Committee reviews amendment to tie hemp rules to federal law and ease requirements for small processors

Bradley Schollman, Office of Legislative Council, walked the Agriculture, Food Resiliency, & Forestry committee through draft 3.1 of an amendment to Senate Bill 323 and said the change adds language to the bill’s purpose to "support small business hemp producers and processors" and to help them "take advantage of interstate opportunities." Schollman cautioned the panel that language favoring an intrastate market could raise constitutional issues under the Privileges and Immunities Clause of the U.S. Constitution.

"Just be mindful that if we're talking intrastate markets, exceptions for intrastate processors or producers of hemp, it might run into a privileges and immunities problem," Schollman said, urging the committee to consider striking the word "intrastate." The committee’s Chair and other members agreed that removing the term would preserve the intent to support small businesses while reducing legal risk.

The amendment keeps several permissive rulemaking items for the Cannabis Control Board (CCB), including provisions already present in S.323. Schollman said the bill ties the state definition of hemp to federal law so that if federal definitions change the state definition would follow. He noted that the CCB’s authority in the amendment is optional—"may make rules"—so the board could act without additional legislative instruction but is not forced to do so.

Members pressed for specifics about product thresholds and enforcement. The draft references a numerical threshold for registered hemp products that contain "more than 0.4 milligrams of THC" as the point where sales must be restricted to persons 21 and older or limited to specified settings. Committee members raised examples such as full‑spectrum pet treats and asked how the threshold would affect producers who export products out of state. Schollman said that if a product exceeded the federal limit, it could be treated as cannabis and become unlawful for persons under 21.

The amendment would allow the CCB to define a class of "craft processors" and exempt that class from requirements the board finds unnecessary to protect public health, safety and welfare. It would also let the board waive or reduce licensing fees for craft‑processor applicants by rule or accessible policy. Several members flagged Ways and Means oversight, noting that fee waivers could affect revenue streams and that staff would likely ask for justification when they review fiscal impacts.

Committee members debated product‑registration fees: earlier drafts discussed a one‑time product registration fee (for example, $75) versus an annual fee. Board staff and committee members expressed concern that a one‑time fee might not cover ongoing costs tied to formulation changes, labeling, laboratory assays and other compliance work; an annual fee could better sustain the board’s workload unless general fund support is provided.

The amendment also adds language allowing the CCB to regulate the use of processing facilities and equipment "to permit processors to use the same equipment for hemp and cannabis processing" while mandating steps to "prevent cross contamination between hemp and cannabis." Members discussed practical operational controls—cleaning schedules, sequencing production runs, and the potential need to strike or reword specific terms to match industry practice.

On accounting, Schollman said language was adjusted so the CCB could collect fees for hemp and deposit them into the cannabis regulation fund; a member asked whether receipts would be tracked separately on agency accounting spreadsheets to preserve an auditable paper trail. Schollman said he would double‑check statutory references governing fund dedication and reporting.

The committee paused the discussion to reconvene after a brief break and indicated plans to return to policy details and rulemaking questions later.