SB745

SECTION 1. The legislature finds that Hawai‘i's coffee industry is the State's second most lucrative agricultural crop, valued by the United States Department of Agriculture at $98,000,000 annually, with additional upstream and downstream impacts that include employment, land preservation, and tourism.

The legislature further finds that Hawai‘i-grown coffee is among the highest priced coffee sold anywhere in the world, largely due to the high cost of production and its reputation for outstanding quality. As such, the State's coffee industry is susceptible to fraud when less expensive coffees are falsely labeled as originating from Hawai‘i. Currently, state law imposes penalties for the false labeling (counterfeiting) of Hawai‘i-grown coffee in cherry and parchment form, but the fraud of coffee counterfeiting has been almost exclusively committed in roasted coffee products. Coffee counterfeiting undermines Hawai‘i's coffee farmers by misrepresenting an increase in supply, thereby creating downward price pressure and value depreciation in the marketplace. Additionally, further harm occurs when inferior products are introduced into the supply chain, thereby undermining Hawai‘i's hard-fought brand identity for high quality crops.

Moreover, the legislature believes that enforcement of coffee labeling laws is of paramount importance to their effectiveness, and that investment in enforcement will compound labeling requirements' effectiveness by enhancing its deterrent effect. As such, the legislature finds that a full-time position within the department of agriculture dedicated solely to the enforcement of labeling laws applicable to Hawai‘i's agricultural products will greatly improve brand integrity in the State.

Accordingly, the purpose of this Act is to deter coffee counterfeiting by enhancing the penalties for the false labeling of Hawai‘i-grown coffee with regard to its geographic origin through the imposition of a mandatory fine and specification that each act of false labeling is a separate offense, as well as to establish a position within the department of agriculture to effectuate the purpose of this Act.

SECTION 2. Section 708-871.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§708-871.5[]] False labeling of Hawaii-grown coffee. (1) A person commits the offense of false labeling of Hawaii-grown coffee if the person knowingly transports, distributes, advertises, sells, or possesses with the intent to sell Hawaii-grown green coffee, cherry coffee, [or] parchment coffee, or roasted coffee that is falsely labeled with regard to the geographic origin of the Hawaii-grown coffee.

(2) For purposes of this section:

"Cherry coffee" means the unprocessed fruit of the coffee plant.

"Geographic origin" means the geographic areas designated as follows:

(a) Hamakua is the Hamakua district on the island of Hawaii, as designated by the State of Hawaii tax map;

(b) Hawaii is the State of Hawaii;

(d) Kauai is the island of Kauai;

(e) Kona is the north Kona and south Kona districts on the island of Hawaii, as designated by the State of Hawaii tax map;

(f) Maui is the island of Maui;

(g) Molokai is the island of Molokai; and

(h) Oahu is the island of Oahu.

"Green coffee" means the agricultural commodity comprised of green coffee beans.

"Parchment coffee" means the dried product that remains when coffee cherries are processed by removing the coffee seeds from the pulp.

"Roasted coffee" means the product that results from heating the coffee cherry seeds to augment aroma and flavor.

(3) False labeling of Hawaii-grown coffee is a class C felony. In addition to any penalties imposed pursuant to 706‑605, the court shall impose on any defendant convicted of false labeling of Hawaii-grown coffee a mandatory fine of $10,000 for each separate offense. The mandatory fine imposed shall not be suspended or waived."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $88,935.00 or so much thereof as may be necessary for fiscal year 2023-2024 and the same sum or so much thereof as may be necessary for fiscal year 2024-2025 to fund one full-time equivalent (1.0 FTE) measurements standards inspector (BU3, SR-19, Step C) position within the department of agriculture for the purpose of labeling and packaging enforcement and inspection.

The sums appropriated shall be expended by the department of agriculture for the purposes of this Act.

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval; provided that section 3 shall take effect on July 1, 2023.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	745
THIRTY-SECOND LEGISLATURE, 2023
STATE OF HAWAII