BillCam

HB-6330, As Passed House, October 4, 2018

SUBSTITUTE FOR

HOUSE BILL NO. 6330

A bill to amend 2014 PA 547, entitled

"Industrial hemp research act,"

by amending the title and sections 1, 2, 3, and 4 (MCL 286.841,

286.842, 286.843, and 286.844) and by adding sections 5, 6, 7, 8,

9, 10, 11, 12, 13, 14, 15, 16, 17, 18, and 19.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

An act to authorize the growing and cultivating of industrial

hemp for research and development purposes; to require and provide

for the registration and licensing of certain persons engaged in

the growing, processing, and handling of industrial hemp; to

provide for the collection of fees; to authorize the receipt and

expenditure of funding for research and development related to

industrial hemp; and to prescribe the powers and duties of certain

state agencies and officials and colleges and universities in this

state; and to provide for certain fines and sanctions.

Sec. 1. This act shall be known and may be cited as the

"industrial hemp research and development act".

Sec. 2. As used in this act:

(a) "Broker" means to engage or participate in the marketing

of industrial hemp by acting as an intermediary or negotiator

between prospective buyers and sellers.

(b) "Cannabis" means the plant Cannabis sativa L. and any part

of that plant, whether growing or not.

rural development.

(b) "Fund" means the industrial hemp research fund created in

section 4.

(d) "Director" means the director of the department, or his or

her designee.

(e) "GPS coordinates" means latitude and longitude coordinates

derived from a global positioning system.

(f) "Grow" means to plant, propagate, grow, cultivate, or

harvest live plants or viable seeds.

(g) "Grower" means a person registered by the department under

this act to grow industrial hemp.

(h) "Handle" means to possess, store, or transport industrial

hemp on premises owned, operated, or controlled by a registered

grower or licensed processor-handler.

(i) (c) "Industrial hemp" means the plant Cannabis sativa

Cannabis sativaL. and any part of the that plant, including the

viable seeds of that 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% on a dry weight basis. Industrial hemp

includes industrial hemp commodities and products and topical or

ingestible animal and consumer products derived from the plant

Cannabis sativa L. with a delta-9 tetrahydrocannabinol

concentration of not more than 0.3% on a dry weight basis.

(j) "Licensing and registration fund" means the industrial

hemp licensing and registration fund created in section 5.

(k) "Location ID" means the unique identifier established by

the applicant for each unique set of GPS coordinates where

industrial hemp will be grown, handled, stored, processed, or

brokered.

(l) "Market" means to promote or sell industrial hemp or an

industrial hemp commodity or product. Market includes, but is not

limited to, efforts to advertise and gather information about the

needs or preferences of potential consumers or suppliers.

(m) "Nonviable seed" means seed that has been crushed,

dehulled, heat treated, or otherwise rendered to have a 0.0%

germination rate.

(n) "Person" means an individual, partnership, corporation,

association, or other legal entity.

(o) "Plot" means a contiguous area in a field, greenhouse, or

indoor growing structure containing the same variety of industrial

hemp throughout the area.

(p) "Process" means to convert raw industrial hemp into a

marketable form.

(q) "Processor-handler" means a person licensed by the

department under this act to process, handle, broker, or market

industrial hemp.

(r) "Program" means the industrial hemp licensing and

registration program established by this act.

(s) "Propagule" means a plant or plant part that is utilized

to grow a new plant.

(t) "Research fund" means the industrial hemp research and

development fund created in section 4.

(u) "Testing facility" means a safety compliance facility

licensed under the medical marihuana facilities licensing act, 2016

PA 281, MCL 333.27101 to 333.27801, or a testing facility approved

by the department.

(v) "THC" means tetrahydrocannabinol.

(w) "Variety" means a subdivision of a species that has the

following characteristics:

(i) The subdivision is uniform, in the sense that variations

between the subdivision and other subdivisions in essential and

distinctive characteristics are describable.

(ii) The subdivision is distinct, in the sense that the

subdivision can be differentiated by 1 or more identifiable

morphological, physiological, or other characteristics from all

other known subdivisions.

(iii) The subdivision is stable, in the sense that the

subdivision will remain uniform and distinct if reproduced.

(x) "Viable seed" means seed that has a germination rate of

greater than 0.0%.

(y) "Volunteer cannabis plant" means a cannabis plant that is

not intentionally planted and grows of its own accord from seeds or

roots in the years following an intentionally planted cannabis

crop.

Sec. 3. (1) The department or a college or university in this

state may grow or cultivate, or both, industrial hemp for purposes

of research conducted under an agricultural pilot program or other

agricultural or academic research project.

(2) The department or a college or university that transports

industrial hemp as part of a research project authorized under this

act shall include along with a shipment of industrial hemp a letter

on the department's or the college's or university's letterhead

that provides notice that the shipment includes industrial hemp

authorized under the industrial hemp research this act.

(3) A college or university in this state may receive direct

grants from the federal government or any other source for the

purpose of conducting research authorized under this act.

Sec. 4. (1) The industrial hemp research and development fund

is created within the state treasury.

(2) The state treasurer may receive money or other assets from

any source for deposit into the research fund, including federal

research grants. The state treasurer shall direct the investment of

the research fund. The state treasurer shall credit to the research

fund interest and earnings from research fund investments.

(3) Money in the research fund at the close of the fiscal year

shall remain in the research fund and shall not lapse to the

general fund.

(4) The department shall be the administrator of the research

fund for auditing purposes.

(5) The department shall expend money from the research fund,

upon appropriation, only for 1 or more of the following purposes:

(a) Research into growing or cultivating, or both, industrial

hemp.

(b) Providing grants to colleges or universities in this state

to conduct research into growing or cultivating, or both,

industrial hemp.

Sec. 5. (1) The department shall establish, operate, and

administer an industrial hemp licensing and registration program.

(2) The industrial hemp licensing and registration fund is

created within the state treasury.

(3) The state treasurer may receive license and registration

fees and administrative fines under this act for deposit into the

licensing and registration fund. The state treasurer may also

receive money or other assets from any other source for deposit

into the licensing and registration fund. The state treasurer shall

credit to the licensing and registration fund interest and earnings

from licensing and registration fund investments.

(4) The department shall expend money from the licensing and

registration fund to establish, operate, and enforce the licensing

and registration program created under this act.

(5) Money in the licensing and registration fund at the close

of the fiscal year shall remain in the licensing and registration

fund and shall not lapse to the general fund.

(6) The department shall be the administrator of the licensing

and registration fund for auditing purposes.

Sec. 6. (1) Except as otherwise provided under this act for a

college or university in this state, a person shall not grow

industrial hemp in this state unless the person is registered as a

grower under this act. A person other than a college or university

in this state that wishes to grow industrial hemp in this state

shall submit the registration application fee provided under

section 16, and register with the department on a form as

prescribed by the department that includes, but is not limited to,

the following:

(a) The applicant's full name, birth date, mailing address,

telephone number, and valid and monitored electronic mail address.

If the applicant is a person that is not an individual, the full

name of each officer and director, and partner, member, or owner

owning in excess of 35% of equity or stock, including his or her

birth date, title, and valid and monitored electronic mail address.

(b) The proposed acreage and greenhouse or other indoor square

footage to be planted.

each field, greenhouse, building, or other site where industrial

hemp will be grown, handled, or stored.

(d) Maps depicting each field, greenhouse, building, or other

site where industrial hemp will be grown, handled, or stored, with

appropriate indications for entrances, field boundaries, and

specific locations corresponding to the GPS coordinates provided

under subdivision (c).

(e) If applicable, a request by the applicant that a grower

registration issued to the applicant include a designation

authorizing the applicant to sell harvested industrial hemp to a

processor licensed under the medical marihuana facilities licensing

act, 2016 PA 281, MCL 333.27101 to 333.27801, as prescribed under

section 10(6).

(2) An initial grower registration application may be

submitted at any time. An initial grower registration issued by the

department expires at midnight on November 30 in the year in which

it is issued.

(3) Other than an initial grower registration, a grower

registration is valid for 1 year beginning on December 1 and

expiring at midnight on the following November 30 each year.

(4) An application to renew an existing grower registration

shall be postmarked on or before November 30. An application

submitted after November 30 is subject to a late fee of $250.00.

(5) An application and supporting documents submitted to the

department under this section are exempt from disclosure under the

freedom of information act, 1976 PA 442, MCL 15.231 to 15.246.

Sec. 7. (1) Except as otherwise provided under this act for a

college or university in this state, and except for a processor

licensed under the medical marihuana facilities licensing act, 2016

PA 281, MCL 333.27101 to 333.27801, or a testing facility, a person

shall not process, handle, broker, or market industrial hemp in

this state unless the person is licensed as a processor-handler

under this act. A person other than a college or university in this

state that wishes to process, handle, broker, or market industrial

hemp in this state shall submit the license application fee

provided under section 16 and apply to the department for a

processor-handler license on a form as prescribed by the department

that includes, but is not limited to, the following:

(a) The applicant's full name, date of birth, mailing address,

telephone number, and valid and monitored electronic mail address.

If the applicant is a person that is not an individual, the full

name of each officer and director, and partner, member, or owner

owning in excess of 35% of equity or stock, including his or her

birth date, title, and valid and monitored electronic mail address.

(b) The street address, location ID, and GPS coordinates for

each building or site where industrial hemp will be processed,

handled, stored, or brokered.

industrial hemp will be processed, handled, stored, or brokered

with appropriate indications for entrances and specific locations

corresponding to the GPS coordinates provided under subdivision

(b).

(2) An initial processor-handler license application may be

submitted at any time. An initial processor-handler license issued

by the department expires at midnight on November 30 in the year in

which it is issued.

(3) Other than an initial processor-handler license, a

processor-handler license is valid for 1 year beginning on December

1 and expiring at midnight on the following November 30 each year.

(4) An application to renew an existing processor-handler

license shall be postmarked on or before November 30. An

application submitted after November 30 is subject to a late fee of

$250.00.

(5) An application and supporting documents submitted to the

department under this section are exempt from disclosure under the

freedom of information act, 1976 PA 442, MCL 15.231 to 15.246.

Sec. 8. (1) The department shall approve or deny a

registration or license application submitted under this act in a

timely manner. The department shall deny a registration or license

application if the application is incomplete or if any of the

following apply:

(a) The applicant is under the age of 18.

(b) The applicant's growing, handling, storage, processing, or

brokering sites are not located in this state.

director, a willingness to comply with the department's rules,

instructions from the department, or instructions from a law

enforcement agency.

(d) The applicant has unpaid fees, fines, or civil penalties

owed to the department under this act.

(e) The applicant has made false statements or

representations, as determined by the director, to the department

or a law enforcement agency.

(f) The applicant has had a grower registration or processor-

handler license revoked in the 5 years preceding the date of

application.

(2) If the application is denied because it is incomplete, the

department shall notify the applicant in writing within a timely

manner after the department receives the application describing the

deficiency and requesting additional information.

Sec. 9. (1) If the department denies a registration or license

application under this act, the department shall notify the

applicant of the denial in writing by letter or electronic mail.

(2) An applicant may appeal a denial of his or her

registration or license application by submitting to the department

a written request for a hearing. The applicant shall submit the

request to the department not more than 15 days after the date of

the denial.

(3) The department shall conduct a hearing requested under

this section in accordance with the administrative procedures act

of 1969, 1969 PA 306, MCL 24.201 to 24.328.

Sec. 10. (1) A grower consents to all of the following:

(a) Entry onto, and inspection of, all premises by the

department or law enforcement agencies, with or without cause, and

with or without advance notice, where industrial hemp or industrial

hemp cultivation equipment or materials are located, or to be

located.

(b) Collection by the department of samples of cannabis

material in possession of the grower at any time.

without compensation:

(i) Cannabis found to have a measured delta-9-THC content

greater than 0.3% on a dry weight basis.

(ii) Industrial hemp present at a location that is not

included in the grower's registration.

(iii) Industrial hemp that is grown, handled, or stored in a

manner that violates this act.

(d) The risk of financial or other loss under this act is

borne solely by the grower.

(2) A grower shall not do any of the following:

(a) Grow, handle, or store industrial hemp for purposes other

than research into the growing of industrial hemp.

(b) Handle or store industrial hemp not grown under the

authority of his or her grower registration unless licensed as a

processor-handler.

than a location listed in his or her grower registration.

(d) Grow, handle, or store industrial hemp on land or within a

structure that is not owned or completely controlled by the grower.

(e) Interplant industrial hemp with any other crop without

express written permission from the department. As used in this

subdivision, "interplant" means to plant a crop of industrial hemp

together with a crop that is not industrial hemp on a single plot

of land.

(f) Sell or transport, or permit the sale or transport of,

living industrial hemp plants, viable industrial hemp seeds,

industrial hemp leaf material, or industrial hemp floral material

to a location not listed in his or her registration or to a person

in this state who is not a registered grower or licensed processor-

handler.

(3) A grower shall post signage in at least 1 conspicuous

location at each growing location. The signage shall include the

following:

(a) The statement, "Industrial Hemp Registered with the

Michigan Department of Agriculture and Rural Development".

(b) The registered grower's name.

(4) Upon request from the department or a law enforcement

agency, immediately produce a copy of his or her registration for

inspection.

(5) A grower may transfer up to 1 pound of industrial hemp per

transfer to a testing facility for the purpose of measuring THC,

cannabidiol, or other phytocannabinoid levels.

(6) A grower may sell harvested industrial hemp to a processor

licensed under the medical marihuana facilities licensing act, 2016

PA 281, MCL 333.27101 to 333.27801. If a grower intends to sell

harvested industrial hemp to a processor described in this

subsection, the grower must apply for that designation on his or

her grower registration application. Before selling harvested

industrial hemp to a processor described in this subsection, the

grower shall enter the sale into the seed-to-sale tracking system

established under section 3 of the marihuana tracking act, 2016 PA

282, MCL 333.27903.

Sec. 11. (1) A processor-handler consents to all of the

following:

(a) Entry onto, and inspection of, all premises by the

department or law enforcement agencies, with or without cause, and

with or without advance notice, where industrial hemp or industrial

hemp processing equipment or materials are located or to be

located.

(b) Collection by the department of samples of cannabis

material in possession of the processor-handler at any time.

without compensation:

(i) Cannabis found to have a measured delta-9-THC content

greater than 0.3% on a dry weight basis.

(ii) Industrial hemp that is processed, handled, stored, or

brokered in a manner that violates this act.

(iii) Live industrial hemp plants unless the processor-handler

is also registered as a grower.

(d) The risk of financial or other loss under this act is

borne solely by the processor-handler.

(2) A processor-handler shall not sell or transport, or permit

the sale or transport of, viable industrial hemp seeds, industrial

hemp leaf material, or industrial hemp floral material to a

location not listed in his or her current license or to a person in

this state who is not a registered grower or licensed processor-

handler.

(3) Upon request from the department or a law enforcement

agency, a processor-handler shall immediately produce a copy of his

or her license for inspection.

(4) A processor-handler may transfer up to 1 pound of

industrial hemp per transfer to a testing laboratory for the

purpose of measuring THC, cannabidiol, or other phytocannabinoid

levels.

Sec. 12. (1) If any of the following allegations are made

concerning a registered grower or licensed processor-handler, the

department shall suspend his or her registration or license for not

more than 60 days:

(a) The registered grower or licensed processor-handler

intentionally grew or was in possession of cannabis with a delta-9-

THC content greater than 0.3% on a dry weight basis.

(b) The registered grower or licensed processor-handler

violated a provision of this act.

false statement, as determined by the department, to the department

or a law enforcement agency.

(d) The registered grower or licensed processor-handler failed

to comply with an instruction or order from the department or a law

enforcement agency.

(2) If the department suspends a registration or license, the

department shall notify the registered grower or licensed

processor-handler in writing that his or her registration or

license has been suspended.

(3) A person whose grower registration has been suspended

under this section shall not harvest or remove industrial hemp from

the premises where industrial hemp was located at the time the

department issued its notice of suspension, except as authorized in

writing by the department.

(4) A person whose processor-handler license has been

suspended under this section shall not process or remove industrial

hemp from the premises where industrial hemp was located at the

time the department issued its notice of suspension, except as

authorized in writing by the department.

Sec. 13. (1) The department shall not permanently revoke a

registration or license suspended under section 12 unless the

department has notified the registered grower or licensed

processor-handler of the allegation against him or her and given

the registered grower or licensed processor-handler an opportunity

for a hearing to appeal the revocation.

(2) The department shall schedule a registration or license

revocation hearing for a date as soon as practicable that is not

more than 60 days after the date of notification of a registration

or license suspension.

(3) The department shall conduct the hearing required under

this section in accordance with the administrative procedures act

of 1969, 1969 PA 306, MCL 24.201 to 24.328.

(4) If the director finds by a preponderance of the evidence

that an allegation under section 12(1) concerning the person

subject to the registration or license revocation hearing is true,

the director shall revoke the registration or license effective

immediately and the department or a law enforcement agency shall

order destroyed, or confiscate, all cannabis that is in the

person's possession.

(5) The department or a law enforcement agency shall not owe

compensation or indemnity for the value of the cannabis that is

destroyed or confiscated under this section.

(6) A person whose registration or license has been revoked is

barred from participation in the program in any capacity for a

minimum of 5 years from the date on which the registration or

license was revoked.

(7) If the director does not find by a preponderance of the

evidence that an allegation under section 12(1) concerning the

person subject to a registration or license revocation hearing is

true, the department shall lift the suspension imposed under

section 12 within 24 hours.

Sec. 14. (1) A grower that intends to harvest or destroy an

industrial hemp crop shall submit a sample of the crop to a testing

facility. The grower shall submit the sample not less than 15 days

before the intended harvest or destruction date.

(2) A grower who harvests or destroys a crop before receiving

the results of testing under this section is subject to suspension

and revocation of his or her registration.

(3) The testing facility shall measure the THC concentration

of each sample submitted under this section. The following apply to

the THC test results:

(a) If the result of the THC test indicates a delta-9-THC

concentration of less than 0.3% on a dry weight basis, the testing

facility shall provide to the grower and to the department a

certified report stating that result.

(b) If the result of the THC test indicates a delta-9-THC

concentration that is equal to or greater than 0.3% on a dry weight

basis, the grower may destroy the crop or repeat the testing an

additional 2 times. The testing facility shall provide to the

grower and to the department a certified report stating the result

of each test performed under this subdivision.

delta-9-THC concentration that is equal to or greater than 0.3%,

the testing facility shall provide to the grower and to the

department a certified report stating that result and the

department or a law enforcement agency shall order destroyed, or

confiscate, all cannabis that is in the grower's possession.

(4) The department shall establish rules for testing under

this section in accordance with the administrative procedures act

of 1969, 1969 PA 306, MCL 24.201 to 24.328.

(5) An individual who submits a falsified sample of an

industrial hemp crop to a testing facility under this section is

guilty of a felony and shall be imprisoned for not less than 1 year

or more than 2 years and shall be fined $5,000.00.

Sec. 15. (1) Before implementing an alteration to a site

listed in a grower's registration, the grower shall submit a site

modification request form, as prescribed by the department, and the

required fee, as provided in section 16, based on the number of

requested alterations and obtain written approval from the

department.

(2) The department shall not approve a site modification

request under this section unless the grower has paid the site

modification fee in full.

Sec. 16. (1) An applicant for a grower registration or

processor-handler license, or a registered grower or licensed

processor-handler, under this act is subject to the following fees,

as applicable:

(a) A grower registration fee of $100.00.

(b) A processor-handler license application fee of $1,350.00.

site listed in a grower registration after the registration has

been issued.

(2) All fees under this act shall be paid with a check or

money order payable to the department within 15 days of invoice.

(3) A fee required under this section is nonrefundable.

Sec. 17. (1) A person who individually, or by the action of

his or her agent or employee, or as the agent or employee of

another, violates this act or a rule promulgated under this act is

subject to an administrative fine. Upon the request of a person to

whom an administrative fine is issued, the director shall conduct a

hearing in accordance with the administrative procedures act of

1969, 1969 PA 306, MCL 24.201 to 24.328. The department shall

impose a fine authorized by this section as follows:

(a) For a first violation, not less than $100.00 or more than

$500.00, plus actual costs of the investigation and double the

amount of any economic benefit associated with the violation.

(b) For a second violation within 5 years after the first

violation, not less than $500.00 or more than $1,000.00, plus

actual costs of the investigation and double the amount of any

economic benefit associated with the violation.

the date of the first violation, not less than $1,000.00 or more

than $2,000.00, plus actual costs of the investigation and double

the amount of any economic benefit associated with the violation.

(2) A decision of the director under this section is subject

to judicial review as provided by law.

(3) The director shall advise the attorney general of the

failure of any person to pay an administrative fine imposed under

this section. The attorney general shall bring an action in a court

of competent jurisdiction to recover the fine.

(4) Any administrative fine, investigation costs, or recovery

of economic benefit associated with a violation that is collected

under this section shall be paid to the state treasury and

deposited into the licensing and registration fund.

Sec. 18. The department shall establish rules for the

implementation of this act in accordance with the administrative

procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

Sec. 19. A political subdivision of this state shall not adopt

any rule, regulation, code, or ordinance to restrict or limit any

requirements under this act relating to industrial hemp. This act

supersedes and preempts any rule, regulation, code, or ordinance of

any political subdivision of this state relating to industrial

hemp.

Enacting section 1. This amendatory act takes effect 90 days

after the date it is enacted into law.