REGULATE HEMP-DERIVED CONSUMABLES & KRATOM. (NEW)

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View NCGA Bill Details2023-2024 Session
House Bill 563 (Public) Filed Tuesday, April 4, 2023
AN ACT TO REGULATE THE SALE AND DISTRIBUTION OF HEMP-DERIVED CONSUMABLE PRODUCTS AND KRATOM PRODUCTS, AND TO BAN THOSE PRODUCTS FROM SCHOOL GROUNDS.
Intro. by McNeely, Sasser, Cotham, Fontenot.

Status: Ref To Com On Rules and Operations of the Senate (Senate action) (Sep 22 2023)

SOG comments (2):

Long title change

Committee substitute to the 1st edition changed the long title. Original long title was AN ACT TO REGULATE THE SALE AND DISTRIBUTION OF PRODUCTS CONTAINING A HEMP-DERIVED CANNABINOID AND TO ESTABLISH A REGULATORY FRAMEWORK FOR THE COMMERCIALIZATION OF KRATOM.

Long title change

House committee substitute to the 2nd edition changed the long title. Previous title was AN ACT TO REGULATE THE SALE AND DISTRIBUTION OF HEMP-DERIVED CONSUMABLE PRODUCTS, TO BAN HEMP-DERIVED CONSUMABLE PRODUCTS FROM SCHOOL GROUNDS, AND TO REGULATE THE SALE AND DISTRIBUTION OF KRATOM PRODUCTS.

Bill History:

H 563

Bill Summaries:

  • Summary date: Sep 21 2023 - View Summary

    House committee substitute to the 3rd edition makes the following changes.

    Part I.

    Amends proposed GS 18D-100 by deleting the term cannabinoid and replacing it with the term hemp-derived cannabinoid, as defined. Amends the definition of the term hemp-derived consumable product so that it is now defined as a hemp product intended for human ingestion or inhalation that contains a delta-9 THC concentration of not more 0.3% on a dry weight basis, but may contain concentrations of other hemp-derived cannabinoids including CBD, CBDA, 5 CBG, CBGA, CBN, THCA, and THCP, in excess of that amount. 

    Amends GS 18D-101 to prohibit a person from knowingly, or having reason to know, sell at retail a hemp-derived consumable product that has a concentration of more than 0.3% on a dry weight basis total combined of delta-9 tetrahydrocannabinol (was, delta-9 tetrahydrocannabinol, delta-7 tetrahydrocannabinol, delta-8 tetrahydrocannabinol, or delta-10 tetrahydrocannabinol).

    Amends GS 18D-103 to prohibit a manufacturer from knowingly, or having reason to know, manufacture or distribute a hemp-derived consumable product that has a concentration of more than 0.3% on a dry weight basis total combined of delta-9 tetrahydrocannabinol (was, delta-9 tetrahydrocannabinol, delta-7 tetrahydrocannabinol, delta-8 tetrahydrocannabinol, or delta-10 tetrahydrocannabinol). Makes conforming changes.

    Amends GS 18D-104 to require hemp-derived consumable products to be tested for the presence of and amount of cannabinoids, not to exceed a concentration of 0.3% total combined of delta-9 tetrahydrocannabinol (was, delta-9 tetrahydrocannabinol, delta-7 tetrahydrocannabinol, delta-8 tetrahydrocannabinol, or delta-10 tetrahydrocannabinol).

    Amends GS 18D-105 as follows. Amends what must be in a consumer protection warning on the label on a hemp-derived consumable product to require a statement that the product is not approved by the US FDA (was, not approved by the FDA for medical use), and a statement to consult your physician before use (was, only if you are pregnant). Removes the prohibition on a hemp-derived consumable product intended for ingestion from being sold in a serving that contains more than 200 milligrams, in the aggregate, of one or more hemp-derived cannabinoids. Prohibits a hemp-derived consumable product intended for ingestion from being sold in a serving that contains more than three milligrams, in the aggregate, of one or more of: delta-9 tetrahydrocannabinol, delta-7 tetrahydrocannabinol, delta-8 tetrahydrocannabinol, or delta-10 tetrahydrocannabinol.

    Amends GS 18D-301 to require that in order to obtain and maintain a license for manufacturing hemp-derived consumable products, distributing hemp-derived consumable products, selling hemp-derived consumable products, manufacturing kratom products, distributing kratom products, or selling kratom products to consent to reasonable inspection by the ALE Division of the inventory of products regulated by GS Chapter 18D to ensure compliance with the Chapter, and the taking of samples found to not be in compliance with the packaging, labeling, and testing requirements (was, consent to reasonable inspection and the taking of reasonable samples by the ALE Division of the person's inventory of products regulated by this Chapter). 

    Amends GS 18D-400 by amending the ALE's enforcement provisions to require that it enforce the provisions of GS Chapter 18D in a manner reasonable to reduce the extent to which hemp-derived consumable products and kratom products are sold or distributed to persons under age 18 and conduct random, unannounced inspections on locations where products are sold or distributed. Provides that if, upon reasonable inspection, the Division determines a licensee's inventory may consist of products not in compliance with the packaging, labeling, and testing requirements of this Chapter, the Division is authorized to only take samples of a licensee's inventory of hemp-derived consumable products and kratom products considered non-compliant to be submitted for testing in order to determine compliance with the provisions of this Chapter (was, the Division is authorized to take reasonable samples of a licensee's inventory of hemp-derived consumable products and kratom products to be submitted for testing in order to determine compliance with this Chapter). 


  • Summary date: Aug 16 2023 - View Summary

    House committee substitute to the 2nd edition makes the following changes.

    Part I.

    Organizes proposed new GS Chapter 18D into Articles.

    Article 1.

    Amends the definitions in GS 18D-100 as follows. Amends the definition of cannabinoid by amending the list of included photocannabinoids; adds that the term also includes any synthetic cannabinoid derived from a source other than hemp. Changes the definition of hemp-derived consumable product to a hemp product intended for human ingestion or inhalation that contains a concentration of not more than 0.3% on a dry weight basis total combined of delta-9 tetrahydrocannabinol, delta-7 tetrahydrocannabinol, delta-8 tetrahydrocannabinol, or delta-10 tetrahydrocannabinol, or any amount of another cannabinoid; further excludes from the term seeds or seed-derived ingredients that are generally recognized as safe by the US FDA. Removes the term hemp-derived psychoactive cannabinoid. Amends the definition of independent testing laboratory to require that it hold an ISO 17025 accreditation or be registered with the Drug Enforcement Administration (DEA), instead of requiring both. Amends the definition of manufacture to also include packaging hemp-derived consumable products and to no longer specify that the term includes the process of extraction or infusion of hemp-derived cannabinoids and packaging, repacking, labeling, and relabeling of hemp-derived consumable products. Amends the definition of manufacturer to also include a person or entity engaged in the process of manufacturing hemp-derived consumable products.

    Amends proposed GS 18D-101 as follows. Prohibits knowingly, or having reason to know, selling at retail a hemp-derived consumable product that has a concentration of more than 0.3% on a dry weight basis total combined of delta-9 tetrahydrocannabinol, delta-7 tetrahydrocannabinol, delta-8 tetrahydrocannabinol, or delta-10 tetrahydrocannabinol (was, has a delta-9 tetrahydrocannabinol concentration of more than 0.3% on a dry weight basis). Adds that when a penalty is imposed for violating this prohibition, the seller must also pay the actual costs paid for testing the samples that resulted in the violation; requires the fees to be remitted to the ALE Division. Specifies that penalties received as on offer in compromise must also be remitted to the Civil Penalty and Forfeiture Fund. Makes a subsequent violation of the prohibition on engaging in the business of selling a hemp-derived consumable product without a valid license a Class A1 misdemeanor.

    Amends proposed GS 18D-103 as follows. Makes it illegal for a manufacturer or distributor to knowingly, or having reason to know, manufacture or distribute a hemp-derived consumable product that has a concentration of more than 0.3% on a dry weight basis total combined of delta-9 tetrahydrocannabinol, delta-7 tetrahydrocannabinol, delta-8 tetrahydrocannabinol, or delta-10 tetrahydrocannabinol (was, has a delta-9 tetrahydrocannabinol concentration of more than 0.3% on a dry weight basis); makes conforming changes. Adds that when a penalty is imposed for violating this prohibition, the seller must also pay the actual costs paid for testing the samples that resulted in the violation; requires the fees to be remitted to the ALE Division. Specifies that penalties received as on offer in compromise must also be remitted to the Civil Penalty and Forfeiture Fund. Provides that when the Department of Revenue (Department) is entitled to suspend or revoke a manufacturer’s or distributor's license (was, seller’s license) the Department may accept an offer in compromise to pay a penalty of not more than $8,000. Makes additional conforming changes.

    Amends GS 18D-106 (now GS 18D-104), as follows. Requires a hemp-derived consumable product to be tested before distribution to determine the presence and amounts of the 101 listed substances (was, seven listed substances). Prohibits the products from exceeding the amounts listed for those substances. Violations will result in one or more of the following actions: (1) suspended license for no more than three years; (2) revocation of the license; (3) impose conditions on the operating hours of the licensee's business; or (4) impose civil penalties as follows: no more than $1,000 for a first violation, no more than $5,000 for a second violation within three years, and no more than $7,500 for a third violation within three years of the first violation. Allows the Department, when it is entitled to suspend or revoke a manufacturer's or distributor's license, to accept an offer in compromise to pay a penalty of not more than $8,000. Allows the Department to accept a compromise or revoke a license, but not both; allows the Department to accept a compromise and suspend the license in the same case. Requires the proceeds of the penalties, including those received as an offer in compromise, to be remitted to the Civil Penalty and Forfeiture Fund. Makes additional conforming changes.

    Amends GS 18D-107 (now GS 18D-105) by amending and expanding upon the statements that must be included in the consumer protection warnings on hemp-derived consumable products. Prohibits a hemp-derived consumable product intended for ingestion from being sold in a serving that contains more than 100 milligrams, in the aggregate, of one or more of the four listed hemp-derived cannabinoids; and specifies that the prohibition on selling in a serving that contains more than 200 milligrams of one or more hemp-derived cannabinoids includes any of those four listed hemp-derived cannabinoids. Violations will result in one or more of the following actions: (1) suspended license for no more than three years; (2) revocation of the license; (3) impose conditions on the operating hours of the licensee's business; or (4) impose civil penalties as follows: no more than $1,000 for a first violation, no more than $5,000 for a second violation within three years, and no more than $7,500 for a third violation within three years of the first violation. Allows the Department, when it is entitled to suspend or revoke a manufacturer's or distributor's license, to accept an offer in compromise to pay a penalty of not more than $8,000. Allows the Department to accept a compromise or revoke a license, but not both; allows the Department to accept a compromise and suspend the license in the same case. Requires the proceeds of the penalties, including those received as an offer in compromise, to be remitted to the Civil Penalty and Forfeiture Fund.

    Moves GS 18D-109 (now GS 18D-106) into Article 1.

    Article 2.

    Places provision related to the regulation of kratom products under Article 2 instead of in new GS Chapter 18E and makes the following changes.

    Amends the definition in GS 18D-200 by changing the term processor to manufacturer; maintains the definition and updates the term throughout.

    Amends GS 18D-201 (was, 18E-101) as follows. Allows the Department, when it is entitled to suspend or revoke a seller’s license, to accept an offer in compromise to pay a penalty of not more than $3,000. Allows the Department to accept a compromise or revoke a license, but not both; allows the Department to accept a compromise and suspend the license in the same case. Adds that when a penalty is imposed for violating the prohibition on knowingly, or having reason to know, selling at retail a kratom product that violates the product limitations, the seller must also pay the actual costs paid for testing the samples that resulted in the violation; requires the fees to be remitted to the ALE Division. Specifies that penalties received as on offer in compromise must also be remitted to the Civil Penalty and Forfeiture Fund. Makes a subsequent violation of the prohibition on engaging in the business of selling a kratom product without a valid license a Class A1 misdemeanor.

    Amends GS 18D-203 (was, 18E-103) as follows. Provides that when the Department is entitled to suspend or revoke a manufacturer’s or distributor's license (was, seller’s license) the Department may accept an offer in compromise to pay a penalty of not more than $8,000. Adds that when a penalty is imposed for violating the prohibition to knowingly, or having reason to know, manufacture or distribute a kratom product that violates the product limitations, the seller must also pay the actual costs paid for testing the samples that resulted in the violation; requires the fees to be remitted to the ALE Division. Specifies that penalties received as on offer in compromise must also be remitted to the Civil Penalty and Forfeiture Fund.

    Article 3.

    Article 3 pertains to licensing, combing provisions previously found in 18D-105 and 18E-105. Specifies that a person or entity engaged in more than one of the businesses listed is required to obtain only a single license. Amends the fees for a license to manufacture hemp-derived consumable products or manufacture kratom products, or to distribute hemp-derived consumable products or kratom products, to allow for a lower fee if the applicant can demonstrate their gross income for the prior calendar year was less than $100,000.

    Allows the Department to revoke or refuse to issue any license for: (1) failure to comply with or meet any of the licensure qualifications; (2) submission of false or misleading information in an application for licensure or renewal; (3) submission of false or misleading information in any report or information required by this Chapter to be submitted to the Department; and (4) failure to comply with civil penalties.

    Requires that proceedings for the assessment of civil penalties authorized in Articles 1 and 2 be governed by GS Chapter 150B. Upon failure to pay a penalty, allows the Department to institute an action in the superior court of the county in which the person resides or has their principal place of business to recover the unpaid amount; specifies that this recovery does not relieve any party from any other penalty prescribed by law.

    Requires the Department to develop and make available online an application for the license required by this Article.

    Article 4.

    Article 4 contains enforcement provisions previously found in GS 18D-104 and makes them applicable to both hemp-derived consumable products and kratom.

    Authorizes the ALE Division to take reasonable samples of inventory for testing in order to determine compliance. Requires the ALE Division to report to the Department any violations for which civil penalties are authorized.

    Expands upon the forfeiture provisions as follows. Requires safe storage of a product subject to forfeiture until trial. Allows the presiding judge in a criminal proceeding for violation of GS 18D-101(a)(4) or GS 18D-103(a)(3) to do the following after resolution of a charge against the owner or possessor of products subject to forfeiture: (1) if the owner or possessor of the product is found guilty of specified violations, the judge must order the product forfeited; (2) if the owner or possessor of the product is found not guilty, or if the charge is dismissed or otherwise resolved in favor of the owner or possessor, the judge must order the product returned to the owner or possessor; (3) if the product is also needed as evidence at an administrative hearing, the judge must provide that the order does not go into effect until the Department determines that the product is no longer needed for the administrative proceeding. Requires a judge ordering forfeiture of property to order the product destroyed. Allows the owner of products seized for forfeiture to apply to have the products returned if no criminal charge has been made in connection with that product within a reasonable time after seizure. Prohibits ordering return of the product if possession by the owner would be unlawful.

    Part II.

    Changes the effective date of the repeal of GS 90-94.1 to December 1, 2023 (was, July 1, 2023).

    Part III.

    Reduces the amount appropriated to the Department of Public Safety for other costs incurred by the Department of Revenue in implementing the act from $500,000 to $375,000 and appropriates $125,000 to be used for any other costs incurred by the ALE Division in implementing the act.

    Part IV.

    Amends the changes in the bill to Article 29A of GS Chapter 115 to now also include kratom products.

    Further amends GS 115C-407 by removing the requirement that the North Carolina Health and Wellness Trust Fund Commission work with local boards of education to provide assistance with the implementation of the policy prohibiting tobacco use in school buildings, grounds, and events, including providing information regarding smoking cessation and prevention resources.

    Makes the changes in this section applicable beginning with the 2024-25 school year instead of the 2023-24 school year.

    Makes conforming and technical changes throughout. Amends the act’s long title.


  • Bill H 563
    Summary date: Jun 21 2023 - View Summary

    House committee substitute to the 1st edition makes the following changes.

    Parts I and V.

    Substantially revises new GS Chapter 18D, now pertaining to regulation of hemp-derived consumable products (was, hemp-derived cannabinoid products) in Part I of the act, as discussed below. Part V of the act creates new GS Chapter 18E, pertaining to Regulation of Kratom Products and Processors, which is largely identical to the regulatory scheme set forth in GS Chapter 18D, except for the differences discussed below.  Removes references to the NC Alcoholic Beverage Control Commission (Commission) throughout new GS Chapter18D and replaces it with the Department of Revenue (Department). Makes conforming changes throughout new GS Chapter 18D for new term, "hemp-derived consumable products," and change from Commission to Department.

    Enacts new 18D/E-101, creating the following four sales restrictions on hemp-derived consumable products and kratom products and processors: (1) knowingly, or having reason to know, sell a hemp-derived consumable product/kratom product to a person under 18 years of age; (2) knowingly, or having reason to know, distribute samples of hemp-derived consumable products/kratom products in or on a public street, sidewalk, or park; (3) engage in the business of selling hemp-derived consumable products/a kratom product without a valid license; and (4) (i) for GS 18D-101, knowingly, or having reason to know, sell at retail a hemp-derived consumable product that has a delta-9 tetrahydrocannabinol concentration of more than 0.3% on a dry weight basis or (ii) for GS 18E-101, knowingly, or having reason to know, sell at retail a kratom product that violates the provisions of GS18E-106 (limits on kratom products). Provides for civil penalties imposed by the Department ranging from a penalty of no more than $500 for the first violation to a penalty of no more than $2,000 and either suspension of the seller’s license for up to a year or revocation of the seller’s license for a fourth or subsequent violation within three years of the first violation. Permits the Department, in any case which the Department is entitled to suspend or revoke a seller's license, to accept from the seller an offer in compromise to pay a penalty of not more than $3,000. Specifies that the Department may either accept a compromise or revoke a license, but not both. Allows the Department to accept a compromise and suspend the license in the same case.

    Provides for three listed defenses, including (1) demonstrating that the purchaser produced identification showing their age to be the required age for purchase and bearing a physical description of the person named on the card that reasonably describes the purchaser or (2) production of other facts that reasonably indicated that at the time of sale, the purchaser was at least the required age.  Retains civil penalty provision and forfeiture authorization from prior version and applies it to new GS Chapter 18E.

    Amends new GS 18D/18E-102, offenses involving the purchase, attempted purchase, or possession of hemp-derived consumable products/kratom products by a person under 18 years of age, as follows. Makes it unlawful for: (1) any person to give hemp-derived consumable products/kratom products to any person under 18 without the consent of the person’s parent or guardian; (2) any person under 18 to purchase, or attempt to purchase, any hemp-derived consumable products/kratom products; (3) for any person to enter or attempt to enter a place where hemp-derived consumable products/kratom products are sold or to obtain, or attempt to obtain hemp-derived consumable products/kratom products by using fraudulent identification; and (4) for any person to allow their identification to be used by any other person attempting to purchase hemp-derived consumable products/kratom products if they are under 18. Specifies that if the person is under 18, they are guilty of a Class 2 misdemeanor and if they are over 18, they are guilty of a Class 1 misdemeanor. Provides for aiding and abetting liability.

    Specifies that the act is not intended to prohibit an underage person from selling, transporting, or possessing hemp-derived consumable products/kratom products in the course of employment, if the employment of the person for that purpose is lawful under applicable youth employment statutes.

    Amends new 18D/E-103, creating three offenses involving the manufacture and distribution of hemp-derived consumable products and kratom products and processors: (1) knowingly, or having reason to know, distribute samples of any hemp-derived consumable products/kratom products in or on a public street, sidewalk, or park; (2) engage in the business of manufacturing or distributing hemp-derived consumable products/kratom products without a valid license; or (3) (i) knowingly, or having reason to know, manufacture or distribute a hemp-derived consumable product that has a delta-9 tetrahydrocannabinol concentration of more than 0.3% on a dry weight basis or (ii) knowingly, or having reason to know, manufacture or distribute a kratom product that violates the provisions of GS 18E-106 (product limits). Specifies that violation is a Class A1 misdemeanor. Specifies that in addition to any criminal punishment, a violation must result in the Department imposing one or more of four listed civil penalties against the licensee including suspension of their license for not more than three years, revocation of licenses, and monetary penalties ranging from $1,000 for the first violation to $7,500 for a third violation within three years of the first violation.  Provides for offers in compromise of not more than $8,000 in cases where the Department is entitled to suspend or revoke a seller’s compromise. Allows the Department to accept a compromise and suspend the license in the same case, but not to revoke a license if an offer in compromise is accepted.  Directs that the clear proceeds of any civil penalty be remitted to the Civil Penalty and Forfeiture Fund. Authorizes forfeiture of products sold in violation of the bar on hemp-derived consumable products that have a delta-9 tetrahydrocannabinol concentration of more than three tenths of one percent (0.3%) on a dry weight basis or kratom products that are sold in violation of GS 18E-106.

    For violations pertaining to the manufacture and/or distribution of hemp-derived consumable products that have a delta-9 tetrahydrocannabinol concentration of more than 0.3% on a dry weight basis (GS 18D-103), creates a defense if the manufacturer does all of the following: (1) recalls all hemp-derived consumable products from the same batch as the product on which the violation is based; (2) has samples of the batch tested by an independent testing laboratory (provides for minimum sample sizes); and (3) provides certified results from the independent testing laboratory indicating that the sample tested does not contain a delta-9 tetrahydrocannabinol concentration of more than 0.3% on a dry weight basis.

    Amends new GS 18D/E-105, setting forth seven licensure requirements for persons or entities in the business of manufacturing, distributing, or selling hemp-derived consumable products/kratom products, including that the applicant be at least 18 years of age, not have been convicted of a felony related to a controlled substance within 10 years in any state or federal jurisdiction, and that they consent to reasonable inspection and the taking of reasonable samples by the Alcohol Law Enforcement (ALE) Division of the person’s inventory of hemp-derived consumable products/kratom products. Sets forth application fee schedule as follows: (1) for a manufacturer’s license, $5,000; (2) distributor license, $2,500; (3) retail sales license, $100 per location with a cap of $2,500 with a requirement that the applicant submit a list of all locations to the Department; (4) online sales license, $100 per location with a cap of $2,500 with a requirement that the applicant submit a list of all internet websites to the Department.

    Specifies that the license is valid for one year and sets forth fee renewal schedule as follows; (1) $1,000 for a manufacturer’s license; (2) $750 for a distributor license; and (3) the same amount as the initial application fee for retail licenses.

    Authorizes the Department to adopt, amend, and repeal rules to carry out the provisions of GS Chapter 18D/E. Provides for distribution of revenue collected from fees to the ALE Division to cover its costs in enforcing GS Chapter 18D/E.  Exempts businesses with permits issued under GS 18B-1001 (ABC permits) or GS 90-85.21 (pharmacy permits) from the licensure requirements of GS 18D/E to sell hemp-derived consumable products/kratom products. Specifies that such businesses are still subject to the other provisions of GS 18D/E.

    Makes organizational, conforming, and technical changes.

    For processors and distributors of kratom products licensed under GS 18E-105, requires them to register all kratom products they offer for sale in the State with the Department. Specifies that the registration must include any information that the Department deems necessary to ensure compliance with the provisions of GS Chapter 18E. Requires the Department to require the processor or distributor, upon receipt of any adverse event report related to a product manufactured or distributed by that processor or distributor, to submit a copy of the adverse event report, as required under 21 U.S.C. 49 §379aa-1, to the Department within 30 days. If the processor or distributor does not submit a copy of the adverse event report within the time allotted, requires that the registration for that product must be revoked and the license for that processor or distributor must be suspended or revoked, at the discretion of the Department.

    Provides for forfeiture of property that has not been previously seized pursuant to an arrest or search in conjunction with certain alleged violations of GS 18D/E-101 by application to the court for an order authorizing seizure of such property. Specifies that an order for seizure can only issue after criminal process has been issued for any of those alleged violations.

    Part I.

    In addition to statutory provisions set forth above, makes the following changes to new GS Chapter 18D. Adds new defined terms cannabinoid, department, distributor, hemp, hemp-derived consumer product, hemp-derived psychoactive cannabinoid, hemp product, independent testing laboratory, ingestion, inhalation, license, manufacturer, and seller. Removes defined terms commission, hemp-derived cannabinoid, and proof of age. Changes definition of batch to the hemp-derived consumable product produced during a period of time under similar conditions and identified by a specific code that allows traceability. (Was, a single stock keeping unit with common cannabinoid input or a hemp flower of the same varietal and harvested on the same date manufactured during a defined cycle in such a way that it could be expected to be of a uniform character and should be designated as such.)

    Amends GS 18D-106 (testing requirements prior to distribution of a hemp-derived consumable product) to add that the tests run on such products must also test for any other controlled substance, in addition to six other listed things that must be tested for. Provides for required sample sizes based on the size of the batch for batch testing. Makes conforming changes. Amends GS 18D-107 (setting forth additional requirements and restrictions for hemp-derived consumable products) as follows. Changes the cap on the amount of milligrams per serving of an ingestible from 75 milligrams to 200 milligrams of hemp-derived cannabinoids. Makes clarifying changes.

    Changes the effective date to July 1, 2024 (was, October 1, 2023).

    Part II.

    Deletes proposed changes to GS 18B-500(b)(1) and repeal of GS 90-87(13). Repeals instead of amending GS 90-94.1 (exemption for use or possession of hemp extract). Effective July 1, 2023, and applies to offenses committed on or after that date.

    Part III.

    Amends the appropriation provision to specify that once the $2 million provided to the ALE Division has been exhausted, the fees remitted to the Division pursuant to GS 18D-105 should be used to support the new full-time positions on a recurring basis. Also specifies that any nonrecurring funds appropriated by this section for the 2023-24 fiscal year that remain unexpended at the end of the 2023-24 fiscal year will not revert at the end of the 2023-24 fiscal year and will remain available for expenditure for the purpose for which the funds were appropriated until the funds are expended.

    Part IV.

    Amends Article 29A of GS Chapter 115C so that it also requires a policy prohibiting the use of hemp-derived consumable products, in addition to tobacco.  Changes the entity responsible for adopting such written policies from the local boards of education to the governing bodies of public school units under GS 115C-407. Removes duties to implement and enforce such policies. Makes conforming changes.

    Enacts new GS 115C-407.1 (policy prohibiting the use of hemp-derived consumable products in school buildings, grounds, and at school sponsored events), as follows. Requires governing bodies of public school units to adopt a written policy prohibiting at all times the use of any hemp-derived consumable product by any person in school buildings, in school facilities, on school campuses, and in or on any other school property owned or operated by the public school unit. Requires the policy to further prohibit the use of all hemp-derived consumable products by persons attending a school-sponsored event at any other location when in the presence of students or school personnel or in an area where the use of hemp-derived consumable products is otherwise prohibited by law. Requires the policy to include at least the following: (1) adequate notice to students, parents, the public, and school personnel of the policy; (2) posting of signs prohibiting at all times the use of hemp-derived consumable products by any person in and on school property; and (3) requirements that school personnel enforce the policy.

    Authorizes hemp-derived consumable products to be included in instructional or research activities in public school buildings if the activity is conducted or supervised by the faculty member overseeing the instruction or research and the activity does not include smoking, chewing, or otherwise ingesting or inhaling the hemp-derived consumable product.  Specifies that local school units can adopt and enforce a more restrictive policy on the hemp-derived consumable products in school buildings, in school facilities on school campuses, or at school-related or school-sponsored events, and in or on other school property.

    Requires charter schools, regional schools, schools for students with visual and hearing impairments, and UNC lab schools to adopt a policy in conformity with the requirements discussed above.  Makes conforming change to Section 6(d) of SL 2018-32 (renewal school system plans) to account for increased scope of mandatory tobacco/hemp-derived consumable products policy.

    Applies beginning with the 2023-24 school year.

    Part V.

    In addition to statutory provisions set forth above, does the following as part of new GS Chapter 18E. Defines terms department, distributor, processor, kratom product, and seller. Prohibits a kratom processor, distributor, or seller from preparing, manufacturing, distributing, or offering for sale any of six listed types of kratom products.  Enacts new GS 18E-104 and GS 18E-108, which is identical to GS 18D-104’s enforcement provisions and GS 18D-109’s statutory construction provisions, respectively. Makes conforming change to GS 18B-500(b) as amended by the act to refer to new GS Chapter 18E. Effective date of GS Chapter 18E is July 1, 2024, and applies to all kratom products possessed, sold, distributed, processed, or manufactured on or after that date, and to all offenses committed on or after that date.

    Part VI.

    Now requires the Department to establish guidance to parties regulated by the provisions of GS Chapter 18D and GS Chapter 18E as enacted by the act. Specifies that the Department must adopt and amend rules prior to July 1, 2024; however, no rule may become effective until on or after that date. Requires the Department to provide and accept applications for licensure, and issue licenses in accordance with GS Chapters 18D and 18E prior to July 1, 2024, in order that licensees may be in compliance on July 1, 2024. Specifies that no license issued by the Department will become effective prior to July 1, 2024. Authorizes the Department to use the procedure set forth in GS 150B-21.1 (APA procedure for temporary rules) to adopt or amend any rules as required by the act.

    Now requires the Department of Public Safety (DPS), solo (was the Board of Agriculture, DPS, and the ABC Commission), to adopt rules  consistent with the provisions of the act. Allows for the APA procedures pertaining to temporary rules to apply to the rules adopted or amended by those entities.

    Changes the general effective date to when the act becomes law.

    Makes conforming changes to the act's titles.


  • Summary date: Apr 5 2023 - View Summary

    Part I

    Enacts new GS Chapter 18D, pertaining to the regulation of hemp-derived cannabinoid products.  Defines  Alcohol Law Enforcement (ALE) Division, batch, commission, hemp-derived cannabinoid, manufacture, proof of age, and serving.

    Enacts GS 18D-101, which sets forth seven offenses involving the manufacture, sale, and distribution of hemp-derived cannabinoid products, as follows: (1) to knowingly sell or distribute a product containing a hemp-derived cannabinoid to a person who is under 21 years of age; (2) to knowingly purchase a product containing a hemp-derived cannabinoid on behalf of a person who is under 21 years of age; (3) to knowingly persuade, entice, send, or assist a person who is under 21 years of age to purchase, acquire, receive, or attempt to purchase a product containing  a hemp-derived cannabinoid; (4) to knowingly distribute samples of products containing a hemp-derived cannabinoid in or on a public street, sidewalk, or park; (5) to knowingly sell or distribute a product containing a hemp-derived cannabinoid without having first obtained proof of age from the purchaser or recipient; (6) to engage in the business of manufacturing, distributing, or selling a product containing a hemp-derived cannabinoid without a valid license issued in  accordance with new GS Chapter 18D; (7) to knowingly manufacture, distribute, or sell a product containing a hemp-derived cannabinoid that has a delta-9 tetrahydrocannabinol concentration of more than 0.3% on a dry weight basis. Exempts certain law enforcement efforts from GS 18D-101. Classifies violation of GS 18D-101 as a Class A misdemeanor and provides for civil penalties ranging from $5,000 to $15,000 and for suspension of hemp manufacturing licenses for initial and subsequent violations. Directs that the proceeds of any civil penalty be remitted to the Civil Penalty and Forfeiture Fund. Permits for forfeiture of products manufactured, distributed, or sold in violation of the offenses listed as 6 and 7 above.

    Enacts GS 18D-102, which makes it a Class A1 misdemeanor for any person under 21 years of age to either (1) knowingly purchase, possess, or accept receipt of a product containing a hemp-derived cannabinoid or (2) knowingly present purported proof of age that is false, fraudulent, or not actually that person's for the purpose of purchasing or receiving a product containing a hemp-derived cannabinoid. Exempts certain law enforcement activities.

    Authorizes the ALE Division to enforce the provisions of GS Chapter 18D. Requires ALE to conduct random, unannounced inspections at locations where products containing a hemp-derived cannabinoid are sold or distributed to ensure compliance with the provisions of GS Chapter 18D. Beginning January 1, 2025, requires the ALE Division to submit an annual report to the General Assembly describing in detail the ALE Division's enforcement efforts under GS Chapter 18D and to post the report on its website.  

    Enacts GS 18D-104, which establishes a license for manufacturing, distribution, and selling of hemp-derived cannabinoid products, as follows. Requires a person or entity that is in the business of manufacturing, distributing, or selling products containing a hemp-derived cannabinoid in the state to obtain a license from the North Carolina Alcoholic Beverage Control Commission (Commission) authorizing the person or entity to engage in that business prior to the commencement of business or by January 1, 2024, whichever is later. Sets forth three requirements for licensure, including submission of information requested by the Commission, a fee, and consent to reasonable inspection and sampling by the ALE Division of the person’s inventory of products containing a hemp-derived cannabinoid. Specifies that a person is ineligible to obtain a license if they are serving sentence for, or for ten years following the completion of a sentence for a drug-related felony offense in any state or federal jurisdiction. Specifies the license is valid for one year and may be renewed annually. Sets forth schedule of annual renewal fees. Authorizes the Commission to adopt, amend, and repeal rules to carry out the provisions of Chapter 18D. Specifies that the rules are effective when adopted and filed pursuant to the APA. Directs that the revenue collected from fees established under GS 18D-104 must be remitted to the Department of Revenue (Department) on a monthly basis. The Department must then remit that revenue to the ALE Division to be used to cover costs incurred by the ALE Division from enforcing the provisions of GS Chapter 18D.

    Enacts GS 18D-105, which sets forth requirements for testing of products containing a hemp-derived cannabinoid by laboratories approved by the Commission. Enacts GS 18D-106 which sets forth packing requirements, advertising restrictions, and ingestible product restrictions for products containing hemp-derived cannabinoids.  Enacts GS 18D-107, which sets forth nine things that continue to not be prohibited by GS Chapter 18D.

    Effective October 1, 2023, and applies to offenses committed on or after that date.

    Part II

    Repeals the definition of hemp contained in GS 90-87(13a). Makes conforming changes to GS 18B-500(b)(1) (pertaining to ALE agents) to account for new licenses under GS 18D-104 and GS 90-94.1 (exemption for use or possession of hemp extract) to refer to new GS Chapter 18D. Effective October 1, 2023.

    Part III

    Appropriates $2 million from the General Fund to the Department of Public Safety (DPS) in nonrecurring funds for the 2023-2024 fiscal year to hire 20 full-time equivalent positions in the ALE division to serve as Special Agents and assist in implementing the provisions of the act. Appropriates $500,000 from the General Fund to the Department of Public Safety in nonrecurring funds for the 2023-2024 fiscal year to be used for any other costs incurred by the Commission and the ALE Division in implementing the provisions of the act. Effective July 1, 2023.

    Part IV

    Amends GS 106-121 (definitions provisions of the food, drugs, and cosmetics article) to add defined terms kratom processor and kratom product. Requires the Board of Agriculture (Board) to adopt rules for regulating kratom processors to ensure the quality and safety of kratom products sold in the state. Requires the Board to address registration, noncompliance, and adverse events reports in its rules. Specifies that the manufacture, sale, delivery, holding, or offering for sale of any kratom products that are falsely certified as compliant with the certification rules adopted by the Board under are be prohibited and also be subject to  GS 106-123 (injunction restraining violations) and GS 106-125 (adulterated or misbranded article).

    Part V

    Contains severability clause. 

    Sets act’s effective date as July 1, 2023, except as otherwise provided.  Specifies that prosecutions for offenses committed before the effective date of the act are not abated or affected by the act, and the statutes that would be applicable but for the act remain applicable to those prosecutions.  

    Requires the Board, DPS, and the ABC Commission to adopt rule that are consistent with the provision of the act. Allows for the APA procedures pertaining to temporary rules to apply to the rules adopted or amended by those entities.