HOUSE OF REPRESENTATIVES	H.B. NO.	1243
THIRTY-FIRST LEGISLATURE, 2021		H.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO HEMP.

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

SECTION 1. The legislature finds that Act 14, Session Laws of Hawaii 2020, (Act 14) was passed to allow the growth of hemp in the State through the United States Department of Agriculture's hemp production program as the state department of agriculture's industrial hemp pilot program was set to expire in June 2021. Timely passage of Act 14 was important to ensure continuation of existing hemp production operations. However, Act 14 does not completely address the manufacture of hemp products, an important next step to fully realize the legislature's intent to allow the development of a legal and regulated hemp industry within the State. The legislature further finds that the United States Food and Drug Administration has not created a national regulatory framework through which legally grown hemp can be transformed into products that are safe and legal for sale to consumers, leaving states to establish such frameworks.

Accordingly, the purpose of this Act is to:

(1) Allow and regulate the manufacture of certain hemp products in the State; and

(2) Clarify the respective roles of persons growing hemp, processing hemp, and manufacturing hemp products.

SECTION 2. Chapter 328G, Hawaii Revised Statutes, is amended to read as follows:

"CHAPTER 328G

HEMP [PROCESSORS] PROCESSING AND HEMP PRODUCT MANUFACTURING

[[]§328G-1[]] Definitions. As used in this chapter:

"Applicant" means the person applying to register [as a] to process hemp [processor] or manufacture hemp products under this chapter.

"Cannabinoids" means any of the various naturally occurring[,] biologically active[,] chemical constituents of cannabis that bind to or interact with receptors of the endogenous cannabinoid system.

"Cannabis" means the genus of the flowering plant in the family Cannabaceae. For the purpose of this chapter, cannabis refers to any form of the plant where the delta-9 tetrahydrocannabinol concentration on a dry weight basis has not yet been determined.

"Certificate of registration" means the certificate issued by the department attesting that the applicant is registered to process hemp[.] or manufacture a hemp product.

"Decarboxylated" means the completion of the chemical reaction that converts delta-9 tetrahydrocannabinol's acids (THCA) into delta-9-tetrahydrocannabinol. The decarboxylated value may be calculated using a conversion formula that sums delta-9-tetrahydrocannabinol and eighty-seven and seven tenths (87.7) per cent of THCA.

"Delta-9 tetrahydrocannabinol" or "THC" means the primary psychoactive component of cannabis.

"Department" means the department of health.

"Director" means the director of health.

"Dry weight basis" refers to a method of determining the percentage of a chemical in a substance after removing the moisture from the substance.

"Enclosed indoor facility" means a permanent, stationary structure with a solid floor, rigid exterior walls that encircle the entire structure on all sides, and a roof that protects the entire interior area from the elements of weather. Nothing in this definition shall be construed to relieve the registered applicant from the applicant's duty to comply with all applicable building codes and regulations.

"FDA" means the United States Food and Drug Administration.

"Gummy" means a gelatinous cube, sphere, prismatoid, or ovoid.

"Hemp" means Cannabis sativa L. and any part of that plant, whether growing or not, including the seeds thereof [and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers], with a delta-9-tetrahydrocannabinol concentration of not more than 0.3 per cent on a dry weight basis, as measured post-decarboxylation or by other similarly reliable methods.

["Hemp processor" means a person processing hemp to manufacture a hemp product.]

"Hemp product" means [a product that:

(1) Contains naturally occurring cannabinoids, compounds, concentrates, extracts, isolates, resins or derivatives from processed hemp;

(2) Does not include any living hemp plants, viable seeds, leaf materials, or floral materials;

(3) Has a delta-9-tetrahydrocannabinol concentration of not more than 0.3 per cent, as measured post-decarboxylation, or other similarly reliable methods;

(4) Is intended to be consumed orally to supplement the human or animal diet; and

(5) Is in the form of a tablet, capsule, powder, softgel, gelcap, or liquid form (e.g. hemp oil) to be used by the consumer to infuse edible items at home for personal use or for topical application to the skin or hair.

For purposes of this chapter, a hemp product shall be considered as intended for oral ingestion in liquid form only if it is formulated in a fluid carrier and it is intended for ingestion in daily quantities measured in drops or similar small units of measure per labeled directions for use.] processed hemp:

(1) Intended to be sold direct to consumer; and

(2) To which additives have been introduced during manufacture.

"Manufacture" means to compound, blend, extract, infuse, or otherwise use processed hemp to make or prepare a hemp product[, but does not include planting, growing, harvesting, drying, curing, grading, or trimming a hemp plant or part of a hemp plant].

"Person" means an individual, firm, corporation, partnership, association, or any form of business or legal entity.

"Processed hemp" means any compounds, concentrates, extracts, isolates, resins, or derivatives generated from the processing of hemp, excluding any part of the hemp plant and waste byproduct.

"Processing" means making a transformative change to the hemp plant [following harvest by converting an agricultural commodity into a hemp product.] using mechanical, chemical, or other means, to produce processed hemp that is intended:

(1) To be consumed orally to supplement the human or animal diet or be applied topically to the skin or hair; or

(2) For use in manufacture of a hemp product intended to be consumed orally to supplement the human or animal diet or be applied topically to the skin or hair.

"Synthetic cannabinoid" means a cannabinoid that is:

(1) Produced artificially, whether from chemicals or from recombinant biological agents including but not limited to yeast and algae; and

(2) Not derived from the genus cannabis, including biosynthetic cannabinoids.

[[]§328G-2[]] Hemp [processor] processing and manufacture registry; [application; removal from registry.] registration and updates. (a) No person shall process hemp without first obtaining a license to produce hemp, issued by the Secretary of the United States Department of Agriculture pursuant to title 7 United States Code section 1639q.

(b) No person shall process hemp or manufacture a hemp product without being registered by the department [as a hemp processor] pursuant to this [part] chapter and any rules adopted pursuant [[]to[]] this chapter.

(c) A person who intends to process hemp or manufacture a hemp product shall apply to the department for registration on an application form [created] provided by the department.

(d) The applicant shall provide, at a minimum, the following information:

(1) The applicant's name, mailing address, and phone number in [Hawaii;] the State;

(2) The legal description of [the] each parcel of land on which [the] hemp is to be processed [or]; hemp products are to be manufactured; or hemp, processed hemp, or hemp products are to be stored;

(3) A description of [the] each enclosed indoor facility where hemp processing or hemp product manufacturing will occur;

(4) [Documentation that the indoor facility and planned hemp processing operation complies with all zoning ordinances, building codes, and fire codes;

(5) Documentation] For persons intending to process hemp, documentation showing that the applicant has obtained a license to produce hemp, issued by the Secretary of the United States Department of Agriculture pursuant to title 7 United States Code section 1639q; and

[(6)] (5) Any other information required by the department.

(e) In addition to the application form, each applicant shall submit a non-refundable application fee established by the department. If the fee does not accompany the application, the application for registration shall be deemed incomplete.

(f) Any incomplete application shall be denied.

(g) Upon the department's receipt of a complete and accurate application that meets the requirements adopted by the department pursuant to this chapter, any other information requested by the department, and [remittal of] the application fee, the [applicant shall be registered and shall be issued] department shall issue a certificate of registration [to process hemp].

(h) [The certificate of registration shall be renewed] Persons on the registry shall re-register annually by [payment of] paying the [annual renewal] re-registration fee to be determined by the department[.] and certifying that there has been no change to the information required in subsection (d) or submitting an update as provided in subsection (i).

(i) The information required by subsection (d) shall be updated on a form provided by the department by the person to whom a certificate of registration was issued no later than sixty days after the event giving rise to the need to make any corrections or to otherwise update information in the registry and shall accurately account for any changes related to that person's registration.

[(i)] (j) [Hemp processors] Persons processing hemp or manufacturing hemp products shall allow any member of the department, or any agent or third party authorized by the department, to enter at reasonable times upon any private property in order to inspect, sample, and test the hemp processing or hemp product manufacturing area, processed hemp, hemp products, and equipment[,] and facilities incident to the processing or storage of hemp[,] and manufacturing or storage of hemp products, and review all pertinent records.

[(j) The department may remove any person from the registry for failure to comply with any law or regulation under this chapter. It is the responsibility of the hemp processor to make sure it is registered and legally allowed to process hemp and in compliance with any and all laws and regulations. The removal of a hemp processor from the registry shall be in accordance with the procedures set forth in section 328H-F.]

(k) A person on the registry or applying for registration shall, upon request, submit to the department documentation that the indoor facility and hemp processing or hemp product manufacturing operation complies with all zoning ordinances, building codes, and fire codes.

[[]§328G-3[]] Hemp processing[;] and hemp product [sale and prohibitions; labeling.] manufacturing. (a) No hemp shall be processed [into hemp products], nor shall any [hemp processor] person hold for processing or sale any hemp, unless lawfully obtained from a person [approved or otherwise authorized by applicable federal, state or local law to cultivate hemp plants.] holding a valid license issued by the United States Department of Agriculture pursuant to title 7 United States Code section 1639q or by a state or tribal agency administering a plan approved by the United States Department of Agriculture pursuant to title 7 United States Code section 1639p.

(b) Hemp shall be processed and hemp products shall be [processed] manufactured within an enclosed indoor facility secured to prevent unauthorized entry. Hemp, hemp products, and any toxic or otherwise hazardous by-products of hemp processing[, or by-products,] or hemp product manufacturing, including but not limited to delta-9 tetrahydrocannabinol, shall be stored within an enclosed indoor facility, secured to prevent unauthorized entry in a manner that prevents cross-contamination and unintended exposures.

(c) Hemp shall not be processed within 500 feet of a pre-existing playground, school, state park, state recreation area, residential neighborhood, hospital, or daycare facility.

(d) Hemp shall not be processed nor shall hemp products be manufactured using butane in an open system where fumes are not contained or by use of any other method of processing the department determines poses a risk to health and safety.

(e) Hemp processing and hemp product manufacturing facilities and operations shall comply with applicable local rules and regulations.

§328G-4 Sale and prohibitions. (a) No person shall sell, hold[,] for sale, offer, or distribute [for sale] any food, as that term is defined in section 328-1, into which [a cannabinoid, synthetic cannabinoid, hemp extract, hemp derivatives or other] hemp, processed hemp, a hemp product, or a synthetic cannabinoid that has been added as an ingredient or component. This section shall not apply to hemp that is generally recognized as safe (GRAS) by the FDA for use in foods, as intended, in a public GRAS notification.

[(f)] (b) No person shall sell, hold[,] for sale, offer, or distribute [for sale] any hemp product into which a synthetic cannabinoid has been added[.] nor any synthetic cannabinoid for oral consumption or topical use.

[(g)] (c) No person shall sell, hold[,] for sale, offer, or distribute [for sale any cannabinoid products used to aerosolize] any product containing hemp, made from hemp, or containing synthetic cannabinoids for respiratory routes of delivery, [such as an inhaler, nebulizer] including but not limited to cigarettes, cigars, pre-rolls, inhalers, nebulizers, electronic smoking devices, or other device designed for such purpose.

[(h)] (d) No person shall sell, hold[,] for sale, offer, or distribute [for sale,] direct to consumers any hemp leaf or hemp floral material [that is intended to be smoked or inhaled, including but not limited to hemp cigars or hemp cigarettes].

[(i)] (e) Except for hemp products intended for external topical application to the skin or hair, no person shall sell, hold[,] for sale, offer, or distribute [for sale] any products containing hemp [or hemp derivatives], made from hemp, or containing synthetic cannabinoids that are intended to be introduced via non-oral routes of entry to the body, including but not limited to[,] use in eyes, ears, and nasal cavities.

(f) No person shall sell, hold for sale, offer, or distribute any processed hemp or hemp product unless the hemp used to make the processed hemp or hemp product was grown by a person holding a valid license issued by the United States Department of Agriculture pursuant to title 7 United States Code section 1639q or by a state or tribal agency administering a plan approved by the United State Department of Agriculture pursuant to title 7 United States Code section 1639p.

(g) No person shall sell, hold for sale, offer, or distribute any processed hemp or hemp product that has a delta‑9-tetrahydrocannabinol concentration of more than 0.3 per cent, as measured post-decarboxylation, or by other similarly reliable methods.

(h) No person shall sell, hold for sale, offer, or distribute any hemp product intended to be consumed orally to supplement the human or animal diet unless the product is in the form of a tablet, capsule, powder, softgel, gelcap, gummy, or liquid to be ingested in daily quantities measure in drops or similar units of measure.

(i) No person shall sell, hold for sale, offer, or distribute processed hemp or a hemp product unless it has been tested in accordance with, and meets the standards established by, rules adopted by the department.

(j) No person shall sell, hold[,] for sale, offer or distribute [for sale,] any processed hemp or hemp [products] product without a label, in a form prescribed by the department, affixed to the packaging that [identifies] includes confirmation that the processed hemp or hemp product [as having] has been tested pursuant to department rules.

(k) No person shall sell, hold for sale, offer, or distribute any hemp product without a label, in a form prescribed by the department, affixed to the packaging that includes, at a minimum, the following:

(1) The hemp product name;

(2) A list of all ingredients;

(3) The name and business address of the manufacturer, or, in the case of processed hemp intended for sale direct to consumers, the name and business address of the hemp processor; and

(4) A statement reading "This product has not been evaluated by the United States Food and Drug Administration and is not intended to diagnose, treat, cure, or prevent any disease.".

(l) No person shall sell, offer, or distribute for sale any hemp product to any individual under twenty-one years of age.

[[§328G-4]] §328G-5 Rulemaking. (a) The department [shall] may adopt rules pursuant to chapter 91 that include but are not limited to:

(1) [Inspection and sampling requirements of hemp products;] Handling, storage, and quality control requirements for persons processing hemp and manufacturing hemp products;

(2) Labeling requirements and restrictions for processed hemp and hemp products, including but not limited to those related to intended use, health advisories and warnings, and medical claims;

[(2)] (3) Testing protocols, including certification by state laboratories or independent third-party laboratories,] Requirements for sampling and testing of processed hemp and hemp products to determine delta-9-tetrahydrocannabinol concentration and [screening for contaminants of hemp products;] presence of contaminants;

(4) Procedures for certification of state laboratories and independent third-party laboratories;

[(3)] (5) Reporting and record-keeping requirements[;] for persons processing hemp and manufacturing hemp products;

[(4)] (6) Assessment of fees for application, inspecting, sampling, and other fees as deemed necessary[;] to implement this chapter;

[(5)] (7) Penalties for any violation; and

[(6)] (8) Any other rules and procedures necessary to carry out this chapter.

(b) The department may adopt and amend interim rules, which shall be exempt from chapter 91 and chapter 201M, to effectuate the purposes of this chapter; provided that any interim rules shall only remain in effect until July 1, 2025, or until rules are adopted pursuant to subsection (a), whichever occurs sooner.

[[§328G-5] Laboratory standards and testing; certification. (a) The department shall establish and enforce standards for laboratory-based testing of the hemp products for content, contamination, and consistency.

(b) The department may certify laboratories and recognize certifications from other jurisdictions of laboratories that are qualified to test hemp products for quality control prior to sale.]

[[]§328G-6[]] Enforcement; penalty. (a) Any person who violates this chapter or any rule adopted by the department pursuant to this chapter shall be fined not more than $10,000 for each separate offense. Any action taken to collect the penalty provided for in this subsection shall be considered a civil action. In addition to any other administrative or judicial remedy provided by this chapter, or by rules adopted pursuant to this chapter, the director may impose by order the administrative penalty specified in this section.

(b) Any order issued under this chapter shall become final, unless not later than twenty days after the notice of order is served, the person or persons named therein request in writing a hearing before the director. Any penalty imposed[, including removal from the registry,] shall become final, and any monetary penalty shall become due and payable twenty days after the order is served unless the person or persons named therein request in writing a hearing before the director. Whenever a hearing is requested, the penalty imposed[, including removal from the registry,] shall become final, and any monetary penalty shall become due and payable, only upon completion of all review proceedings and the issuance of a final order confirming the penalty in whole or in part. Any hearing shall be in accordance with chapter 91.

(c) For any judicial proceeding to recover an administrative penalty imposed by order [or to enforce a cease and desist order against a hemp processor removed from the registry], the director may petition any court of appropriate jurisdiction and need only show that:

(1) Notice was given;

(2) A hearing was held or the time granted for requesting a hearing has expired without such a request;

(3) The administrative penalty was imposed [or the hemp processor was removed from the registry]; and

(4) The penalty remains unpaid [or the hemp processor continues to process hemp].

(d) The director, in the event there is deemed a potential health hazard, may take precautionary measures to protect the public through imposition of a cease and desist order, an embargo, the detention and removal of processed hemp or hemp products from the market, and the sequestration of processed hemp or hemp products suspected to be contaminated or otherwise harmful to human health. In the event of any cease and desist order, embargo, or detention of processed hemp or hemp products, the person or persons so named in the order imposing the cease and desist, embargo, or detention shall be afforded an opportunity to contest the [findings of the department] order in a hearing pursuant to chapter 91.

(e) The director may institute a civil action in any court of competent jurisdiction for injunctive relief to prevent violation of any order issues or rule adopted pursuant to this chapter, in addition to any other remedy or penalty provided for under this chapter. Nothing in this chapter shall limit any other legal remedy, or limit any civil or criminal action, available under any other statute, rule, or ordinance.

[[]§328G-7[]] Hawaii hemp processing and hemp product manufacturing special fund; established. (a) There is established within the state treasury the Hawaii hemp processing and hemp product manufacturing special fund into which shall be deposited:

(1) Appropriations made by the legislature to the special fund;

(2) Any income and capital gains earned by the fund; and

(3) Any fees or fines collected by the department pursuant to this [part.] chapter.

(b) Moneys in the Hawaii hemp processing and hemp product manufacturing special fund shall be used by the department for the following purposes:

(1) To establish and regulate a system of registering persons intending to process hemp [processors;] or manufacture hemp products;

(2) To fund positions and operating costs authorized by the legislature; and

(3) For any other expenditure necessary, consistent with this chapter, to implement the Hawaii hemp processing and hemp product manufacturing program."

SECTION 3. Act 14, Session Laws of Hawaii 2020, is amended by amending section 9 to read as follows:

"SECTION 9. This Act shall take effect upon its approval[, and shall be repealed on June 30, 2022; provided that the definition of "marijuana" in section 329-1, Hawaii Revised Statutes, and the definitions of "marijuana" and "marijuana Concentrate" in section 712-1240, Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day prior to the effective date of this Act]."

SECTION 4. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.

Report Title:

Hemp Products; Hemp Processors; Hemp Manufacturing

Description:

Clarifies the regulation of growing hemp, hemp processing, and hemp product manufacturing in the State. Repeals the sunset date of Act 14, Session Laws of Hawaii 2020. (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.