Section 1.

Article 1.

Enacts new GS Chapter 18E, pertaining to the regulation of kratom products.  Defines sixteen terms.

Enacts GS 18E-101, which sets forth six offenses involving the sale of kratom products, as follows:

1. To knowingly sell a kratom product to a person who is under 21 years of age or to sell that product to a person under 21 years of age when the seller has reason to know they are under 21. Specifies conditions when the seller must require proof of age, including requiring age verification for online sales.   
2. Knowingly, or having reason to know, distribute samples of kratom products in or on a public street, sidewalk, park, or public building.
3. Engage in the business of selling a kratom product without a valid license.
4. Knowingly, or having reason to know, sell a kratom product that is not contained in an exit package or a child-resistant package.
5. Knowingly, or having reason to know, sell at retail a kratom product that is not in compliance with GS 18E-105.
6. Knowingly, or having reason to know, sell at retail a kratom product that has not been tested as outlined in GS 18E-104.

Provides for three defenses to the violation described as 1 above, including (1) proof that the buyer produced an official State, tribal, military, or federal identification showing their age to be at least 21 years old and bearing a physical description reasonably describing the buyer; (2) evidence of other facts that reasonably indicated at the time of sale that the purchaser was at least the required age; and (3) evidence that at the time of sale the purchaser utilized a biometric identification system that demonstrated their age to be at least 21 and that they had registered an official federal, tribal, military, or State ID with the seller or the seller’s agent showing them to be the legal age for purchase.

Provides for civil penalties imposed by the Alcohol Law Enforcement Division of the Department of Public Safety (ALE Division) ranging from $500 to $2,000 and for a one-year suspension of retail dealer licenses for third violations, and revocation of that license for subsequent violations. Allows for compromise in cases of revocation or suspension of licensure where the retail dealer may pay a penalty of not more than $3,000. Allows the ALE Division to accept a compromise and suspend a license in the same case but prevents it from revoking a license if a compromise is accepted. Provides for payment of a testing fee conducted as part of sample testing in investigating alleged violations of the offense listed as 6 above, to be remitted to the ALE Division. Directs that the clear proceeds of any civil penalty be remitted to the Civil Penalty and Forfeiture Fund (Fund). Permits for forfeiture of products manufactured, distributed, or sold in violation of the offense listed as 6 above. Designates second violations of the offense listed as 3 above as a Class A1 misdemeanor with third or subsequent violations a Class H felony.

Enacts GS 18E-101A, preventing a producer from knowingly selling or in any way transferring kratom that has been processed or prepared with the intent to be used in a kratom product to any person or entity other than a manufacturer licensed under GS Chapter 18E. Provides for civil penalties ranging from $500 to $2,000. Designates second violations as a Class A1 misdemeanor with third or subsequent violations a Class H felony.

Directs that the clear proceeds of any civil penalty be remitted to the Fund. Clarifies that the statute cannot be construed as preventing a producer from selling or transferring kratom intended to be used in a lawful product.

Enacts GS 18E-102, as follows. Bars persons from giving a kratom product to anyone less than 21 years of age without the consent of that person’s parent or legal guardian. Prevents persons less than 21 years of age from purchasing, attempting to purchase kratom products and to use fraudulent or altered identification or documentation, identification or documents issued to another, or any other form or means of identification that indicates or symbolizes that the person is not prohibited from purchasing or possessing a kratom product under the statute. Further makes it unlawful for a person to permit use of their identification to allow an underage person to purchase a kratom product. Makes it a Class 2 misdemeanor for persons who violate the statute who are less than 21 years of age and a Class 1 misdemeanor for persons 21 and over who violate the section. Provides for aiding and abetting liability. Exempts an underage person from liability for selling, transporting, or possessing kratom products in the course of employment if the employment of the person for that purpose is lawful under applicable youth employment statutes.

Enacts GS 18E-103, which makes it unlawful for a manufacturer or distributor to do any of the following three offenses:

1. Knowingly, or having reason to know, distribute samples of a kratom product in or on a public street, sidewalk, or park.
2. Engage in the business of manufacturing or distributing a kratom product without a valid license.
3. Knowingly, or having reason to know, manufacture or distribute a kratom product that violates the provisions of GS 18E-104.

Classifies violations as a Class A1 misdemeanor and provides for civil penalties ranging from $1,000 to $7,500. Authorizes suspension, revocation, or conditions placed upon manufacturer or distributor licenses. Allows for compromise in cases of revocation or suspension of licensure where the licensee may pay a penalty of not more than $8,000. Allows the ALE Division to accept a compromise and suspend a license in the same case but prevents it from revoking a license if a compromise is accepted. Provides for payment of a testing fee conducted as part of sample testing in investigating alleged violations of the offense listed as 3 above, to be remitted to the ALE Division. Directs that the clear proceeds of any civil penalty be remitted to the Fund. Permits for forfeiture of products manufactured, distributed, or sold in violation of the offense listed as 3 above.

Requires in new GS 18E-104, that a manufacturer have a kratom product tested by an independent testing laboratory prior to distribution to a distributor or before distributing the product to a seller as described and for the substances listed in the section. Requires a kratom product to be labeled with an expiration date that conforms with applicable federal law. Provides for civil penalties ranging from $1,000 to $7,500. Directs that the clear proceeds of any civil penalty be remitted to the Fund. Authorizes suspension, revocation, or conditions placed on the operating hours of the licensee’s business placed upon the licensee’s licenses. Allows for compromise in cases of revocation or suspension of licensure where the licensee may pay a penalty of not more than $8,000. Allows the ALE Division to accept a compromise and suspend a license in the same case but prevents it from revoking a license if a compromise is accepted. Requires the ALE Division to (1) maintain and post on its website a registry of testing labs that are qualified to conduct the testing required by the section and (2) develop an application and process to determine qualifying laboratories listed on its website, including a sample certificate of analysis.

Enacts new GS 18E-105, which concerns additional requirements and restrictions for manufacturers and distributors of kratom products including registration, packaging requirements, reporting of adverse events, and advertising restrictions. Prohibits a licensee or their agent or employee from knowingly allowing violations of GS Chapter 18E and other laws to occur on the licensed premises in new GS 18E-105.1. Requires a licensee to superintend the business for which the license has been issued, either in person or through a manager.

Contains a safe harbor provision for kratom products and manufacturer or storage facilities, which applies to products that contain kratom, whether as a finished product or in the process of being produced, that is allowed to be manufactured, produced, or packaged in the State but not sold in the State in new GS 18E-105.2. Enacts GS 18E-106, which sets forth eight things that continue to not be prohibited by GS Chapter 18E.

Article 2.

Requires manufacturers, sellers, and distributors of kratom products in the State to obtain the appropriate license(s) from the ALE Division either prior to commencing business or by July 1, 2026. Specifies that a person or entity engaged in more than one of the businesses listed is required to obtain only a single license. Lists five qualifications for licensure including that the licensee be at least 21 years of age and have not been convicted of a felony related to a controlled substance within 10 years in any state or federal jurisdiction. Requires annual renewal of licenses. Provides, in new GS 18E-202, for application fees ranging from $250 for each location or each website offering delivery in the State, to $15,000 for manufacturers whose income in the calendar year prior to application is $100,000 or more. Sets renewal fees at $5,000 for manufacturers, $750 for distributors, and the same amount as the initial licensing fee for sellers. Specifies that for those applicants engaging in more than one type of business requiring licensure under GS Chapter 18E, the fee will be the highest applicable.

Allows the ALE Division 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 ALE Division; and (4) failure to comply with civil penalties. Requires that proceedings for the assessment of civil penalties authorized in Article 1 be governed by GS Chapter 150B. Upon failure to pay a penalty, allows the ALE Division 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 ALE Division to develop and make available online an application for the license required by this Article. Authorizes the ALE Division to adopt rules, amend, and repeal rules to implement GS Chapter 18E. Provides for monthly distribution of fee revenue to the ALE Division to cover enforcement costs. 

Article 3. 

Enacts new GS 18E-300 describing the enforcement authority of the ALE Division over GS Chapter 18E, including the ability to conduct random, unannounced inspections or general investigative inspections as described at locations where kratom products are sold or distributed to ensure compliance with the Chapter. Authorizes the ALE Division to take samples for testing, if upon reasonable inspection, it determines a licensee's inventory may consist of products not in compliance with the packaging, labeling, and testing requirements discussed above. Makes it a Class 2 misdemeanor for any person to resist or obstruct an ALE Division agent attempting to make a lawful inspection. Specifies that refusal by a licensee or by any employee of a licensee to permit ALE Division agents to enter the premises to make an inspection is cause for suspension, revocation, or other action against the licensee. Starting January 1, 2027, requires the ALE Division to submit an annual report to the General Assembly on its enforcement efforts under GS Chapter 18E and to post such reports on its website. Enacts GS 18E-301 authorizing a law enforcement officer to seize any kratom product that is subject to forfeiture, and to provide for its safe storage until trial. Provides for disposition after a criminal trial and after a civil forfeiture proceeding as described. Allows for an owner of seized property to apply for return of the products if no criminal charge has been made or no action for civil forfeiture has been commenced in connection with that product within a reasonable time after seizure. Prevents return if doing so would be unlawful.

Section 2.

Makes conforming changes to GS 18B-500 (subject matter jurisdiction for investigation and enforcement by ALE Division agents).

Section 3.

Specifies that as part of the costs in criminal actions in GS 7A-304, $600 should be ordered to be remitted to the ALE Division or agency that paid for laboratory services in cases where (1) defendant is convicted of a violation of GS 18E-103 and (2) as part of the investigation leading to the defendant's conviction, testing was conducted at a laboratory on products regulated under GS Chapter 18E.

Applies to all kratom products possessed, sold, distributed, or manufactured on or after July 1, 2026, and to all offenses committed on or after that date.