Bill Summary for S 315 (2019-2020)

Summary date: 

Jun 6 2019

Bill Information:

View NCGA Bill Details2019-2020 Session
Senate Bill 315 (Public) Filed Wednesday, March 20, 2019
AN ACT TO MAKE VARIOUS CHANGES TO THE AGRICULTURAL LAWS OF THE STATE.
Intro. by B. Jackson, Sanderson, Johnson.

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Bill summary

Senate committee substitute modifies and adds to the 1st edition as follows. 

Changes the act’s long title and makes organizational changes.

Sections 1 through 7

Makes the following changes to Article 50E of GS Chapter 106. Retitles the Article as North Carolina Hemp Commission (was, Industrial Hemp). Amends the legislative findings and purpose set forth for the Article, declaring hemp to be a viable agricultural commodity and the promotion of the hemp industry to be in the best interest of citizens (previously established an agricultural pilot program for the cultivation of industrial hemp). Adds to the Article’s defined terms: cannabidiol, cannabinoid, commercial sale, cultivating, federally defined THC level for hemp, handling, hemp, hemp extract, licensee, processing, and smokable hemp. Removes commercial use, grower, industrial hemp, industrial hemp research program, state land grant university, and verified propagule from the defined terms given. Modifies the definitions for hemp product and tetrahydrocannabinol.

Renames the NC Industrial Hemp Commission as the NC Hemp Commission (Commission) and sets current members’ terms to expire July 1, 2021. Now allows the two appointments of the Governor to the Commission to be a full-time faculty member or Emeritus faculty member of a State land grant university who regularly works in agricultural science or research (previously, limited to only full-time faculty members). Modifies and adds to the powers and duties of the Commission, now charging the Commission with establishing the NC Hemp Program (Program) to cultivate hemp in the state, issuing licenses for cultivating and handling hemp, and adopting necessary rules that prescribe sampling and testing procedures and set a schedule of nonrefundable fees for administering the Program. Eliminates all powers and duties related to the industrial hemp research program and cultivation licenses. Provides for hemp licensing qualifications for persons to cultivate or handle hemp in the state, issuable by the Commission and limited to qualifying farmers or conditional qualifying farmers. Allows the Commission to grant a license to cultivate hemp to a State agency or higher-learning institution, or an employee thereof for use in the scope of the employee's duties. Makes ineligible for licensure for a period of ten years any person convicted of a felony relating to a controlled substance under state or federal law. Honors licenses issued by the former NC Industrial Hemp Commission for the term of the license. Eliminates the funding limitations set forth for the Commission. Establishes a $250,000 minimum bonding requirement for hemp handler licensees, recoverable by any cultivator injured by a contracted handler, as specified.

Directs the Commission to require compliance with corrective action plans for persons required to obtain a hemp license under the Article and determined to have negligently violated any of the Article’s provisions. Details corrective action plan requirements, including correcting the violation by a specified date and periodic reporting to the Commission for at least two years. Makes ineligible to obtain a hemp license for a period of five years any person who negligently violates the Article or related rules three times in a five-year period, in addition to being subject to criminal and civil penalties for additional violations during that period. Requires the Commission to immediately report to the Commissioner of Agriculture (Commissioner), the Attorney General, and the appropriate law enforcement authority any violation of the Article or related rules that is reckless, willful, knowing, or intentional. Maintains the civil and criminal penalties under the Article, made applicable to hemp rather than industrial hemp.

Adds that licenses are not required to possess, handle, transport, or sell hemp products or hemp extracts. Provides for export of hemp products consistent with the laws of the receiving jurisdiction.

Establishes the NC Hemp Program Fund, housed in the Department of Agriculture and Consumer Services (Department), to be used by the Commission and the Department for the costs of personnel, program administration, testing, and any other costs incurred in administering the Article, including promotion, marketing, and branding of hemp grown and processed in the state.

Directs (rather than authorizes) the Commission to adopt temporary rules to implement the above provisions of Section 1 of the act, effective until permanent rules are adopted (was, for 180 days after the effective date of the section).

Deletes the previous provisions concerning the consideration of current members of the Industrial Hemp Commission in the appointment of members to the Commission. 

Repeals Article 50E in its entirety, effective July 1, 2021.

Amends GS 90-87 to exclude from the definition of marijuana hemp, hemp products, hemp extracts, and smokable hemp (was, excluded industrial hemp only) when produced and used in compliance with the Controlled Substances Act and rules adopted by the Commission. Amends GS 90-94 to exclude from schedule VI controlled substances tetrahydrocannabinols in hemp, hemp products, hemp extracts, or smokable hemp. Amends GS 90-95 to provide that any person who manufactures, sells or delivers, or possesses with intent to manufacture, sell, or deliver a controlled substance classified in Schedule VI is to be punished by being required to comply with a corrective action plan issued by the Commission for a first or second offense so long as the person has a valid hemp license and they did not willfully, knowingly, or intentionally cause the controlled substance to exceed the federally defined THC level for hemp. Sets out the same punishment for any person with a valid hemp license who possesses a controlled substance classified in Schedule VI. 

The above changes are effective and apply to offenses committed on or after the later of December 1, 2019, or 30 days after the effective date of specified regulations adopted by the US Department of Agriculture, and expire July 1, 2021. 

Amends GS 105-113.106 to define hemp as used in Article 2D, Unauthorized Substances Taxes, to mean hemp, hemp extracts, and hemp products. Exempts lawfully possessed hemp from unauthorized substance taxes under GS 105-113.107A. Effective for taxable years beginning on or after July 1, 2019, and expire July 1, 2021.

Now requires the Commissioner (in consultation with the Governor and Attorney General) to submit to the Secretary of the US Department of Agriculture a State plan for the regulation of hemp production (was, six months after the specified regulations are adopted by the US Department of Agriculture). Sets out six elements (was, four) that must be included in the plan, including a procedure to maintain information regarding land on which hemp is produced in the state, and a procedure for the disposal of products that are produced in violation of new Article 50F or any rule adopted by the Commission. Additionally requires the plan to include a procedure for conducting annual inspections and submitting information on each hemp producer to the US Department of Agriculture Secretary. Maintains that an amended plan must be submitted if the initial plan is disapproved. 

Amends SL 2015-299, Section 4, to change the expiration of the act (establishing Article 50E, which regulates industrial hemp) until the later of December 1, 2019, or 30 days after the effective date of the specified regulations adopted by the US Department of Agriculture (was, the date that the NC Industrial Hemp Commission adopts and submits to the Governor and Revisor a resolution that a State industrial hemp pilot program is no longer necessary because federal legislation has been enacted and taken effect that removes industrial hemp from the federal Controlled Substances Act). 

Sections 8 through 11

Modifies proposed Article 50F, North Carolina Hemp Program, GS Chapter 106, as follows. 

Adds cannabinoid and smokable hemp to the defined terms, and modifies the definitions set forth for hemp extract, hemp product, and tetrahydrocannabinol, mirroring the definitions of those terms provided in Article 50E, as amended. Eliminates the NC Hemp Commission. Makes changes throughout the Article to refer to the Department rather than the Commission, including granting the Department and the Commissioner the powers and duties previously granted to the Commission. Eliminates the previous provisions which directed that rules required to be adopted regarding sampling and testing procedures use a decarboxylation testing method. Modifies the Article’s civil penalties, authorizing a civil penalty not exceeding $2,500 per violation against any person who knowingly or intentionally manufactures, delivers, sells, or possesses smokable hemp, except for hemp plants or parts of a hemp plant grown or handled by a licensee for processing or manufacturing into a legal hemp product. Additionally makes it a Class 1 misdemeanor to knowingly or intentionally manufacture, deliver, sell, or possess smokable hemp, except for hemp plants or parts of a hemp plant grown or handled by a licensee for processing or manufacturing into a legal hemp product (mirroring the civil and criminal penalties set out in Article 50E, as amended). Modifies the provision which specifies that no license is required to possess, handle, transport, or sell hemp products or hemp extracts, no longer specifically including those containing CBD or other hemp-derived cannabinoids. Makes further conforming and technical changes.

Now grants the Department enforcement authority of rules adopted by the Commission to implement Section 1 of the act until the Department amends or repeals the rules.

Further amends GS 90-87 to also exclude from the definition of marijuana smokable hemp. Changes the statutory cross-reference. Amends GS 90-94 to exclude from schedule VI controlled substances tetrahydrocannabinols in hemp, hemp products, hemp extracts, or smokable hemp (mirroring the changes made to GS 90-94 by the act, expiring July 1, 2021). Modifies the proposed changes to GS 90-95 to provide that any person who manufactures, sells or delivers, or possesses with intent to manufacture, sell, or deliver a controlled substance classified in Schedule VI is to be punished by being required to comply with a corrective action plan issued by the Department (rather than the Commission, eliminated by the act) for a first or second offense so long as the person has a valid hemp license and they did not willfully, knowingly, or intentionally cause the controlled substance to exceed the federally defined THC level for hemp (rather than a specified concentration). Makes the same changes to the provisions setting out the same punishment for any person with a valid hemp license who possesses a controlled substance classified in Schedule VI. 

Amends GS 105-113.106 to define hemp as used in Article 2D, Unauthorized Substances Taxes, to mean hemp, hemp extracts, and hemp products. Exempts lawfully possessed hemp from unauthorized substance taxes (mirroring the changes made to GS Chapter 105 made by the act, expiring July 1, 2021, with necessary changes to statutory references). 

Effective July 1, 2021 (was the date that the NC Industrial Hemp Commission adopts and submits to the Governor and Revisor a resolution that a State industrial hemp pilot program is no longer necessary because federal legislation has been enacted and taken effect that removes industrial hemp from the federal Controlled Substances Act).

Section 12

Amends GS 106-121, adding the term cannabinoid related compounds, applicable to Article 12, Food, Drugs and Cosmetics. Modifies the proposed changes to GS 106-139, now directing the Board of Agriculture to adopt rules to establish current good manufacturing practices in manufacturing, packaging, labeling, or holding operations cannabinoid-related compounds derived from hemp (was, compounds related to industrial hemp), and prohibits engaging in manufacturing, packaging, labeling, processing, holding or selling of cannabinoid-related compounds without a valid license (previously did not include selling). Now directs the Board of Agriculture to develop a schedule of license fees to be used to cover costs of administering the licensing program. Eliminates the proposed provision which excluded retail establishments, wholesalers, and warehousing operations that do not engage in the manufacturing, packaging, or labeling of cannabinoid related compounds from licensure requirements. Makes the changes effective January 1, 2020 (was, effective on the date that the Commission adopts and submits the specified resolution to the Governor and to the Revisor of Statutes) and sunsets the provisions on July 1, 2021. Makes similar changes to the proposed changes to GS 106-139 to allow the Board of Agriculture to adopt rules to establish current good manufacturing practices in manufacturing, packaging, labeling, holding, or selling cannabinoid-related compounds derived from hemp, now effective July 1, 2021 (was, the date the Industrial Hemp Commission adopts and submits the resolution). Directs the Board of Agriculture to adopt temporary rules to implement Section 12 by November 1, 2019. 

Section 13

Further amends GS 106-550 to make technical changes. Maintains proposed GS 106-554.1 regarding applications for hemp referendums, now providing for the statute to expire July 1, 2021. Provides that the changes to GS 106-550 and proposed GS 106-554.1 are effective when the act becomes law (was, the date that the NC Industrial Hemp Commission adopts and submits to the Governor and Revisor a resolution that a State industrial hemp pilot program is no longer necessary because federal legislation has been enacted and taken effect that removes industrial hemp from the federal Controlled Substances Act).

Section 14

Amends GS 106-568.56, as amended, adding to the civil penalties provisions. Authorizes a civil penalty not exceeding $2,500 per violation against any person who knowingly or intentionally manufactures, delivers, sells, or possesses smokable hemp, except for hemp plants or parts of a hemp plant grown or handled by a licensee for processing or manufacturing into a legal hemp product. Amends GS 106-568.57, as amended, making it a Class 1 misdemeanor to knowingly or intentionally manufacture, deliver, sell, or possess smokable hemp, except for hemp plants or parts of a hemp plant grown or handled by a licensee for processing or manufacturing into a legal hemp product. Applies to offenses occurring on or after December 1, 2020.

Requires the Department, the NC Industrial Hemp Association, the Commission, the State Bureau of Investigation, and other law enforcement agencies and district attorneys at the request of the SBI, to meet at least quarterly to discuss best practices for the hemp industry. Directs the Department to report any findings and recommendations from the meetings to the specified Commission within 30 days.

Requires the State Bureau of Investigation to notify the Agriculture and Forestry Awareness Study Commission when the US Drug Enforcement Agency has adopted an approved immediate testing method to determine whether hemp is within the federally defined THC level for hemp, at which time the Commission must conduct a study on whether the prohibition on the sale of smokable hemp should be repealed.

Sections 15 and 16

Maintains proposed GS 62-193, concerning disposition of certain unused easements, and GS 20-150(e1), concerning right-of-way for farm equipment turning left.

Section 17

Modifies the proposed changes to GS 136-129 concerning outdoor advertising devices, to exempt specified outdoor advertising promoting a bona fide farm from the prohibition on outdoor advertising within 660 feet of the right-of-way of the interstate or primary highway system, so long as the outdoor advertising promotes a bona fide farm that is exempt from specified zoning regulations and the sign is more than three feet long on any side and it is located on any bona fide farm property owned or leased by the owner or lessee of the bona fide farm (previously did not specify that the sign must be located on a property owned or leased by the owner or lessee of the bona fide farm; instead required the sign to be located on the bona fide farm property).

Sections 18 and 19

Maintains the proposed changes to GS 120-150, concerning the Agriculture and Forestry Awareness Study Commission, and the directives regarding the implementation of the odorous emissions rule by the Environmental Review Commission. 

Section 20

Modifies the proposed changes to GS 99E-30 and GS 153A-340 to additionally include equestrian activities in the definition of agritourism activity, and to no longer explicitly exclude hunting or shooting sporting involving semiautomatic centerfire rifles from the definition of agritourism acitivity. Instead, amends GS 99E-30 and GS 153A-340 to require properties used for shooting sports to comply with guidelines for design and site evaluation as established by the Wildlife Resources Commission. Further amends GS 153A-340 to require a vote of the full board of county commissioners to determine whether a property used for shooting sports is in compliance with the Wildlife Resource Commission's guidelines. Makes technical changes.

Enacts GS 153A-145.8 (concerning counties) and GS 160A-203.2 (concerning cities) to prohibit counties and cities from requiring catering permits for businesses located on property used for bona fide farm purposes that provide catering services on- and off-site from the property. Clarifies that the statutes do not exempt the businesses from any health and safety rules adopted by the local health department, the Department of Health and Human Services, or the Commission of Public Health.

Section 21

Modifies proposed Article 87 of GS Chapter 106, now titling the Article as the NC Sweetpotato Act (was, the NC Sweet Potato Act of 2019), and making conforming changes throughout to refer to sweetpotatoes instead of sweet potatoes. Makes further technical changes. Now requires the Commissioner to remit all royalties and license fees under the Article to the NC SweetPotato Commission for the promotion of North Carolina sweetpotatoes, less any costs for regulating trademarks (previously, the Commissioner was to keep all royalties and fees for the promotion of the crop as well as to cover the costs for trademark regulation). No longer specifically refers to the US Standards for Grades of Sweetpotatoes effective April 21, 2005; instead adopts the most recently adopted US Standards for Grades by reference. Adds a new requirement for membership of the NC Sweetpotato Advisory Council to include at least one sweetpotato processor and at least one sweetpotato retailer. Makes further technical changes.

Section 22

Maintains the proposed changes to GS 89C-25, GS 139-3, and GS 139-4, concerning the program for granting job approval authority to the Soil and Water Conservation District staff and employees of the Division of Soil and Water Conservation. Makes technical changes to the proposed changes to GS 89C-25 and GS 139-4.

Section 23

Maintains the proposed changes to GS 105-277.4, regarding present use value of agricultural, horticultural, and forestland.

Section 24

Amends Section 10.24(a) of SL 2017-57, renaming the Food Processing Innovation Center Committee as the NC Food Innovation Lab Committee.

Section 25

Enacts GS 139-8.2, requiring information collected by soil and water conservation districts from farm owners, animal owners, agricultural producers, or owners of agricultural land that is confidential under federal or state law to be held confidential by the soil and water conservation districts. Specifically includes information provided by an agricultural producer or owner of agricultural land concerning the agricultural operation, farming, or conservation practices, or the land itself, in order to participate in soil water conservation programs and geospatial information otherwise maintained by the district about agricultural lands or operations for which information described as confidential is provided. Excludes applications for cost share assistance and associated contract documents that require the approval of the soil and water conservation district or the Soil and Water Conservation Commission. Effective October 1, 2019.

Section 26

Enacts Article 9, Right to Repair Act, to GS Chapter 75. Sets forth 12 defined terms. Requires original farm equipment manufacturers (manufacturers) of farm equipment sold or used in North Carolina to make diagnostic and repair information available to independent repair facilities, as defined, or owners of the manufacturer's products, free of charge and in the same manner the manufacturer makes them available to its authorized repair providers. Defines farm equipment to mean equipment that is used or intended for use in a farm operation, including any combine, tractor, implement, engine, motor, or attachment; excludes motor vehicles. Requires those manufacturers to make farm equipment parts available for purchase by the owner, owner’s agent, or any independent repair provider on fair and reasonable terms. Prohibits manufacturers that sell information to independent repair providers or owners in a standardized format, on conditions more favorable than those under which an authorized repair provider obtains the same information, from requiring the authorized repair provider to continue to purchase that information in a proprietary format, unless the proprietary format includes documentation or functionality not available in the standardized format. Requires manufacturers to make diagnostic repair tools available for purchase by owners and independent repair providers available to any authorized repair providers. Manufacturers that provide repair information to aftermarket service information publications and systems have fully satisfied their obligations under this statute. Requires farm equipment manufactured and sold or used for security-related functions to include necessary documentation to reset a security-related electronic function from information provided to owners and independent repair facilities, and authorizes provision of the information through an appropriate secure data release system. 

Does not require divulging of trade secrets. Does not affect agreements between authorized repair providers and manufacturers. Grants authorized repair providers all rights under this statute, except in the case of a dispute under an existing agreement. Does not require manufacturers or authorized repair providers to provide an owner or independent repair provider with nondiagnostic and nonrepair information provided to an authorized repair provider by the manufacturer pursuant to an agreement or contract.

Places enforcement authority with the Attorney General and authorizes civil penalties of up to $500 per violation of the Article. Also establishes a claim for an owner or independent repair provider to recover from a manufacturer up to $500 per violation.

Effective October 1, 2019.

Section 27

Amends GS 143-215.10I, concerning swine farm modifications, to condition modification of an animal waste management system permit upon the permitting action not resulting in an increase in the permitted capacity of the swine farm, as measured by the annual steady state live weight capacity of the farm. Makes further organizational and clarifying changes. 

Section 28

Amends GS 143-215.71 and GS 143B-135-238 (appears to intend GS 143B-135.238) to specify that projects cannot receive grant funding from both the Environmental Quality Incentives Program and the Clean Water Management Trust Fund.

Directs the Department of Environmental Quality (DEQ) and the Department of Natural and Cultural Resources to jointly report to the specified NCGA committee by September 30, 2019, regarding funding overlaps between water resources development grant funding and Clean Water Management Trust Fund grants for the Western Stream Initiative (Initiative) and the efforts of the Departments to improve administration of grants for the Environmental Quality Incentives Program.

Section 29

Directs DEQ to develop performance management procedures for projects funded as part of the Initiative, including the collection and reporting of 10 specified measures for all projects receiving grant funding. Requires the Department of Natural and Cultural Resources to provide DEQ with the specified measures relevant to funding for the Initiative provided by the Clean Water Management Trust Fund. 

Amends GS 143-215.72, establishing an annual reporting requirement for DEQ regarding grants for projects funded through the Initiative (defined as the portion of the federal Environmental Quality Incentives Program funding provided to the Western Stream Initiative for certain counties). Requires the report to be submitted to the specified NCGA committee and division by November 1, and requires the report to include measures of grant administration and grant implementation efficiency and effectiveness.

Section 30

Directs the Office of the State Auditor to audit all State funds ever paid to the Resources Institute for the Initiative through the Clean Water Management Trust Fund and Water Resources Development Grants for the Environmental Quality Incentives Program no later than June 1, 2020. Directs the Director and Board of Trustees of the Clean Water Management Trust Fund and DEQ to seek recoupment of any identified overpayment of State funds based on the audit’s findings.

Section 31

Maintains the act’s severability clause and effective date provision. 

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