WSR 17-06-080 PROPOSED RULES DEPARTMENT OF AGRICULTURE [Filed March 1, 2017, 10:59 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 16-12-105.
Title of Rule and Other Identifying Information: Chapter 16-305 WAC, Industrial hemp research program.
Hearing Location(s): Department of Agriculture, Conference Room 238, 21 North 1st Avenue, Yakima, WA 98902, on April 6, 2017, at 11:00 a.m.; and at the Department of Agriculture, Conference Room 259, 1111 Washington Street S.E., Olympia, WA 98504, on April 7, 2017, at 11:00 a.m.
Date of Intended Adoption: April 13, 2017.
Submit Written Comments to: Henri Gonzales, Agency Rules Coordinator, P.O. Box 42560, Olympia, WA 98504-2560, email wsdarulescomments@agr.wa.gov, fax (360) 902-2094, by April 7, 2017.
Assistance for Persons with Disabilities: Contact the agency receptionist by calling TTY (800) 833-6388 or 711 no later than March 30, 2017.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The department is proposing to adopt rules establishing an industrial hemp research program to include program goals, applicant requirements, licensing requirements and fees, transportation requirements, data and reporting requirements, records retention requirements, inspection and sampling criteria, and testing criteria and fees.
Reasons Supporting Proposal: RCW 15.120.030 requires the department to adopt rules establishing an industrial hemp research program to be supervised by the department to study the growth, cultivation and marketing of industrial hemp.
Statute Being Implemented: Chapter 15.120 RCW.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Department of agriculture, governmental.
Name of Agency Personnel Responsible for Drafting, Implementation, and Enforcement: Emily Febles, 21 North 1st Avenue, Suite 203, Yakima, WA 98902, (509) 249-6931.
A small business economic impact statement has been prepared under chapter 19.85 RCW.
Small Business Economic Impact Statement
SECTION 1: Describe the proposed rule, including: A brief history of the issue; an explanation of why the proposed rule is needed; and a brief description of the probable compliance requirements and the kinds of professional services that a small business is likely to need in order to comply with the proposed rule.
During the 2016 legislative session, the legislature passed ESSB 6206 (codified as chapter 15.120 RCW). This bill required the department to adopt rules establishing an industrial hemp research program to determine the feasibility and desirability of industrial hemp production in Washington state. The legislature authorized the growing of industrial hemp as a legal agricultural activity in this state solely as part of an agricultural pilot program. Industrial hemp may not be grown, produced, possessed, processed, or exchanged in the state except as part of the industrial hemp research program. The legislature has not authorized any commercial activity for industrial hemp.
Industrial hemp is a variety of the plant species Cannabis. Its tetrahydrocannabinol (THC) concentration is restricted to 0.3 percent or less by dry weight. Industrial hemp has many uses due to its fiber length, strength, durability, absorbency, antimildew, and antimicrobial properties. Some of these uses include cordage, clothing, mulch, animal bedding, biofuels, and plastics. Industrial hemp fiber has been used extensively throughout history for paper and rope.
The rule development of the industrial hemp research program is broken down into two components. One component establishes the requirements for participation in the research program. The other component establishes the requirements for growing certified industrial hemp seed. This small business economic impact statement (SBEIS) focuses on the requirements related to the industrial hemp research program. Separate rule making is being conducted regarding establishing the requirements for growing certified industrial hemp seed.
RCW 15.120.005 states, "The legislature intends to authorize the growing of industrial hemp as a legal, agricultural activity in this state as part of an agricultural pilot program …." RCW 15.120.030 authorizes the director of agriculture to adopt by rule requirements for the industrial hemp research program. These include:
The purpose of the industrial hemp research program is to research the growth, cultivation, and marketing of industrial hemp within the state. The research is intended to give the department valuable data about whether industrial hemp could be a viable agricultural product for the state in the future. Participation in the research on industrial hemp is voluntary; however, businesses wishing to participate will be required to comply with the application, licensing fees, and other requirements associated with the program.
In order for someone to grow, produce, possess, process, market, or exchange Washington grown industrial hemp within the state, they have to be licensed under the program. Fees established by rule are necessary to recover the costs associated with implementation of the new research program. The legislature granted the program a moderate budget to begin with the expectation that user-fees will sustain the program in the future.
Industrial hemp seed acquisition is limited by law to the valid forms of importation permitted by the United States Drug Enforcement Administration (DEA) pursuant to RCW 15.120.040(4), "The programs under this chapter are subject to a grant of necessary permissions, waivers, or other form of valid legal status by the United States drug enforcement administration or other appropriate federal agency pursuant to applicable federal laws relating to industrial hemp." Due to this, the industrial hemp seeds used to begin the research program will be imported from abroad. In the future, industrial hemp seeds may be grown within the state and these seeds may be used to begin future research projects.
Anticipated costs to participating businesses include: Paying fees for application and licensure, inspection, sampling, and testing; a soil test; and maintaining the farming environment to include costs associated with water, fertilizers, pesticides and herbicides, labor for maintaining weed control, etc. The rules do not expressly or impliedly require that participants retain any external professional services. Businesses researching the growth, cultivation, processing, or marketing of industrial hemp will be making their own business decisions about acquiring the knowledge and expertise necessary to successfully conduct that enterprise.
SECTION 2: Identify which businesses are required to comply with the proposed rule using the North American Industry Classification System (NAICS) codes and what the minor cost thresholds are.
Table A:
No NAICS code is specifically assigned to industrial hemp farming. There are currently no legally established industrial hemp businesses operating within the state.
SECTION 3: Analyze the probable cost of compliance. Identify the probable costs to comply with the proposed rule, including: Cost of equipment, supplies, labor, professional services and increased administrative costs; and whether compliance with the proposed rule will cause businesses to lose sales or revenue.
Below are anticipated costs associated with participation in the program. Each table lists the costs associated with the different licensing categories.
The application fee is being charged to recover the cost of the department reviewing each application for:
The license fee is being charged to recover the cost of issuing the license, notifying sheriff's departments of research projects in their jurisdiction, recordkeeping of researcher's data, issuing field signs to research participants, and general administrative costs associated with monitoring a year-long research project.
If additional addresses are listed on an application where industrial hemp may be grown, an additional fee will be charged to recover the costs with monitoring multiple, separate locations.
If industrial hemp research will involve growing or processing for human consumption, an additional fee will be charged to recover the costs for running the pesticide screening.
THC concentration testing will be performed on fields sown with industrial hemp one time per license period. The fee will be charged to recover expenses associated with THC laboratory testing. THC concentration testing fees for industrial hemp production are established on a sliding rate scale. THC concentration testing will be scheduled based on the availability of laboratory resources. Individual samples may be batched with samples from the same or different licensees in order to reduce the overall cost of the testing. For the purposes of this section, "batch" means a group of samples that are tested by the department on the same day, using the same equipment calibration and testing supplies to test each sample independently from other samples in the batch. The department will bill each licensee for the samples that licensee provides, based on batch size at the time of testing.
A soil test is required for those wishing to participate in research on industrial hemp growth. The program considers data on the impacts of industrial hemp on soil profiles to be of high importance. Soil tests are already industrial standard for those engaged in industrial agriculture. Test kits cost about $25 and are available online and at many outlets for those who are new to farming or may not already conduct these tests as part of standard farming practice.
The inspection fee is being charged to recover the expenses associated with industrial hemp inspections. A grower's industrial hemp research project will be inspected twice during each license period by the department. A processor's industrial hemp research project will be inspected once during each license period. A combination licensee's research project will be inspected three times during each license period.
There are some minor costs associated with recordkeeping of industrial hemp research throughout the license period - i.e. the cost of a spiral notebook to record field data. During the inspection process, the department will be auditing data being collected on each research project. Each licensee may keep records of research data in a method suitable to the research being performed. Examples of acceptable research recording may be by notebook to record observations, in a spreadsheet to record data, in a computer program to monitor changes, or other typically acceptable methods to track research data.
SECTION 4: Analyze whether the proposed rule may impose more than minor costs on businesses in the industry.
Minor costs is defined in RCW 19.85.020 as cost per business that is less than three-tenths of one percent of annual revenue or income, or one hundred dollars, whichever is greater, or one percent of annual payroll. Because there are no legally established industrial hemp businesses in Washington state, an assessment of regulatory costs on a potential licensee's annual revenue, income, or payroll would be speculative. The costs for licensed participants will exceed one hundred dollars per year based on the fee schedules outlined in section 3. Therefore, the costs are considered more than minor.
SECTION 5: Determine whether the proposed rule may have a disproportionate impact on small businesses as compared to the ten percent of businesses that are the largest businesses required to comply with the proposed rule.
The department conducted a survey via Survey Monkey to obtain information regarding the size of businesses interested in the program. The survey was open from November 8 to December 1, 2016. One hundred forty-four responses were received. All respondents indicated they were small businesses as defined in RCW 19.85.020(3).
There are currently no legally established industrial hemp businesses operating within the state. Based on the survey the department conducted, only respondents that are considered small businesses indicated that they are interested in participating in the program. The department does not anticipate that any large businesses will apply for participation in the program.
Although the application fee will disproportionately impact small businesses, the costs associated with inspection and testing are based on the number of fields – fewer fields may equal less inspection and testing fees. The $200 per additional field cost will not disproportionately impact small businesses because it is based on the number of fields – smaller businesses will have fewer fields than larger businesses. Therefore, there would not be disproportionate costs between large and small businesses with regard to testing, inspection, and additional field costs.
SECTION 6: If the proposed rule has a disproportionate impact on small businesses, identify the steps taken to reduce the costs of the rule on small businesses. If the costs cannot be reduced provide a clear explanation of why.
Under RCW 19.85.030, the program considers the following methods of reducing the impact of the proposed rule on small businesses:
a. Reducing, modifying, or eliminating substantive regulatory requirements: The requirements for the industrial hemp research program are established in chapter 15.120 RCW and any change to the requirements will take legislative action. The program is a research program written to conform with federal guidelines. The procedures for industrial hemp research are clear under state and federal guidelines. The methods and activities permissible are meant to be quite restrictive because the federal government considers industrial hemp to be a Class I controlled substance. Reducing, modifying, or eliminating any of the regulatory requirements would make the program illegal federally and would jeopardize the ability for the program to obtain industrial hemp seed-stock under the federal DEA permitting process for Class 1 controlled substances.
b. Simplifying, reducing, or eliminating recordkeeping and reporting requirements: The program is intended only as a research program. As such, recordkeeping of research data is an integral part of the licensee's participation in the program. The ability of the program to obtain data regarding the viability of an industrial hemp industry in the state is the entire purpose of the program, and because the program will be under significant federal oversight, there is not an option to reduce recordkeeping or reporting requirements.
c. Reducing the frequency of inspections: Federal guidelines on Class 1 controlled substances require strict and thorough monitoring of research projects involving these substances. The minimum number of inspections that the program feels it needs to comply with these guidelines per growing season is two. The first inspection will check to see that the industrial hemp is planted where the licensee indicated on his/her application and combines an audit of the licensee's research data. The last inspection will include a THC sample for testing and again combines an audit of the licensee's research data. For research on processing industrial hemp, the program has included only one inspection per license period and combines an audit of the licensee's research data. Again, this inspection is necessary to ensure compliance with federal guidelines of research on Class 1 controlled substances and proper oversight by the department. To reduce the overall number of inspections, the department will be checking for multiple compliance components during each inspection.
d. Delaying compliance timetables: Delaying inspection and sampling time frames on licensed growers is not an option because they are based on the growth stage of the plants. Delaying compliance inspections on processing industrial hemp is not an option because the intent of the inspection is to ensure compliance with federal guidelines of research on Class 1 controlled substances. Delaying any inspection and/or sampling time frames may jeopardize valuable research data being collected by the program - for example, delayed inspection for THC testing has been shown to cause an increase in the amount of the THC present. Collecting data with precision is key to scientific and economic research.
e. Reducing or modifying fine schedules for noncompliance: Except for the limited exception for those growing specifically for industrial hemp seed certification, there are no civil penalties allowed by law for violations. Industrial hemp for seed certification is addressed in a separate SBEIS.
f. Any other mitigation techniques including those suggested by small businesses or small business advocates: All licenses - the fee for pesticide testing was reduced from being required by all licensees to only those growing industrial hemp for human consumption.
All licenses - the cost of an individual THC test is $2,000. To mitigate that cost, the department has offered the option to batch the tests with other growers. Batched tests are substantially less costly. If a grower chooses to batch their THC test with nine other growers, the cost to perform the test drops to $200.
Combination license - the application fee was reduced by $100 from the full cost of two separate licenses.
Processor and marketer license - a mandatory THC test for processors was removed after consultation with small businesses. Industrial hemp grown in Washington must already be tested for THC concentration by law before processing and imported industrial hemp must be tested for THC concentration prior to importation; therefore the extra testing on processors was considered redundant. A THC test is now only required of processors if there is an observation during inspection of noncompliance.
SECTION 7: Describe how small businesses were involved in the development of the proposed rule.
An industrial hemp email distribution list was created to keep individuals, small businesses, large businesses and all stakeholders informed of the creation and rule-making process for the industrial hemp research program.
The department held a five-hour, in-person working group meeting consisting of those who expressed an interest in seeking licensure. All license types were represented. The purpose of holding this working group meeting was to seek public comment on the program rule draft before officially initiating the formal rule-making process.
The department conducted a survey via Survey Monkey to obtain information regarding the size of businesses interested in participation in the program. The survey was open from November 8 to December 1, 2016. One hundred forty-four responses were received. All respondents indicated they were small businesses as defined in RCW 19.85.020(3).
Small businesses were involved with writing the proposed rules and in providing input to the department with regards to the expected costs associated with this new research program. The ultimate goal of the legislature mandated program fees for industrial hemp research is to set them at a level that supports the program.
SECTION 8: Identify the estimated number of jobs that will be created or lost as the result of compliance with the proposed rule.
As there are no legally established industrial hemp businesses within the state, no jobs will be lost under the creation and amendment of these rules.
The creation of the industrial hemp research program and subsequent seed certification has the potential to create some limited jobs within the state. The number of jobs created will depend on the number of applications received and licenses issued. These jobs will mainly be created in the agricultural research sector, although some jobs may be created in the marketing research sector of agricultural commodities as well. If data from the research program indicates that growing industrial hemp in Washington state is viable, then this could be the basis for future job creation. Purely commercial growing or processing of industrial hemp is currently not permitted under chapter 15.120 RCW or under federal law.
A copy of the statement may be obtained by contacting Henri Gonzales, 1111 Washington Street S.E., P.O. Box 42560, Olympia, WA 98504-2560, phone (360) 902-1802, fax (360) 902-2094, email wsdarulescomments@agr.wa.gov.
A cost-benefit analysis is not required under RCW 34.05.328. The Washington state department of agriculture is not a listed agency under RCW 34.05.328 (5)(a)(i).
March 1, 2017
Jason Ferrante
Assistant Director
Chapter 16-305 WAC
INDUSTRIAL HEMP RESEARCH PROGRAM NEW SECTION
WAC 16-305-010 Purpose of chapter.
The purpose of this chapter is to establish the requirements for persons to participate in the department's industrial hemp research program as provided under chapter 15.120 RCW. These rules include licensing requirements. Licensing is required for persons to grow, produce, possess, process, and market or exchange industrial hemp as provided under this chapter and chapters 15.120 and 15.49 RCW and the rules adopted thereunder as related to industrial hemp seed certification.
NEW SECTION
WAC 16-305-020 Industrial hemp research program goals.
(1) The department intends to study the feasibility and desirability of industrial hemp production in Washington state based on the availability of resources and funding for such studies. Potential areas for the department's studies and research include the following:
(a) Growing industrial hemp grain;
(b) Growing industrial hemp fiber; and
(c) Developing a seed certification program.
(2) The industrial hemp research program deems the agricultural goals specific to crop production to be of high importance. These goals include:
(a) Variety trials;
(b) Pollen flow studies;
(c) Plant genetics;
(d) Pest and disease management;
(e) Beneficial insects;
(f) Soil quality;
(g) Phytoremediation and bioremediation; and
(h) Certified industrial hemp seed production.
(3) The main marketing and processing goals of the industrial hemp research program include:
(a) Animal bedding;
(b) Cosmetic or beauty products from seed oil;
(c) Fiber products;
(d) Biofuels;
(e) Bioplastics;
(f) Food and beverage additives from seeds and seed oil;
(g) Industrial hemp grain and grain products;
(h) Industrial hemp seed oil;
(i) Construction materials;
(j) Compost;
(k) Insulation; and
(l) Bio-char and soil amendment technologies.
NEW SECTION
WAC 16-305-030 Definitions.
"Applicant" means a person who submits an application for a license to participate in the industrial hemp research program as required under this chapter.
"Approved seed" means a variety of industrial hemp seed that is approved by the department for growing industrial hemp.
"Authorized representative" means any person identified in writing by a licensee who may act as agent on behalf of the licensee for purposes of the license subject to any limitations stated in writing by the licensee. The licensee remains responsible for compliance with the license requirements irrespective of the acts or omissions of an authorized representative.
"Certified seed" means an industrial hemp seed variety that has been bred to comprise satisfactory genetic purity and varietal identity or has been accepted by Association of Seed Certifying Agencies (AOSCA), Organization for Economic Cooperation and Development (OECD) or other certifying entity as determined by the department.
"Contiguous land area" means a specific field with designated boundaries that is planted with industrial hemp. Separate parcels connected only by thin or narrow plantings of industrial hemp or separated by physical barriers such as ditches or roads are not considered contiguous for the purposes of this rule.
"Continuous licensing" means annual licenses renewed in such a way that the licensee is continuously operating under a valid license.
"DEA" means the federal Drug Enforcement Administration.
"Department" means the Washington state department of agriculture.
"Destroyed" means incinerated, tilled under the soil, made into compost, or another manner approved by the department.
"Devitalization" means the process of sterilizing viable industrial hemp seed in such a way that the seed is unable to grow into new plants. Devitalization may happen through steam sterilization, dehulling, pressing, or another method approved by the department. If using steam sterilization, the seeds must be steamed to one hundred eighty degrees Fahrenheit for at least fifteen minutes.
"Field" means a contiguous land area, registered with the department, on which a licensee plans to grow industrial hemp.
"Grain" means any devitalized industrial hemp seeds that are not intended for replanting, but will be used for food, feed, fiber, oil or other products.
"Industrial hemp" means all parts and varieties of the genera Cannabis, cultivated or possessed by a grower, whether growing or not, containing a THC concentration of 0.3 percent or less by dry weight. Industrial hemp does not include plants of the genera Cannabis that meet the definition of "marijuana" as defined in RCW 69.50.101.
"Industrial hemp research program" means the department's "agricultural pilot program" established under chapter 15.120 RCW, this chapter, and the industrial hemp seed rules under chapters 16-302 and 16-303 WAC.
"Leadership position" means any board member, manager, or leader in a business or organization who will provide oversight and monitoring of subordinates.
"Licensee" means any person who holds a license from the department to grow, produce, possess, process, or exchange or sell industrial hemp. A licensee may be a person who is authorized to carry out department supervised research on the feasibility and desirability of industrial hemp production in Washington state.
"Processing area" means any area, building, plant or facility registered with and approved by the department in which a licensee will make industrial hemp into a marketable product. For the purposes of this definition, a person's domicile, home or residence is not considered a processing area.
"Registered land area" means a contiguous land area, including greenhouses, processing areas and storage areas registered with the department as a condition of licensing, on which a licensee will conduct licensed activities. A registered land area may include more than one field, greenhouse, processing area or storage area so long as those fields, greenhouses, processing areas or storage areas are at the same physical address.
"Report" means any data, statistics or information required to be provided to the department by a licensee under an industrial hemp license.
"Seed distributor" means any person licensed by the department to distribute or sell viable industrial hemp seed.
"Storage area" means any area, building, plant or facility registered with the department in which a licensee plans to store industrial hemp.
"THC concentration" means the percent of total tetrahydrocannabinol, which is the combined percent of delta-9 tetrahydrocannabinol and tetrahydrocannabinolic acid in any part of the genera Cannabis.
"Volunteer plant" means an industrial hemp plant that results from a previous crop.
NEW SECTION
WAC 16-305-040 Industrial hemp license application.
(1) A person wishing to participate in the industrial hemp research program must submit a license application on a form provided by the department. A person wishing to obtain an application form for an industrial hemp research license may contact the department at: 509-249-6950, hemp@agr.wa.gov, 21 North 1st Avenue, Suite 203, Yakima, WA 98902 or download the application form from the department's web site at http://agr.wa.gov/. The department will post on its web site any deadline for submitting an application.
(2) Each applicant for a license to grow, produce, possess, process, or market or exchange industrial hemp shall submit a signed, complete, accurate, and legible application on a form provided by the department. Applications must be submitted at least thirty days prior to commencing industrial hemp operations regulated under this chapter. To maintain continuous licensing, an applicant must submit an application for a renewal license at least thirty days prior to the expiration of the previous license. The application must include the following information:
(a) The name and business address of the applicant;
(b) For corporate applicants, the type of business entity, such as corporation, LLC, or partnership, the state or country where the business is incorporated, and the name and address of the entity's agent in Washington state;
(c) If applicable, the legal description (section, township, and range) in which any proposed registered land area is located;
(d) The global positioning location coordinates taken at the approximate center of any proposed registered land area;
(e) The results of a soil quality test for each field, which, at a minimum, provides test results on the soil for pH, nitrogen, phosphorus and potassium. This requirement is not applicable for greenhouses;
(f) A map of the proposed registered land area, showing the boundaries and dimensions of the proposed registered land area in acres or square feet, and the proposed location of any variety of industrial hemp crop to be grown in the registered land area(s); and
(g) The applicant's signature accepting the license terms and conditions including the following:
(i) That the applicant agrees to collect, retain and transmit to the department data gathered while conducting each licensed activity as specified in the license for use by the department in studying the feasibility and desirability of industrial hemp production in Washing-ton state. Such information shall be retained and transmitted to the department in a schedule and a format identified in each license;
(ii) That the applicant agrees to allow the department to inspect and sample any industrial hemp, or inspect any registered lands, facilities, and records required of the licensee under the terms of each license;
(iii) That the applicant is responsible to pay any fees adopted under the department's rules applicable to the licensed activities;
(iv) If applicable, the applicant must have the legal right which includes, but is not limited to, a valid deed or lease, to the registered land area, including the legal authority to grant the department access for inspection and sampling; and
(v) That the individual grower or combination license applicant or any member of the applicant's business occupying a leadership position has not been convicted of any felony related to the possession, production, sale, or distribution of a controlled substance in any form in the United States or any other country within ten years of the date of the application.
(3) In addition to the completed application form, each applicant must submit a nonrefundable application fee. If the application fee does not accompany the application, the application will be deemed incomplete.
(4) An application may be deemed incomplete if the applicant does not include information sufficient for the department to make a determination about the nature and scope of the applicant's proposed uses or activities.
(5) The department may deny an application where the applicant seeks to conduct activities or uses outside the scope of these rules and chapter 15.120 RCW; where the applicant has not met a material requirement identified in the application requirements; or where the applicant proposes a use or activity in conflict with local, state, or federal law. An application may be denied should the application contain goals or information that the department could reasonably conclude would be out of conformance with state or federal laws.
NEW SECTION
WAC 16-305-050 Qualifications of applicants.
(1) For any type of license, the applicant must include a signed declaration indicating whether the applicant has ever been convicted of a felony or misdemeanor.
(2) A person with a prior felony drug conviction within ten years of applying for a grower or combination license is not eligible for the license. Associations, corporations and other business entities employing persons in leadership positions with a prior felony drug conviction within ten years of applying for a grower or combination license are not eligible for the license under this felony drug conviction limitation.
INDUSTRIAL HEMP LICENSES
NEW SECTION
WAC 16-305-060 Industrial hemp grower license.
(1) A person must obtain an industrial hemp grower license prior to planting or growing any industrial hemp in this state, including growing any industrial hemp seed crop. A licensed grower may sell or exchange industrial hemp produced under the license to any licensed industrial hemp processor or grower. A fit for commerce certificate issued by the department under WAC 16-305-130 must be obtained by a grower prior to transporting any industrial hemp from the grower's registered land area.
(2) Any information obtained by the department regarding a grower's growth of industrial hemp may be provided to law enforcement agencies and fire and rescue agencies by the department without further notice to the licensee.
(3) The department may inspect and sample a grower's licensed operations and must have unrestricted access to all industrial hemp plants, plant parts, grain and seeds within a registered land area whether growing or not, and all land and facilities used by a grower for the growing and storage of industrial hemp, pesticide storage or housing, and all documents and records pertaining to the licensee's industrial hemp business operations.
(4) The licensee must pay all applicable fees adopted under this chapter and under the industrial hemp seed rules for any required inspections and testing. Samples may be taken at the department's discretion for testing.
(5) No registered land area or storage area may contain cannabis plants or parts thereof that the licensee knows or has reason to know are of a variety that will produce a plant that when tested will produce more than three-tenths of one percent THC concentration on a dry weight basis. No licensee shall use any such variety for any purpose associated with the growing of industrial hemp.
(6) Industrial hemp may not be grown within four miles of any field or facility being used to grow marijuana as licensed under chapter 314-55 WAC. For calculation purposes, for outdoor fields licensed under chapter 314-55 WAC, four miles means from any field border of any registered land area, and for indoor facilities licensed under chapter 314-55 WAC, four miles means from any exterior or interior border wall.
(7) All licenses are valid for one year from date of issuance, and may be renewed in successive years. Each annual renewal shall require the payment of application renewal fees and license renewal fees.
(8) Unless approved by the department for continuous licensing, any plant material that is not harvested during the license period in which it was planted must be destroyed.
(9) Any licensee that wishes to change the registered land area(s) after issuance of the license, must submit to the department for approval an updated legal description, global positioning system location, and map specifying the proposed changes to the registered land area(s), pay fees and obtain the department's approval documented as an amendment to the license. The department may deny the requested change for good cause. The fee to change the registered land area(s) after issuance of the license is two hundred dollars.
(10) A copy of each license issued by the department under this section shall be forwarded by the department to the sheriff of each county where the industrial hemp is licensed to be grown.
(11) Signs provided by the department must be posted by each grower stating that the grower is a licensed industrial hemp research program participant. The grower must post such signs on at least each side of every field listed on the application, including the principal entry point(s) of each field.
(12) Licensees growing industrial hemp for seed certification must also follow the requirements in chapter 16-302 WAC.
NEW SECTION
WAC 16-305-070 Industrial hemp processor and marketer license.
(1) A person shall obtain an industrial hemp processor and marketer license prior to obtaining industrial hemp for processing or marketing purposes.
(2) The department may inspect and sample and must have unrestricted access to all industrial hemp plants, parts, grain, seeds and products within a registered land area, and all documents and records pertaining to the licensee's industrial hemp business. A person's domicile, home or residence may not be used as a processing area.
(3) An inspection of a licensee's facilities may be conducted at least once by the department during a license period. The inspection activities may include:
(a) An inspection of the licensee's facilities, including any processing and storage areas;
(b) An inspection of all industrial hemp in the possession of the licensee;
(c) Sampling of industrial hemp for testing;
(d) An inspection of any industrial hemp products being produced under the license; and
(e) An inspection of any records and reports pertaining to the licensee's industrial hemp business.
(4) Any licensee that wishes to change the registered land area(s) after issuance of the license must submit to the department for approval an updated legal description, global positioning system location, and map specifying the proposed changes to registered land area(s), pay fees and obtain the department's approval documented as an amendment to the license. The department may deny the requested change for good cause. The fee to change the registered land area(s) after issuance of the license is two hundred dollars.
(5) A processor and marketer must obtain industrial hemp from a licensed Washington grower or from legally imported sources of industrial hemp. Each licensee must obtain a copy of the grower's license and fit for commerce certificate (WAC 16-305-130) from any licensed Washington grower with whom the processor and marketer conducts business before processing or marketing the industrial hemp.
(6) It is the duty of any processor to devitalize any industrial hemp seed received.
NEW SECTION
WAC 16-305-080 Industrial hemp combination license.
(1) A person wishing to grow and process or market industrial hemp in this state may apply for separate licenses or for a combination license. A person who is granted a combination license is subject to all applicable requirements in this chapter, including under WAC 16-305-060 and 16-305-070.
(2) Under a combination license, industrial hemp seed harvested and processed without transporting the seed from the registered land area must be devitalized.
NEW SECTION
WAC 16-305-090 Industrial hemp distributor license.
(1) Any person wishing to solely distribute or sell viable industrial hemp seed or propagules in Washington state must be licensed by the department as an industrial hemp distributor. A person must obtain an industrial hemp distributor license prior to exchanging, distributing, selling or reselling viable industrial hemp seed or propagules in Washington state.
(2) This license type may not be combined with licenses described in WAC 16-305-060, 16-305-070, or 16-305-080.
(3) Where appropriate, licensed industrial hemp distributors shall follow seed certification rules in chapter 16-302 WAC.
NEW SECTION
WAC 16-305-100 Industrial hemp importer certificate.
Any person wishing to import viable industrial hemp seed or propagules into the state must obtain an importer certificate from the department. Only those persons holding a valid license issued by the department may obtain an importer certificate. There is no charge for this certificate.
NEW SECTION
WAC 16-305-110 Industrial hemp business licenses and taxes.
(1) Licensees must maintain all proper state, county and local business licenses and permits and comply with all applicable zoning regulations.
(2) Licensees must comply with business and occupation tax requirements set forth in chapter 82.04 RCW and regulations adopted thereunder.
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WAC 16-305-120 Suspension of industrial hemp licenses for noncompliance with a child support order.
(1) If the department receives notice under RCW 74.20A.320 that a licensee is not in compliance with a child support order, the department will suspend or not renew the licensee's industrial hemp license(s) until the department of social and health services provides the department with a release stating that the licensee is in compliance with the child support order. If a licensee's license is suspended, all industrial hemp crops and products in the licensee's possession must remain on the licensee's registered land area until the suspension is lifted.
(2) The department may renew, reinstate or otherwise extend the licensee's industrial hemp license(s) upon receipt of a copy of the release specified in subsection (1) of this section.
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WAC 16-305-130 Fit for commerce certification.
(1) A fit for commerce certificate is a document issued by the department attesting that industrial hemp has been tested for THC concentration and is in compliance with this chapter.
(2) No industrial hemp may leave a registered land area identified on a license without a fit for commerce certificate.
(3) No processor may acquire or process industrial hemp grown within the state of Washington without acquiring a legible copy of all fit for commerce certificates issued by the department to the grower or growers with whom the processor conducts business and specific to the industrial hemp purchased.
(4) A person who is issued an applicable combination license must obtain fit for commerce certificates before any industrial hemp may be processed.
(5) For the purposes of this section, "processing" does not include drying industrial hemp if the drying takes place on the registered land area as identified in the license.
(6) Industrial hemp plants, pieces or parts from different fields or registered land areas may not be combined into one lot until a fit for commerce certificate for each field or registered land area is issued. Industrial hemp seeds and grain are excluded from this restriction.
(7) Processor licensees using industrial hemp which was obtained from outside of the state of Washington must maintain a bill of lading or other proper documentation demonstrating that the industrial hemp was legally imported into the state.
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WAC 16-305-140 Transporting industrial hemp.
(1) Industrial hemp subject to any applicable license issued under this chapter may not be transported from a registered land area as identified on the license until a fit for commerce certificate (WAC 16-305-130) is obtained by the applicable licensee prior to transport. During transport of industrial hemp off a grower's registered land area, including to a processor, the person in possession of the industrial hemp during transport must have in his or her possession either:
(a) Copies of the industrial hemp license and fit for commerce certificates, as required by this chapter; or
(b) A bill of lading or other proper documentation demonstrating that the industrial hemp was legally imported or is otherwise legally present in the state of Washington under applicable state and federal laws relating to industrial hemp.
(2) Any industrial hemp from a licensed Washington grower that is found in Washington state at any location off the premises of a registered land area of a licensee without a fit for commerce certificate (WAC 16-305-130) is deemed to be contraband and subject to seizure by the Washington state patrol or any law enforcement officer. Any such contraband material is subject to destruction at the licensee's expense, and may result in suspension or revocation of the license.
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WAC 16-305-150 Industrial hemp seed and propagules.
(1) A licensee must use approved varieties of certified industrial hemp seed or propagules.
(2) A licensee may only obtain industrial hemp capable of propagation as follows:
(a) From a licensed distributor of industrial hemp seed or propagules under WAC 16-305-090; or
(b) Directly from the department as outlined in subsection (3) of this section.
(3) If an approved industrial hemp seed variety cannot be acquired within the state of Washington, a licensee may request in writing that the department import the approved seed under the department's DEA registration number. If the licensee does not currently hold an importer certificate (WAC 16-305-100), the licensee must request such a certificate in writing from the department.
(4) If the department agrees to request the importation of industrial hemp seed on behalf of the licensee, the licensee agrees to the following conditions:
(a) That the department is not liable for and does not warrant that the seed is fit for any purpose;
(b) That the industrial hemp seed shall be a certified seed variety;
(c) That the licensee must pay when due all costs associated with the importation of such industrial hemp seed; and
(d) That upon suspension, revocation, expiration or nonrenewal of a licensee's license, any industrial hemp seed that is not used by a licensee must be transported to a DEA approved storage facility without charge or reimbursement. Continuous licensing is required. If a licensee fails to renew their license, any industrial hemp seed in the licensee's possession will become the property of the department without charge or reimbursement. At the department's discretion, and before the termination of the licensing period, the licensee may request in writing the department hold, on behalf of the licensee, the viable industrial hemp seed at a DEA approved storage location for a period of no greater than six months from the expiration of the license.
(5) Industrial hemp seed imported under the department's DEA registration number may either be stored in a DEA approved storage facility under the industrial hemp research program or it may be delivered directly to the licensee's address as identified on the license.
(6) Industrial hemp seed delivered directly to the grower's address must be planted immediately upon receipt or transported to a DEA approved storage facility.
(7) Industrial hemp seed collected by a grower from a DEA approved seed storage facility must be planted or returned to a DEA approved storage facility within twenty-four hours of receipt. The grower must provide a signed declaration on a form provided by the department declaring all the seed will be planted, returned to a DEA approved storage facility or destroyed within twenty-four hours of receipt.
(8) Before collecting from storage or receiving industrial hemp seed at the licensee's address, a licensee must make arrangements with the department to have a department representative present to verify the receipt of the industrial hemp seed.
(9) During industrial hemp seed collection, the licensee must present to the department:
(a) A valid industrial hemp license;
(b) A valid form of photo identification;
(c) A signed declaration on a form provided by the department declaring the grower will take all steps necessary to prevent diversion;
(d) If applicable, a valid industrial hemp importer certificate (WAC 16-305-100);
(e) Copies of all seed importation documents; and
(f) Other documents as required by the department.
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WAC 16-305-160 Industrial hemp data and reporting requirements.
(1) The licensee shall submit all reports required by the department in the format and by the due dates specified in the terms and conditions of each license. The data to be retained and transmitted to the department by each licensee will be used by the department to study the feasibility and desirability of industrial hemp production in Washington state.
(2) Each field inspection or processing area inspection may include an audit of the licensee's records and data, including the system used by the licensee to preserve required classes of records and data in a timely manner, using a format that facilitates meeting the terms and conditions of the license.
(3) The department may require a licensee to submit responses to a questionnaire or survey at the end of each licensing period. This questionnaire must be completed and returned to the department within thirty business days of transmittal to the licensee by the department. A licensee's failure to return the completed questionnaire or survey may be good cause for the department to deny a license renewal application.
(4) The licensee must maintain records regarding the sale of any industrial hemp grown under the license.
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WAC 16-305-170 Records retention.
Records, data and reports required to be collected or maintained by the licensee or provided by the licensee to the department must be retained by the licensee for a period of three years from the expiration date of the license that was in effect at the time the records were generated.
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WAC 16-305-180 Industrial hemp for human consumption.
Industrial hemp processed for human consumption must follow food safety requirements as set forth in chapters 69.04, 69.07 and 69.10 RCW and regulations adopted thereunder. As provided under RCW 15.120.020, "processing any part of industrial hemp, except seed, as food, extract, oil, cake, concentrate, resin, or other preparation for topical use, oral consumption, or inhalation by humans is prohibited."
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WAC 16-305-190 Industrial hemp inspection and sampling criteria.
(1) All licensees are subject to inspection by the department. The department's inspections of the registered land area may include the following:
(a) Inspections for unauthorized plant growth;
(b) Inspections for industrial hemp in any form on the registered land area;
(c) Inspections for rogue, volunteer, or off-type industrial hemp plants;
(d) Identification of any industrial hemp activities not listed on the license;
(e) Audits of existing business data and reports related to industrial hemp;
(f) Identifying compliance with required signage (WAC 16-305-060);
(g) Assessing compliance with other applicable licensing terms and conditions; and
(h) Obtaining samples for lab testing.
(2) Registered land areas under a grower or combination license must be inspected by the department no less than two times during each license period. Registered land areas may be inspected by the department for a period of three hundred sixty-five days from the end of the license period to check for unauthorized plant growth such as, but not limited to, volunteer plants. Industrial hemp samples from registered land areas licensed under a grower or combination license must be taken by the department no less than once during any growing period. Industrial hemp samples from registered land areas shall be tested by the department for THC concentration at least once during any growing period.
(3) Registered land areas licensed under a processor and marketer or combination license must be inspected by the department no less than once during each license period. Industrial hemp seed being stored under a processor and marketer or combination license will be inspected by the department for devitalization practices no less than once per year.
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WAC 16-305-200 Industrial hemp lab testing criteria.
(1) Industrial hemp will be tested in a department run or contracted laboratory as determined by the department using testing methods approved by the department.
(2) Industrial hemp seed stored under a processor and marketer or combination license may be sampled and tested by the department for viability. The licensee will be required to reimburse the department for the actual costs incurred by the department for conducting such tests.
(3) Industrial hemp for food for human consumption must be tested for nonapproved pesticide or herbicide use. The grower or combination licensee will be required to reimburse the department for the actual costs incurred by the department for conducting such tests.
(4) Industrial hemp testing will take place at times and on dates determined by the department.
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WAC 16-305-210 Industrial hemp testing fees.
(1) Fees for industrial hemp tests are the responsibility of the licensee.
(2) No fit for commerce certificates (WAC 16-305-130) will be issued until all test fees due the department are paid in full.
(3) No renewal licenses will be issued until all test fees due the department are paid in full.
(4) THC concentration testing fees for industrial hemp production are established on a sliding rate scale. THC concentration testing will be scheduled by the department based on the availability of laboratory resources. Individual samples may be batched with samples from the same or different licensees in order to reduce the overall cost of the testing. For the purposes of this section, "batch" means a group of samples that are tested by the department on the same day, using the same equipment calibration and testing supplies to test each sample independently from other samples in the batch. The department will bill each licensee for the samples that licensee provides, based on batch size at the time of testing as shown in the following table:
NEW SECTION
WAC 16-305-220 Industrial hemp license fees.
/1 Fee includes one field.
/2 See WAC 16-305-210 for THC concentration testing fees.
/3 Applicable if growing industrial hemp for human consumption.
/4 See WAC 16-303-250 for travel time and mileage rates.
/5 See WAC 16-303-200 for seed testing fees.
/6 See WAC 16-303-320 for seed certification fees.
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WAC 16-305-230 Industrial hemp noncompliance for THC concentration.
(1) If a licensee's industrial hemp tests higher than three-tenths of one percent THC concentration, the licensee may be subject to suspension or revocation of the license. The crop must be destroyed or utilized on-site in a manner approved by the department. If determined to be appropriate, the department may give notice of noncompliance to appropriate law enforcement agencies and the Washington state liquor and cannabis board, with a summary of the actions taken to destroy the noncompliant industrial hemp.
(2) If a licensee's industrial hemp tests higher than three-tenths of one percent but less than one percent THC concentration, the department may run appropriate genetic tests, at the licensee's expense, to verify the industrial hemp was from a variety of approved seed. If the industrial hemp was from a variety of approved seed, at the licensee's expense the licensee may either request a THC retest within thirty days or resampling of the same field.
(3) If at any time a licensee's industrial hemp tests higher than one percent THC concentration, the licensee may be subject to revocation or suspension of the license. The licensee, or any legal entity subsequently employing the licensee, may be ineligible for a license to grow or process industrial hemp for a period of three years from the termination date of the license held at the time of noncompliance.
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WAC 16-305-240 Noncompliance conditions.
Licensees may be subject to license suspension or revocation for any violation of chapter 15.120 RCW or this chapter.
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WAC 16-305-250 License denial, suspension or revocation and right to adjudicative proceeding.
Upon notice by the department to an applicant to deny a license or notice to a licensee to suspend or revoke a license, or upon receipt of a crop destruction order, a person may request an adjudicative proceeding under chapter 34.05 RCW, the Administrative Procedure Act.
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WAC 16-305-260 Venue for legal action.
The venue for any legal action under this chapter shall be Thurston County, Washington.
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