

inspections under this section.

(d) The Department of Public Safety may inspect, collect

samples from, or test plants from any portion of a plot to ensure

compliance with this chapter. A license holder shall allow the

Department of Public Safety access to the plot and the property on

which the plot is located for purposes of this subsection.

(e) If, after conducting an inspection or performing

testing under this section, the department or the Department of

Public Safety determines any portion of a plot is not compliant with

this chapter, the department or the Department of Public Safety may

report the license holder to the other department or to the attorney

general.

Sec. 122.054. SAMPLE COLLECTION AND TESTING. The

department may collect samples and perform testing or contract with

a laboratory for the performance of that collection and testing on

behalf of the department. A test performed by a laboratory on behalf

of the department is considered to be performed by the department

for purposes of this chapter.

Sec. 122.055. SHIPPING CERTIFICATE OR CARGO MANIFEST. (a)

The department shall develop a shipping certificate or cargo

manifest which the department shall issue to a license holder in

connection with the transportation of a shipment of hemp plant

material originating in this state, other than sterilized seeds

that are incapable of beginning germination.

(b) A certificate or manifest developed 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 cultivated in

compliance with this chapter.

to deceive law enforcement, forges, falsifies, or alters a shipping

certificate or cargo manifest issued under this section. An

offense under this subsection is a third degree felony.

SUBCHAPTER C. HEMP GROWER'S LICENSE

Sec. 122.101. LICENSE REQUIRED; EXCEPTIONS. (a) Except as

provided by Subsection (b), a person or the person's agent may not

cultivate or handle hemp in this state or transport hemp outside of

this state unless the person holds a license under this subchapter.

(b) A person is not required to hold a license under this

subchapter to manufacture a consumable hemp product in accordance

with Subtitle A, Title 6, Health and Safety Code.

Sec. 122.102. LICENSE INELIGIBILITY. (a) An individual

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

substance under federal law or the law of any state may not, before

the 10th anniversary of the date of the conviction:

(1) hold a license under this subchapter; or

(2) be a governing person of a business entity that

holds a license under this subchapter.

(b) The department may not issue a license under this

subchapter to a person who materially falsifies any information

contained in an application submitted to the department under

Section 122.103.

Sec. 122.103. APPLICATION; ISSUANCE. (a) A person may

apply for a license under this subchapter by submitting an

application 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

applicant intends to cultivate or handle 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 or handled to conduct a physical inspection or to

ensure compliance with this chapter and rules adopted under this

chapter;

(3) the application fee; and

(4) any other information required by department rule.

(b) Except as provided by Subsection (c), the department

shall issue a license to a qualified applicant not later than the

60th day after the date the department receives the completed

application and the required application fees.

submits proof to the department that the applicant holds a license

under Chapter 487, Health and Safety Code, is not required to pay an

application fee, and the department shall issue the license to the

applicant within the time prescribed by Subsection (b).

Sec. 122.104. TERM; RENEWAL. (a) A license is valid for

one year and may be renewed as provided by this section.

(b) The department shall renew a license if the license

holder:

(1) is not ineligible to hold the license under

Section 122.102;

(2) submits to the department the license renewal fee;

and

(3) does not owe any outstanding fee described by

Section 122.052.

Sec. 122.105. REVOCATION. The department shall revoke a

license if the license holder is convicted of a felony relating to a

controlled substance under federal law or the law of any state.

SUBCHAPTER D. TESTING

Sec. 122.151. TESTING LABORATORIES. (a) Subject to

Subsection (b), testing under this subchapter or Section 122.053

must be performed by:

(1) the department;

(2) an institution of higher education; or

(3) an independent testing laboratory registered

under Section 122.152.

(b) To perform testing under this chapter, a laboratory

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

accreditation body in accordance with International Organization

for Standardization ISO/IEC 17025 or a comparable or successor

standard.

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

sample taken from the license holder's plot. A license holder may

not select an independent testing laboratory under Subsection

(a)(3) unless the license holder has:

(1) no ownership interest in the laboratory; or

(2) less than a 10 percent ownership interest in the

laboratory if the laboratory is a publicly traded company.

(d) A license holder must pay the costs of preharvest or

postharvest sample collection and testing in the amount prescribed

by the laboratory selected by the license holder.

(e) 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 license holder.

(f) The department shall notify the license holder of the

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

sample was collected under Section 122.154 or the date the

department receives test results under Subsection (e).

Sec. 122.152. REGISTRATION OF INDEPENDENT TESTING

LABORATORIES. (a) The department shall register independent

testing laboratories authorized to conduct testing under Section

122.151(a)(3).

(b) A laboratory is eligible for registration if the

laboratory submits to the department proof of accreditation by an

independent accreditation body in accordance with International

Organization for Standardization ISO/IEC 17025 or a comparable or

successor standard and any required fee.

independent testing laboratories registered by the department and

make the registry available to license holders.

(d) The department may charge a registration fee to recover

the costs of administering this section.

Sec. 122.153. PREHARVEST TESTING REQUIRED. (a) A license

holder may not harvest a hemp plant or plant intended or believed to

be hemp unless a representative sample of plants from the plot where

the plant is grown is collected before harvest and subsequently

tested using post-decarboxylation, high-performance liquid

chromatography, or another similarly reliable method to determine

the delta-9 tetrahydrocannabinol concentration of the sample in the

manner required by this subchapter.

(b) For purposes of Subsection (a), a representative sample

of plants from a plot consists of cuttings taken from at least five

plants throughout the plot. The department by rule shall prescribe

the minimum distance between plants from which cuttings may be

taken based on the size of the plot.

section shall homogenize all the cuttings in the sample and test the

delta-9 tetrahydrocannabinol concentration of a random sample of

the homogenized material.

(d) This section does not prohibit a license holder from

harvesting plants immediately after a preharvest sample is

collected.

Sec. 122.154. PREHARVEST SAMPLE COLLECTION. (a) A license

holder shall notify the department at least 20 days before the date

the license holder expects to harvest plants from a plot in the

manner prescribed by department rule.

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

entity described by Section 122.151(a) for purposes of preharvest

testing under Section 122.153.

procedures for submitting a preharvest sample collected under this

section to a testing laboratory selected by the license holder.

Sec. 122.155. OPTIONAL POSTHARVEST TESTING. (a) The

department by rule shall allow a license holder to have a single

postharvest test performed on a representative sample of plants

from a plot if the results of the preharvest test representing the

plot show a delta-9 tetrahydrocannabinol concentration of more than

0.3 percent on a dry weight basis.

(b) The department by rule shall prescribe the requirements

for a representative sample and for sample collection under this

section.

on or before the 15th day after the date the license holder is

notified of the results of the preharvest test, the results of the

preharvest test are final.

Sec. 122.156. 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 described by Section 122.151(a).

Sec. 122.157. FALSE LABORATORY REPORT; CRIMINAL OFFENSE.

(a) A person commits an offense if the person, with the intent to

deceive, forges, falsifies, or alters the results of a laboratory

test required or authorized under this chapter.

(b) An offense under Subsection (a) is a third degree

felony.

SUBCHAPTER E. HARVEST AND USE OR DISPOSAL OF PLANTS

Sec. 122.201. HARVEST. (a) A license holder shall harvest

the plants from a plot not later than the 20th day after the date a

preharvest sample is collected under Section 122.154 unless field

conditions delay harvesting or the department authorizes the

license holder to delay harvesting. This subsection does not

prohibit the license holder from harvesting the plants immediately

after the preharvest sample is collected.

(b) A license holder may not sell or use harvested plants

before the results of a preharvest and, if applicable, postharvest

test performed on a sample representing the plants are received. If

the test results are not received before the plants are harvested,

the license holder shall dry and store the harvested plants until

the results are received.

represented by one sample with plants represented by another sample

until the results of the tests are received.

Sec. 122.202. USE OR DISPOSAL OF HARVESTED PLANTS. (a) If

the results of a preharvest or postharvest test performed on a

sample show a delta-9 tetrahydrocannabinol concentration of not

more than 0.3 percent on a dry weight basis, the license holder may

sell or use the plants represented by the sample for any purpose

allowed by law.

(b) If the results of a preharvest and, if applicable,

postharvest test performed on a sample show a delta-9

tetrahydrocannabinol concentration of more than 0.3 percent on a

dry weight basis:

(1) the license holder shall dispose of or destroy all

plants represented by the sample:

(A) in the manner prescribed by federal law; or

(B) in a manner approved by the department that

does not conflict with federal law; or

(2) if the department determines the plants

represented by the sample reached that concentration solely as a

result of negligence, the license holder is subject to Section

122.403(c) and may:

(A) trim the plants until the delta-9

tetrahydrocannabinol concentration of the plants is not more than

0.3 percent on a dry weight basis and dispose of the noncompliant

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

(B) process the plants into fiber with a delta-9

tetrahydrocannabinol concentration of not more than 0.3 percent on

a dry weight basis 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 F. HEMP SEED

Sec. 122.251. APPLICABILITY OF SUBCHAPTER. This subchapter

does not apply to sterilized seeds that are incapable of beginning

germination.

Sec. 122.252. CERTIFICATION OR APPROVAL. (a) The

department or an entity authorized to certify seed under Chapter 62

shall identify and certify or approve seed confirmed to produce

hemp.

(b) The department or entity may not certify or approve a

variety of hemp seed if the seed is tested and confirmed to produce

a plant that has delta-9 tetrahydrocannabinol concentration of more

than 0.3 percent on a dry weight basis. 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 or approval under this section.

seed certified in accordance with the law of another state or

jurisdiction that requires as a condition of certification that

hemp be produced in compliance with:

(1) that state or jurisdiction's plan approved by the

United States Department of Agriculture under 7 U.S.C. Section

1639p; or

(2) a plan established under 7 U.S.C. Section 1639q if

that plan applies in the state or jurisdiction.

(d) The department shall maintain and make available to

license holders a list of hemp seeds certified or approved under

this section.

Sec. 122.253. PROHIBITED USE OF CERTAIN HEMP SEED. A person

may not sell, offer for sale, distribute, or use hemp seed in this

state unless the seed is certified or approved under Section

122.252.

SUBCHAPTER G. NONCONSUMABLE HEMP PRODUCTS

Sec. 122.301. MANUFACTURE. (a) Except as provided by

Subsection (b), a state agency may not prohibit a person who

manufactures a product regulated by the agency, other than an

article regulated under Chapter 431, Health and Safety Code, from

applying for or obtaining a permit or other authorization to

manufacture the product solely on the basis that the person intends

to manufacture the product as a nonconsumable hemp product.

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

a product containing hemp for smoking, as defined by Section

443.001, Health and Safety Code.

Sec. 122.302. POSSESSION, TRANSPORTATION, AND SALE. (a)

Notwithstanding any other law, a person may possess, transport,

sell, and purchase legally produced nonconsumable hemp products in

this state.

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

nonconsumable 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. 122.303. RETAIL SALE OF OUT-OF-STATE PRODUCTS. (a)

Retail sales of nonconsumable hemp products manufactured outside of

this state may be made in this state when the hemp used in the

products was cultivated legally in another state or jurisdiction in

compliance with:

(1) that state or jurisdiction's plan approved by the

United States Department of Agriculture under 7 U.S.C. Section

1639p; or

(2) a plan established under 7 U.S.C. Section 1639q if

that plan applies to the state or jurisdiction.

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

jurisdictions in which hemp may be cultivated legally as described

by Subsection (a).

Sec. 122.304. TRANSPORTATION AND EXPORTATION OUT OF STATE.

Nonconsumable 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 H. TRANSPORTATION REQUIREMENTS

Sec. 122.351. DEFINITION. In this subchapter, "peace

officer" has the meaning assigned by Article 2.12, Code of Criminal

Procedure.

Sec. 122.352. POLICY. It is the policy of this state to not

interfere with the interstate commerce of hemp or the transshipment

of hemp through this state.

Sec. 122.353. INTERSTATE TRANSPORTATION. To the extent of

a conflict between a provision of this chapter and a provision of

federal law involving interstate transportation of hemp, including

a United States Department of Agriculture regulation, federal law

controls and conflicting provisions of this chapter do not apply.

Sec. 122.354. DEPARTMENT RULES. The department, in

consultation with the Department of Public Safety, shall adopt

rules regulating the transportation of hemp in this state to ensure

that illegal marihuana is not transported into or through this

state disguised as legal hemp.

Sec. 122.355. HEMP TRANSPORTATION ACCOUNT. (a) The hemp

transportation account is a dedicated account in the general

revenue fund administered by the department. The account consists

of:

(1) civil penalties collected under this subchapter;

and

(2) interest and income earned on the investment of

money in the account.

(b) Money in the account may be appropriated only to the

department for the administration and enforcement of this

subchapter. The department may transfer money appropriated under

this subsection to the Department of Public Safety for the

administration and enforcement of that department's powers and

duties under this subchapter, unless prohibited by other law.

Sec. 122.356. DOCUMENTATION AND OTHER SHIPPING

REQUIREMENTS. (a) A person may not transport hemp plant material

in this state unless the hemp:

(1) is produced in compliance with:

(A) a state or tribal plan approved by the United

States Department of Agriculture under 7 U.S.C. Section 1639p; or

(B) a plan established under 7 U.S.C. Section

1639q if the hemp was cultivated in an area where that plan applies;

and

(2) is accompanied by:

(A) a shipping certificate or cargo manifest

issued under Section 122.055 if the hemp originated in this state;

(B) documentation containing the name and

address of the place where the hemp was cultivated and a statement

that the hemp was produced in compliance with 7 U.S.C. Chapter 38,

Subchapter VII, if the hemp originated outside this state.

(b) A person transporting hemp plant material in this state:

(1) may not concurrently transport any cargo that is

not hemp plant material; and

(2) shall furnish the documentation required by this

section to the department or any peace officer on request.

Sec. 122.357. AGRICULTURAL PESTS AND DISEASES. A person

may not transport in this state hemp that contains an agricultural

pest or disease as provided by department rule.

Sec. 122.358. POWERS AND DUTIES OF PEACE OFFICERS. (a) A

peace officer may inspect and collect a reasonably sized sample of

any material from the plant Cannabis sativa L. found in a vehicle to

determine the delta-9 tetrahydrocannabinol concentration of the

plant material. Unless a peace officer has probable cause to

believe the plant material is marihuana, the peace officer may not:

(1) seize the plant material; or

(2) arrest the person transporting the plant material.

(b) A peace officer may detain any hemp being transported in

this state until the person transporting the hemp provides the

documentation required by Section 122.356. The peace officer shall

immediately release the hemp to the person if the person produces

documentation required by that section.

person transporting hemp in this state is also transporting

marihuana or a controlled substance, as defined by Section 481.002,

Health and Safety Code, or any other illegal substance under state

or federal law, the peace officer may seize and impound the hemp

along with the controlled or illegal substance.

(d) This subchapter does not limit or restrict a peace

officer from enforcing to the fullest extent the laws of this state

regulating marihuana and controlled substances, as defined by

Section 481.002, Health and Safety Code.

Sec. 122.359. CIVIL PENALTY. (a) A person who violates

Section 122.356 is liable to this state for a civil penalty in an

amount not to exceed $500 for each violation.

(b) The attorney general or any district or county attorney

may bring an action to recover the civil penalty.

deposited in the hemp transportation account under Section 122.355.

Sec. 122.360. CRIMINAL OFFENSE. (a) A person commits an

offense if the person violates Section 122.356.

(b) An offense under this section is a misdemeanor

punishable by a fine of not more than $1,000.

SUBCHAPTER I. ENFORCEMENT; PENALTIES

Sec. 122.401. 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 other than a

civil penalty collected under Subchapter H must be deposited in the

state hemp production account under Section 122.003.

Sec. 122.402. ADMINISTRATIVE PENALTY. Except as provided

by Section 122.403 and to the extent permitted under 7 U.S.C.

Section 1639p(e), 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.

Sec. 122.403. NEGLIGENT VIOLATIONS BY LICENSE HOLDER. (a)

If the department determines that a license holder 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).

(b) A license holder described by Subsection (a) is not

subject to a civil, criminal, or administrative enforcement action

other than an enforcement action provided by this chapter.

cultivating plants described by Section 122.202(b)(2):

(1) must comply with an enhanced testing protocol

developed by the department;

(2) shall pay a fee in the amount of $500 for each

violation to cover the department's costs of administering the

enhanced testing protocol; and

(3) shall be included on a list maintained by the

department of license holders with negligent violations, which is

public information for purposes of Chapter 552, Government Code.

(d) A person who negligently violates this chapter three

times in any five-year period may not cultivate, process, or

otherwise produce hemp in this state before the fifth anniversary

of the date of the third violation. The department shall include

each person subject to this subsection on a list of banned

producers, which is public information for purposes of Chapter 552,

Government Code.

Sec. 122.404. OTHER VIOLATIONS BY LICENSE HOLDER. If the

department suspects or determines that a license holder violated

this chapter or a rule adopted under this chapter with a culpable

mental state greater than negligence, the department shall

immediately report the license holder to:

(1) the United States attorney general; and

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

(A) investigate the violation;

(B) institute proceedings for injunctive or

other appropriate relief on behalf of the department; or

Safety and any other appropriate law enforcement agency.

SECTION 3. Subchapter A, Chapter 141, Agriculture Code, is

amended by adding Section 141.008 to read as follows:

Sec. 141.008. HEMP IN COMMERCIAL FEED. The service may

adopt rules authorizing, defining, and controlling the use of hemp

and hemp products in commercial feed.

SECTION 4. Subchapter A, Chapter 431, Health and Safety

Code, is amended by adding Section 431.011 to read as follows:

Sec. 431.011. APPLICABILITY OF CHAPTER TO CONSUMABLE HEMP

PRODUCTS AND MANUFACTURERS. (a) This chapter applies to a

consumable hemp product subject to Chapter 443. An article

regulated under this chapter may not be deemed to be adulterated

solely on the basis that the article is a consumable hemp product.

(b) Except as provided by Subsection (c), this chapter

applies to the conduct of a person who holds a license under Chapter

443.

to the processing of hemp or the manufacturing of a consumable hemp

product regulated under that chapter and is engaging in conduct

within the scope of that license is not required to hold a license

as a food manufacturer or food wholesaler under Subchapter J.

SECTION 5. Section 431.043, Health and Safety Code, is

amended to read as follows:

Sec. 431.043. ACCESS TO RECORDS. A person who is required

to maintain records under this chapter or Section 519 or 520(g) of

the federal Act or a person who is in charge or custody of those

records shall, at the request of the department or a health

authority, permit the department or health authority at all

reasonable times access to and to copy and verify the records,

including records that verify that the hemp in a consumable hemp

product was produced in accordance with Chapter 122, Agriculture

Code, or 7 U.S.C. Chapter 38, Subchapter VII.

SECTION 6. Section 431.2211, Health and Safety Code, is

amended by adding Subsection (a-3) to read as follows:

(a-3) A person is not required to hold a license under this

subchapter if the person holds a license under Chapter 443 and is

engaging in conduct within the scope of that license.

SECTION 7. Subtitle A, Title 6, Health and Safety Code, is

amended by adding Chapter 443 to read as follows:

CHAPTER 443. MANUFACTURE, DISTRIBUTION, AND SALE OF CONSUMABLE

HEMP PRODUCTS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 443.001. DEFINITIONS. In this chapter:

(1) "Consumable hemp product" means food, a drug, a

device, or a cosmetic, as those terms are defined by Section

431.002, that contains hemp or one or more hemp-derived

cannabinoids, including cannabidiol.

(2) "Department" means the Department of State Health

Services.

(3) "Establishment" means each location where a person

processes hemp or manufactures a consumable hemp product.

(4) "Executive commissioner" means the executive

commissioner of the Health and Human Services Commission.

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

121.001, Agriculture Code.

(6) "License" means a consumable hemp product

manufacturer's license issued under this chapter.

(7) "License holder" means an individual or business

entity holding a license.

(8) "Manufacture" has the meaning assigned by Section

431.002.

(9) "Process" means to extract a component of hemp,

including cannabidiol or another cannabinoid, that is:

(A) sold as a consumable hemp product;

(B) offered for sale as a consumable hemp

product;

(D) intended to be incorporated into a consumable

hemp product.

(10) "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.

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

and inhaling the smoke or heating a substance and inhaling the

resulting vapor or aerosol.

Sec. 443.002. APPLICABILITY OF OTHER LAW. Except as

provided by Section 431.011(c), Chapter 431 applies to a license

holder and a consumable hemp product regulated under this chapter.

Sec. 443.003. LOCAL REGULATION PROHIBITED. A municipality,

county, or other political subdivision of this state may not enact,

adopt, or enforce a rule, ordinance, order, resolution, or other

regulation that prohibits the processing of hemp or the

manufacturing or sale of a consumable hemp product as authorized by

this chapter.

Sec. 443.004. SEVERABILITY. (a) A provision of this

chapter or its application to any person or circumstance is invalid

if the secretary of the United States Department of Agriculture

determines that the provision or application conflicts with 7

U.S.C. Chapter 38, Subchapter VII, and prevents the approval of the

state plan submitted under Chapter 121, Agriculture Code.

(b) The invalidity of a provision or application under

Subsection (a) does not affect the other provisions or applications

of this chapter that can be given effect without the invalid

provision or application, and to this end the provisions of this

chapter are declared to be severable.

SUBCHAPTER B. POWERS AND DUTIES

Sec. 443.051. RULEMAKING AUTHORITY OF EXECUTIVE

COMMISSIONER. The executive commissioner shall adopt rules and

procedures necessary to administer and enforce this chapter. Rules

and procedures adopted under this section must be consistent with:

(1) an approved state plan submitted to the United

States Department of Agriculture under Chapter 121, Agriculture

Code; and

(2) 7 U.S.C. Chapter 38, Subchapter VII, and federal

regulations adopted under that subchapter.

SUBCHAPTER C. CONSUMABLE HEMP PRODUCT MANUFACTURER LICENSE

Sec. 443.101. LICENSE REQUIRED; EXCEPTIONS. A person may

not process hemp or manufacture a consumable hemp product in this

state unless the person holds a license under this subchapter.

Sec. 443.102. LICENSE INELIGIBILITY. (a) An individual

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

substance under federal law or the law of any state may not, before

the 10th anniversary of the date of the conviction:

(1) hold a license under this subchapter; or

(2) be a governing person of an establishment that

holds a license under this subchapter.

(b) The department may not issue a license under this

subchapter to a person who materially falsifies any information

contained in an application submitted to the department under

Section 443.103.

Sec. 443.103. APPLICATION; ISSUANCE. An individual or

establishment may apply for a license under this subchapter by

submitting an application 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

applicant intends to process hemp or manufacture consumable hemp

products 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 processed or consumable hemp products are manufactured 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.

Sec. 443.104. TERM; RENEWAL. (a) A license is valid for

one year and may be renewed as provided by this section.

(b) The department shall renew a license if the license

holder:

(1) is not ineligible to hold the license under

Section 443.102;

(2) submits to the department any license renewal fee;

and

(3) does not owe any outstanding fees to the

department.

Sec. 443.105. REVOCATION. The department shall revoke a

license if the license holder is convicted of a felony relating to a

controlled substance under federal law or the law of any state.

SUBCHAPTER D. TESTING OF CONSUMABLE HEMP PRODUCTS

Sec. 443.151. TESTING REQUIRED. (a) A consumable hemp

product must be tested as provided by:

(1) Subsections (b) and (c); or

(2) Subsection (d).

(b) Before a hemp plant is processed or otherwise used in

the manufacture of a consumable hemp product, a sample representing

the plant must be tested, as required by the executive

commissioner, to determine:

(1) the concentration of various cannabinoids; and

(2) the presence or quantity of heavy metals,

pesticides, and any other substance prescribed by the department.

sold as, offered for sale as, or incorporated into a consumable hemp

product, the material must be tested, as required by the executive

commissioner, to determine:

(1) the presence of harmful microorganisms; and

(2) the presence or quantity of:

(A) any residual solvents used in processing, if

applicable; and

(B) any other substance prescribed by the

department.

(d) Except as otherwise provided by Subsection (e), before a

consumable hemp product is sold at retail or otherwise introduced

into commerce in this state, a sample representing the hemp product

must be tested by a laboratory that is accredited by an

accreditation body in accordance with International Organization

for Standardization ISO/IEC 17025 or a comparable or successor

standard to determine the delta-9 tetrahydrocannabinol

concentration of the product.

(e) A consumable hemp product is not required to be tested

under Subsection (d) if each hemp-derived ingredient of the

product:

(1) has been tested in accordance with Subsections (b)

and (c); and

(2) does not have a delta-9 tetrahydrocannabinol

concentration of more than 0.3 percent.

Sec. 443.152. PROVISIONS RELATED TO TESTING. (a) A

consumable hemp product that has a delta-9 tetrahydrocannabinol

concentration of more than 0.3 percent may not be sold at retail or

otherwise introduced into commerce in this state.

(b) A person licensed under Chapter 122, Agriculture Code,

shall provide to a license holder who is processing hemp harvested

by the person or otherwise using that hemp to manufacture a

consumable hemp product the results of a test conducted under that

chapter, if available, as proof that the delta-9

tetrahydrocannabinol concentration of the hemp does not exceed 0.3

percent, including for purposes of Section 443.151(b)(1).

consumable hemp product processed or manufactured by the license

holder the results of testing required by Section 443.151. The

results may accompany a shipment to the seller or be made available

to the seller electronically. If the results are not able to be

made available, the seller may have the testing required under

Section 443.151 performed on the product and shall make the results

available to a consumer.

SUBCHAPTER E. RETAIL SALE OF CONSUMABLE HEMP PRODUCTS

Sec. 443.201. POSSESSION, TRANSPORTATION, AND SALE OF

CONSUMABLE HEMP PRODUCTS. (a) A person may possess, transport,

sell, or purchase a consumable hemp product processed or

manufactured in compliance with this chapter.

(b) The executive commissioner by rule must provide to a

retailer of consumable hemp products fair notice of a potential

violation concerning consumable hemp products sold by the retailer

and an opportunity to cure a violation made unintentionally or

negligently.

Sec. 443.202. REGULATION OF CERTAIN CANNABINOID OILS. (a)

This section does not apply to low-THC cannabis regulated under

Chapter 487.

(b) Notwithstanding any other law, a person may not sell,

offer for sale, possess, distribute, or transport a cannabinoid

oil, including cannabidiol oil, in this state:

(1) if the oil contains any material extracted or

derived from the plant Cannabis sativa L., other than from hemp

produced in compliance with 7 U.S.C. Chapter 38, Subchapter VII;

and

(2) unless a sample representing the oil has been

tested by a laboratory that is accredited by an independent

accreditation body in accordance with International Organization

for Standardization ISO/IEC 17025 or a comparable or successor

standard and found to have a delta-9 tetrahydrocannabinol

concentration of not more than 0.3 percent.

establish a process for the random testing of cannabinoid oil,

including cannabidiol oil, at various retail and other

establishments that sell, offer for sale, distribute, or use the

oil to ensure that the oil:

(1) does not contain harmful ingredients;

(2) is produced in compliance with 7 U.S.C. Chapter

38, Subchapter VII; and

(3) has a delta-9 tetrahydrocannabinol concentration

of not more than 0.3 percent.

Sec. 443.2025. PERMIT REQUIRED FOR RETAILERS OF CERTAIN

PRODUCTS. (a) This section does not apply to low-THC cannabis

regulated under Chapter 487.

(b) A person may not sell a consumable hemp product

containing cannabidiol at retail in this state unless the person

holds a permit issued by the department.

department under Subsection (b) if the person is:

(1) an employee of a permit holder; or

(2) a location affiliated with or owned, operated, or

controlled by the permit holder whose address is maintained in a

list by the permit holder under Subsection (d).

(d) A permit holder shall maintain a list of each location

affiliated with or owned, operated, or controlled by the permit

holder that sells products described by Subsection (b) at retail in

this state. The permit holder shall make the list readily available

to the department on request.

(e) The department shall adopt rules and may prescribe a

reasonable permit fee to implement and administer this section.

Sec. 443.203. DECEPTIVE TRADE PRACTICE. (a) A person who

sells, offers for sale, or distributes a cannabinoid oil, including

cannabidiol oil, that the person claims is processed or

manufactured in compliance with this chapter commits a false,

misleading, or deceptive act or practice actionable under

Subchapter E, Chapter 17, Business & Commerce Code, if the oil is

not processed or manufactured in accordance with this chapter.

(b) A person who sells, offers for sale, or distributes a

cannabinoid oil commits a false, misleading, or deceptive act or

practice actionable under Subchapter E, Chapter 17, Business &

Commerce Code, if the oil:

(1) contains harmful ingredients;

(2) is not produced in compliance with 7 U.S.C.

Chapter 38, Subchapter VII; or

(3) has a delta-9 tetrahydrocannabinol concentration

of more than 0.3 percent.

Sec. 443.204. RULES RELATED TO SALE OF CONSUMABLE HEMP

PRODUCTS. Rules adopted by the executive commissioner regulating

the sale of consumable hemp products must to the extent allowable by

federal law 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

considered foods, not controlled substances or adulterated

products;

(3) consumable hemp products must be packaged and

labeled in the manner provided by Section 443.205; and

(4) the processing or manufacturing of a consumable

hemp product for smoking is prohibited.

Sec. 443.205. PACKAGING AND LABELING REQUIREMENTS. (a)

Before a consumable hemp product that contains or is marketed as

containing more than trace amounts of cannabinoids may be

distributed or sold, the product must be labeled in the manner

provided by this section with the following information:

(1) batch identification number;

(2) batch date;

(3) product name;

(4) a uniform resource locator (URL) that provides or

links to a certificate of analysis for the product or each

hemp-derived ingredient of the product;

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

(6) a certification that the delta-9

tetrahydrocannabinol concentration of the product or each

hemp-derived ingredient of the product is not more than 0.3

percent.

(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 or links to the

information required by that subsection; and

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

that leads to the information required by that subsection.

unit of the product intended for individual retail sale. If that

unit includes inner and outer packaging, the label may appear on any

of that packaging.

(d) This section does not apply to sterilized seeds

incapable of beginning germination.

Sec. 443.206. RETAIL SALE OF OUT-OF-STATE CONSUMABLE HEMP

PRODUCTS. (a) Retail sales of consumable hemp products processed or

manufactured outside of this state may be made in this state when

the products were processed or manufactured legally in another

state or jurisdiction in compliance with:

(1) that state or jurisdiction's plan approved by the

United States Department of Agriculture under 7 U.S.C. Section

1639p; or

(2) a plan established under 7 U.S.C. Section 1639q if

that plan applies to the state or jurisdiction.

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

jurisdictions described by Subsection (a).

Sec. 443.207. TRANSPORTATION AND EXPORTATION OF CONSUMABLE

HEMP PRODUCTS OUT OF STATE. Consumable 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.

SECTION 8. 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 9. (a) Not later than the 90th day after the

effective date of this Act, the Department of Agriculture shall

submit for approval a state plan to the secretary of the United

States Department of Agriculture as provided by Section 121.003,

Agriculture Code, as added by this Act.

(b) The Department of Agriculture shall submit amended

state plans as provided by Section 121.003(c), Agriculture Code, as

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

Act, the executive commissioner of the Health and Human Services

Commission shall adopt rules necessary to implement the changes in

law made by this Act.

SECTION 10. The Department of Agriculture and the

Department of State Health Services shall begin implementing the

state plan approved by the secretary of the United States

Department of Agriculture not later than the 30th day after the date

on which the state plan is approved and shall fully implement the

state plan as soon as practicable after the state plan is approved.

SECTION 11. Notwithstanding Chapter 443, Health and Safety

Code, as added by this Act, a retailer may possess, transport, or

sell a consumable hemp product, as defined by Section 443.001,

Health and Safety Code, as added by this Act, that is part of the

retailer's inventory on the effective date of this Act regardless

of whether the product was processed, manufactured, packaged, or

labeled in compliance with that chapter.

SECTION 12. Notwithstanding Section 443.2025, Health and

Safety Code, as added by this Act, a person is not required to hold a

permit to sell a consumable hemp product containing cannabidiol at

retail in this state until the 60th day after the date the

Department of State Health Services begins accepting applications

for the permit.

SECTION 13. 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.

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