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

Changes the long and short titles of the act.

Amends GS 106-568.51, which defines terms as they are used in Article 50E of GS Chapter 106, Industrial Hemp, by adding two new defined terms. New subsection (7a) defines industrial hemp research program to mean the research program established pursuant to GS 106-568.53(1), as amended by the act. New subsection (7b) defines State land grant university to mean North Carolina State University and North Carolina A&T State University.

Amends GS 106-568.52, subsection (a), establishing the North Carolina Industrial Hemp Commission (Commission), by increasing the number of Commission members from five to nine members. Increases the Commission members appointed by the Governor from one to two, and provides that those members are to, at the time of appointment, be full-time faculty members of a State land grant university (previously, of a State university) who regularly work in the field of agricultural science or research (previously, who regularly teach in the field of agricultural science). Increases the Commission members appointed by the Commissioner of Agriculture from one to two. Establishes two new Commission members that are to be appointed by the Commissioner of Agriculture, and provides that one is to be a professional agricultural consultant and the other is to be an agribusiness professional. Amends subsection (b), which sets out terms of Commission members, by adding that the term for a member designated by new subdivision (a)(6) of the statute (appointed by the Commissioner of Agriculture, who is a professional agricultural consultant) expire on June 30 of any year evenly divisible by four. Amends subsection (g) to increase the number of Commission members that constitutes a quorum for the transaction of business from three to five members.

Amends GS 106-568.53, concerning the powers and duties of the Commission, as follows.

Amends subsection (1) to direct the Commission to establish an industrial hemp research program to grow or cultivate industrial hemp in the State, to be directly managed and coordinated by State land grant universities (currently, to establish an agricultural program to grow or cultivate industrial hemp in the State). Establishes that the Commission must pursue any permits or waivers from the United States Drug Enforcement Agency or any other federal agency necessary for the establishment of the industrial hemp research program (currently, industrial hemp cultivation pilot program) established by Article 50E. Establishes that the research program is to consist primarily of demonstration plots planted and cultivated in the State by selected growers, who are to be licensed pursuant to section (2) of the statute prior to growing any industrial hemp.

Amends subsection (2) to provide that the Commission is to issue licenses allowing a person, firm, or corporation to cultivate industrial hemp for research purposes to the extent allowed by federal law, upon proper application as the Commission may specify, and in accordance with GS 106-568.53A, as enacted by this act to establish responsibilities of licensees. Deletes the revision of subsection (2) of the previous edition that established that research purposes include the growth, cultivation, and marketing of industrial hemp for purposes of Article 50E.

Amends subsection (3) to direct the Department of Agriculture (Department)  to collect and manage all fees charges by the Commission and remit all funds collected under the statute to the Commission at least monthly. Also allows the Department to retain its actual expenses associated with the issuance of cultivation licenses from the amount to be remitted to the Commission.

Deletes subsections (6) and (7) of the statute, which required the Commission to study and investigate marketplace opportunities for hemp products and best methods of industrial hemp cultivation suited for soil conservation and restoration. 

Amends subsection (8) to provide that the Commission is to adopt rules (currently, directs the Commission to propose to the Board of Agriculture for adoption of reasonable rules and regulations) necessary to carry out the purposes of Article 50E, as specified in existing language. Makes conforming change.

Enacts new subsection (10) to direct the Commission to notify the State Bureau of Investigation (SBI) and all local law enforcement agencies of the duration, size, and location of all industrial hemp demonstration plots authorized for the industrial hemp research program.

Enacts new GS 106-568.53A to require the following of a person granted an industrial hemp license: (1) maintain records that demonstrate compliance with Article 50E and with all other State laws regulating the planting and cultivation of industrial hemp; (2) retain all industrial hemp production records for a minimum of three years; (3) allow industrial hemp crops, throughout sowing, growing, and harvesting, to be inspected by and at the direction of the Commission, the SBI, or the chief law enforcement officer of the unit or units of local government where the farm is located; and (4) maintain a current written agreement with a State land grant university that states that the grower is a participant in the industrial hemp research program managed by that institution.

Enacts GS 106-568.55 to set out 11 permissible research activities in which a licensed grower may participate as part of the industrial hemp research program directly managed by a State land grant university. Permissible research activities include studying and investigating marketplace opportunities for hemp products to increase the job base in the State, studying and investigating best methods of industrial hemp cultivation suited to soil conservation and restoration, conducting seed research to identify seed types that are best suited to be grown in the State, and studying the use of industrial hemp in new energy technologies.

Enacts new GS 106-568.56 to establish a civil penalty and authorizes the Commissioner to assess a civil penalty of no more than $2,500 per violation against any person who: (1) violates any provisions of Article 50E or a rule adopted by the Commission, or conditions of license, permit, or order issued by the Commission; (2) manufactures, distributes, dispenses, delivers, purchases, aids, abets, attempts, or conspires to manufacture, distribute, dispense, deliver, purchase, or possess with the intent to manufacture, distribute, dispense, deliver, or purchase marijuana on property used for industrial hemp production, or in a manner intended to disguise the marijuana due to its proximity to industrial hemp, which may be in addition to any other penalties provided by law; (3) provides the Commission with false or misleading information in relation to a license application or renewal, inspection, or investigation authorized by the Article; or (4) tampers with or adulterates an industrial hemp crop lawfully planted pursuant to the Article. Directs the Commissioner to remit the clear proceeds of civil penalties assessed pursuant to the statute to the Civil Penalty and Forfeiture Fund in accordance with GS 115C-457.2. Effective December 1, 2016, and applies to offenses committed on or after that date.

Enacts new GS 106-568.57 to establish that any person that manufactures, distributes, dispenses, delivers, purchases, aids, abets, attempts or conspires to manufacture, distribute, dispense, deliver, purchase, or possesses with the intent to manufacture, distribute, dispense, deliver, or purchase marijuana on property used for industrial hemp production, or in a manner intended to disguise the marijuana due to its proximity to industrial hemp, will be deemed guilty of a Class 2 misdemeanor. Provides that this penalty may be imposed in addition to any other penalties provided by law. Establishes that any person that provides the Commission with false or misleading information in relation to a license application or renewal, inspection, or investigation authorized by the Article will be deemed guilty of a Class 2 misdemeanor. Establishes that any person that tampers with or adulterates an industrial hemp crop lawfully planted pursuant to the Article will be deemed guilty of a Class 2 misdemeanor. Effective December 1, 2016, and applies to offenses committed on or after that date.

Current SL 2015-299, Section 3, provides that the Board of Agriculture may adopt temporary rules to implement the provisions of the act and must adopt permanent rules as recommended by the Commission. Changes Section 3 to provide that the Commission may adopt temporary rules to implement the provision of the act, and that the temporary rules are to remain in effect until permanent rules that replace the temporary rules become effective. Makes conforming change to SL 2015-299, Section 4, and to GS 90-87(16).