No. 43145 (New Rule): Rule R68-24. Industrial Hemp Research Pilot Program for Growers

(New Rule)

DAR File No.: 43145
Filed: 08/10/2018 03:15:10 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This purposed rule sets forth the licensing and operational requirements for individuals seeking to cultivate or grow industrial hemp in the state of Utah in accordance with Subsection 4-41-103(4).

Summary of the rule or change:

This purposed rule sets forth the licensing requirements for individuals interested in growing industrial hemp. It establishes that a person must be at least 18 years of age to apply for a license and they must submit a criminal history. Additionally, this purposed rule places limitations on where Industrial hemp can be grown and restrictions on what material can be sold. It outlines the testing and sampling methods the Department of Agriculture and Food (Department) will use for testing industrial hemp. This purposed rule outlines the necessary reporting requirements and time frame for which those reports are due in order to maintain a license.

Statutory or constitutional authorization for this rule:

• Subsection 4-41-103(4)

Anticipated cost or savings to:

the state budget:

As this is a new program, the state will have the additional cost of starting up the program and purchasing the needed equipment to effectively run the Industrial Hemp Program. The Department will need to hire two new employees, an office specialist to oversee the application, licensing, and reporting processes, and an inspector to go out and inspect the growing areas and to take samples to the lab. It is estimated that the new employees in the first year will cost $136,000. These employees will need to be receive training which the Department anticipates to cost $10,000; testing equipment and standards necessary to test the plants for THC compliance; and standards and laboratory equipment will run $5,000. Sampling equipment and supplies, such as GPS, scissors, and sampling containers, is estimated to cost $3,000. The total cost of the first year of the program is then estimated to be $154,000. The second year the Department anticipates that the cost will stay much the same with some slight decreases in inspection supplies, as well as the cost for training, but the Department does anticipate increasing by at least one employee. It is likely, depending on the number of growers, that another inspector will need to hired to cover both the northern and southern ends of the state. Therefore, the cost of employees would be $216, 000. The training cost would be $5,000. The cost of laboratory testing standards and maintenance of the laboratory equipment will remain the same at $5,000. The Department will need to purchase another vehicle and GPS and sampling supplies for the new inspector which is estimated at $31,500. For a total cost of the second year being $257,500. It may be necessary to hire more inspectors as the program grows in the third year, but the Department anticipates that the cost for the program will remain similar to the second year in the third year. The cost may decrease if no new inspectors are needed as training will not be necessary nor will new vehicles or supplies. The cost of employees will remain the same at $216,000 and laboratory cost remain at $5,000. Sampling cost of training will be $0 and there will be minimal sampling equipment which the Department estimates at $700. The total cost then for year three would be $221,700. The Department has a grower license fee of $500. Each grower must pay the licensing fee before they are issued a license. The Department is unable to estimate the amount this licensing fee will generate for the Department as this is a new and developing industry and there are currently no legal growers of industrial hemp in the state. However, the Department will be generating some revenue from the licensing fees.

local governments:

Local governments may experience an increase in law enforcement costs due to the nature of the crop being grown. Local law enforcement may wish to coordinate more with the Department in making sure the growing sites are licensed with the Department. The Department will be working with them to notify them of all licensed growing areas. However, those are decisions that will need to be left up to local governments to determine and the Department cannot adequately estimate those costs.

small businesses:

This rule will allow for the growth of a new and innovative industry in the state of Utah. Previously, the growth of industrial hemp was not allowed under both state and federal laws. This would allow for individuals to start a new business. As it has not been allowed, the proposed rule does not place any additional cost to the business aside from the $500 licensing fee assessed by the Department.

persons other than small businesses, businesses, or local governmental entities:

This proposed rule allows for the development of a new industry in the state. It will allow for the production and distribution of new products to the consumers of the state. However, due to the nature of the industry it is impossible for the Department to estimate the cost or benefits to the consumer.

Compliance costs for affected persons:

There will be a $500 licensing fee assessed for a license. Due to the nature of the business and the previous legal statutes of industrial hemp, there has been no prior legal growing of the plant. Therefore, the only cost to affected persons is the licensing fee. All other costs are the costs of engaging in the growing of industrial hemp.

Comments by the department head on the fiscal impact the rule may have on businesses:

This proposed rule will open new markets to our agricultural producers which have previously been closed to them. This proposed rule will allow for producers to diversify the crop products and attempt to enter into a new and emerging market. The licensing fee is necessary for the Department to comply with both state and federal law to ensure that the product is industrial hemp and not marijuana.

LuAnn Adams, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Agriculture and Food
Plant Industry
350 N REDWOOD RD
SALT LAKE CITY, UT 84116-3034

Direct questions regarding this rule to:

• Robert Hougaard at the above address, by phone at 801-538-7187, by FAX at 801-538-7189, or by Internet E-mail at [e-mail]
• Scott Ericson at the above address, by phone at 801-538-7102, by FAX at 801-538-7126, or by Internet E-mail at [e-mail]
• Melissa Ure at the above address, by phone at 801-538-4976, by FAX at , or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/01/2018

This rule may become effective on:

10/08/2018

Authorized by:

LuAnn Adams, Commissioner

RULE TEXT

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs

FY 2019

FY 2020

FY 2021

State Government

$154,000

$257,700

$221,700

Local Government

$0

$0

$0

Small Businesses

$500

$500

$500

Non-Small Businesses

$500

$500

$500

Other Person

$0

$0

$0

Total Fiscal Costs:

$155,00 0

$258,70 0

$222,70 0

Fiscal Benefits

State Government

$500

$500

$500

Local Government

$0

$0

$0

Small Businesses

$0

$0

$0

Non-Small Businesses

$0

$0

$0

Other Persons

$0

$0

$0

Total Fiscal Benefits:

$50 0

$50 0

$50 0

Net Fiscal Benefits:

-$154,000

-$258,200

-$222,500

 

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described above. Inestimable impacts for Non - Small Businesses are described below.

 

Appendix 2: Regulatory Impact to Non - Small Businesses

This rule will allow for the growth of a new and innovative industry in the state of Utah. Previously, the growth of industrial hemp was not allowed under both state and federal laws. This would allow for individuals to start a new business. As it has not been allowed,the proposed rule does not place any additional cost to the business aside from the $500 licensing fee assessed by the Department. Because it is a new program, the Department is unable to estimate how many participants there will be in program.

 

The Commissioner of the Department of Agriculture and Food, LuAnn Adams, has reviewed and approved this fiscal analysis.

 

 

R68. Agriculture and Food, Plant Industry.

R68-24. Industrial Hemp Research Pilot Program for Growers.

R68-24-1. Authority and Purpose.

Pursuant to Section 4-41-103(4), this rule establishes the standards, practices, procedures, and requirements for participation in the Utah Industrial Hemp Research Pilot Program for the growing and cultivation of industrial hemp.

 

R68-24-2. Definitions.

1) "Department" means the Utah Department of Agriculture and Food.

2) "Growing Area" means a contiguous area on which hemp is grown whether inside or outside.

3) "Handle" or "handling" means possessing, transporting or storing industrial hemp for any period of time.

4) "Industrial Hemp" means any part of a cannabis plant, whether growing or not, with a concentration of less than 0.3% tetrahydrocannabinol by weight.

5) "Licensee" means a person authorized by the department to grow industrial hemp.

6) "THC" means total composite tetrahydrocannabinol, including delta -9- tetrahydrocannabinol and tetrahydrocannabinolic acid.

 

R68-24-3. Grower License Application Requirements.

1) The applicant shall be a minimum of eighteen (18) years old.

2) The applicant is not eligible to receive a license if they have:

a) been convicted of a felony or its equivalent; or

b) been convicted of a drug-related misdemeanor within the last ten (10) years.

3) An applicant seeking an industrial hemp cultivation license shall submit the following to the department:

a) a completed application form provided by the department;

b) the legal description of the growing area;

c) the global positioning coordinates for the center of the outdoor growing area;

d) maps of the growing area in acres or square feet, and the location of different varieties within the growing area;

e) a statement of the intended end use or disposal for all parts of the hemp plant grown; and

f) a plan for the storage of seed or clone and harvested industrial hemp material as specified in R68-24-7.

4) An applicant shall submit a nationwide criminal history from the FBI completed within three (3) months of their application.

5) The applicant shall submit a fee as approved by the legislature in the fee schedule.

6) The department shall deny any applicant who does not submit all required information.

 

R68-24-4. Growing Area.

1) A licensee shall not plant or grow industrial hemp on any site not listed on the grower license application and shall take immediate steps to prevent the inadvertent of industrial hemp the authorized grow area.

2) A licensee shall not grow hemp in any structure used for residential purposes.

3) A licensee shall not handle or store leaf, viable seed, or floral material from hemp in a structure used for residential purposes.

4) A licensee shall not grow industrial hemp outdoors within 1,000 feet of a school or a public recreational area.

5) The licensee shall post signage at the plot location's entrance and where the plot is visible to a public roadway in a manner that would reasonably be expected to be seen by a person in the area.

6) The signage shall include the following information:

a) the statement, "Utah Department of Agriculture Industrial Hemp Research Pilot Program";

b) the name of the licensee;

c) the Utah Department of Agriculture and Food licensee number; and

d) the department's telephone number.

 

R68-24-5. Reporting Requirements.

1) Prior to planting the growing area, the licensee shall submit a Pre-Planting Report, on a form provided by the department, which includes:

a) a description of the industrial hemp varieties to be planted,

b) a description of all other plant material being grown in the growing area;

c) the number of acres to be planted or the amount of seed or clone to be planted in the growing area, and

d) the source of the seed or clone being planted.

2) Within ten (10) days of planting the licensee shall submit a Planting Report, on a form provided by the department, which includes:

a) a list of all industrial hemp varieties and other plants in the growing area which were planted;

b) the actual acres planted or the seeding rate or number of clones planted in the growing area;

c) adjusted maps and global position coordinates for the area planted; and

d) the amount of seed that was not used.

3) Thirty (30) days prior to harvest the licensee shall submit a Harvest Report, on a form provided by the department, which includes:

a) any contracts entered into between the grower and an industrial hemp processor or a statement of the intended use of all industrial hemp cultivated in the growing area;

b) any intended storage areas for industrial hemp or industrial hemp material; and

c) the harvest dates and location of each variety cultivated in the growing areas;

i) the licensee shall immediately inform the department of any changes in the reported harvest date which exceeds five (5) days.

4) Thirty (30) days after completion of harvest the licensee shall submit a Production Report, on a form provided by the department, which includes:

a) yield from the growing area;

b) THC testing reports, if any, conducted at the licensee's request;

c) water application rates;

d) report of any pest infestations or problems; and

e) a statement on the final disposition of the all industrial hemp product in the growing area.

5) Failure to submit the required reports may result in the revocation of the grower license.

 

R68-24-6. Inspection and Sampling.

1) The growing area shall be subject to random sampling to verify the THC concentration does not exceed 0.3% on a dry weight basis by department officials.

2) The department shall have complete and unrestricted access to all industrial hemp plants and seeds whether growing or harvested, all land, buildings and other structures used for the cultivation of storage of industrial hemp.

3) Samples of each variety of industrial hemp shall be randomly sampled from the growing area by department officials.

4) The department shall conduct the laboratory testing on the sample to determine the THC concentration on a dry weight basis by gas chromatography.

5) The sample taken by the department shall be the official sample.

6) The department shall test the growing area within thirty (30) days prior to harvest.

7) The department shall notify the licensee of the test results from the official sample within a reasonable amount of time.

8) Any laboratory test result greater than 0.3% THC may be considered a violation of the terms of the license and may result in a license revocation.

9) Upon a test result with greater than 0.3% THC, the department shall notify the grower.

10) Any laboratory test result with 1% THC or greater will be turned over to the appropriate law enforcement agency and revocation of the license will be immediate.

 

R68-24-7. Storage of Industrial Hemp and Hemp Material.

1) A licensee may store hemp and hemp material provided:

a) the licensee notifies the department, in writing, of the location of the storage facility;

b) the licensee informs the department of the type and amount of product being stored in the storage facility;

c) the storage facility is owned by the licensee; and

d) the storage facility is outside of the public view.

e) the storage facility is secured with physical containment and reasonable security measures.

2) The storage area is subject to random inspection by department officials.

 

R68-24-8. Transportation of Industrial Hemp Materials.

1) A licensee shall not transport any industrial hemp materials, except to a storage facility owned by the licensee, until the department has notified the licensee of the test results from the growing area.

2) A licensee may move nonviable hemp products without an industrial hemp transportation permit.

3) An industrial hemp transportation permit is required for each day and each vehicle used to move industrial hemp or industrial hemp products.

4) The licensee shall submit an industrial hemp transportation permit request form provided by the department.

5) Requests for an industrial hemp transportation permit shall be submitted to the department at least five (5) business days prior to movement.

6) An industrial hemp transportation permit authorizes the transportation of industrial hemp materials only within the borders of the state.

7) The department may deny any application for a movement permit that is not completed in accordance with this rule.

 

R68-24-9. Restrictions on the Sale and Transfer of Industrial Hemp and Hemp Materials.

1) A licensee shall not sell or transfer living plants, viable plants, viable seeds, leaf material, or floral material to any person not licensed by the department or to any person outside the state who is not authorized by the laws of that state.

2) The licensee may sell or transfer stripped stalks, fiber, and nonviable seed to the general public provided the product's THC level is less than 0.3%.

 

R68-24-10. Renewal.

1) A licensee shall resubmit all documents required in R68-24-3, with updated information, before December 31 ^st of the current year.

2) The department may deny a renewal for an incomplete application.

3) The department may deny renewal for any licensee who has violated any portion of this rule or state law.

 

R68-24-11. Destruction of Industrial Hemp Material.

1) The licensee shall be responsible for the destruction any plant material which tests greater than 0.3% THC by dry weight.

2) The licensee shall work with the department on an approved plan for the destruction of the plant material.

3) The department may destroy the plant material at cost to the licensee.

4) The department may inspect the growing area to verify the destruction of all plant material.

 

R68-24-12. Violations.

1) A licensee shall not grow industrial hemp that tests greater than 0.3% THC on a dry weight basis.

2) A licensee shall not sell or transfer material that tests greater than 0.3% THC on a dry weight basis.

3) It is a violation of the grower license to grow or store industrial hemp or industrial hemp material on a site not approved by the department as part of the license.

4) A licensee shall not allow unsupervised public access to hemp plots.

5) A licensee shall not deny an official of the department access for sampling or inspection purposes.

6) A licensee shall not violate any portion of this rule or state law.

7) It is a violation of this rule to grow, cultivate, handle, or possess industrial hemp or viable industrial hemp materials without a license from the department.

9) It is a violation to grow industrial hemp material on a site not approved by the department as listed on the license.

10) It is a violation to grow industrial hemp outdoors within 1,000 feet of a school or public recreational area.

 

KEY: industrial hemp cultivation

Date of Enactment or Last Substantive Amendment: 2018

Authorizing, and Implemented or Interpreted Law: 4-41-103(4)

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