WA House COG - Committee Meeting
(March 19, 2021) - SB 5372 - Public Hearing

Hemp Processing Facility
[ Event Details ]

A bill to create a voluntary hemp processor registration program and hemp extract certificate garnered mostly supportive testimony in the House from the public and state officials.

Here are some observations from the Friday March 19th Washington State House Commerce and Gaming Committee (WA House COG) committee meeting.

My top 3 takeaways:

  • Legislation to create a voluntary hemp processor registration and “a hemp extract certificate” received its first hearing in the Washington State House of Representatives where the prime sponsor suggested it would increase exportability of Washington hemp products.
    • On February 2nd, a public hearing was held for SB 5372 by the Washington State Senate Agriculture, Water, Natural Resources, and Parks Committee (WA Senate AWNP) which then recommended passage of the legislation during a February 4th executive session.
    • On February 10th, Washington State Liquor and Cannabis Board (WSLCB) leadership acknowledged they had no “role in overseeing or regulating hemp" but would advise lawmakers to amend SB 5372 so WSLCB staff could “test samples represented as hemp obtained from a location licensed for marijuana production or processing for the sole purpose of validating THC content.”
    • On March 9th, senators adopted the amendment and passed the bill unanimously.
    • WA House COG Counsel Kyle Raymond took committee members through the background of current state and federal practices around hemp processing before laying out the legislation’s effects (audio - 6m, video).
      • Raymond explained that federal legalization of hemp in the 2018 Agricultural Improvement Act (the Farm Bill) allowed “states and tribes to be the primary regulator.” Washington subsequently legalized hemp production in 2019 and the Washington State Department of Agriculture (WSDA) reformed the Industrial Hemp Research Pilot (IHRP) into the current hemp program to allow for licensing of producers.
      • Additionally, the Farm Bill included hemp within the U.S. Food and Drug Administration (FDA) oversight authority for food additives, Raymond stated, and the agency “issued guidance that federal law prohibits [cannabidiol] CBD from being used as a food additive.” Washington state 2019 hemp legislation expressly allowed the “whole hemp plant may be used as food and [WSDA] must regulate the processing of hemp for food products,” he said, adding that an August 2019 statement from the Department stated, “While CBD is not allowed as a food ingredient, WSDA licensed food processors can currently use other hemp products in food, such as hulled hemp seeds, hemp seed protein power and hemp seed oil, provided they comply with all other requirements. FDA has determined that these components are Generally Recognized as Safe (GRAS) based on federal requirements.” Raymond specified that only one CBD product, the pharmaceutical Epidiolex, had been approved as safe by the FDA.
      • Raymond reported that SB 5372 “creates a voluntary hemp processor registration process under which” those that “process hemp for commercial use or sale may register with” WSDA for “compliance with interstate or international hemp processing requirements.” He said WSDA may “adopt rules as necessary to register hemp processors” and outlined some requirements like “the physical address of all locations where hemp is processed or stored, and the registration fee is set by the department in rule.”
      • Raymond noted processors wouldn’t be expected to already hold a hemp production license though they would have to be a “registered business entity” with the State. Licensed marijuana processors may also obtain a license to process hemp at the same location, but under the bill “LCB may test samples represented as hemp to validate the [tetrahydrocannabinol] THC content of the product,” Raymond noted.
      • Raymond explained the bill also “creates a hemp extract certificate” for hemp processors intending to create “a food ingredient” for “export to other states that allow hemp extract as a food ingredient.” Hemp extract was defined so as to “not include hemp seeds or hemp...seed derived ingredients that” are considered GRAS by the FDA. The bill required hemp extracts not be considered a food ingredient in Washington until they were designated as a food ingredient federally. Should this occur, he noted, individuals holding a hemp extract certificate would need to obtain a food processing license at their next renewal instead.
      • The certificate would indicate the processor was in “compliance with Washington’s inspection requirements,” Raymond said. WSDA officials would be expected to regulate hemp processing “the same as other food processing” and may take up rulemaking to “establish application, initial certification, and renewal fees,” he remarked.
      • The bill fiscal note predicted:
        • One-time costs for WSLCB of $18,000.
        • Expenditures for WSDA of $197,200 for the first biennium and $154,800 in subsequent bienniums.
        • Revenue generated for WSDA was reported to be “indeterminate at this time because that agency does no[t] know the number of licenses that will be issued and fees will be determined during rulemaking.” Staff projected the cost of extract certification would be $4,000 annually, as compared to the $1,200 annual fee for a hemp production license and $1,281 for a cannabis license.
      • Representative Eric Robertson sought clarification on whether CBD could be a food additive in Washington. Raymond replied that it wouldn’t until federal change, but hemp processors would be able “to export hemp extract to another state that would allow” its use as a food additive (audio - 2m, video).
        • In an October 2020 webinar on cannabis edibles, WSDA Food Safety Program Manager David Smith confirmed they were “still not allowing hemp in manufactured food” outside of “long standing” allowances for “hemp seed, the protein powder, and pressed oil.”
        • On April 7th, department staff planned to host a webinar on “Hemp Exports and Food Safety.”
    • Senator Derek Stanford, the prime sponsor of the bill, said hemp processors wanting to export their crop had found “a barrier” in the form of “registration or in some cases certification” mandated by other states. The bill would establish “entirely voluntary” documentation for processors wanting to export. He said SB 5372 would support more “jobs here and income here” (audio - 2m, video).
      • Speaking to Robertson’s question, he offered that some states classified CBD and hemp extracts as food and therefore expected a food handler certification so regulators could feel confident “it’s being handled here the way a food product would be.” As Washington state didn’t define the extract as food, the bill offered an equivalent certification “that will stay in place until such time as federally it might be changed to food,” he said. Upon passage of the bill, a hemp extract’s re-designation as a food ingredient could “change along with” any federal action on the topic.
  • A Washington State Department of Agriculture official offered insight without taking a position on the bill, and five other speakers testified in favor.
    • Kelly McLain, Washington State Department of Agriculture (WSDA) Policy Advisor to the Director (audio - 2m, video).
      • McLain said Washington’s 2019 hemp law “replaced a pilot hemp program...which included hemp producers and processors.” She communicated that as the federal Farm Bill “didn't specify that processors needed coverage" WSDA had chosen to “phase that out.” Processors came to the realization that “some type of registration or license would assist them” in exporting crops outside the state as other jurisdictions wanted “assurances” about the quality of hemp and/or extracts for sale, McLain said. Moreover, the regulations envisioned by SB 5372 would be intended to “meet good manufacturing practices as well as sanitation practices,” she commented, clarifying that WSDA was supportive of “creating these non-mandatory registration and certification options through rulemaking” by the Department.
    • Chris Thompson, WSLCB Director of Legislative Relations (audio - 3m, video). 
      • Thompson specified that while WSLCB didn’t regulate hemp and wanted "to stay in our lane," current law allowed dual hemp/cannabis licensure “at the same location.” He said WSLCB had requested section 4 be added to the bill to allow the agency to test products represented as hemp on cannabis licensed premises because "you can't tell these two products apart visually" and staff “can't determine what [the plant] is without testing." However, existing law “specifically says we may not test,” Thompson commented.
        • RCW 15.140.030(2) states, in part, “All rules relating to hemp, including any testing of hemp, are outside of the control and authority of the liquor and cannabis board.”
      • Thompson said “a handful” of licensees were affected but "we have received some complaints" about the practice which meant the language "removes a roadblock in current law to our responsibility for addressing this situation,” he added.
        • The WSLCB fiscal note presumed nine investigations of dual cannabis/hemp licensees each year.
    • Sativa Rasmussen, Dorsey and Whitney Associate Attorney (audio - 2m, video).
      • Rasmussen stated she was representing Wyckoff Farms in supporting the bill, saying, “in short, we believe the bill is needed for two reasons, first, it provides for a voluntary hemp processor registration...which will open up some markets.” Secondly, the extract certification in SB 5372 would demonstrate “that the hemp extract was produced in compliance with Washington’s inspection and sanitation requirements,” she said. Rasmussen was optimistic the bill would “further open up currently closed interstate commerce opportunities.”
    • Bonny Jo Peterson, Industrial Hemp Association of Washington (audio - 3m, video). 
      • Peterson identified herself as the person who had brought the legislation to Stanford after she’d consulted with WSDA and other stakeholders “for multiple months.” She’d encountered difficulties around interstate hemp commerce and drafted text around processing registration, with extract certification added after “trying to figure out through regulations of...how to provide this food safety inspection.” Peterson supported the bill’s current form, which she argued would “help with companies that are having trouble getting insurance because they don’t have a processor license” as well as bringing hemp producers to “market in multiple...aspects.”
      • Representative Kelly Chambers asked about infused cannabis edibles produced by licensed cannabis processors which Peterson pointed out were limited to the state’s legal market (audio - 1m, video). 
      • Chair Shelley Kloba wanted to know if there was a "ballpark figure on how much” SB 5372 might increase “access” for Washington state hemp businesses. Peterson guessed hemp processors certified by the State would gain “90% more access to the market both internationally and nationally” (audio - 1m, video).
    • Joy Beckerman, Hemp Ace International (audio - 7m, video).
      • Beckerman prefaced that she’d moved back to the state after living in New York “to assist with some large hemp projects there and get the [industrial hemp] program going” in that state. Having been “in hemp for 30 years,” she described her experience with hemp as a plant and as a commodity having served as President of the Hemp Industries Association (HIA), former Executive Vice President of the advocacy organization U.S. Hemp Roundtable, and established her consulting firm, Hemp Ace International, in 2014.
      • Addressing Robertson’s question first, Beckerman testified that the FDA was already empowered under the Food, Drug, and Cosmetic Act and could “use its enforcement discretion” to permit CBD and “other hemp extract derivatives other than hemp seed which is already recognized as safe.” She said hemp and dietary supplement advocates had lobbied for H.R. 841 in hopes it would "inspire a change in the FDA’s guidance position" on the crop. Beckerman expressed disappointment that Washington state had not yet “moved forward on behalf of our farmers and our entrepreneurs and consumers that deserve safe access to these products.” She said “states as sophisticated as Washington” had recognized that the FDA provided “a guidance position, [but] it is not the law. It’s actually not illegal” for jurisdictions to design their own food ingredient standards for hemp.
      • “I am very pleased with this bill,” Beckerman announced but identified two issues with its wording:
        • Beckerman noted the “10 year drug felony conviction” window could potentially impact processor registration approval for racial minorities who’d historically faced disproportionate enforcement of drug laws because current law allowed the hemp production licensing process to “exclude persons with felony convictions as required under the agriculture improvement act of 2018.” She asked for a revision to “simply match [the Farm Bill] which states that it’s during the ten year period following the date of conviction” and individuals with “a license under an agricultural pilot program for hemp that you would be grandfathered in and you would have an exception” to that restriction.
        • Regarding the section allowing for WSLCB testing, Beckerman was sympathetic to “the confounding problems” the agency faced as it sought to regulate cannabis but not hemp production. She called for the agency to adapt to “testing in the field” to more quickly differentiate between the cultivars with significant THC and those with very little. Beckerman explained that in May 2018, the U.S. Department of Agriculture (USDA) General Counsel issued a legal opinion on THC (“which is everybody else’s in the hemp industry’s legal opinion”) that hemp-derived THC “have been specifically removed from the [U.S.] Controlled Substances Act.” She said she was working with hemp advocates on an “in-process hemp extract rule” so that the U.S. Drug Enforcement Administration (DEA) “current interim final rule, which has not been finalized, which states that any in-processed hemp extract that exceeds 0.3% delta-9-THC” would not be considered “marijuana.”
      • Beckerman closed out her remarks by questioning why state law needed to be changed for what Thompson had described as “not many, a handful, and a few” licensees cultivating hemp and cannabis at the same location.
    • Dylan Summers, Lazarus Naturals Vice President of Government Affairs (audio - 2m, video).
      • Summers said the company he represented was “a vertically integrated hemp producer and products manufacturer with our flagship facility based in Seattle” and described his collaboration with those developing SB 5372. He said he was “tremendously pleased” with the bill due in part to his view that “Washington’s hemp program is positioned nicely but currently falls behind other more progressive hemp programs like those in Colorado and Oregon.” Summers remarked that absent a hemp processor certification, “producers and manufacturers are often unable to ship transitional or final hemp products to states and other countries.” He was similarly confident the bill would lower overall “barriers to entry for hemp producers across the state who have recently been left with very few buyer options” and push the state towards being “a worthy national and international competitor.”
  • Chair Shelley Kloba acknowledged three people who had signed in to support the legislation which was scheduled to be addressed in executive session on Thursday March 25th (audio - 1m, video).

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